Investments in National Bank for Financing Infrastructure and Development

IRDAI vide its Circular dated June 5, 2023 has discussed about the National Bank for Financing Infrastructure and Development (NaBFID) which is established under National Bank for Financing Infrastructure and Development Act, 2021 to support the development of long-term non-recourse infrastructure financing in India. NaBFID is regulated by RBI as All India Financial Institution.

The circular clarifies that the exposure limits for the investments in NaBFID will be considered in line with the limits prescribed for Public Limited Infrastructure Investee Company under note 3 of Regulation 9 of IRDAI (Investment) Regulations, 2016.

Reference:

IRDAI (Investment) Regulations, 2016

“9. Exposure / Prudential Norms :

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3. Exposure to a public limited ‘Infrastructure investee company’ will be:

i. 20% of outstanding equity shares (face value) in case of equity (or)

ii. 20% of outstanding equity plus free reserves (excluding revaluation reserve) plus debentures / bonds taken together, in the case of debt (or)

iii. amount under Regulation 9 (B) (i), whichever is lower.

iv. The 20% mentioned above, can be further increased by an additional 5%, in case of debt instruments alone, with the prior approval of Board of Insurer.

v. The outstanding tenure of debt instruments, beyond the exposure prescribed in the above table in this regulation, in an infrastructure Investee Company, should not be less than 5 years at the time of investment.

vi. in case of Equity investment, dividend track record as per these regulations, in the case of primary issuance of a wholly owned subsidiary of a Corporate / PSU shall apply to the holding company.

vii. all investments made in an ‘infrastructure investee company’ shall be subject to group / promoter group exposure norms.”

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Source category: IRDAI

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• /2023/210_Investments_in_National_Bank_for_Financing_Infrastructure_and_Development.pdf