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New infra bonds norms by RBI

mumbai Updated: Nov 04, 2011 00:20 IST
HT Correspondent
HT Correspondent
Hindustan Times
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The Reserve Bank of India (RBI), in a notification on Thursday, allowed foreign institutional investors (FIIs) to invest up to $25 billion in non-convertible debentures (NCDs) and bonds issued by non-banking finance companies (NBFCs) that lend to the infrastructure sector.

"FIIs would also be allowed to invest in non-convertible debentures / bonds issued by NBFCs categorized as 'Infrastructure Finance Companies'(IFCs) by the Reserve Bank of India within the overall limit of $25 billion," the RBI notification said.

Earlier, in April, the RBI had hiked the limit for investment by FIIs in NCDs and bonds of infrastructure companies to $25 bn, up five times from the earlier limit of $5 billion.

Thursday's notification by RBI also reduced the lock-in period for such investment to one year, from three years earlier, for amounts upto $5 billion within the overall limit of $25 billion. This lock-in-period shall be computed from the time of first purchase by FIIs, the RBI further said.

The changes will also be applicable to qualified foreign investors (QFIs) who can now also invest in mutual fund debt schemes of NBFCs lending to infrastructure sector upto a limit of $3 billion.

In a separate notification, the central bank has extended the disclosure norms for residential real estate projects to commercial real estate projects as well, for developers seeking finance from banks for their projects.

It has stipulated that the developers constructing a commercial real estate project, disclose in their brochures the names of the banks to which the property is mortgaged, similar to the existing norms for residential projects.

Realtors must to disclose this information in their advertisements and must obtain NOC from the mortgagee bank for sale of property, if required, as per the RBI.