The Reserve Bank of India (RBI) on Thursday proposed new regulations governing infrastructure debt funds (IDFs). This revised framework aims to streamline and optimize the financing of infrastructure projects, RBI Governor Shaktikanta Das said while announcing the bi-monthly monetary policy,
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One notable change is the withdrawal of the requirement for a sponsor for IDFs, which is expected to facilitate smoother operations and encourage increased participation. Additionally, IDFs will now have the permission to directly finance Toll Operate Transfer projects (ToT), marking a significant shift in their role and capacity. To enhance the financial capabilities of IDFs, the revised regulations grant them access to External Commercial Borrowings (ECBs), enabling them to tap into international sources of funding.
Moreover, the regulatory shift makes the tri-partite agreement optional for Public-Private Partnership (PPP) projects, offering greater flexibility in project execution.
Das expressed that these alterations are aimed at fostering a more robust role for IDFs in infrastructure financing. The move is part of a broader effort to harmonize regulations for different categories of Non-Banking Financial Companies (NBFCs), in alignment with the RBI's regulatory objectives.
Highlighting the significance of these changes, Das pointed out that they are expected to augment the country's infrastructure financing capacity. Since its establishment as a distinct category of NBFCs in 2011, the Infrastructure Debt Fund has evolved to play a pivotal role in funding crucial projects.
Governor Das also emphasized India's rapid strides in digitalization, showcasing the embrace of digital public infrastructure. This embrace has nurtured an environment conducive to the growth of FinTech companies and startups, encouraging innovative solutions in various financial domains, including payments and credit.
This step is anticipated to usher in a new era of infrastructure financing, boosting economic growth and development in the country, experts say.
Catch all updates on RBI policy here
First Published: Aug 10, 2023 11:27 AM IST
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