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Financial Products

Debt Refinancing

The policy is applicable for extending term loan for refinancing existing project term loan of all typesof commissioned project in power sector including renewable energy projects, of government andprivate sector borrowers.

Eligibility Criteria:

  • The entire project should have achieved COD at the time of submission of application. COD shall be certified by lenders independent engineer/competent authority
  • The entity should not be in default to any Bank/FI/NBFC, including REC.
  • The loan asset should be a 'Standard' asset in the books of all the lenders, on the applicationdate.
  • REC shall not consider financial assistance under the scheme where the borrower seeks fresh financial assistance from REC to prepay/replace the existing facility sanctioned by REC itself. However, refinancing of the loan of other lender(s) in case of a project where REC is already a lender can be considered as a new business proposal on the terms and conditions in line with the refinancing policy. In such cases REC shall necessarily carry out integrated rating/re –rating of the project, however the benefit of improved rating, if any, would be for original as well as additional debt to be refinanced.
  • The following conditions should also be fulfilled:
    • Consent from the lenders whose debt is being refinanced shall be required beforecommencement of disbursement. This consent may be obtained as per the terms of CommonLoan Agreement (CLA).
    • Confirmation of outstanding loan balance shall be obtained from the Bank(s)/FI(s)/NBFC(s)whose loan is/are being refinanced before commencement of disbursement.
    • Borrower should ensure that that all the conditions for debt refinancing stipulated in CLA, termsof sanction, TRA agreement, etc. are complied with.
  • REC may refinance existing project loans based on the reassessment and actual performance of the project cash flows provided: i. Average DSCR and Minimum DSCR for the proposed loan period shall have the same limit as specified in REC Project Appraisal Guidelines. Appraisal/Reappraise the project (based on latest available actual data) shall be done as per its existing Project Appraisal Guidelines for generation, renewable and transmission projects respectively. The fundamental viability of the project shall be established on the basis of other requisite financial and non-financial parameters, indicating capacity to service the loan and ability to repay over the tenor of the loan. It is recommended that refinancing shall be considered for those cases where adequate Power Purchase Agreement (PPA) and Fuel Supply Agreement (FSA) have been executed to the satisfaction of REC. Further, REC shall refinance the outstanding loan principal of theBank/FI/NBFC only.
  • The funds shall normally be paid directly to the Bank(s)/FI(s)/NBFC(s) whose loan is/are being refinanced.
  • Repayment period should be fixed by taking into account life cycle of and cash flows from the project and Boards of the existing and new banks should be satisfied with the viability of the project. Further, there shall normally not be any moratorium on repayment of loan and interest.
  • Security shall be as per extent policy of REC or as sought to the satisfaction of RFC.
  • Interest rates and financial charges shall be as per prevailing REC policies.

 

Note: - Debt Refinancing / takeout financing in terms of following RBI guidelines/ circular also undertaken by the REC: -  

1).Flexible restructuring & periodic refinancing (covering new & existing loans both): - DNBR.PD.CC.No.012/03.10.001/2014-15 dated 19.01.2015.

2).Refinancing of project loan (take over financing): - Circular no DBOD.BP.BC.No.98/21.04.132/2013-14 dt. 26/02/2014 & circular no DBOD.BP.BC.No.31/21.04.132/2014-15 dt. 07/08/2014 (Made applicable to NBFC vide circular np. DNBR.CC.PD.No.085/03.10.001/2015-16 dated 02nd June 2016).