June 07, 2002

REF. DBS.FID No. C.17 /01.02.00/2001-02

The CEOs of All-India Term-Lending and Refinancing Institutions

Dear Sir,

Asset Classification of Projects Under Implementation –
Time Overrun – Definition of Financial Closure

Please refer to our Circular DBS.FID.No. C.11/ 01.02.00 /2001-02 dated February 1, 2002 on the captioned subject in terms of which the asset classification of certain categories of projects under implementation is related to the timing of the "financial closure" for the project.

2. In order to ensure uniform interpretation of the term "financial closure", it has been decided to define "financial closure" as follows :

"For greenfield projects, financial closure is defined as a legally binding commitment of equity holders and debt financiers to provide or mobilise funding for the project. Such funding must account for a significant part of the project cost which should not be less than 90 per cent of the total project cost securing the construction of the facility ".

3. The date of financial closure in respect of projects under implementation should be determined accordingly for the purpose of asset classification of such projects, under the extant norms.

4. Please acknowledge receipt.

Yours faithfully,

(K. C. Bandyopadhyay)
Chief General Manager