Kotak Mahindra Bank on Friday said the Reserve Bank of India has issued certificate of registration to its subsidiary Kotak Infrastructure Debt Fund permitting it to commence the business of non-banking financial institution as Infrastructure Debt Fund (NBFC-IDF).
So far, three NBFC-IDFs are registered with the RBI — India Infradebt (a joint venture between ICICI Bank, Bank of Baroda, Citi Bank, and LIC), L&T Infra Debt Fund, and IDFC Infra Debt Fund.
IDFs are investment vehicles which can be sponsored by commercial banks and NBFCs in which domestic/ offshore institutional investors, specially insurance and pension funds, can invest through units and bonds issued by the IDFs. According to the RBI, IDFs would essentially act as vehicles for refinancing existing debt of infrastructure companies, thereby creating fresh headroom for banks to lend to fresh infrastructure projects. IDF-NBFCs would take over the loans extended to infrastructure projects, which are created through the Public Private Partnership route and have successfully completed one year of commercial operations.
Such takeover of loans from banks would be covered by a tripartite agreement between the IDF, the concessionaire and the project authority for ensuring compulsory buyout with termination payment in the event of default in repayment by the concessionaire.