**Executive Summary**
This document contains draft amendment directions from the Reserve Bank of India (RBI) regarding Non-Banking Financial Companies (NBFCs) and their infrastructure exposures, amending the Master Direction issued in 2023. The primary purpose of these amendments is to revise the risk weights applicable to infrastructure exposures of NBFCs. The directions will come into effect on April 1, 2026, or earlier if adopted in entirety by an NBFC.
**Key Points / Main Content**
* **Definition of High-Quality Infrastructure Projects:**
* Infrastructure projects meeting specific criteria will be classified as "high-quality infrastructure projects."
* Criteria include:
* Completion of at least one year of satisfactory commercial operations.
* Exposure classified as 'standard' in the lender's books.
* Obligor's revenue depending on a Central Government or Public Sector Entity, with contractual provisions for payment certainty.
* Contractual provisions providing a high degree of creditor protection (escrow, legal claims, etc.).
* Obligor having sufficient funds for working capital.
* Restrictions on the obligor from detrimental actions like issuing additional debt without creditor consent.
* **Risk Weight Modifications (Amendment to Chapter IX, Section III, Paragraph 84):**
* Risk weights for on-balance sheet items are modified as follows:
* All assets covering PPP and post-commercial operations date (COD) infrastructure projects in existence over a year of commercial operation: 50%
* Loans to 'High-quality infrastructure projects' where the obligor has repaid at least 10% of the sanctioned amount: 50%
* Loans to 'High-quality infrastructure projects' where the obligor has repaid at least 5% but less than 10% of the sanctioned amount: 75%
* Projects that initially qualify as High-quality but later fail to meet the conditions will be subject to the regular risk weights applicable.
* **Effective Date:**
* The Amendment Directions shall come into force from April 1, 2026, or from an earlier date when adopted by a NBFC in entirety.
**Impact Analysis**
**Stakeholder: Non-Banking Financial Companies (NBFCs)**
* **Impact:** NBFCs lending to infrastructure projects are directly affected by the revised risk weights. They need to assess their existing infrastructure portfolio based on the new definition of "high-quality infrastructure projects" to determine applicable risk weights.
* **Action Required:** NBFCs must review their infrastructure loan portfolios, classify projects according to the new criteria, and adjust risk weights accordingly. They also have the option to adopt the new directions before April 1, 2026, if desired.
**Stakeholder: Infrastructure Project Developers**
* **Impact:** Project developers seeking financing from NBFCs will be impacted by the new definition of "high-quality infrastructure projects," as it will influence the terms and availability of financing.
* **Action Required:** Project developers should ensure their projects meet the criteria for "high-quality infrastructure projects" to qualify for more favorable financing terms from NBFCs.
**Stakeholder: Reserve Bank of India (RBI)**
* **Impact:** The RBI is impacted by its responsibility for overseeing the financial stability of the NBFC sector and ensuring the appropriate risk management of infrastructure lending.
* **Action Required:** The RBI will need to monitor the implementation of these amendment directions by NBFCs and assess their impact on the NBFC sector's exposure to infrastructure projects.
Key Entities Referenced
Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Amendment Directions, 2025: Amendment directions issued by the Reserve Bank of India pertaining to the regulation of Non-Banking Financial Companies (NBFCs) with a focus on risk weights for infrastructure exposures.
Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023: The existing Master Direction that the Amendment Directions modify, governing the regulation of Non-Banking Financial Companies.
Chapter IIIB of the Reserve Bank of India Act, 1934: The enabling legislation that provides the Reserve Bank of India with the power to issue these directions.
Chapter IX – Prudential Regulations under Section III: The chapter within the Master Direction that is being amended, specifically concerning prudential regulations.
Reserve Bank of India: The central bank of India, responsible for issuing and regulating the directions related to NBFCs.
भारतीय �रज़वर् बैंक
_________________________ RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2025-26/..
DOR.CRE.REC…./03.10.001/2025-26 DD-MM-YY
Reserve Bank of India (Non-Banking Financial Company – Scale Based
Regulation) Amendment Directions, 2025 - Draft for Comments
The Reserve Bank had issued Master Direction – Reserve Bank of India (Non-
Banking Financial Company – Scale Based Regulation) Directions, 2023 (hereinafter
referred to as Master Direction). Based on a review, it is proposed to amend certain
provisions relating to the applicable risk weights for infrastructure exposures of
NBFCs.
2. Accordingly, in exercise of the powers conferred by Chapter IIIB of the Reserve
Bank of India Act, 1934 and all other laws enabling the Reserve Bank in this regard,
the Reserve Bank being satisfied that it is necessary and expedient in the public
interest to do so, hereby issues the Amendment Directions hereinafter specified.
3. These Amendment Directions modify the Master Direction as under:
(i) In Chapter II – ‘Definitions’, a sub-subparagraph 5.1.14 (A) shall be inserted
after sub-paragraph 5.1.14 as given below:
“5.1.14 (A) Infrastructure projects that meet all the following criteria shall be
classified as high-quality infrastructure projects:
a) The infrastructure project has completed at least one year of satisfactory
operations post achievement of the date of completion of commercial
operations.
b) The exposure is classified as ‘standard’ in the books of the lender.
c) The obligor's revenue depends on one main counterparty, which shall be
a Central Government or a Public Sector Entity, and the contractual
िविनयमन िवभाग, केंद्रीय कायार्लय, केंद्रीय कायार्लय भवन, 12वी/ं 13वी ंमंिज़ल, शहीद भगत िसंह मागर्, फोटर्, मुंबई - 400001
टेलीफोन/ Tel No: 22661602, 22601000 फै�/ Fax No: 022-2270 5691
Department of Regulation, Central Office, Central Office Building, 12th/ 13th Floor, Shahid Bhagat Singh Marg, Fort, Mumbai – 400001
�हदं ी आसान ह,� इसका �योग बड़ाइएprovisions provide for certainty regarding payments from the counterparty,
for eg. availability-based revenues or take-or-pay provisions.
d) The contractual provisions provide for a high degree of protection for
creditors, such as escrow of cash flows; legal first claim of the lender over
all movable and immovable assets; and protection of interest of the
creditors in case of early termination.
e) The obligor has sufficient internal or external financial arrangements to
cover current and future working capital and other funding requirements of
the project as per the assessment of the lender.
f) The obligor is restricted from acting to the detriment of the creditors, eg.
being restricted from issuing additional debt against the cashflows and
assets of the project without consent of the existing creditors.
(ii) In Chapter IX – Prudential Regulations under Section III, Sr. no. 2 (e) of the
Table under paragraph 84 shall stand modified as under:
Sr. Weighted risk assets - On-balance Sheet items Percentage
No. Weight
(e) All assets covering PPP and post commercial operations 50
date (COD) infrastructure projects in existence over a
year of commercial operation
(e) (i) Loans to ‘High-quality infrastructure projects’ as defined in 50
sub-subparagraph 5.1.14 (A) and where the obligor has
repaid at least 10 percent of the sanctioned amount
(e) (ii) Loans to ‘High-quality infrastructure projects’ as defined in 75
sub-subparagraph 5.1.14 (A) and where the obligor has
repaid at least 5 percent but less than 10 percent of the
sanctioned amount
Note: In the event the projects that qualify as High-quality
infrastructure projects subsequently fail to meet these
conditions, they shall be subject to risk weights prescribed
under Sr. no.3(e) or (g), as applicable, of this table.
4. The Amendment Directions shall come into force from April 1, 2026, or from an
earlier date when adopted by a NBFC in entirety.
(Vaibhav Chaturvedi)
Chief General Manager