The non-banking finance companies (NBFCs) that are focused on infrastructure front are likely to get more credit from the banks in order to meet the rising demand in sector. A proposal on the rise of exposure limit to NBFCs by banks is on review under the government.

Presently, the bank's exposure limit to the NBFCs is set at 15% of the total capital funds of a bank, which are a sum of tier-1 and tier-II capital. Above RBI has set a 5% margin for NBFCs lending to the infrastructure sector. However the proposal sent by a commission group on infrastructure financing has asked the exposure limit to rise to 30%.

A government official said, "There is a proposal that exposure limit for NBFCs, in general, should be increased to 20% while additional 10% should be provided for NBFCs funding infrastructure projects." Presently the finance ministry is in discussion with the Planning Commission and RBI regarding the matter. However there is no contract made on the exposure limit and therefore the central bank's decision will be considered final.

There are many companies that are likely to benefit from the implementation of this project. The beneficiaries will include the likes of Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and SREI Infrastructure Finance. The proposal is of great significance as infrastructure sector requires investment of more than $500 million during the period of Eleventh five year plan.

An official from the finance ministry said, "There has been demand from several quarters, including aviation, power and oil sector, for measures to improve funding from multiple sources including those from the NBFCs. However, only RBI can take a final call on the issue."

Earlier this month, the finance secretary Arun Ramanathan had met the chiefs of major NBFCs to talk about the troubles faced by them. NBFCs said that the banks have been hesitant to lend to them and therefore they want the government interference to solve the matter. To this Prime Minister Manmohan Singh and finance minister P Chidambaram ensured these NBFCs by saying that the government would take every potential step to improve the growth in infrastructure.

The infrastructure sector has been facing a shortfall in funds due to the recent global financial turmoil and lack of overseas funds. The crisis in the economy had pressurized the government to prolong in the sector.