In draft guidelines issued on Friday, the central bank said loans to “high-quality infrastructure projects,” where the borrower has already repaid at least 10% of the sanctioned amount, will attract a 50% risk weight. If the repayment is at least 5% but below 10%, the exposure will carry a 75% risk weight, compared to the current 100%.
The RBI has defined high-quality projects as those that have completed at least one year of satisfactory commercial operations and are classified as standard assets in the NBFC’s books. The borrower’s revenue must be tied primarily to a single counterparty, such as the central government or a public sector enterprise, ensuring predictable cash flows.
Additionally, strong safeguards, including escrow mechanisms for cash flows, a first charge over project assets and restrictions on raising further debt without lender consent, must be in place.
The draft directions also require the project to have adequate funding arrangements to meet ongoing working capital and future obligations, reducing the risk of delays or financial stress.
The central bank had earlier indicated this policy shift in its Monetary Policy Committee review, noting that high-quality, operational infrastructure projects pose lower credit risk than those under construction.
While Infrastructure Debt Funds and specialised infrastructure finance NBFCs already benefit from lower risk weights under specific frameworks, the new norms extend similar treatment to a broader range of wholesale NBFC lenders.
The move is expected to free up capital for NBFCs, enabling them to expand lending to infrastructure—a key area for India’s economic growth plans. Lower capital requirements typically reduce the cost of funds, which could translate into more competitive lending rates for infrastructure developers.
RBI has invited comments from stakeholders and the public until November 21, 2025. The proposed amendments will come into effect from April 1, 2026, though NBFCs may choose to adopt the framework earlier if they implement it in full.
