RBI Issues Revised Guidelines For IDF-NBFCs

Infrastructure Debt Fund-NBFCs (IDF-NBFCs) will now be required to have a net owned fund (NOF) of at least Rs 300 crore, said the Reserve Bank's revised norms for such entities issued on Friday.
     
Besides, they should have a capital-to-risk weighted assets ratio (CRAR) of minimum 15 per cent (with minimum Tier 1 capital of 10 per cent).
     
RBI said a review of the guidelines applicable to IDF-NBFCs has been undertaken in order to enable them play a greater role in financing of the infrastructure sector and to harmonise the regulations governing financing of infrastructure sector by NBFCs.
     
The review has been undertaken in consultation with Government of India.
     
An IDF-NBFC is a company registered as NBFC to facilitate the flow of long- term debt into infrastructure projects. It raises resources through issue of rupee or dollar-denominated bonds of minimum 5-year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
     
"IDF-NBFC shall raise funds through issue of either rupee or dollar- denominated bonds of minimum five-year maturity," said the revised regulatory framework for IDF-NBFCs.
     
With a view to facilitating better asset-liability management (ALM), IDF-NBFCs can raise funds through shorter tenor bonds and commercial papers (CPs) from the domestic market to the extent of up to 10 per cent of their total outstanding borrowings, it added.
     
Under the earlier guidelines, an IDF-NBFC was required to be sponsored by a bank or an NBFC-Infrastructure Finance Company (NBFC-IFC).
     
The requirement of a sponsor for an IDF-NBFC has now been withdrawn and shareholders of IDF-NBFCs would be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs, RBI said.
     
All NBFCs would be eligible to sponsor IDF-MFs with prior approval of RBI subject to certain conditions.