The Cabinet Committee
on Infrastructure (CCI) approved the Model Tripartite Agreement for
Infrastructure Debt Funds (IDFs).
The CCI also approved the constitution of empowered Inter-Ministerial
Group to approve sector-specific or project-specific modifications.
This Model Tripartite Agreement will facilitate early operationalisation
of the IDFs.
Setting up of Infrastructure Debt Funds (IDFs) was announced in the
Union Budget for 2011-12. These are aimed at accelerating and enhancing
flow of long term debt for funding infrastructure projects in the
country. They will also act as a catalyst to channelize domestic
savings. IDFs would provide a vehicle for refinancing the existing debt
of infrastructure projects which are funded mostly by commercial banks.
This would create fresh headroom for commercial banks and enable them to
take up a larger number of new infrastructure projects.
An IDF can be structured either as a company or as a trust. If set up as
a trust, it would be regulated by SEBI under the Mutual Fund
Regulations. If set up as a company, the IDF would be structured as a
Non-Banking Finance Company (NBFC) and will be under the regulatory
oversight of RBI. Guidelines with enabling provisions have already been
issued by the Reserve Bank of India and SEBI.
An IDF-NBFC would issue either rupee or dollar denominated bonds and
invest only in debt securities of Public Private Partnership projects
which have a buy-out guarantee and have completed at least one year of
commercial operations. Such projects are expected to be viewed as
low-risk investments and would, therefore, be attractive for risk-averse
insurance and pension funds.
Regulations issued by RBI provide that a Tripartite Agreement, which
shall be binding on all the parties thereto, will be entered into
between the Concessionaire, the Project Authority and the IDF.