What changed
The RBI amended the NBFC Prudential Norms Directions, 2007 to include two new sub-sectors in the Harmonised Master List of Infrastructure sub-sectors: hotels with project cost exceeding ₹200 crore (any star rating, any location in India) and convention centres with project cost exceeding ₹300 crore. This change follows a Government of India gazette notification dated October 7, 2013, and applies prospectively from the circular date for eligible projects for a three-year period.
What it means for you
NBFCs can now classify loans for these large-scale hospitality and convention projects as 'infrastructure lending', which typically attracts preferential treatment under prudential norms (e.g., lower risk weights, longer repayment periods). This expands the scope of infrastructure financing, potentially boosting credit flow to these sectors. NBFCs must update their internal classification systems to reflect the revised definition and ensure compliance with the amended directions.
What you must do
- Update internal credit policies to include hotels (project cost >₹200 crore) and convention centres (>₹300 crore) as eligible infrastructure sub-sectors.
- Ensure that for these new sub-sectors, project cost excludes land and lease charges but includes interest during construction, and the classification applies only for projects initiated within three years from November 29, 2013.
- Review existing loan portfolios to identify any exposures that may now qualify as infrastructure lending and reclassify them accordingly.
- Train credit and risk teams on the updated definition and the specific eligibility criteria (cost thresholds, exclusion of land cost).
Who it affects
All NBFCs engaged in infrastructure lending, Borrowers in hospitality and convention centre sectors
What are the new sub-sectors added to infrastructure lending?
Hotels with project cost over ₹200 crore (any star rating, any location in India) and convention centres with project cost over ₹300 crore have been added to the Harmonised Master List of Infrastructure sub-sectors.
Does this circular apply retrospectively?
No, the inclusion of hotels and convention centres applies prospectively from the date of this circular (November 29, 2013) and is available for eligible projects for a period of three years.
What costs are excluded from the project cost threshold?
The eligible project cost excludes cost of land and lease charges but includes interest during construction.