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The Reserve Bank of India (“RBI”) in order to enable infrastructure debt funds- non banking financial companies (“IDF-NBFC(s)”) to play a greater role in the financing of the infrastructure sector and to harmonise the regulations governing financing of infrastructure sector by the NBFCs, undertook a review of the guidelines applicable to IDF-NBFC and notified the revised regulatory framework applicable to such IDF-NBFC vide circular no. RBI/2023-24/54 DoR.SIG.FIN.REC.31/03.10.001/2023-24 dated August 18, 2023 (“Circular”)1.
IDF-NBFCs are non-deposit taking non-banking financial companies (“NBFC”) permitted to refinance post commencement of operations date, infrastructure projects that have completed at least one year of satisfactory commercial operations. Additionally, they can also finance toll operate transfer projects as the direct lender.

The following are the key highlights of the Circular:

  1. he net owned funds of an IDF-NBFC shall be a minimum of INR 300,00,00,000 (Rupees Three Hundred Crores Only) and the capital-to-risk weighted assets ratio (“CRAR”) of minimum of 15% (fifteen percent) (with minimum tier 1 capital of 10% (ten percent)). In order to compute the CRAR the assets shall be risk-weighted as per risk weights applicable to NBFC-investment and credit companies.

  2. IDF-NBFC shall raise funds through the issue of rupee or dollar denominated bonds with a minimum maturity period of 5 (five) years. Additionally, they can also raise funds through a loan route under external commercial borrowings, but such loans cannot be availed through foreign branches of Indian banks.

  3. The quantum and the reason for the penal charges shall be disclosed by the REs in the loan contract.

  4. The exposure limits for IDF-NBFCs shall be 30% (thirty percent) of their tier 1 capital for single borrower/ party and 50% (fifty percent) of their tier 1 capital for single group of borrowers/ parties.

  5. In accordance with the previous RBI circular no. DNBS.PD.CC.No.249/03.02.089/2011-122 dated November 21, 2011, IDF-NBFCs were mandated to enter into a tripartite agreement with the concessionaire and the project authority for investments in the public private partnership infrastructure projects having a project authority. The requirement of the tripartite agreement has now been made optional.

  6. The requirement of an IDF-NBFC to be sponsored by a bank or an NBFC-Infrastructure Finance Company (NBFC-IFC), has been withdrawn by the Circular. However, the shareholders of IDF-NBFCs shall be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs.

  7. All other regulatory norms including income recognition, asset classification and provisioning norms3 as applicable to NBFC-ICCs shall be applicable to IDF-NBFCs.

  8. The Circular also mentions the guidelines governing the sponsorship of infrastructure debt funds- mutual funds (“IDF-MF(s)”) by NBFCs. All NBFCs shall be permitted to sponsor IDF-MFs with the prior approval of the RBI subject to the following conditions:
    1. The NBFC shall have a minimum net owned funds of INR 300,00,00,000 (Rupees Three Hundred Crores Only) and CRAR of 15% (fifteen percent).
    2. Its net NPAs shall be less than 3% (three percent) of the net advances.
    3. It shall have been in existence for at least 5 (five) years.
    4. It shall be earning profits for the previous 3 (three) years and its performance shall be satisfactory.
    5. The CRAR of the NBFC post investment in the IDF-MF shall not be less than the regulatory minimum prescribed for it.
    6. The NBFC shall continue to maintain the required level of net owned funds after accounting for investment in the proposed IDF-MF.
    7. There shall be no supervisory concerns with respect to the NBFC.

1.Reserve Bank of India - Notifications (
2..Reserve Bank of India - Master Circulars (