IDF norms tweaked to give infra funds more leeway

NBFCs lending to infra firms can recover their non-performing assets without court intervention

In order to augment resources for infrastructure, debt funds for this purpose under the NBFC route will now be eligible for recovering bad debts from defaulters without intervention of courts.

The Cabinet Committee on Economic Affairs has approved a proposal to allow infrastructure debt funds (IDFs) access to provisions of the SARFAESI Act. The Act empowers banks and financial institutions to recover their non-performing assets without the intervention of the court. T

Besides, the CCEA decision allows projects successfully executed by IDFs in public-private-partnership mode to access funds from insurance companies, mutual funds, provident funds and employment provident funds.

It also caps the annual guarantee fee payable to the concession authority at 0.05 per cent of outstanding debt financed by the IDF NBFC for the first three years.

Besides, the move would make IDFs to file shelf prospectus under the Companies Act with registrar of companies. Once filed, IDFs are not then required to file prospectus again and again during the vailidity of prospectus.

IDFs are expected to channelize long term funds from insurance and pension funds, sovereign wealth funds, etc. to supplement lending for infrastructure projects by commercial banks which are increasingly being constrained by their asset-liability mismatch and exposure limits,

The cost and tariff of Infrastructure services are likely to go down as a result of low cost, long term debt provided by IDFs. The taking over of existing bank debts by IDFs will release an equivalent volume for fresh lending by banks to infrastructure projects. This will also help in overcoming the issue of asset-liability mismatch being faced by banks.

The total investment in the infrastructure sector during the Twelfth Five Year Plan, is estimated at $ one trillion, which is nearly double of that made during the Eleventh Five Year Plan.

The government has so far announced three IDFs to be set up by both public and private financial institutions.

Rajsawa Bhawan:

Rajaswa Bhawan, which will house both Central Board of Direct Taxes and Central Board of Excise and Customs, will come up at Kasturba Gandhi Marg of New Delhi. CCEA approved construction of the Bhawan at Rs 485.16 crore over a period of next three-and-a-half years and Rs 15 crore as annual recurring expenditure.