What changed
RBI amended the Non-Banking Financial Companies Acceptance of Public Deposits Directions, 1998, by inserting a new sub-clause (m) under paragraph 2(1)(xii). This exempts amounts raised by IFCs through infrastructure bonds specified by the Central Government under Section 80CCF from the definition of 'public deposit'.
What it means for you
IFCs can now raise long-term infrastructure bonds without these funds counting toward their public deposit limits, reducing compliance burden. This encourages IFCs to channel more capital into infrastructure projects, supporting the government's focus on infrastructure financing. Banks lending to or investing in IFCs may see improved credit quality as IFCs gain a cheaper, tax-advantaged funding source.
What you must do
- Review your IFC clients' funding mix to assess reliance on these exempt bonds.
- Update internal classification of IFC deposits to exclude Section 80CCF bonds from public deposit calculations.
- Advise IFC clients on the regulatory benefits of issuing these bonds for infrastructure funding.
- Monitor Central Government notifications for updates on eligible bonds under Section 80CCF.
Who it affects
Infrastructure Finance Companies (IFCs), Banks lending to or investing in IFCs, NBFCs classified as IFCs by RBI, Investors in long-term infrastructure bonds
What is the key change in this circular?
RBI exempts amounts raised by IFCs through long-term infrastructure bonds under Section 80CCF from being treated as public deposits, amending the 1998 Directions.
Which entities are eligible for this exemption?
Only NBFCs classified as Infrastructure Finance Companies by RBI, as specified in Central Government notifications under Section 80CCF, are eligible.
Does this affect existing public deposit limits for IFCs?
Yes, these bonds no longer count toward public deposit ceilings, giving IFCs more headroom to raise funds without triggering additional regulatory requirements.