The Reserve Bank on Tuesday said non-resident investors will be allowed to invest up to $10 billion in Infrastructure Debt Funds , a move that will help in channelising funds for the infra sector which needs about $1 trillion during the 12th Plan period (2012-17).
In a notification, the central bank also said that sovereign wealth funds, multilateral agencies, pension funds, insurance funds and endowment funds registered with the market regulator SEBI, among others, would be eligible as non-resident investors in IDFs.
Banks, NBFCs to float infra debt funds
"All non-resident investment in IDFs, other than non-resident Indians (in both rupee and foreign currency denominated securities) would be within an overall cap/limit of $10 billion only," the RBI said.
This come a day after the apex bank issued guidelines on Infrastructure Debt Funds (IDFs) paying the way for banks and NBFCs to float such funds, a move that will help in garnering long-term resources for the infrastructure sector.
Banks and Non Banking Financial Companies (NBFCs) will now be able to sponsor IDFs, which can be set up either as Mutual Funds (MFs) or NBFCs, RBI had said on Monday.
"All non-resident investment in the securities would be subject to a lock in period of three years. However, all non-resident investors can trade amongst themselves within this lock in period of three years," the notification said.
However, the original/initial maturity of all securities at the time of first investment by a non-resident investor shall be five years. The cap of $10 billion would be within the overall cap of $25 billion for FII investment in bonds/non convertible debentures issued by Indian companies in the infrastructure sector.
"There would be no cap/limit for NRI investment in IDFs by way of rupee denominated bonds/units," the notification said.