RBI issues new guidelines for infra debt funds by NBFCs

The Reserve Bank today capped the average exposure limit for an NBFC to issue infra debt funds at 50 per cent and maximum at 75 per cent of its total capital fund, apart from limiting such issuance to only PPPs which have been successfully operational at least for a year.
The central bank announced these changes in a new circular that amends the November 2011 guidelines which sought to allow non-banking finance companies to sponsor infra debt funds (IDFs).
Accordingly, the RBI has allowed NBFCs to invest only in PPP projects which are at least one year into commercial operations and assigning a risk weight of 50 per cent.

"An IDF-NBFC can invest in individual projects up to 50 per cent of its total capital funds. An additional exposure of up to 10 per cent could be taken at the discretion of the board of the IDF-NBFC," RBI said in the amended circular.
The RBI further said that it may, upon specific request, allow an IDF-NBFC an additional exposure up to 15 per cent (over 60 per cent) subject to such conditions as it may deem fit to impose regarding additional prudential safeguards.
This has been enabled after amending the maximum exposure limit norms as envisaged in para 8 of the November 21, 2011 direction, RBI said. The RBI has also amended para 7 of these directions.

The RBI said NBFCs can invest only in PPPs and post-commercial operations date infrastructure (COD) projects which have completed at least one year of commercial operations.