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To enhance flow of funds to the infrastructure sector, the Reserve Bank of India on Friday said banks and non-banking finance companies (NBFCs) will be eligible to sponsor infrastructure debt funds (IDFs), which can be set up as mutual funds and NBFCs.
The central bank has drawn up the broad parameters to enable banks and NBFCs, which are classified as infrastructure finance companies (NBFC-IFC) to set up IDFs under MF and NBFC structures.
IDF floated as MF
Banks acting as sponsors to IDF-MFs would be subject to existing prudential limits including limits on investments in financial services companies and limits on capital markets exposure.
NBFCs sponsoring IDF-MF will be required to have minimum net owned funds (NOF) of Rs 300 crore; capital-to-risk-weighted assets ratio (CRAR) of 15 per cent; and net non-performing assets of less than 3 per cent of net advances.
Further, NBFCs should have been in existence for at least five years; earning profits for the last three years and its performance should be satisfactory.
Post-investment in the IDF-MF, the CRAR of the NBFC should not be less than that prescribed and it should continue to maintain the required level of NOF.
IDF floated as NBFC
Sponsors (banks and NBFC-IFC) will have to contribute a minimum equity of 30 per cent and a maximum equity of 49 per cent in IDF-NBFC.
Banks acting as sponsors to IDF-NBFC would be subject to existing prudential limits including limits on investments in financial services companies and limits on capital markets exposure.
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