Infra financing to be made easier

MUMBAI: Non-banking finance companies (NBFCs) such as IL&FS, IDFC, L&T Finance, Srei Infrastructure and India Infrastructure Finance Company (IIFCL) will find it easier to lend to infrastructure projects with the RBI creating a new category of NBFCs.

The new category of NBFCs will be those that specialise in financing infrastructure projects and includes firms which have allotted 75% of their total assets to financing infrastructure projects. There are three categories of NBFCs now ��� asset finance companies, loan companies and investment companies. Up until now, all NBFCs involved in infrastructure finance were classified under asset finance companies.

���With this move, RBI has created an enabling environment for NBFCs to lend to the infrastructure sector,��� said Hemant Kanoria, chairman, Srei Infrastructure Finance. Further pricing of loans to such NBFCs by banks is also likely to become easier. Risk weightage of banks��� exposure to infrastructure NBFCs will be linked to ratings assigned by external rating agencies and not to the uniform 100%, as is the case with all other classes of NBFC.

���A separate category was a long-pending request with the government and RBI. This will place infrastructure NBFCs on a better footing while they are raising funds from the market,��� said Mahesh Thakkar, director general of Finance Industry Development Council, a self-regulatory organisation for NBFCs.

Currently, most infrastructure companies raise part of their finances from commercial banks, part from the overseas market and the rest from the equities market.

In a parallel development, RBI has provided some clarity on capital requirement for banks involved in takeout financing deals. RBI has said that buyer bank will have to set aside 50% of the credit conversion factor (capital that banks have to set aside) against 100% decided earlier. RBI is expected to issue detailed guidelines on this later.