The Reserve Bank of India (RBI) has withdrawn the requirement of a sponsor of IDF-NBFCs as a part of its revised regulatory framework issued on Friday.
“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 The requirement of a sponsor for an IDF-NBFC has now been withdrawn and shareholders of IDF-NBFCs shall be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs,” the central bank said.
Further, RBI has made optional the mandate to enter into a tripartite agreements for investments in the Public Private Partnership (PPP) infrastructure projects having a project authority.
The guidelines have been revised in consultation with the government to enable IDF-NBFCs to play a greater role in the financing of the infrastructure sector, and to harmonise regulations governing financing of infrastructure sector by the NBFCs, RBI said.
Capital and fund raising
IDF-NBFCs will be required to have net-owned funds of at least ₹300 crore and capital-to-risk weighted assets ratio (CRAR) of 15 per cent with minimum tier-1 capital of 10 per cent.
They will be allowed to raise funds through rupee or dollar-denominated bonds with at least a five-year maturity, and also through shorter tenor bonds and commercial papers up to 10 per cent of their total outstanding borrowings.
“IDF-NBFCs can also raise funds through loan route under external commercial borrowings (ECBs). However, such borrowings shall be subject to minimum tenor of five years and the ECB loans should not be sourced from foreign branches of Indian banks,” it said.
Single borrower exposure limits for IDF-NBFCs have been set at 30 per cent of tier-1 capital whereas for single group or borrower party the cap has been set at 50 per cent.
Sponsoring IDF-MFs
NBFCs have also been made eligible to sponsor IDF-MFs with prior approval of RBI, subject to it fulfilling capital requirement for IDF-NBFCs, having a net NPA ratio of less then 3 per cent and being profitable for the last three years.
In addition to a company based IDF being set up as an IDF-NBFC which is regulated by RBI, Infrastructure Development Funds (IDFs) can also be et up as a trust and registered as IDF-Mutual Fund (IDF-MF) which is regulated by SEBI.
IDF-NBFCs are non-deposit taking NBFCs which refinance post commencement operations date (COD) infrastructure projects that have completed at least one year of commercial operations, and toll operate transfer (TOT) projects as the direct lender.
