Master Circular – “Infrastructure Debt Fund-NBFC (Reserve Bank) Directions, 2011”

RBI/2014–15/631 DNBR (PD) CC No. 039/03.01.001/2014–15

June 11, 2015

Mas­ter Cir­cu­lar – “Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­nies (Reserve Bank) Direc­tions, 2011”.

As you are aware, in order to have all cur­rent instruc­tions on the sub­ject at one place, the Reserve Bank of India issues updat­ed cir­cu­lars / noti­fi­ca­tions. The instruc­tions con­tained in the Noti­fi­ca­tion No.DNBS.233/CGM(US)-2011 dat­ed Novem­ber 21, 2011 updat­ed till the date as indi­cat­ed above are repro­duced below. The updat­ed noti­fi­ca­tion has also been placed on the RBI web-site (http://rbi.org.in/).

Yours faith­ful­ly,

(C.D.Srinivasan)
Chief Gen­er­al Manager

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Table of Contents

Para No	Par­tic­u­lars
1	Short title and com­mence­ment of the Directions
2	Applic­a­bil­i­ty of Directions
3–4	Def­i­n­i­tions
5	Cred­it Rating
5	Account­ing standards
6	Cap­i­tal Adequacy
7	Invest­ment
8	Cred­it Con­cen­tra­tion Norms
9	Risk Weights for the Pur­pose of Cap­i­tal Adequacy
10	Oth­er Pru­den­tial Norms
	Appen­dix

RESERVE BANK OF INDIA
DEPARTMENT OF NON-BANKING REGULATION
CENTRAL OFFICE, CENTRE I, WORLD TRADE CENTRE
CUFFE PARADE, COLABA, MUMBAI 400 005

Noti­fi­ca­tion No. DNBS.233/CGM (US)-2011 dat­ed Novem­ber 21, 2011

The Reserve Bank of India hav­ing con­sid­ered it nec­es­sary in the pub­lic inter­est and being sat­is­fied that for the pur­pose of enabling the Bank to reg­u­late the cred­it sys­tem to the advan­tage of the coun­try, it is nec­es­sary to give the Direc­tions set out below, here­by, in exer­cise of the pow­ers con­ferred by sec­tions 45JA, 45K, 45L and 45M of the Reserve Bank of India Act, 1934 (2 of 1934), and of all the pow­ers enabling it in this behalf, here­by gives the Direc­tions here­inafter specified.

Short title and Com­mence­ment of the Directions

1. These Direc­tions shall be known as the Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­nies (Reserve Bank) Direc­tions, 2011 and shall come into force with imme­di­ate effect.

Applic­a­bil­i­ty of Directions

2. These Direc­tions shall apply to every Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­ny (IDF-NBFC).

Def­i­n­i­tions

3. For the pur­pose of these direc­tions, unless the con­text oth­er­wise requires,-

(a) “Con­ces­sion­aire” means a par­ty which has entered into an agree­ment called ‘Con­ces­sion Agree­ment’ with a Project Author­i­ty, for devel­op­ing infrastructure.

(b) “Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­ny” or “IDF-NBFC” means a non-deposit tak­ing NBFC that has Net Owned Fund of Rs. 300 crores or more and which invests only in Pub­lic Pri­vate Part­ner­ships (PPP) and post com­mence­ment oper­a­tions date (COD) infra­struc­ture projects which have com­plet­ed at least one year of sat­is­fac­to­ry com­mer­cial oper­a­tion and becomes a par­ty to a Tri­par­tite Agreement.

© “Project Author­i­ty” means an author­i­ty con­sti­tut­ed by a statute for the devel­op­ment of infra­struc­ture in the country.

(d) “Tri­par­tite Agree­ment” means an agree­ment between three par­ties, name­ly, the Con­ces­sion­aire, the Project Author­i­ty and IDF-NBFC that also binds all the par­ties there­to to the terms and con­di­tions of the oth­er Agree­ments referred to therein.

4. Words and expres­sions used but not defined here­in and defined in Reserve Bank of India Act, 1934 or the Direc­tions issued under Chap­ter III there­of shall, unless the con­text oth­er­wise requires, have the mean­ing assigned to them thereunder.

Cred­it Rating

5. IDF-NBFC shall have at the min­i­mum, a cred­it rat­ing grade of ‘A’ of CRISIL or equiv­a­lent rat­ing issued by oth­er accred­it­ed rat­ing agen­cies such as FITCH, CARE and ICRA.

Cap­i­tal Adequacy

6. The IDF-NBFC shall have at the min­i­mum CRAR of 15 per­cent and Tier II Cap­i­tal of IDF–NBFC shall not exceed Tier I.

Invest­ment

7. ¹IDF-NBFCs can invest in post COD infra­struc­ture projects which have com­plet­ed at least one year of sat­is­fac­to­ry com­mer­cial oper­a­tion that are

i. PPP projects and are a par­ty to a Tri­par­tite Agree­ment with the Con­ces­sion­aire and the Project Author­i­ty for ensur­ing a com­pul­so­ry buy­out with ter­mi­na­tion payment.

ii. non-PPP projects and PPP projects with­out a Project Author­i­ty, in sec­tors where there is no Project Authority.

Cred­it Con­cen­tra­tion Norms

8. ²i. For PPP and post COD infra­struc­ture projects which have com­plet­ed at least one year of sat­is­fac­to­ry com­mer­cial oper­a­tion and are a par­ty to a Tri­par­tite Agree­ment with the Con­ces­sion­aire and the Project Author­i­ty for ensur­ing a com­pul­so­ry buy­out with ter­mi­na­tion payment.

a) The max­i­mum expo­sure that an IDF-NBFC can take on indi­vid­ual projects will be at 50 per cent of its total Cap­i­tal Funds [Tier I plus Tier II as defined in Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015].

b) An addi­tion­al expo­sure up to 10 per cent could be tak­en at the dis­cre­tion of the Board of the IDF-NBFC.

c) RBI may, upon receipt of an appli­ca­tion from an IDF-NBFC and on being sat­is­fied that the finan­cial posi­tion of the IDF-NBFC is sat­is­fac­to­ry, per­mit 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.

ii. Expo­sure to oth­er assets shall be gov­erned by the extant reg­u­la­tions applic­a­ble to Infra­struc­ture Finance Com­pa­nies as giv­en in Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015.

Risk Weights for the Pur­pose of Cap­i­tal Adequacy

9. ³For the pur­pose of com­put­ing cap­i­tal ade­qua­cy of the IDF-NBFC,

i. all assets cov­er­ing PPP and post COD infra­struc­ture projects in exis­tence over a year of com­mer­cial oper­a­tion shall be assigned a risk weight of 50 per cent.

ii. All oth­er assets shall be risk weight­ed as per the extant reg­u­la­tions as giv­en in the Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015.

Oth­er Pru­den­tial Norms

10. ⁴All oth­er pru­den­tial norms as spec­i­fied in Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 includ­ing income recog­ni­tion, asset clas­si­fi­ca­tion and pro­vi­sion­ing norms will be applic­a­ble for IDF-NBFCs.

(Uma Sub­ra­ma­ni­am)
Chief Gen­er­al Man­ag­er In-Charge

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Appen­dix

List of Circulars

Sr No	Cir­cu­lar No	Date
1	DNBS.233/CGM (US)-2011	Novem­ber 21, 2011
2	DNBR.020/CGM(CDS)-2015	May 14, 2015