30 pc of infra loans to qualify for CRR, SLR-free bonds: IDFC

IDFC today said Reserve Bank has allowed it to treat 30 per cent of the loans qualifying as 'infrastructure loans' to be eligible for the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR)-free long term bonds once it turns into a bank.
"Yes, we have received the clarity and we will appropriately design or optimise our balance sheet," its group financial officer Sunil Kakar told reporters today.
In July 2014, the Reserve Bank followed up on a budget announcement and allowed banks to raise long term money for lending to infrastructure and affordable housing, in order to take care of potential asset liability mismatches.

The biggest gain for banks in this is that entire money raised through these bonds will be available for the stated purpose and will not get stuck in the mandatory CRR (4 per cent) and SLR (23 per cent).
For infra-focused IDFC, which is among two companies granted license to start a full fledged bank, there were doubts about treatment of its loans under the special category and the quantum which qualifies for the special instrument, which will have a direct impact on profitability.
"Basically, what they are saying is, all eligible loans outstanding as of the date of conversion, say, the 1st of October, 30% of the stock will be eligible from the asset side on that day, plus all incremental which we do after we become a bank," Kakar said.

He added that on the liabilities side, all long term bonds issued by the company after July 15 will also be treated under the newly-introduced instrument.
"Also you have to remember that this equation also has to be balanced by corresponding long-term bonds. So all long-term bonds issued after 15th July will also be eligible," he said.
The company, which is targeting to launch its services on October 1, had sought clarity from the RBI on this aspect.