Risk Weights for Bank Exposure to NBFC-IFCs Linked to Credit Ratings
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2009-10/317 · issued 12 Feb 2010 · ~1 min read
Quick answerRBI now requires banks to assign risk weights to NBFC-Infrastructure Finance Companies based on external credit ratings, similar to corporates. Exposure ceiling is 15% of capital funds, extendable to 20% for on-lent infrastructure funds.
What changed
Previously, risk weights for bank exposures to NBFC-IFCs were not explicitly linked to credit ratings. Now, banks must use ratings from SEBI-registered and RBI-accredited agencies to determine risk weights, aligning with the corporate bond framework. The prudential exposure limit remains at 15% of capital funds, with a 20% cap if funds are on-lent to infrastructure.
What it means for you
Banks must recalibrate capital adequacy calculations for NBFC-IFC exposures based on credit ratings, potentially lowering capital charges for highly rated IFCs. The 15-20% exposure ceiling provides clarity for infrastructure lending, encouraging banks to support the sector while managing concentration risk. Compliance with the New Capital Adequacy Framework's risk-weighting rules is now mandatory for these exposures.
Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.
What banks were required to do at the time
Assign risk weights to NBFC-IFC exposures using ratings from SEBI-registered and RBI-accredited agencies, per the New Capital Adequacy Framework.
Ensure exposure to any single NBFC-IFC does not exceed 15% of capital funds, or 20% if funds are on-lent to infrastructure.
Update internal credit risk models and reporting systems to reflect rating-based risk weights for NBFC-IFCs.
Review existing NBFC-IFC portfolios to verify compliance with the new risk-weight and exposure norms.
Who it affects
All commercial banks (excluding RRBs and LABs), NBFCs categorized as Infrastructure Finance Companies, Bank credit risk and compliance teams
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 07:28 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What rating agencies are acceptable for determining risk weights?
Only rating agencies registered with SEBI and accredited by RBI can be used to assign risk weights to NBFC-IFC exposures.
Can the exposure limit exceed 20% of capital funds?
No, the maximum exposure to a single NBFC-IFC is 15% of capital funds, extendable to 20% only if the funds are on-lent to the infrastructure sector.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #1749: DBOD.No.BP.BC.74/21.04.172/2009-10 — "Risk Weights and Exposure Norms in respect of Bank Exposure to NBFCs categorised as 'Infrastructure Finance Companies'" ”
📜 Read the original circular — full text as issued by RBI
RBI/2009-10/317
DBOD. No. BP. BC. 74/21.04.172/ 2009-10
February 12, 2010
All Commercial Banks
(excluding RRBs and LABs)
Dear Sir,
Risk weights and exposure norms in respect of bank exposure to NBFCs
categorised as ‘Infrastructure Finance Companies’
Please refer to paragraph 160 of the Second Quarter Review of the Monetary Policy for the year 2009-10 ( copy of extract enclosed ) wherein it was proposed to link the risk weights of banks’ exposure to NBFCs categorised as Infrastructure Finance Companies (IFCs) to the credit rating assigned to these NBFCs by external credit assessment institutions (ECAIs).
2. Accordingly, banks’ exposures to NBFC-IFCs will henceforth be risk weighted as per the ratings assigned to these NBFCs by the rating agencies registered with the SEBI and accredited by the Reserve Bank of India. Banks may refer to paragraphs 5.8.1 and 8.3.5 of our Master Circular DBOD.No.BP.BC. 73 /21.06.001/2009-10 dated February 8, 2010 on New Capital Adequacy Framework and assign appropriate risk weights, i.e. similar to corporates/corporate bonds, while computing capital for credit risk and specific risk under market risk. The other provisions as indicated in our above Circular would also be applicable.
3. A reference is also invited to paragraph 8 of the Master Circular on Bank Finance to Non Banking Financial Companies ( DBOD. BP.BC. No. 5/21.04.172/2009-10 dated July 1, 2009 ) in terms of which prudential ceilings for exposure of banks to NBFCs have been prescribed. In this regard, it is advised that the exposure of a bank to the IFCs should not exceed 15 per cent of its capital funds as per its last audited balance sheet, with a provision to increase it to 20 per cent if the same is on account of funds on-lent by the IFCs to the infrastructure sector.
Yours faithfully,
(B. Mahapatra)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/317 · issued 12 Feb 2010. The plain-English explanation above is BankPulse’s own independent summary.
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5504&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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