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IIFCL to come under oversight of RBI regulatory

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The Union Cabinet has approved the proposals to bring India Infrastructure Finance Company Ltd. (IIFCL) under regulatory oversight of Reserve Bank of India (RBI), to enhance its professional capability and to increase its capital base.
With this approval, IIFCL to be brought under the regulatory oversight of RBI by registering it as an Non-Banking Finance Company– Infrastructure Finance Company (NBFC-IFC).
The decision also talk about increasing the authorized capital of IIFCL from Rs2000 crore to Rs5000 crore with a proviso that it may be further increased to Rs8000 crore with the approval of the Finance Minister.

Once IIFCL is brought under regulatory oversight of RBI, it will dispense with the Oversight Committee.
This will also look 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,” the government said.
The performance of IIFCL was reviewed by the Economic Advisory Council to the Prime Minister (EAC to PM) and it had 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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