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The Reserve Bank of India (RBI) has announced that infrastructure debt fund non-banking financial companies (IDF-NBFCs) are now authorized to gather funds through foreign loan channels alongside bond issuances.
In its circular, the RBI stated that it has undergone a comprehensive review of the regulations governing the financing of the infrastructure sector, leading to revised guidelines.
Previously, IDF-NBFCs were sanctioned to raise funds through rupee or dollar-denominated bonds with a minimum maturity of five years, up to 10% of their total outstanding borrowings.
Under the updated regulations, IDF-NBFCs can now acquire funds through external commercial borrowings with a minimum tenure of five years. However, these loans must not be procured from foreign branches of Indian banks, as specified by the RBI.
The new guidelines also eliminate the need for IDF-NBFCs to have a sponsor, with their shareholders now subject to the same scrutiny applied to other NBFCs.
Furthermore, the RBI has expanded the scope of IDF-NBFCs to include the financing of toll operate transfer projects as a direct lender.
Previously, IDF-NBFCs were mandated to engage in a tripartite agreement with the concessionaire and the project authority for investments in public-private partnership infrastructure projects. This requirement has now been made optional by the central bank.
The regulatory norms applicable to NBFC investment and credit companies, including income recognition, asset classification, and provisioning norms, will also be applicable to IDF-NBFCs, as outlined by the RBI.
This follows the RBI’s recent announcement of a review of the regulatory framework for IDF-NBFCs, with the detailed guidelines published on Friday.
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