NBFC-IDFs do not need sponsors, says RBI

To enable infrastructure debt funds (IDFs) to play a greater role in financing the infrastructure sector and to harmonise regulations applicable to various categories of NBFCs, the RBI has withdrawn the requirement of a sponsor for setting up an IDF.

Further, it allowed IDFs to finance Toll Operate Transfer (ToT) projects as direct lenders and access ECBs (external commercial borrowings) to raise funds. The central bank also made tri-partite agreements optional for PPP projects.

The revised framework has been put in place following a review of the extant regulatory framework for IDFs in consultation with the government, RBI said, adding that it will issue final norms shortly.

IDFs provide refinancing facilities for lenders in the infrastructure sector, and the expanded scope is expected to further augment the capacity for infrastructure financing in the country, it added.

”The proposed changes in the IDF regulations will help these entities diversify on both assets as well as liabilites. Simultaneous opening up of avenues for funding, capital raise and expansion of eligible segments for financing can boost the overall growth for these entities,” said Manushree Saggar, Vice President, ICRA.

“At the same time, it would be critical to maintain the stringent risk guardrails to ensure the good asset quality reported so far by these entities,” she added.