The Cabinet Committee on Economic Affairs (CCEA) on 23 September 2013 took some steps to promote the operationalisation of Infrastructure Debt Funds (IDFs).
Steps taken by The Cabinet Committee on Economic Affairs (CCEA)
• Capping of the annual Guarantee Fee payable to the Concession Authority at 0.05 percent per annum, of outstanding debt financed by the IDF NBFC (Non Banking Financial Companies) for the first three years of operation of the IDF NBFC.
• Now Infrastructure Debt Funds (IDF) will get the status of Public Financial Institutions (PFI). Infrastructure Debt Funds are permitted to file Shelf Prospectus under Section 60 A of the Companies Act, 1956 and access to provisions of the SARFAESI Act, including to the adjudicatory process through Debt Recovery Tribunals.
• Post-successful COD PPP (commercial Operation Declaration) projects shall now be eligible for investment by Insurance Companies, Provident Funds (PFs), EPFO, Mutual Funds (MFs), etc.
About Infrastructure Debt Funds (IDF)
• IDFs are investment vehicles which can be sponsored by commercial banks and NBFCs in India in which domestic/offshore institutional investors, specially insurance and pension funds can invest through units and bonds issued by the IDFs.
• IDFs would essentially act as vehicles for refinancing existing debt of infrastructure companies, thereby creating fresh headroom for banks to lend to fresh infrastructure projects.
• IDF-NBFCs would take over loans extended to infrastructure projects which are created through the Public Private Partnership (PPP) route and have successfully completed one year of commercial production. Such take-over of loans from banks would be covered by a Tripartite Agreement between the IDF, Concessionaire and the Project Authority for ensuring a compulsory buyout with termination payment in the event of default in repayment by the Concessionaire.