NBFCs may get to tap more core sector funds

NEW DELHI: The government is planning to allow non-banking finance companies (NBFCs) to tap lines of credit offered by multilateral agencies, including ADB and IMF, to boost infrastructure financing. In a bid to give a leg-up to infrastructure financing, the government wants to clear the roadblocks. A proposal to allow NBFCs to subscribe to long-term borrowings from multilateral agencies, is being examined, sources told ET.

The funding requirement for the infrastructure sector has been pegged at $350 billion over next five years in the country. NBFCs have not been able to raise resources easily through issuances of multi-lateral agencies. It is perceived that the RBI has been cautious in allowing these companies to raise debt.

Industry experts says even NBFCs with high credit ratings have not been able to get permission from the RBI to bank on such credit lines. It is likely that the regulator will adopt a case-by-case approach to allow infrastructure NBFCs to tap this window.

���We have already sought permission from RBI to tap into issuances of multi-lateral agencies. Even if it is to subscribe to these bonds, we have to do so, on the back of the sovereign guarantee. So far we have sought an approval up to Rs 5,000 crore,��� SS Kohli, CMD, IIFCL told ET. A source at a multi-lateral agency said any move to liberalise borrowings of NBFCs will give a huge boost to infrastructure. They have been able to mobilise resources in small tranches, which makes them inefficient.

���It is difficult for these companies to finance large volumes of investment required for infrastructure on the back of mobilising deposits,��� the source said. ���It should give comfort to the RBI that multi-lateral agencies will do the due diligence and assess the credit risk, while lending to private or quasi-private entities. We are willing to take on such risks, but will lend responsibly,��� the source added.