Inquisitive Mind

Reserve Bank of India (RBI) has revised the regulatory framework for Infrastructure Debt Fund - Non Banking Financial Companies (IDF-NBFCs). What is Infrastructure Debt Fund - Non Banking Financial Company (IDF-NBFC)? An Infrastructure Debt Fund - Non Banking Financial Company (IDF-NBFC) means a non-deposit taking Non Banking Financial Company (NBFC) which is permitted to –  Refinance post commencement operations date (COD) infrastructure projects that have completed at least 1 year of satisfactory commercial operations.  Finance toll operate transfer (TOT) projects as the direct lender. Commencement of Operations Date (COD) means the date when the Service Provider begins the operations of the project pursuant to the issuance of Completion Certificate by the Authority. In what forms can Infrastructure Debt Fund (IDF) be set up? An Infrastructure Debt Fund (IDF) is set up either as a trust or as a company.  A trust based IDF is registered as an IDF-Mutual Fund (IDF-MF) and...

Reserve Bank of India (RBI) has issued circular on penal charges in loan accounts to ensure fair lending practice by the regulated entities. Why are penal interest / charges levied? The intent of levying penal interest / charges is essentially to inculcate a sense of credit discipline among borrowers through negative incentives and to ensure fair compensation to the lender.  Penal interest / charges are not meant to be used as a revenue enhancement tool over and above the contracted rate of interest.  What is rationale behind the circular? Under the extant guidelines, lending institutions have the operational autonomy with regard to levy of penal rates of interest.  During supervisory reviews of regulated entities (REs) it was observed that – Many REs use penal rates of interest, over and above the applicable interest rates, in case of defaults / non-compliance by the borrower with the terms on which credit facilities were sanctioned. Divergent practices amongst the REs w...

The bi-monthly monetary policy of Reserve Bank of India (RBI) has been announced on August 10, 2023. Here are some of the highlights of the monetary policy announcement. Rates and reserves   Change Rate Policy repo rate Unchanged 6.50% Standing deposit facility (SDF) rate 6.25% Marginal standing facility (MSF) rate 6.75% Bank rate 6.75% Monetary policy stance Withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth. Economy    GDP growth projection CPI inflation projection FY 2023-24 6.5% 5.4% Q1 of FY 2023-24 8.0% 4.6% Q2 of FY 2023-24 6.5% 6.2% Q3 of FY 2023-24 6.0% 5.7% Q4 of FY 2023-24 5.7% 5.2% Q1 of FY 2024-25 6.6% 5.2% Indian economy is exuding enhanced strength and stability. India’s strong macroeconomic fundamentals...