According to the RBI, if a company wants to be classified as IFC, it should have a minimum of 75 per cent of its total assets deployed in infrastructure loans and it should have net owned funds of Rs 300 crore or above. It should have a minimum credit rating ‘A’ or equivalent by rating agencies. The capital adequacy ratio (CRAR) should be 15 per cent (with a minimum Tier I capital of 10 per cent). Apart from IFCs, the other thre categories of NBFCs are asset finance companies (AFCs), loan companies (LCs) and investment companies (ICs).

The RBI has extended several sops to IFCs in lending. IFCs can exceed the concentration of credit norms to any single borrower by ten per cent of its owned fund and single group of borrowers by 15 per cent of its owned fund. In the case of group lending and investing (loans/investments taken together), it can exceed the limit of five per cent of its owned fund to a single party and ten cent of its owned fund to a single group of parties.

Systematically important non-deposit taking non-banking finance companies, engaged predominantly in the infrastructure financing, had earlier requested the RBI 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. In another notification issued today, the Reserve Bank has linked the risk weight of banks’ exposure to infrastructure finance companies to their credit rating assigned by external credit assessment institutions (ECAIs). Further, with a view to encouraging larger flow of funds to infrastructure, the exposure of a bank to infrastructure finance companies has been enhanced up to 20 per cent of its capital funds.

The latest RBI move has come at a time when bankers urged the central bank to include infrastructure loans in the category of priority sector advances and exempt infrastructure bonds from mandatory cash requirements, as they struggle to finance long-term projects.