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Tue, Oct 05, 2010 | Updated 04.24PM IST

16 JAN, 2010, 02.53AM IST, DHEERAJ TIWARI,ET BUREAU

Dedicated NBFCs likely to fund core sector growth

NEW DELHI: The government has asked the central bank to quickly put in place a regulatory framework for the specialised non-banking finance companies (NBFCs)

to facilitate greater flow of funds to the infrastrucrue sector. The RBI had suggested creation of special category Infrastructure NBFCs dedicated for financing

infrastructure projects in its July 2009 monetary policy review. The finance ministry has taken up the issue with the RBI, a ministry official who did not wished to be

identified told ET.

NBFCs that hold a minimum of 75% of their total assets in infrastructure projects, will be considered as infrastructure NBFCs. The apex bank is yet to announce the

guidelines for such NBFC.

Once the guidelines are in place, these NBFCs will have greater access to funds as RBI is expected give a clarity on the prudential norms and exposure limits on

borrowing from multilateral and other financial institutions. The move will benefit Power Finance Corporation , Rural Electrification Corporation , Srei Infrastructure

Finance and L&T Finance and also lead to increased flow of funds to infrastructure that requires about $ 500 billion over eleventh five year plan period(2007-2012).

Once their is a clarity on the prudential norms that such NBFCs will have to follow, and guidelines on access of funds, well be able to chalk out our future plans,

said CMD Srei Infrastructure Finance Limited, Hemant Kanoria.

Looking to provide greater access to funds for these NBFCs, the ministry has also asked the RBI to further liberalise the overseas debt route and ease financing and

refinancing from banks and insurance companies. We have asked RBI to consider theses issue while framing the guidelines, the official said.

In December, RBI had allowed all such NBFCs to avail ECBs from the recognised lender category including international banks under the approval route. RBI was to

further announce detailed instructions including eligibility criteria, since theyve not done it so far, weve requested them to expedite the same, the official said.

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Page 1 of 1Dedicated NBFCs likely to fund core sector growth - The Economic Times

10/5/2010http://economictimes.indiatimes.com/articleshow/5450639.cms?prtpage=1