**Executive Summary**
The Reserve Bank of India (RBI) has issued Amendment Directions, 2026, to the Reserve Bank of India (All India Financial Institutions – Credit Facilities) Directions, 2025. These amendments, effective July 1, 2026, or earlier if adopted fully, permit All India Financial Institutions (AIFIs) to lend to Infrastructure Investment Trusts (InvITs) registered with and regulated by SEBI, subject to certain conditions and prudential guidelines. The directions provide clarity on lending practices, risk management, and security coverage for AIFIs financing InvITs.
**Key Points / Main Content**
* **Amendment to Directions:**
* Paragraphs 123 to 126 in Chapter VI ('Other Instructions on Credit Facilities') of the Directions are deleted.
* **Lending to Infrastructure Investment Trusts (InvITs):**
* AIFIs are permitted to lend to InvITs registered with and regulated by SEBI.
* AIFIs must be mindful of legal provisions regarding enforcement of security, ensuring borrowing by the trustee is within the powers of the trust deed.
* AIFIs must strictly monitor the end use of funds to ensure they are not used to finance activities such as land acquisition where such acquisition forms part of a project.
* **General Conditions for Lending to InvITs:**
* AIFIs must have a Board-approved policy covering appraisal, sanctioning, underwriting norms (including DSCR), internal limits, and monitoring mechanisms.
* AIFIs can only lend to InvITs where none of the underlying SPVs face 'financial difficulty' as defined in existing RBI guidelines.
* Financing InvITs for acquiring equity of other entities is subject to conditions outlined in Paragraph 114.
* Lending must be done via loans without bullet or ballooning principal repayments.
* AIFIs can only lend to InvITs that are listed, have a minimum of three years of operations with positive net distributable cash flows in the preceding two financial years, and have not faced material adverse regulatory action in the previous three years.
* **Prudential Ceiling on Leverage:**
* AIFIs must assess critical parameters, including cash flow sufficiency, to ensure timely debt servicing.
* Overall leverage of InvIT borrowing must be within the prudential ceiling prescribed by SEBI or a lower limit set by the AIFI's Board.
* **Security Coverage:**
* Financing to InvITs must be fully secured by a charge on identified assets.
* Financing against a specified asset must be extended either at the InvIT level or at the SPV/holdco level, but not both.
* AIFIs must create a charge over receivables from underlying assets and/or establish an escrow mechanism to prevent diversion of cash flows.
* **Effective Date:**
* The directions are effective from July 1, 2026, or an earlier date if adopted in entirety by an AIFI.
**Impact Analysis**
**Stakeholder:** All India Financial Institutions (AIFIs)
**Impact:**
AIFIs are now permitted to lend to InvITs registered with SEBI, expanding their lending opportunities within the infrastructure sector, but it also creates an obligation to adhere to the new guidelines.
**Action Required:**
AIFIs must review and update their lending policies, implement appropriate risk management procedures, and ensure compliance with the new conditions specified in the Amendment Directions. AIFIs must also ensure policies are updated in line with these regulations before July 1, 2026.
**Stakeholder:** Infrastructure Investment Trusts (InvITs)
**Impact:**
InvITs gain access to a new source of funding from AIFIs, potentially facilitating growth and expansion of infrastructure projects.
**Action Required:**
InvITs need to ensure they meet the eligibility criteria specified in the Amendment Directions to qualify for lending from AIFIs.
**Stakeholder:** SEBI
**Impact:**
The amendment reinforces the role of SEBI in regulating InvITs and potentially increases the oversight required to ensure compliance with both SEBI regulations and RBI guidelines.
**Action Required:**
No direct action listed in document.
Key Entities Referenced
Reserve Bank of India (All India Financial Institutions – Credit Facilities) Directions, 2025: The original directions being amended.
Reserve Bank of India: The regulator and issuer of the directions.
Reserve Bank of India (All India Financial Institutions – Credit Facilities) Amendment Directions, 2026: The main subject of the document; an amendment to existing credit facility directions.
Infrastructure Investment Trusts (InvITs): The investment vehicles which are the subject of the lending guidelines outlined in the amended directions.
Section 45L of the Reserve Bank of India Act, 1934: The section of the Act granting powers exercised in these directions.
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
RBI/2025-26/<>
DOR.CRE.REC. /07.01.007/2025-26 DD-MM-YYYY
Reserve Bank of India (All India Financial Institutions – Credit Facilities)
Amendment Directions, 2026 – Draft for Comments
Please refer to the Reserve Bank of India (All India Financial Institutions – Credit
Facilities) Directions, 2025 (hereinafter referred to as ‘Directions’).
2. On a review, and in exercise of the powers conferred by Section 45L of the
Reserve Bank of India Act, 1934 and all other provisions / laws enabling the Reserve
Bank of India in this regard, the Reserve Bank of India, being satisfied that it is
necessary and expedient in public interest so to do , hereby, issues the Amendment
Directions hereinafter specified.
3. The Amendment Directions modify the Directions as under:
3(1) In ‘Chapter VI – Other Instructions on Credit Facilities’ of the Directions,
paragraphs 123 to 126 shall be deleted.
3(2) The following paragraphs shall be inserted under the sub-section ‘C.2 Lending
to Infrastructure Investment Trusts (InvITs)’, namely:
“126A. AIFIs shall be permitted to lend to InvITs which are registered with and
regulated by SEBI.
126B. As InvITs are trusts, the AIFI shall be mindful of the legal provisions in
respect of these entities especially those regarding enforcement of security.
Specifically, the AIFI shall establish that the borrowing by the trustee is well
within the powers allowed under the respective trust deed.
126C. An AIFI shall strictly monitor the end use of funds lent to InvITs to
ensure that this route is not being used to finance activities which are notReserve Bank of India (All India Financial Institutions – Credit Facilities) Amendment Directions, 2026
permitted, such as land acquisition, even where such acquisition forms part of
a project.
126D. General Conditions:
(1) An AIFI shall put in place a Board approved policy on lending to
InvITs, which shall, inter alia, cover appraisal mechanism,
sanctioning conditions, underwriting norms, including metrics such
as the debt service coverage ratio (DSCR) and their corresponding
benchmark levels, internal limits for individual exposures as well as
the aggregate portfolio, and monitoring mechanisms, including
stipulation of appropriate covenants.
(2) An AIFI shall lend to only those InvITs where none of the underlying
SPVs is facing ‘financial difficulty’ as defined in the Reserve Bank of
India (All India Financial Institutions – Resolution of Stressed
Assets) Directions, 2025.
(3) Finance to InvITs for acquiring equity of other entities shall be
subject to the relevant conditions given in Paragraph 114 of this
Chapter.
(4) Lending to an InvIT by an AIFI shall only be by way of loans not
involving bullet or ballooning principal repayments.
(5) An AIFI may lend only to an InvIT which satisfies the following
conditions:
a) InvIT is listed;
b) InvIT has completed minimum three years of operations, with
a positive ‘net distributable cash flows’ in the preceding two
financial years.
c) InvIT should not have been subject to any material adverse
regulatory action during the previous three years.
126E. Prudential Ceiling on Leverage:
(1) Without prejudice to generality, an AIFI shall undertake assessment
of all critical parameters including sufficiency of cash flows at InvIT
level to ensure timely debt servicing.Reserve Bank of India (All India Financial Institutions – Credit Facilities) Amendment Directions, 2026
(2) Overall leverage of the borrowing InvIT shall be within the
prudential ceiling prescribed by SEBI, or such lower limit as may be
decided by the AIFI’s Board.
126F. Security Coverage
(1) Finance by an AIFI to InvITs shall be fully secured by way of a
charge on identified assets. The financing against a specified asset
across all banks and AIFIs shall be extended either at the InvIT
level or at the SPV/holdco level, but not at both levels. Where a
facility is extended at the InvIT level against a specified asset, any
existing loan at the SPV or holding company level in respect of such
asset shall be fully liquidated.
(2) The AIFI shall also create a charge over receivables from the
underlying assets and / or establish an escrow mechanism to
prevent diversion of cash flows.”
4. These Directions shall come into force from July 1, 2026, or an earlier date when
adopted by an AIFI in entirety.
(Vaibhav Chaturvedi)
Chief General Manager