Sebi announces norms for infra debt fund

Market regulator the Securities and Exchange Board of India (Sebi) today came out with guidelines for infrastructure debt fund (IDF), which can be set up by any existing mutual fund or a company which have been engaged in financing the sector for five years.

Now mutual funds can float a 'Infrastructure Debt Fund' as a close-ended scheme maturing after five years or an interval scheme with lock-in of five years, Sebi Chairman UK Sinha said.

The IDF would invest 90% of its assets in the debt securities of infrastructure companies.

The minimum investment into IDF would be Rs 1 crore and the minimum size of the unit would be 1 million, Sebi said.

The IDF, which was proposed by Finance Minister Pranab Mukherjee in the Union Budget for FY12, is aimed at accelerating and enhancing flow of long-term debt for funding the ambitious programme of infrastructure development in the country.

The requirement of infrastructure in the 12th Plan has been pegged at $1 trillion.

As per the government norms an IDF may be set up either as a trust or company. While the trust based IDF (Mutual Fund) would be regulated by Sebi, an IDF set up as a company (NBFC) would be regulated by the RBI.

While coming out with the guidelines for IDFs floated by MFs, Sebi said, the strategic investor would have to make a firm commitment of Rs 25 crore. The units of infrastructure debt fund schemes shall be listed on the stock exchange.

"An Infrastructure debt fund shall have minimum five investors and no single investor shall hold more than 50% of net assets of the scheme," the regulator added.

MFs may also disclose indicative portfolio of the infrastructure debt fund scheme to its potential investors disclosing the type of assets the mutual fund will be investing.