RBI issues norms for setting up of IDFs by banks, NBFCs

An NBFC sponsoring IDF-Mutual Fund should have a minimum net owned funds (NOF) of Rs300 crore and capital adequacy ratio of 15% while sponsors of NBFC-IDFs will have to contribute a minimum equity of 30% and a maximum equity of 49% of the IDF-NBFC

Mumbai: The Reserve Bank of India (RBI) today announced guidelines for permitting banks and non banking financial companies (NBFCs) to set up Infrastructure Debt Funds (IDFs), to help meet long-term financing for the sector, reports PTI.

IDFs would be set up either as mutual funds (MFs) or NBFCs, RBI said in a statement.

Outlining the parameters for setting up IDF-MF, the central bank said an NBFC sponsoring IDF-Mutual Fund should have a minimum net owned funds (NOF) of Rs300 crore and capital adequacy ratio of 15%.

Besides, its net NPAs should be less than 3% of net advances and the NBFCs should have been in existence for at least five years and earning profits for the last three years, it said.

Banks and NBFCs would be eligible to sponsor (as defined by SEBI regulations for mutual funds) IDFs as mutual funds with prior approval of RBI, it said.

It also said that the Securities and Exchange Board of India (SEBI) has amended the (Mutual Funds) Regulations to provide regulatory framework for IDF-MFs.

Banks acting as sponsors to IDF-MFs would be subject to existing prudential limits including limits on investments in financial services companies and limits on capital market exposure, it said.

The finance minister, in his budget speech for 2011-12, had announced setting up of IDFs to accelerate and enhance the flow of long term debt in infrastructure projects for funding the government's ambitious programmes in the sector.

The government has said that the infrastructure sector requires an investment of $1 trillion during the 12th Five Year Plan beginning next fiscal. Of this, 50% of the funding is expected to come from the private sector.

As for the setting up of IDF-NBFC by banks and non-banking finance institutions, sponsors of NBFC-IDFs will have to contribute a minimum equity of 30% and a maximum equity of 49% of the IDF-NBFC.

Banks and NBFC-Infrastructure Finance Company (NBFC-IFCs) may sponsor IDFs as NBFCs with prior approval by RBI.

Post investment in the IDF, the sponsor must maintain minimum CRAR and NOF prescribed for IFCs.

The IDF should be assigned a minimum credit rating 'A' or equivalent of CRISIL, Fitch, CARE, ICRA or equivalent rating by any other accredited rating agencies, it said.

Tier II capital cannot exceed Tier I. Minimum capital adequacy ratio should be 15% of risk weighted assets, it added.

Detailed guidelines for setting up IDFs banks and NBFCs would be issued separately, it said.

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Neyveli Lignite pays Rs361 crore dividend to Coal Ministry

NLC had reported nearly flat growth in profit to Rs342.8 crore for the quarter ended 30th June from Rs342.1 crore in the corresponding period of 2009-10

State-owned Neyveli Lignite Corporation (NLC) has paid a dividend of Rs361.02 crore to the Ministry of Coal for the 2010-11 fiscal. The dividend cheque was presented to coal minister Sriprakash Jaiswal by NLC chairman and managing director AR Ansari, an official statement said.

In the last fiscal, the PSU had declared a 23% dividend, amounting to Rs448.47 crore, it said. "The shareholders of the company at the 55th Annual General Meeting held on 12th September have declared a dividend at the rate of 23% for the financial year 2010-11. The total dividend payout... amounts to Rs448.47 crore," the statement said.

NLC had reported nearly flat growth in profit to Rs342.8 crore for the quarter ended 30th June from Rs342.1 crore in the corresponding period of 2009-10.

The company has four opencast lignite mines with a capacity of about 30.60 million tonne per annum, while it can produce about 2,740MW of power from four power plants.

On Friday, NLC ended 1.8% down for Rs81.95 on the Bombay Stock Exchange, while the benchmark Sensex declined 1.22% to 16,162.06.

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ABB secures $71 million order from SAIL

ABB would supply various products, including switchgear, transformers, cables, fire protection and detection systems

Multinational power and automation technology company ABB said it has secured a $71 million order from Steel Authority of India Ltd (SAIL) for supply of a high-voltage sub-station package to the steel major's Bhilai plant in Chhattisgarh.

"The new high voltage sub-stations will enable the additional power supply needed to support a planned increase in the steel plant's annual production capacity from 5 million to 7 million tonnes," the Swiss entity said in a statement.

ABB would supply various products, including switchgear, transformers, cables, fire protection and detection systems. The company would also install substation automation systems for the project, which is expected to be completed by 2013.

Apart from enhancing power supplies to support increased production, the sub-stations would improve the availability and reliability of electricity supplied to the plant, said Mr Peter Leupp, ABB's Power Systems division head.

"ABB's energy-efficient and environmentally friendly technologies will also facilitate the phase out of ageing, energy-intensive equipment, bringing operational benefits," Mr Leupp noted.

On Friday, ABB ended 5.71% down for Rs750.05 on the Bombay Stock Exchange, while the benchmark Sensex declined 1.22% to 16,162.06.

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