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    Question

    Which of the following is not true with regard to any

    change in the repayment schedule of a project loan caused due to an increase in the project outlay on account of increase in scope and size of the project, being continued to be classified as ‘standard’?
    A The increase in scope and size of the project must take place before commencement of commercial operations of the existing project Correct Answer Incorrect Answer
    B In case of already rated projects, on re-rating, the new rating is not below the previous rating by more than two notch Correct Answer Incorrect Answer
    C The rise in project cost excluding any cost-overrun in respect of the original project is 25% or more of the original outlay Correct Answer Incorrect Answer
    D Any approval of the enhancement of scope and fixing a fresh DCCO of the project is done by the lenders after re-assess the viability of the project Correct Answer Incorrect Answer
    E All are correct Correct Answer Incorrect Answer

    Solution

    Any change in the repayment schedule of a project loan caused due to an increase in the project outlay on account of increase in scope and size of the project, shall continue to be classified as ‘standard’ if:

    • The increase in scope and size of the project takes place before commencement of commercial operations of the existing project.
    • The rise in project cost excluding any cost-overrun in respect of the original project is 25% or more of the original outlay
    • lenders re-assess the viability of the project before approving the enhancement of scope and fixing a fresh DCCO.
    • On re-rating , (if already rated) the new rating is not below the previous rating by more than one notch .
    • If the project debt was unrated at the time of increase in scope or size, then it should be rated investment grade upon such increase in scope or size.
    Provided that standard asset classification benefit for changes in repayment schedule on account of ‘change in scope’ shall be allowed only once during the lifetime of the project

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