RBI introduces new category of Non Banking Finance Companies as Infrastructure Finance Companies (IFCs)
February 12, 2010:
The Reserve Bank of India has today issued a notification introducing a new category of Non Banking Finance Companies as “Infrastructure Finance Companies (IFCs)”. Currently, the Reserve Bank classified NBFCs under three categories, viz., Asset Finance Companies, Loan companies and Investment Companies.
Important non deposit taking non banking finance companies engaged predominantly in the infrastructure financing had requested that there should be a separate category of infrastructure financing NBFCs in view of the critical role played by them in providing credit to the infrastructure sector.
2. Accordingly, RBI has advised that the present classification of NBFCs stands modified to include IFCs. An IFC is defined as non deposit taking NBFC that fulfills the criteria mentioned below:
i) a minimum of 75 per cent of its total assets should be deployed in infrastructure loans as defined in Para 2(viii) of the Non Banking Financial (Non Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007;
ii) Net owned funds of Rs. 300 crore or above;
iii) minimum credit rating 'A' or equivalent of CRISIL, FITCH, CARE, ICRA or equivalent rating by any other accrediting rating agencies
iv) CRAR of 15 percent (with a minimum Tier I capital of 10 percent).
3. IFCs may exceed the concentration of credit norms as provided in paragraph 18 of the aforesaid Directions as under :
(i) in lending to
(a) any single borrower by ten per cent of its owned fund; and
(b) any single group of borrowers by fifteen per cent of its owned fund;
(ii) in lending and investing (loans/investments taken together) by
(a) five percent of its owned fund to a single party; and
(b) ten cent of its owned fund to a single group of parties.
(iii) The extant norms for investment for both single party and single group of parties will remain same as in Para 20 of the Directions referred to above.
4. The present norms relating to infrastructure loan as laid out will continue for NBFCs that do not meet the criteria to be classified as IFCs.
5. Since the classification for the purpose of income recognition, asset classification and provisioning norms is based on asset specification, the extant prudential norms will continue as hitherto.
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