RBI revises IDF-NBFC Norms

• Reserve Bank of India has revised norms Infrastructure Debt Fund-NBFCs.
• This has been done in order to enable them play a greater role in financing of the infrastructure sector.

ABOUT IDF-NBFC

• An IDF-NBFC is a company registered as NBFC to facilitate the flow of long- term debt into infrastructure projects.
• They can finance toll operate transfer (TOT) projects as the direct lender.
• IDF-NBFCs are non-deposit-taking entities.

GUIDELINES

• IDF-NBFCs will now be required to have a net owned fund (NOF) of at least Rs 300 crore
• They should have a capital-to-risk weighted assets ratio (CRAR) of minimum 15% (with minimum Tier 1 capital of 10%).
• 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 raises resources through issue of rupee or dollar-denominated bonds of minimum 5-year maturity.
• IDF-NBFCs are prohibited from sourcing the External Commercial Borrowings (ECB) loans from the foreign branches of Indian banks.
• The requirement of a sponsor for an IDF-NBFC has now been withdrawn and shareholders of IDF-NBFCs would be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs, RBI said.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.