Reserve Bank of India has released detailed guidelines for the Infrastructure Debt Fund-NBFCs on Friday. Reiterating the key changes announced at the time of MPC meet, the central bank prescribed conditions under which all NBFCs shall be eligible to sponsor IDF-MFs with prior approval.
The NBFC shall have a minimum NOF of Rs 300 crore and CRAR of 15 percent with earning profits for the last three years and its performance shall be satisfactory.
As per the central bank, the NBFC should have been in existence for at least 5 years with net NPAs shall be less than 3 per cent of the net advances.
Also, after the investment in the IDF-MF, the CRAR of the NBFC shall not be less than the regulatory minimum prescribed for it.
As prescribed, the NBFC shall continue to maintain the required level of NOF after accounting for investment in the proposed IDF-MF.
Tripartite agreement now optional
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The requirement of a sponsor for an IDF-NBFC has now been withdrawn and shareholders of IDF-NBFCs shall be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs.
Under the earlier arrangement, IDF-NBFCs were required to enter into a tripartite agreement with the concessionaire and the project authority for investments in the Public Private Partnership (PPP) infrastructure projects having a project authority.
The requirement of the tripartite agreement has now been made optional.
Fund raising
IDF-NBFC shall raise funds through issue of either rupee or dollar denominated bonds of minimum five-year maturity.
The entities 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 with a view to facilitate better asset-liability management (ALM).
They 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.
