A recent press report said that the Indian Infrastructure Finance Company would be under the regulations of the Reserve Bank of India. A proposal regarding this subject has been approved by the Union Cabinet. Regarding this Ms. Ambika Soni, Minister of Information and Broadcasting , had said that IIFCL would operate under the regulations of the RBI by registering it as non-banking finance company – Infrastructure Finance Company (NBFC – IFC).
She also said that this decision would allow the company to increase its capital from Rs.2000 crore to Rs.5000 crore with a provision of increasing it to Rs.8000 crore with the permission of the Finance Minister.
IIFCL which started its operations from April 2006 lends long – term debt to infrastructure companies. The Economic Advisory Council to the Prime Minister, after reviewing the performance of the company has advised to bring the company under the purview of the regulations of the RBI such as NABARD, Exim Bank or National Housing Bank in order to safeguard the sustainability of the company.
According to the Government statement, bringing IIFCL under the purview of the RBI regulations with well defined norms would be financially cautious and would also ensure long-term sustainability of the company. Besides, the increase in capital would help in expand its financial assistance to the infrastructure sector and meet the requirements of capital adequacy ratio.
Earlier reports said that the RBI worried over high inflation, has hiked key interest rates by 25 basis points, which is its 12th such hike since March, 2010. The hike has made auto, home and other loans more expensive.