RBI issues prudential norms for infra debt funds by banks and NBFCs
23 Sep 2011
The Reserve Bank of India (RBI) today issued prudential norms for both banks and non-banking financial institutions (NBFCs) for setting up infrastructure debt funds.
RBI said banks and NBFCs, to be eligible to sponsor infrastructure debt funds (IDFs) in the form of mutual funds (MFs) and NBFCs, should comply with these prudential regulations in addition to the Mutual Fund regulations of the Securities and Exchange Board of India (SEBI).
Market regulator SEBI has amended (Mutual Funds) Regulations to provide regulatory framework for IDF-MFs by inserting Chapter VI-B to the MF Regulations.
RBI today issued broad parameters for setting up of IDFs under the MF and NBFC structures by banks and NBFCs.
Under the guidelines issued by the RBI, banks and NBFCs have to get prior approval of the central bank to be eligible to sponsor IDFs as mutual funds, while also abiding by the conditions prescribed by SEBI.
Banks acting as sponsors of IDF-MFs would be subject to existing prudential limits, including limits on investments in financial service companies and limits on capital market exposure.
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