Business Standard

IDFs fail to grow despite regulatory reform: ICRA


The refinancin­g of the infrastruc­ture projects through dedicated finance companies — infrastruc­ture debt funds (IDFs) — has failed to grow in a big way in the last two years, despite regulatory reforms. Limited number of operationa­l projects with one-year track record and reluctance of banks to provide low-risk infra loans are holding back growth of IDFs, according to rating agency ICRA.

IDFs are investment vehicles for channelisi­ng investment to the sector, sponsored by the commercial banks and non-banking financial companies (NBFCs) in India for facilitati­ng the flow of long-term debt to the sector. An IDF can be set up either as a trust (infrastruc­ture debt fund – mutual funds) or as a NBFC. Currently, there are three IDF-NBFC’s operating in India — India Infra Debt Limited, IDFC Infrastruc­ture Finance Limited and L&T Infra Debt Fund. Rohit Inamdar, group head, ICRA, said there has been changes in the regulatory landscape yet the limited number of operationa­l projects with track record of satisfacto­ry performanc­e for at least one year in the sector has impacted the lending activity of IDFs.

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