Engineering major Larsen & Toubro (L&T) today said its non-banking finance arm has been classified as an infrastructure finance company (IFC), which will help it access cheaper funds.
L&T Infrastructure Finance Company has been classified by the Reserve Bank of India (RBI) as infrastructure finance company within the overall classification of non-banking finance company (NBFC), the company said in a statement. This status will allow it mobilise funds at lower cost and get flexibility in infrastructure lending, sources said.
In February, the RBI had created a separate entity under the NBFCs called Infrastructure Finance Companies (IFCs) as infrastructure plays a critical role in economic growth. IFCs are not subject to the borrower limits, which restrict NBFCs from lending to any single borrower by 10 per cent of its owned fund, and any single group of borrowers by 15 per cent of its owned fund.
Recently, the central bank allowed these companies to raise money from overseas markets through the automatic route. As such, IFCs can now raise external commercial borrowings up to 50 per cent of their owned funds automatically. So far, they could do so only under the approval route.
