What changed
The minimum net owned funds for IDF-NBFCs has been raised to ₹300 crore, and the capital adequacy ratio is now 15% with a 10% Tier 1 capital floor. The requirement for a sponsor (bank or NBFC-IFC) has been withdrawn, and tripartite agreements for PPP projects are now optional. IDF-NBFCs can now raise up to 10% of total borrowings through shorter tenor bonds and commercial papers, and can also use ECB loans (minimum 5-year tenor, not from foreign branches of Indian banks).
What it means for you
These changes aim to strengthen the financial health of IDF-NBFCs while giving them more operational flexibility. The higher capital requirements will likely lead to consolidation among smaller players, but the removal of sponsor and tripartite agreement mandates reduces entry barriers and operational costs. The new fund-raising options improve asset-liability management, enabling IDF-NBFCs to better match short-term liabilities with infrastructure project cash flows.
What you must do
- Review and adjust capital planning to meet the new ₹300 crore NOF and 15% CRAR requirements immediately.
- Update internal policies to reflect the removal of sponsor and tripartite agreement requirements for new investments.
- Assess fund-raising strategies to utilize the new 10% short-term bond/CP limit and ECB route for better ALM.
- Ensure compliance with risk-weighting norms as per NBFC-ICC guidelines for all assets.
- If sponsoring an IDF-MF, verify eligibility against the new conditions (NOF, CRAR, NPA, profitability, track record, and minimum 5 years of existence).
Who it affects
All existing and prospective IDF-NBFCs, NBFCs looking to sponsor IDF-Mutual Funds, Infrastructure project developers and concessionaires, Banks and financial institutions lending to or investing in IDF-NBFCs
What is the new minimum net owned funds requirement for IDF-NBFCs?
The minimum net owned funds has been increased to ₹300 crore, up from the previous requirement.
Can IDF-NBFCs now raise funds through commercial papers?
Yes, IDF-NBFCs can raise up to 10% of their total outstanding borrowings through shorter tenor bonds and commercial papers to improve asset-liability management.
Is a sponsor still required for setting up an IDF-NBFC?
No, the requirement for a sponsor (bank or NBFC-IFC) has been withdrawn. Shareholders will be subject to standard NBFC scrutiny.