 "RBI, reserve bank of india")
The Reserve Bank of India (RBI) has permitted non-banking finance companies operating as Infrastructure Debt Fund (IDF-NBFCs) to raise money through external commercial borrowings (ECBs). These borrowings will be subject to a minimum tenor of five years, and IDF-NBFCs are prohibited from sourcing the ECB loans from the foreign branches of Indian banks, as stated by the RBI in communication to the companies.
This decision came after the guidelines applicable to IDF-NBFCs were reviewed in consultation with the Government. The aim was to enable IDF-NBFCs to play a more substantial role in financing the infrastructure sector and to bring the relevant regulations into harmony.
IDF-NBFCs are non-deposit-taking entities. They are allowed to refinance post commencement operations date (COD) infrastructure projects that have completed at least one year of satisfactory commercial operations. Additionally, they can finance toll operate transfer (TOT) projects as the direct lender, according to the RBI. Currently, there are three active IDF-NBFCs: NIIF Infrastructure Finance Ltd, India Infradebt Ltd, and Kotak Infrastructure Debt Fund, with combined assets under management (AUM) of about Rs 36,000 crore.
The revised framework includes the withdrawal of the requirement for a sponsor for the IDFs, and it makes the tripartite agreement optional for Public Private Partnership (PPP) projects. Previously, IDF-NBFCs were mandated to enter into a tripartite agreement with both the concessionaire and the project authority for investments in PPP infrastructure projects that involved a project authority.
