30 per cent of infrastructure loans to qualify for CRR, SLR-free bonds: IDFC

MUMBAI: Infrastructure Development Finance Company ( IDFC), the country’s largest infrastructure financing company, is seen benefiting from the Reserve Bank of India (RBI) norms that exempt lenders from maintaining statutory liquidity ratio (SLR)/cash reserve ratio requirement ( CRR) on eligible infra loan books.

To encourage banks to provide long-term finance for infrastructure, RBI, in July last year, had exempted lenders from regulatory requirements such as CRR, SLR and priority sector lending. By October 2015, IDFC will have an exemption on 30% of its eligible infra loan book, subject to verification and certification by RBI. This exemption will increase to 46% in 2016, 64% in 2017 and 100% in 2018.

IDFC — one of the 25 applicants in the race for a banking licence — was awarded a permit, along with Bandhan Financial Services, in April 2014.

On a gross loan book size of Rs 54,004 crore, IDFC will get an exemption on the eligible infra loan book. Given that 70% of the loans are provided for infrastructure projects, and that the loans qualify for exemption from SLR and CRR, IDFC will save about Rs 3,000 crore.

Given a balance sheet size of Rs 86,388 crore, IDFC is required to have Rs 20,000 crore for SLR and CRR. “This is just a clarification from the Reserve Bank and this benefit is available to all banks,” said an executive of IDFC. “There are two levels of saving — SLR/CRR and priority sector. The biggest relief is on priority sector lending requirement.”

Meeting priority sector norms is one of the challenges before IDFC that lends primarily to energy, telecommunications and transportation. The guidelines, however, prescribe new banks to meet the norms on lending 40% of loans to agriculture, education and other low-income groups and weaker sections from March 2017.