RBI new risk-weight rules for NBFC infra loans from April 1: Key takeaways

The Reserve Bank of India (RBI) on January 1 issued amendment directions revising the risk-weighting framework for non-banking financial companies’ (NBFCs) exposure to infrastructure projects, with the objective of aligning capital requirements more closely with the underlying risk profile of operational projects.

The central bank said the changes follow feedback received on the draft amendment directions issued on October 24, 2025, which proposed recalibrating risk weights to better reflect the actual risk characteristics of infrastructure lending.

The RBI examined stakeholder responses and incorporated the resulting modifications into the final directions.

Accordingly, the RBI has notified the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Amendment Directions, 2026 and the Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Amendment Directions, 2026.

Under the revised capital adequacy norms, loans extended by NBFCs to “high-quality infrastructure projects” will attract lower risk weights, subject to specified conditions.

Loans to such projects where the borrower has repaid at least 2% of the sanctioned project debt will carry a risk weight of 75%, while those where at least 5% of the sanctioned debt has been repaid will attract a lower risk weight of 50%.

The RBI clarified that if projects initially classified as high-quality infrastructure projects subsequently fail to meet the prescribed conditions, the exposures will revert to higher risk weights applicable to infrastructure lending under the existing framework.

The repayment thresholds will be assessed based on the total sanctioned project debt, including any additional debt sanctioned through loan takeovers or otherwise.

In parallel, the RBI has defined the criteria for classifying infrastructure lending as exposure to “high-quality infrastructure projects” under the concentration risk management framework.

To qualify, projects must have completed at least one year of operations after achieving commercial operations without breaching material lender covenants, and the exposure must be classified as ‘standard’ in the lender’s books.

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The revised framework also requires that project revenues depend on concession or contractual rights granted by the Centre, state governments, public sector entities, or statutory bodies, with provisions that protect these rights throughout the concession period.

In addition, lenders must benefit from strong contractual safeguards, including escrow or trust and retention account mechanisms to ring-fence cash flows, pari-passu charge over project assets, and risk-mitigation features such as step-in rights or minimum termination payments.

Other conditions include adequate financial arrangements to meet working capital and funding requirements, as assessed by the lender, and restrictions on the borrower from taking actions detrimental to lenders, such as raising additional debt or encumbering project cash flows without lender consent.

The amendment directions will come into effect from April 1, 2026, or earlier if adopted by an NBFC in full. However, for exposures that currently attract lower risk weights but will be subject to higher risk weights under the revised norms, NBFCs may continue with the existing risk weights until the next review or renewal, or March 31, 2027, whichever is earlier.

The RBI said the amendments are aimed at promoting more accurate risk assessment, improved capital allocation, and greater financial stability in infrastructure financing by NBFCs.

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