RBI proposes lower risk weight on NBFCs’ infrastructure loans

To boost financing of infrastructure projects, the Reserve Bank of India (RBI) on Friday proposed reducing risk weights on ‘high value infrastructure projects’ financed by non-banking financial companies (NBFCs), according to draft guidelines.

For projects where the debtor has repaid at least 10 percent of the sanctioned amount to the NBFC, the risk weight has been fixed at 50 percent. Loans where the borrower has repaid at least 5 percent but less than 10 percent of the sanctioned amount will be assigned a risk weight of 75 percent, compared to 100 percent earlier.

If projects that qualify as high-quality infrastructure projects subsequently do not meet these conditions, they will be subject to risk weights of 100 percent. The RBI has sought public feedback on the proposed changes by November 21, 2025, and said the changes will be applicable from April 1, 2026, or from an earlier date when adopted in their entirety by an NBFC.

In addition, to be classified as a high quality infrastructure project, the project must have completed satisfactory operations for at least one year after reaching the date of completion of commercial operations (DCCO), the exposure must be classified as standard assets on the lender’s books, and the obligor’s revenues are dependent on one significant counterparty, namely a central government or a public sector entity, and the contractual provisions provide certainty with regard to payments from the counterparty.

“The contractual provisions provide for a high degree of protection for creditors, such as safeguarding cash flows; legal first claim of the lender on all movable and immovable assets; and protection of creditors’ interests in the event of early termination,” the regulator said.

The borrower must also have sufficient internal or external financial arrangements to cover the current and future working capital and other financing needs of the project, as determined by the lender. They may not act to the detriment of creditors, for example by not issuing additional debt against the project’s existing cash flows and assets without the consent of existing creditors.

Published on October 24, 2025