The Reserve Bank of India (RBI) today included infrastructure finance companies (IFC) in the category of non-banking finance company (NBFC) with a capital adequacy ratio requirement of 15 per cent.
At present, there are three categories of NBFCs — asset finance companies, loan finance companies and investment companies. All these have to maintain a minimum capital adequacy ratio of 12 per cent.
RBI said all criteria of NBFCs would apply to IFCs. In addition, the central bank said that a minimum of 75 per cent of these institutions’ assets should be deployed in infrastructure and their net owned funds should be Rs 300 crore or above. Moreover, they should carry ‘A’ or equivalent rating from Crisil, Fitch, Care, Icra or their equivalent rating agencies. The minimum Tier-1 capital has been fixed at 10 per cent.
“Infrastructure needs long-term funds, so it was important to form a separate category. Now, we can approach RBI and create an environment to relax borrowing norms. We can ask it to raise the external commercial borrowing limit or seek use of refinance from IIFCL,” said Srei Infrastructure Managing Director Hemant Kanoria.
“Since the classification for the purpose of income recognition, asset classification and provisioning norms is based on asset specification, the extant prudential norms will continue as hitherto,” RBI said.
The regulator mandated that a bank’s exposure to IFCs should not exceed 15 per cent of its capital funds, with a provision of increasing it to 20 per cent if it is on account of funds on-lent by IFCs to the infrastructure sector.
The central bank said IFCs would not be allowed to accept deposits from public. An IFC may exceed the concentration of credit norms by 10 per cent of its owned fund in lending to any single borrower and by 15 per cent of its owned fund in case of a single group of borrowers.
