The amendment guidelines are primarily aimed at aligning risk weights with the actual risk characteristics of operational infrastructure projects, thereby promoting better risk assessment and capital allocation, the RBI said.
As per the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Amendment Directions, 2026, loans extended by NBFCs to ‘high-end infrastructure projects’, where the borrower has repaid at least 2 per cent of the sanctioned project debt, will carry a risk weight of 75 per cent.
design guidelines
The draft guidelines set the repayment threshold for attracting a risk weight of 75 percent higher: the debtor had to repay at least 5 percent but less than 10 percent of the sanctioned amount.
The risk weight determines the amount of capital that a lender must set aside to provide a loan. The higher the risk weight, the more capital a lender must set aside. Moreover, loans extended by NBFCs to high-value infrastructure projects, where the borrower has repaid at least 5 percent of the sanctioned project debt, will carry a risk weight of 50 percent.
The draft guidelines set the repayment threshold for attracting a risk weight of 50 percent higher: the debtor had to repay at least 10 percent of the sanctioned amount.
The RBI said infrastructure projects will be considered of high quality if they meet criteria such as the project being operational for at least one year after reaching the date of completion of commercial operations, without breaching any material covenants laid down by the lender, and the exposure is classified as ‘standard’ in their books.
Further, the borrower’s income must be dependent on rights granted under a concession/contract by the Central Government, a State Government, a public sector entity or a legislative or regulatory body, and the contractual provisions provide for protection of these rights throughout the period of the concession/contract, as long as the borrower fulfills its obligations under the contract.
Another condition for a project to be considered high quality is that the concession/contractual provisions provide a high degree of protection for a lender.
This includes at least: (i) provisions for an escrow/trust and lien account mechanism to shield the cash flows; (ii) a pari-passu tax in favor of the lender on all movable and immovable assets; and (iii) limiting the risk for lenders in the event of early termination (entry rights for lenders, minimum termination fees).
The borrower must 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.
The borrower is also prohibited from acting to the detriment of the lender – for example, it may not issue additional debt or further burden the project’s cash flows and assets without the consent of the existing lenders.
The RBI said the amendment guidelines will be applicable from April 1, 2026, or from such earlier date when these guidelines are adopted in their entirety by an NBFC.
Published on January 1, 2026
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