**Executive Summary**
The Reserve Bank of India (RBI) proposes amendments to the Master Direction concerning Non-Banking Financial Companies (NBFCs) and Scale Based Regulations, specifically regarding risk weights for infrastructure exposures. The amendments, issued under the powers conferred by the Reserve Bank of India Act, 1934, introduce a classification for "high-quality infrastructure projects." The directions will come into force from April 1, 2026, or earlier if adopted in entirety by a NBFC.
**Key Points / Main Content**
* **Definitions (Chapter II)**
* A sub-subparagraph 5.1.14 (A) is inserted after sub-paragraph 5.1.14.
* Infrastructure projects meeting specific criteria are classified as "high-quality infrastructure projects."
* Criteria for high-quality infrastructure projects:
* Completed at least one year of satisfactory operations post the date of completion of commercial operations.
* Exposure classified as 'standard' in the lender's books.
* Obligor's revenue depends on one main counterparty (Central Government or Public Sector Entity), with contractual provisions ensuring payment certainty.
* Contractual provisions provide a high degree of protection for creditors (escrow of cash flows, first legal claim, protection of interest).
* Obligor has sufficient financial arrangements to cover working capital and funding requirements.
* Obligor is restricted from actions detrimental to creditors (e.g., issuing additional debt without consent).
* **Prudential Regulations (Chapter IX, Section III)**
* The table under paragraph 84 is modified regarding weighted risk assets:
* All assets covering PPP and post commercial operations date (COD) infrastructure projects in existence over a year of commercial operation: 50% risk weight.
* Loans to 'High-quality infrastructure projects' where the obligor has repaid at least 10 percent of the sanctioned amount: 50% risk weight.
* Loans to 'High-quality infrastructure projects' where the obligor has repaid at least 5 percent but less than 10 percent of the sanctioned amount: 75% risk weight.
* Projects that initially qualify as high-quality but later fail to meet the conditions will be subject to risk weights prescribed under Sr. no.3(e) or (g).
* **Effective Date**
* The Amendment Directions come into force from April 1, 2026, or from an earlier date when adopted by a NBFC in entirety.
**Impact Analysis**
**Stakeholder: NBFCs**
* **Impact:** The amendments affect the applicable risk weights for infrastructure exposures held by NBFCs, potentially influencing their capital adequacy and lending strategies. The introduction of "high-quality infrastructure project" classification provides an opportunity for reduced risk weights if criteria are met.
* **Action Required:** Review current infrastructure project portfolios to assess eligibility for the "high-quality" classification. Adapt internal processes and risk assessment frameworks to align with the new regulations. Decide on the date of adoption (earlier date, or the default effective date).
Key Entities Referenced
Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Amendment Directions, 2025: Amendment directions pertaining to risk weights for infrastructure exposures of Non-Banking Financial Companies (NBFCs).
Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023: The Master Direction which the 2025 Amendment Directions modify.
Chapter IIIB of the Reserve Bank of India Act, 1934: The legal basis for the Reserve Bank of India's authority to issue the Amendment Directions.
Mumbai: Location of the Department of Regulation, Central Office of the Reserve Bank of India.
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