RBI allows infra debt funds to raise money via foreign loan route
Advertisement

RBI allows infra debt funds to raise money via foreign loan route

By Reuters

  • 18 Aug 2023
RBI allows infra debt funds to raise money via foreign loan route
Credit: VCCircle

The Reserve Bank of India (RBI) on Friday said it has allowed infrastructure debt fund non-banking financial companies (IDF-NBFC) to raise funds through foreign loan route in addition to bond issuances.

The RBI reviewed and has revised the guidelines to harmonise the regulations governing financing of the infrastructure sector, it said in a circular.

IDF-NBFCs were earlier allowed to raise funds through rupee or dollar-denominated bonds of minimum five-year maturity, to the extent of up to 10% of their total outstanding borrowings.

Advertisement

Under the revised provisions, IDF-NBFCs can raise funds via loans under external commercial borrowings with minimum tenor of five years. These loans, however, should not be sourced from foreign branches of Indian banks, RBI said.

Under the new guidelines, IDF-NBFCs will no longer require a sponsor, and their shareholders will be subject to scrutiny as applicable to other NBFCs.

The central bank has also allowed IDF-NBFCs to finance toll operate transfer projects as a direct lender.

Advertisement

Earlier, IDF-NBFCs were required to enter into 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, the central bank said.

All other regulatory norms, including income recognition, asset classification and provisioning norms as applicable to NBFC investment and credit companies will be applicable to IDF-NBFCs as well, it added.

Advertisement

The RBI had announced a review of regulatory framework for IDF-NBFCs last week, and issued the detailed guidelines on Friday.

Share article on

Advertisement
Advertisement
Google News Icon

Google News

Follow VCCircle on Google News for the latest updates on Business and Startup News