Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Amendment Directions, 2026

**Executive Summary** The Reserve Bank of India (RBI) issued Amendment Directions, 2026, modifying the existing RBI Directions, 2025, concerning Non-Banking Financial Companies (NBFCs) and Concentration Risk Management. These amendments specify criteria under which infrastructure lending to projects can be classified as lending to 'high-quality infrastructure projects'. The amendment directions are applicable when the NBFC decides to implement prudential norms on capital adequacy amendment directions, or from April 1, 2026, whichever is earlier. **Key Points / Main Content** * **Amendment to Directions, 2025:** * The Amendment Directions modify the RBI Directions, 2025. * **Classification of High-Quality Infrastructure Projects:** * Infrastructure lending to projects meeting specific criteria shall be classified as lending to 'high-quality infrastructure projects'. * Criteria include: * The infrastructure project has completed at least one year of operations post achievement of commercial operations. * No breach of material covenants stipulated by lenders. * The exposure is classified as 'standard' in the books of the lender. * The borrower's revenue depends on rights granted by the Central Government, a State Government, a public sector entity, or a statutory or regulatory body. * The concession/contractual provisions provide a high degree of protection for the lender including: * Escrow / Trust and Retention Account for ringfencing the cash flows. * Pari-passu charge in favor of the lender over all movable and immovable assets. * Mitigation of risk for lenders in case of early termination. * Sufficient financial arrangements (internal or external) to cover working capital and funding needs. * Restriction on the borrower from acting to the detriment of the lender (e.g., issuing additional debt or encumbering cashflows without consent). * **Applicability:** * The Amendment Directions are applicable when the NBFC decides to implement the Reserve Bank of India (Non-Banking Financial Companies - Prudential Norms on Capital Adequacy) Amendment Directions, 2026 or from April 1, 2026, whichever is earlier. **Impact Analysis** **Stakeholder: Non-Banking Financial Companies (NBFCs)** * **Impact:** NBFCs need to understand the new criteria for classifying infrastructure lending as 'high-quality'. This may affect their risk assessment and capital adequacy calculations. * **Action Required:** NBFCs need to review their infrastructure lending portfolios and classify them according to the new criteria, updating their internal policies and procedures accordingly. They also need to determine when to implement the Amendment Directions (either upon deciding to implement the Prudential Norms on Capital Adequacy Amendment Directions, 2026 or from April 1, 2026). **Stakeholder: Borrowers (Infrastructure Projects)** * **Impact:** Infrastructure projects seeking loans need to meet the specified criteria to be considered 'high-quality'. This could influence the terms and availability of financing. * **Action Required:** Borrowers should review their project structures and agreements to ensure they align with the 'high-quality' criteria and address any potential gaps. **Stakeholder: Lenders (Other than NBFCs)** * **Impact:** Lenders need to understand the new criteria for classifying infrastructure lending as 'high-quality'. This may affect their risk assessment and capital adequacy calculations. * **Action Required:** Lenders need to review their infrastructure lending portfolios and classify them according to the new criteria, updating their internal policies and procedures accordingly.

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