RBI allows banks, NBFCs to set up infra debt funds
PrintListen to this Article
The Reserve Bank of India (RBI) on Monday issued guidelines to allow banks and non-banking financial companies (NBFCs) to sponsor infrastructure debt funds (IDFs), to support long-term finance in infrastructure. The same are based on the parameters RBI had issued in September. IDFs may be set up either as mutual funds or NBFCs.
According to the guidelines, NBFCs trying to set up IDFs should have been operational for at least five years, should have minimum net owned funds of Rs 300 crore and a capital adequacy ratio of 15 per cent. Besides, its net non-performing assets should be less than three per cent of net advances. It should also have earned profits for the last three years, RBI said in a release.
Investors would be primarily domestic and off-shore institutional investors, especially insurance and pension funds with long-term resources. IDFs set up as MFs would be regulated by the Securities and Exchange Board of India, while those set up as NBFCs would be regulated by RBI.
“Sponsor infrastructure financing companies would be allowed to contribute up to 49 per cent to the equity of the IDF-NBFC, with minimum equity holding of 30 per cent of the equity of the IDF-NBFC,” RBI said.
Banks acting as sponsors would be subject to their prudential limits on investments in financial services companies and limits on capital market exposure, RBI said.
"Investment in a bank’s equity in subsidiary companies, financial services firms, financial institutions, stock and other exchanges, put together, should not exceed 20 per cent of the bank’s paid-up share capital and reserves and this limit would also cover the bank’s investments in IDFs as sponsors. Banks’ exposures to IDFs (MFs and NBFCs) by way of contribution to paid-up capital as sponsors would form part of their capital market exposure and should be within the regulatory limits specified,” it said.
Finance Minister Pranab Mukherjee, in the Budget speech for 2011-12, had announced the setting up of IDFs to source long-term debt, both from foreign, as well as domestic investors. Taxation rules were also eased to make IDFs more attractive to off-shore funds. (Business Standard)
Category : RBI | Comments : 0 | Hits : 253
Listing of an Indian company on international stock exchanges got a push with the Reserve Bank of India (RBI) coming out with regulations under Foreign Exchange Management (FEMA). Experts believe new regulations will help companies utilise foreign exchange more effectively. Regulations have been made public through two notifications. First set of regulations deals with mode of payment and reporting of non-debt instruments. “The proceeds of purchase / subscription of equity shares of an ...
The Lok Sabha elections 2024 are in full swing with electioneering adding much colour to the entire process. However, to ensure that there is no wrongdoing, the Reserve Bank of India (RBI) has sent a missive to Payment System Operators (PSOs) asking them to keep a watch on all suspicious high-value transactions that they may come across in their systems. The general purpose of the letter is to deny the use of electronic fund transfer mechanism to anyone who is intending to influence the election...
he Reserve Bank on Tuesday came out with draft guidelines to further strengthen regulations on payment aggregators, a move aimed at boosting the payment ecosystem. The draft also covers the physical point-of-sale activities of payment aggregators (PAs). The RBI said that given the growth in digital transactions and the significant role that PAs play in this space, the current directions on PAs are proposed to be updated and cover, inter alia, KYC and due diligence of merchants, operations ...
The RBI on Monday eased rules to allow resident entities to hedge their exposures to the price risk of gold using the OTC derivatives in the International Financial Services Centre (IFSC) in addition to the derivatives on the exchanges in the IFSC. Resident entities such as banks were permitted to hedge their exposure to the price risk of gold on the exchanges in the IFSC that are recognised by the International Financial Services Centres Authority (IFSCA), and the new directive provides them...
The Reserve Bank of India (RBI) on March 21 said it has imposed monetary penalty on five co-operative banks for rule violations. These banks are Pragati Mahila Nagrik Sahakari Bank, Janata Co-operative Bank, Jila Sahakari Kendriya Bank, Karad Urban Co-operative Bank, and The Kalupur Commercial Co-operative Bank. The central bank imposed Rs 26.60 lakh on The Kalupur Commercial Co-operative Bank, Rs 13.30 lakh on Karad Urban Co-operative Bank, Rs 5 lakh on Janata Co-operative Bank, Rs 1 lakh...
Comments