RBI lets infra lenders dream 45% bigger

The Reserve Bank of India (RBI) on Wednesday increased the large exposure limit for upper-layer infrastructure finance companies, allowing them to lend up to 45% of their eligible capital base to a group of connected borrowers, up from the earlier cap of 35%.The move applies to Non-Banking Financial Company-Infrastructure Finance Companies (NBFC-IFCs) that fall under the RBI's Upper Layer category, which comprises systemically important NBFCs subject to enhanced regulatory oversight.The central bank said the decision was taken considering the specialised nature of infrastructure finance companies, the financing needs of the infrastructure sector and the need to avoid any adverse impact on existing infrastructure projects.The change was announced as part of a set of amendment directions issued after the RBI reviewed feedback received on draft proposals released in April.The RBI also decided to simplify the methodology for identifying Upper Layer NBFCs.

It will now use an asset-size criterion of ₹1 lakh crore and above to identify NBFCs that may be considered for inclusion in the category, replacing the existing multi-parameter methodology.In another significant decision, the RBI said eligible government-owned NBFCs would also be considered for inclusion in the Upper Layer framework, in line with its principle of an ownership-neutral regulatory regime.

However, fully government-owned and government-controlled NBFCs in the Upper Layer will not be required to list on stock exchanges. ...