The central bank noted that these adjustments were made in response to feedback received on the draft amendment directions released on October 24, 2025, which sought to recalibrate risk weights to more accurately represent the actual risk characteristics associated with infrastructure lending.
The RBI reviewed stakeholder feedback and integrated the resulting changes into the finalized directions.
As a result, the RBI has issued the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Amendment Directions, 2026, alongside the Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Amendment Directions, 2026.
According to the updated capital adequacy norms, loans provided by NBFCs to “high-quality infrastructure projects” will incur lower risk weights, subject to certain specified conditions.
For such projects, loans where the borrower has repaid at least 2% of the approved project debt will carry a risk weight of 75%. In contrast, loans with at least 5% of the sanctioned debt repaid will enjoy a reduced risk weight of 50%.
The RBI clarified that if projects initially deemed to be high-quality infrastructure projects fail to adhere to the specified conditions at a later stage, the exposures will revert to the higher risk weights applicable to infrastructure lending under the current framework.
These repayment thresholds will be evaluated based on the total sanctioned project debt, encompassing any additional debt sanctioned through loan takeovers or other means.
Simultaneously, the RBI specified the criteria for classifying infrastructure lending as exposure to “high-quality infrastructure projects” within the concentration risk management framework.
For a project to qualify, it must have completed a minimum of one year of operation post-commercial launch without violating significant lender covenants, and the exposure must be recorded as ‘standard’ in the lender’s financial records.
ALSO READ | January income tax calendar: Key compliance dates to track this month
The revised framework mandates that project revenues should rely on concession or contractual rights awarded by the Centre, state governments, public sector organizations, or statutory bodies, with measures in place to safeguard these rights throughout the concession period.
Additionally, lenders need to have robust contractual safeguards, which may include escrow or trust and retention account mechanisms to securely manage cash flows, a pari-passu charge over project assets, and risk-mitigation features such as step-in rights or minimum termination payments.
Other stipulations include sufficient financial arrangements to satisfy working capital and funding needs, as determined by the lender, along with restrictions on the borrower from undertaking actions that could negatively impact lenders—such as incurring additional debt or encumbering project cash flows without lender approval.
The amendment directions will take effect from April 1, 2026, or earlier if fully adopted by an NBFC. However, for exposures that currently enjoy lower risk weights but will be subject to higher risk weights under the updated norms, NBFCs may maintain existing risk weights until the next review or renewal, or until March 31, 2027, whichever comes first.
The RBI stated that these amendments are designed to facilitate more precise risk assessment, enhance capital allocation, and foster greater financial stability in infrastructure financing through NBFCs.
ALSO READ | India keeps Floating Rate Savings Bond interest unchanged at 8.05% for Jan–June period
