Revision of Infrastructure Debt Funds (IDFs) by RBI

RBI/2014–15/600 DNBR (PD) CC.No.035/03.10.001/2014–15

May 14, 2015

Please refer to the Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­nies (Reserve Bank) Direc­tions, 2011 issued vide Noti­fi­ca­tion No. DNBS.233/ CGM(US)-2011 dat­ed Novem­ber 21, 2011 (the Direc­tions) pre­scrib­ing detailed guide­lines on the reg­u­la­to­ry frame­work for NBFCs to spon­sor IDFs which are to be set up as NBFCs.

2. On a review in con­sul­ta­tion with the Gov­ern­ment of India, it has been decid­ed to amend the Direc­tions so as to allow entry of IDF-NBFCs into sec­tors where there is no pres­ence of a Project Author­i­ty. Accord­ing­ly, the Direc­tions have been amend­ed as giv­en in the sub­se­quent paragraphs:

3. Invest­ments

3.1 In terms of para 7 of the Direc­tions, IDF-NBFCs shall invest only in PPP and post com­mer­cial oper­a­tions date (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.

3.2 In addi­tion to the above, it has been decid­ed to allow IDF-NBFCs to under­take invest­ments in non-PPP projects and PPP projects with­out a Project Author­i­ty, in sec­tors where there is no Project Author­i­ty, pro­vid­ed these are post COD infra­struc­ture projects which have com­plet­ed at least one year of sat­is­fac­to­ry com­mer­cial operation.

4. Risk Weights for the Pur­pose of Cap­i­tal Adequacy

4.1 As per the extant instruc­tions, for the pur­pose of com­put­ing cap­i­tal ade­qua­cy, bonds of IDF-NBFCs and all assets of Infra­struc­ture Finance Com­pa­nies (IFCs), cov­er­ing PPP and post COD projects in exis­tence over a year of com­mer­cial oper­a­tion shall be assigned a risk weight of 50 per cent.

4.2 To bring in uni­for­mi­ty, it has been decid­ed to extend the same to all NBFCs i.e. all assets, includ­ing bonds and loans, 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.

4.3 Invest­ments in non-PPP projects 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.

5. Cred­it Con­cen­tra­tion Norms

5.1 In terms of para 8 of the Direc­tions, the max­i­mum expo­sure that an IDF-NBFC can take on indi­vid­ual projects will be at 50 per cent of its total Cap­i­tal Funds. An addi­tion­al expo­sure up to 10 per cent could be tak­en at the dis­cre­tion of the Board of the IDF-NBFC. 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.

5.2 The direc­tions of para 8 shall con­tin­ue to be in force for all assets cov­er­ing PPP and post COD infra­struc­ture projects in exis­tence over a year of com­mer­cial oper­a­tion and par­ty to a Tri­par­tite Agree­ment with the Con­ces­sion­aire and the Project Author­i­ty for ensur­ing a com­pul­so­ry buy­out with ter­mi­na­tion pay­ment. How­ev­er, invest­ment in non-PPP projects and PPP projects with­out a project author­i­ty, in sec­tors where there is no Project Author­i­ty, shall be gov­erned by the cred­it con­cen­tra­tion norms as applic­a­ble to Infra­struc­ture Finance Com­pa­nies as defined in Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015.

6. Noti­fi­ca­tions of date amend­ing the Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­nies (Reserve Bank) Direc­tions, 2011, Non-Bank­ing Finan­cial (Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2007, Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 and Non-Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 are enclosed.

Yours faith­ful­ly

(C D Srinivasan)
Chief Gen­er­al Manager

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

NOTIFICATION No.DNBR.020/CGM(CDS) — 2015 dat­ed May 14, 2015

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 amend the Infra­struc­ture Debt Fund-Non-Bank­ing Finan­cial Com­pa­nies (Reserve Bank) Direc­tions, 2011 set out in Noti­fi­ca­tion No. DNBS.233/CGM(US)-2011 dat­ed Novem­ber 21, 2011 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 directs that the said Direc­tions shall be amend­ed with imme­di­ate effect as follows –

1. Para 7 shall be read as follows:

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

1. 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.
2. non-PPP projects and PPP projects with­out a Project Author­i­ty, in sec­tors where there is no Project Authority.

2. Para 8 shall be read as

8.i. 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

1. 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].
2. An addi­tion­al expo­sure up to 10 per cent could be tak­en at the dis­cre­tion of the Board of the IDF-NBFC.
3. 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.

3. Para­graph 9 shall be read as

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

1. 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.
2. 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.

4. Para­graph 10 shall be read as

10. All 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.

(C.D.Srinivasan)
Chief Gen­er­al Manager

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

Noti­fi­ca­tion No.DNBR.021/CGM (CDS) — 2015 dat­ed May 14, 2015

The Reserve Bank of India, hav­ing con­sid­ered it nec­es­sary in 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 amend the Non-Bank­ing Finan­cial (Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2007 (Noti­fi­ca­tion No.DNBS.192/DG(VL)-2007 dat­ed Feb­ru­ary 22, 2007) (here­inafter referred to as the said Direc­tions), in exer­cise of the pow­ers con­ferred by sec­tion 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the pow­ers enabling it in this behalf, here­by directs that the said Direc­tions shall be amend­ed with imme­di­ate effect as follows –

1. In para­graph 16, after sub-para­graph (2) in the table in the Expla­na­tions (1) On bal­ance Sheet assets after (ii) (d) the fol­low­ing shall be inserted

(e) All assets cov­er­ing PPP and post com­mer­cial oper­a­tions date (COD) infra­struc­ture projects in exis­tence over a year of com­mer­cial operation.

50

(C.D.Srinivasan)
Chief Gen­er­al Manager

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

Noti­fi­ca­tion No.DNBR.022/CGM (CDS) — 2015 dat­ed May 14, 2015

The Reserve Bank of India, hav­ing con­sid­ered it nec­es­sary in 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 amend the Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 (Noti­fi­ca­tion No.DNBR.009/CGM(CDS) 2015 dat­ed March 27, 2015) (here­inafter referred to as the said Direc­tions), in exer­cise of the pow­ers con­ferred by sec­tion 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the pow­ers enabling it in this behalf, here­by directs that the said Direc­tions shall be amend­ed with imme­di­ate effect as follows –

1. In para­graph 16, after sub-para­graph (4) in the table in the Expla­na­tions (1) On bal­ance Sheet assets after (ii) (d) the fol­low­ing shall be inserted

(e) All assets cov­er­ing PPP and post com­mer­cial oper­a­tions date (COD) infra­struc­ture projects in exis­tence over a year of com­mer­cial operation.

50

(C.D.Srinivasan)
Chief Gen­er­al Manager

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

Noti­fi­ca­tion No.DNBR.023/CGM (CDS) — 2015 dat­ed May 14, 2015

The Reserve Bank of India, hav­ing con­sid­ered it nec­es­sary in 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 amend the Non-Sys­tem­i­cal­ly Impor­tant Non-Bank­ing Finan­cial (Non-Deposit Accept­ing or Hold­ing) Com­pa­nies Pru­den­tial Norms (Reserve Bank) Direc­tions, 2015 (Noti­fi­ca­tion No.DNBR.008/CGM(CDS) — 2015 dat­ed March 27, 2015) (here­inafter referred to as the said Direc­tions), in exer­cise of the pow­ers con­ferred by sec­tion 45JA of the Reserve Bank of India Act, 1934 (2 of 1934) and of all the pow­ers enabling it in this behalf, here­by directs that the said Direc­tions shall be amend­ed with imme­di­ate effect as follows –

1. In para­graph 16, after sub-para­graph (3) in the table in the Expla­na­tions (1) On bal­ance Sheet assets after (ii) (d) the fol­low­ing shall be inserted

(e) All assets cov­er­ing PPP and post com­mer­cial oper­a­tions date (COD) infra­struc­ture projects in exis­tence over a year of com­mer­cial operation.

50

(C.D.Srinivasan)
Chief Gen­er­al Manager