Add-on loan norms set to change

The norms for ‘structured obligations’ or instruments through which firms borrow from overseas banks based on existing domestic loans, are likely to change.

The norms for ‘structured obligations’ or instruments through which firms borrow from overseas banks based on existing domestic loans, are likely to change. Structured obligation is a ‘credit enhancement mechanism’ by which corporations increase their loan amount based on the credit rating of their existing loan portfolio.

HT Image

An official who did not wish to be identified said it has been decided to increase the annual limit for credit enhancement of structured obligations to $1billion from the $600 million now.

Besides, a minimum maturity of seven years is likely be fixed for structured obligations.