RBI permits infra debt funds to issue less than 5-year tenure bonds

• Posted in Infrastructure
• on April 22, 2016
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The Reserve Bank of India on Thursday allowed Infrastructure Debt Fund (IDF) to raise resources through bonds and commercial papers of less than five-year maturity.

Presently, IDF-NBFCs are allowed to raise resources through issue of bonds of minimum five years maturity.

“On a review, with a view to facilitate better asset liability management, it has been decided in consultation with the Government of India, to allow IDF-NBFCs to raise funds through shorter tenor bonds and commercial papers (CPs) from the domestic market to the extent of up to 10 per cent of their total outstanding borrowings,” RBI said in a notification.

IDF-NBFC was created to raise funds to primarily fund infrastructure projects.

RBI has capped the average exposure limit for IDF-NBFC 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. Kerry Hyder Jersey

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