What changed
The definition of 'infrastructure loan' for NBFCs has been harmonised with that of banks, replacing the earlier NBFC Prudential Norms Directions, 2007 definition. The revised definition now matches the government's Master List of Infrastructure sub-sectors notified on March 27, 2012. Exposures to sub-sectors removed from the list continue to get infrastructure lending benefits only until project completion; new lending to those sub-sectors from the circular date does not qualify.
What it means for you
NBFCs must immediately apply the new sub-sector list for classifying loans as infrastructure lending, affecting capital adequacy, provisioning, and exposure norms. Loans to sub-sectors like certain hotels or older categories lose infrastructure status for fresh disbursements, potentially increasing risk weights. Existing projects in dropped sub-sectors are grandfathered, but NBFCs need to monitor and reclassify new advances carefully.
What you must do
- Update internal credit policies and loan classification systems to reflect the revised infrastructure sub-sector list from the annex.
- Identify all existing exposures to sub-sectors removed from the list and ensure they continue to receive infrastructure benefits only until project completion.
- Train credit and risk teams on the new definition to avoid misclassification of fresh loans from December 28, 2012.
- Review and amend any loan documentation or reporting templates that reference the old infrastructure definition.
Who it affects
All NBFCs (deposit-taking and non-deposit-taking), Credit and risk management teams at NBFCs, Compliance and regulatory reporting departments
What happens to our existing loans to sub-sectors that are no longer in the infrastructure list?
Existing exposures to those sub-sectors will continue to be treated as infrastructure lending until the project is completed. However, any fresh lending to those sub-sectors from December 28, 2012, will not qualify as infrastructure lending.
Which sub-sectors are newly included in the infrastructure loan definition?
The revised list includes sub-sectors like urban public transport (excluding rolling stock for road transport), telecommunication towers, three-star or higher hotels outside cities with population over 1 million, common infrastructure for industrial parks/SEZs, fertilizer (capital investment), post-harvest storage, terminal markets, soil-testing labs, cold chain, and cold room facilities.
Does this circular affect our prudential norms compliance?
Yes, the definition of infrastructure loan in the NBFC Prudential Norms Directions, 2007 stands amended. You must align your classification, provisioning, and capital adequacy calculations with the new list to ensure regulatory compliance.