The Reserve Bank of India’s draft guidelines for risk weights in infrastructure lending has put non-banking financial companies (NBFCs) in a fix. Most believe that the proposed framework is more complicated than the current rules and could be difficult to implement.
The draft introduces a split risk weight structure of 50% and 75% for high-quality infrastructure projects, replacing the existing flat 50% applicable to commissioned projects with over a year of commercial operations. Lenders say the new criteria—based on repayment levels and other conditions—add layers of complexity which are not present in the current framework. The guidelines will be effective from April 1.
Power Finance Corporation (PFC) said it is reviewing the draft’s impact across its loan book, which spans generation, transmission, and distribution. “Unlike the current simplified framework, this draft introduces a more detailed approach to classify projects as high-quality infrastructure assets,” Parminder Chopra, chairman and managing director of the company said in the analyst call.
“We would be requesting the RBI to consider a similar framework as is available for banks, which is linking the provision requirement with the ratings. Another alternative is to use data with rating agencies to come out with precise loss given default and probability of default and create data backed dynamic sector wise provisioning for infrastructure instead of one size fits all solution,” said Virender Pankaj, CEO, Aseem Infrastructure.
The Finance Industry Development Council (FIDC) is also gathering member feedback before making a formal representation. “We are discussing it internally and will take it up collectively,” a senior official said.
Analysts say the RBI’s move is timely and aligns with broader policy goals of improving credit flow to infrastructure. “The shift from the earlier PPP/post-COD (commercial operation date)requirement to a more nuanced classification based on financial soundness, cash flow visibility and counterparty risk is a positive step,” said A M Karthik, Senior Vice President & Co-Group Head, Financial Sector Ratings at ICRA. “It should especially benefit renewable energy projects, which typically have shorter gestation periods.”
However, Karthik noted that while lowering risk weights improves capital buffers, most infrastructure finance companies (IFCs) already maintain adequate capitalisation. “Growth in this segment has remained moderate at 10–12%, so the real impact on lending appetite remains to be seen,” he said.
He added that upper-layer NBFCs have limited exposure to infrastructure, with some having exited the segment in recent years. “NBFC-IFCs already have a strong presence, and this move could improve their appetite further. But for non-IFCs, it’s too early to expect a strategic shift.”
Most projects with COD+1 status —excluding captive power and recently restructured assets—are expected to meet the RBI’s definition of ‘high quality’. The industry now awaits further clarity on implementation and final guidelines before recalibrating portfolio strategies.