IREDA Receives Infrastructure Finance Company Status from the RBI
The new status is expected to help IREDA access a broader investor base
Government-owned lender Indian Renewable Energy Development Agency (IREDA) has been granted an ‘Infrastructure Finance Company’ (IFC) status by the Reserve Bank of India (RBI), enabling better exposure to renewable energy sector financing.
The IFC status is expected to help the non-banking financial company (NBFC) achieve competitive fundraising rates by providing access to a broader investor base.
IREDA was previously classified as an ‘Investment and Credit Company.’
Pradip Kumar Das, Chairman, and Managing Director of IREDA, said, “The IFC status is a significant milestone for IREDA and will enable us to maintain our leading position as a financier of renewable energy space. IREDA will continue to play a motherly role in the development of the renewable energy sector.”
The recognition of IREDA as an IFC is expected to increase investor confidence and generate a positive outlook in the market.
To qualify as an IFC, the NBFC must be a non-deposit accepting loan company, with a minimum of 75% of its total assets deployed in infrastructure loans. Further, it must have a minimum net worth of ₹3 billion (~$36.4 million) and a minimum credit rating of ‘A’ from accrediting rating agencies.
The company must also have a Capital to Risk (Weighted) Assets Ratio (CRAR) of 15% with Tier I capital at 10%.
IREDA’s long-term bonds program rating was recently upgraded from ‘AA+’ to ‘AAA’ by the credit rating agency ICRA.
IREDA has sanctioned renewable energy loans amounting to more than ₹1.45 trillion (~$17.59 billion) and financed renewable energy loans exceeding ₹920 billion (~$11.16 billion) to date, with a loan book size exceeding ₹400 billion (~$4.85 billion).
In January this year, the Government set a revenue target of ₹33.61 billion (~$407.86 million) for the financial year (FY) 2022-23 for IREDA, 18% higher than the previous year’s revenue from operations. The government has set key performance parameters such as return on net worth, return on capital employed, non-performing assets (NPAs) to total loans, asset turnover ratio, and earnings per share.
IREDA posted a profit of ₹2 billion (~$24.27 million) for the third quarter of the financial year 2022-23, a jump of 88% year-over-year (YoY). The profit growth was attributable to a sharp fall in IREDA’s non-performing assets to 2.03% in the quarter compared with 6.26% YoY.