The Reserve Bank of India has relaxed norms on financing Infrastructure. Infrastructure Debt Funds (IDFs) will now be able to access funds without a sponsor, finance Toll Operate Transfer projects as direct lenders and access external commercial borrowings. Additionally, tripartite agreements have been made optional for PPP projects.
“To enable the IDFs to play a greater role in financing of the infrastructure sector and to move towards the regulatory objective of harmonisation of regulations applicable to various categories of NBFCs, a review of the extant regulatory framework for IDFs has been undertaken in consultation with the Government of India,” RBI Governor Shaktikanta Das said while announcing the bi-monthly monetary policy.
Infrastructure debt fund was created as a separate category of non-banking finance companies in 2011. Institutional investors invest through units and bonds issued by the IDFs, which are sponsored by commercial banks and NBFCs in India. Most IDFs have been set up as NBFCs.
“It will enable Infrastructure Debt Funds to play a greater role in the financing of the infrastructure sector and will also provide them with better access to funds through External Commercial Borrowings,” said Utsav Johri partner JSA.
The RBI will issue a detailed circular soon.
“The proposed changes in the IDF regulations will help these entities diversify on both assets as well as liabilities,” said Manjushree Sagar Vice President Icra. “Simultaneous opening up of avenues of funding, capital raise and expansion of eligible segments for financing can boost the overall growth for these entities. At the same time, it would be critical to maintain the stringent risk guardrails to ensure good asset quality reported so far by these entities.
