What changed
RBI harmonised NBFC restructuring guidelines with bank norms, following the Mahapatra Working Group recommendations. Mere extension of DCCO for infra, non-infra, and CRE projects up to a specified period no longer counts as restructuring. Special asset classification benefits for CDR, consortium, and SME debt restructuring cases were introduced but withdrawn from April 1, 2015, except for DCCO changes.
What it means for you
NBFCs must now follow the same restructuring rules as banks, reducing regulatory arbitrage. The DCCO extension relaxation provides relief for project loans without triggering NCL classification. However, the withdrawal of special asset classification benefits from April 2015 means NBFCs must plan for eventual standard asset treatment post-restructuring.
What you must do
- Adopt the enclosed Directions for all restructuring of advances immediately.
- Review existing restructuring policies to align with bank guidelines, especially for consortium and CDR cases.
- Monitor DCCO extensions for infra, non-infra, and CRE projects to ensure they stay within specified periods to avoid restructuring classification.
- Prepare for the withdrawal of special asset classification benefits from April 1, 2015, except for DCCO changes.
- Train staff on harmonised norms to ensure consistent application across all lending activities.
Who it affects
All NBFCs excluding primary dealers, NBFCs involved in consortium lending, NBFCs with infrastructure and CRE project loans, NBFCs handling SME debt restructuring
Does extending the DCCO for a project loan count as restructuring under the new guidelines?
No, mere extension of DCCO up to a specified period for infra, non-infra, and CRE projects does not tantamount to restructuring, as per the January 2014 guidelines.
When will the special asset classification benefit for restructured loans be withdrawn?
The special asset classification benefit will be withdrawn from April 1, 2015, except for provisions related to changes in DCCO for infrastructure and non-infrastructure project loans.
Which NBFCs are covered by this circular?
All NBFCs excluding primary dealers are required to follow the harmonised restructuring guidelines.