Published On:August 4 2014
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Hoteliers and developers move to recast loans on delayed projects.
Hoteliers and developers have started moving to restructure loans on their delayed projects after the Reserve Bank of India (RBI) recently eased norms pertaining to the start of commercial operations. The RBI circular has provided some relief for the hospitality industry, where more than 80% of new projects by value have been stalled.
Developers across sectors, including hotels, can change the date of commencement of commercial operations (DCCO) several times within two years of a proposed launch date and adjust their repayment schedules accordingly, according to the RBI notification dated June 26. 'It is clarified that multiple revisions of the DCCO and consequential shift in repayment schedule for equal or shorter duration (including the start date and end date of revised repayment schedule) will be treated as a single event of restructuring, provided that the revised DCCO is fixed within the respective time limits,' the RBI said.
This means hotels that have not been able to open on the date promised to lenders can get multiple extensions of the date for up to an additional two years. Previous RBI circulars dated March 31, 2010, and May 30, 2013, did not mention the number of times the opening date could be extended within the stipulated period.