Partial credit improvement is an aid to improve the creditworthiness of a debt protection and to ensure that investors are partially protected against standard risk | Photocredit: Reuters
In order to extend and broaden financing sources for infrastructure financing, the Reserve Bank of India (RBI) has commercial banks, cooperative banks, non-bank financial companies and financial institutions for development to offer partial credit improvement facility.
Partial credit improvement is an aid to improve the creditworthiness of a debt protection and to ensure that investors are partially protected against the standard risk. The goal behind allowing regulated entities to extend PCE is to improve the creditworthiness of the bonds issued to enable companies to gain access to the funds of the bond market on better conditions.
Until now it has usually been offered by banks. RBI had issued draft guidelines on this in April of this year.
From April 1, 2026
The new regulations are in force from 1 April 2026, or even an earlier date according to the internal policy of the lender, the circular said.
The lender can offer the partial credit improvement a maximum of 50 percent of the total size of the bond issue, an increase in the earlier limit of 20 percent.
The improvement between entities is covered by 50 percent, with such improvements that apply to bond changes with an initial assessment lower than ‘BBB-‘, the circular said.
In the event that the PCE facility is offered by an NBFC, the bonds must have a minimum tenor of three years.
Published on August 6, 2025
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