Proposal to bring India Infrastructure Finance Company Ltd. under regulatory oversight of Reserve Bank of India approved.

Press Information Bureau

Government of India

Ministry of Finance

13-October-2011 13:44 IST

Proposal to bring India Infrastructure Finance Company Ltd. under regulatory oversight of Reserve Bank of India approved

The Union Cabinet today approved the proposals to bring India Infrastructure Finance Company Ltd. (IIFCL) under regulatory oversight of Reserve Bank of India, to enhance its professional capability and to increase its capital base.

The details are as follows:

1.     IIFCL to be brought under the regulatory oversight of RBI by          registering it as an Non-Banking Finance Company–   Infrastructure Finance Company ( NBFC-IFC).

2.    To increase the authorized capital of IIFCL from Rs.2000        crore to Rs.5000 crore with a proviso that it may be further    increased to Rs.8000 crore with the approval of the Finance     Minister.

3.    To broad base the Board of IIFCL.

4.  Once IIFCL is brought under regulatory oversight of RBI, to            dispense with the Oversight Committee.

5.   To modify the  Scheme for Financing Viable Information          Projects (SIFTI).

            Bringing IIFCL under the Regulatory Oversight of RBI with clearly defined prudential norms would be financially prudent and would safeguard the long term sustainability of the institution. Increase in the authorized capital would enable IIFCL to expand its financial assistance to the  infrastructure sector and meet the needs of increased CRAR. Inclusion of members with expertise in accounting and audit, risk management infrastructure financing etc. would strengthen its management and professional capabilities.

Background

The performance of IIFCL was reviewed by the Economic Advisory Council to the Prime Minister (EAC to PM) and it has made, the following recommendations:-

a) Considering the systemic significance of IIFCL and its linkages with other financial intermediaries, it is important that it be placed under the regulatory oversight of the RBI as a Financial Institution like NABARD/SIDBI/EXIM Bank/NHB.

b) The IIFCL Board should be broad based and professionals from the field of accounting and audit, infrastructure finance, risk management etc. need to be inducted in it. The membership should be increased to 14-16, in line with the practice followed for NABARD/SIDBI etc.

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