A new resolution passed by Reserve Bank of India now allows the Banks and NBFC’s to sponsor Infrastructure Debt Funds. As per the new guidelines by Reserve Bank these debt funds can be setup under the structures of Mutual Funds, as well as NBFC’s. Now the NBFC’s and the Banks will have to pick a minimum equity of 30% in the Infra Debt Funds also known as the IDF’s. Whereas, they can hold a maximum of 49% share in these funds.
For these banks must confirm to prudential rules like capital market exposure norms as well as to the limits on their exposure or the investments in the financial service companies.
All these infrastructure debt funds are eligible to take a maximum exposure to the borrowers or any other group of companies’ up to 50% of their capital funds. They are also entitled to take a 10% additional exposure after the approval of the board. All these funds can be invested in PP projects and other infrastructure projects that have completed at least one year of commercial operations.
For these Mutual Funds or NBFC the criteria for IDF’s is that they should have a minimum net own fund of Rs.300 crores. Also the capital adequacy is required to be maintained at 15% and the NPA should be less than 3% of the net advances. Last but not the least they should be profitable for the last three years.
Bell the Bull says: Now Banks and NBFC’s have a new proposition to invest in