The Reserve Bank of India (RBI) on Friday introduced targeted amendments to its scale-based regulation framework for non-banking financial companies (NBFCs), proposing a refined approach to risk weights for infrastructure exposure.
The 2025 amendments revise the risk weight structure with loans to high-quality infrastructure projects where the obligor who has repaid at least 10% of the sanctioned amount will attract a reduced risk weight of 50%. If the repayment is between 5% and 10%, the risk weight increases to 75%.
Projects that fail to meet these standards will be subject to higher risk weights under other categories, ensuring a risk-sensitive and performance-linked regulatory approach, according to a circular by the central bank. Under the new amendment, infrastructure projects are classified as high-quality infrastructure projects that has completed at least one year of satisfactory operations post-commercial launch is classified as a standard asset, and revenue dependence on a central government or public sector entity with contractual certainty of payments.
Additionally, such projects must offer robust creditor protections, including escrow of cash flows and legal first claim over assets, along with adequate financial arrangements and restrictions on issuing additional debt without creditor consent.
These amendments are set to take effect from April 1, 2026, or earlier if adopted in full by an NBFC. RBI has invited feedback on the draft guidelines by November 21.
