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Power producer JSW Energy Ltd is in talks with banks to refinance debt worth Rs.6,000 crore under the so-called 5/25 refinance scheme for long-gestation infrastructure projects, according to two bankers directly involved in the talks.

Source:- live mint

SNP Insight

Companies with good credit worthiness may opt for 5/25 scheme in order to match there cash flows with servicable debt, for the projects involving long gestation period. This scheme will give a window of 25 years in order to repay the debt, resulting into reduced liquidity stress for the debtor in the initial years of the project. The 5:25 flexible structuring / refinancing scheme is a win-win situation for all the stakeholders. However, if the scheme is not implemented in its true spirit and without appropriate monitoring mechanism, in terms of wilful diversion of funds by the promoters, it could potentially paralyse the sector.

Source:- SNP Insight