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RBI eases concentration norms for high-quality infra projects

Current · Source: Reserve Bank of India · RBI/2025-26/169 · issued 01 Jan 2026 · ~1 min read
Quick answerRBI has amended concentration risk directions for NBFCs, allowing certain infrastructure loans to be classified as 'high-quality infrastructure projects' with relaxed exposure limits, applicable when the NBFC decides to implement the RBI (NBFC – Prudential Norms on Capital Adequacy) Amendment Directions, 2026 or from April 1, 2026, whichever is earlier.
The rule, in the simplest words
How it plays out — a real example

An NBFC compliance officer in Indore, Priya, reviews her NBFC's loan to a solar power plant that has been running for 2 years. She checks that the plant's revenue comes from a state government contract, that there is an escrow account for cash flows, and that the loan is marked 'standard'. Because the project meets all six criteria, Priya classifies it as 'high-quality', which lowers the bank's risk charges and frees up money to lend to more small businesses.

What changed

RBI inserted a proviso to sub-paragraph 4(4) of the Concentration Risk Management Directions, 2025, defining criteria for 'high-quality infrastructure projects'. These projects must have at least one year of commercial operations post-completion, standard asset classification, revenue from government/concession contracts, strong lender protections (escrow, pari-passu charge, step-in rights), adequate funding arrangements, and restrictions on additional debt without lender consent.

What it means for you

NBFCs can now classify certain infrastructure loans as high-quality, potentially reducing concentration risk capital charges and freeing up lending capacity. This encourages NBFCs to fund well-structured, government-backed infrastructure projects with robust safeguards, aligning with the government's infrastructure push. Lenders must carefully assess each project against the six criteria to avail the benefit.

What you must do

Who it affects

All NBFCs subject to concentration risk directions, Infrastructure lending teams in NBFCs, Risk management and compliance departments of NBFCs, Borrowers in infrastructure projects with government/concession contracts

❓ Common questions

What is the effective date of these amendment directions?

The directions are applicable when the NBFC decides to implement the RBI (NBFC – Prudential Norms on Capital Adequacy) Amendment Directions, 2026 or from April 1, 2026, whichever is earlier.

📜 Read the original circular — full text as issued by RBI
RBI/2025-26/169 DOR.CRE.REC.372/07-03-008/2025-26 January 1, 2026 Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Amendment Directions, 2026 The Reserve Bank had issued the Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Directions, 2025 (hereinafter referred to as 'the Directions '). 2. On a review, in exercise of the powers conferred by Chapter III B of the Reserve Bank of India Act, 1934 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified. 3. These Amendment Directions modify the Directions as under: (1) The following shall be inserted as a proviso to sub-paragraph 4(4) of the Directions : "Provided that infrastructure lending to projects that meet all the following criteria shall be classified as lending to 'high-quality infrastructure projects' The infrastructure project has completed at least one year of operations post achievement of the date of completion of commercial operations, without breach of any material covenants stipulated by the lenders. The exposure is classified as 'standard' in the books of the lender. The borrower's revenue depends on rights granted under concession / contract by the Central Government, a State Government, a public sector entity, or a statutory or regulatory body, and the contractual provisions provide for protection of these rights for the entire period of concession/ contract as long as the borrower fulfils its obligations under the contract. The concession / contractual provisions provide for a high degree of protection for a lender, which shall, at a minimum, include: (i) provisions of an escrow / Trust and Retention Account mechanism for ringfencing the cash flows; (ii) pari-passu charge in favour of the lender over all movable and immovable assets; and (iii) mitigation of risk for lenders in case of early termination (eg. step-in rights for the lenders, minimum termination payments etc). The borrower has sufficient internal or external financial arrangements to cover current and future working capital and other funding requirements of the project as per the assessment of the lender. The borrower is restricted from acting to the detriment of the lender, eg. being restricted from issuing additional debt against or further encumbering the cashflows and assets of the project without consent of the existing lenders." 4. The Amendment Directions shall be applicable when the NBFC decides to implement the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Amendment Directions, 2026 or from April 1, 2026 , whichever is earlier. (Vaibhav Chaturvedi) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2025-26/169 · issued 01 Jan 2026. The plain-English explanation above is BankPulse’s own independent summary.
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Key termsPlain-English definitions of terms in this circular — see the full Indian banking glossary. NBFC · CRAR (Capital adequacy) · Gross NPA (GNPA) · Wilful defaulter
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Who does what — compliance checklist
💻 IT / Systems
  • Prepare for implementation by April 1, 2026, or earlier if adopting new capital adequacy norms, and ensure systems can flag qualifying exposures.
📜 Compliance
  • Review your current infrastructure loan portfolio to identify projects that may qualify as high-quality under the new criteria.
  • Update internal credit policies and risk management frameworks to incorporate the classification and monitoring requirements.
  • Train credit and risk teams on the six eligibility conditions, especially the need for escrow, pari-passu charge, and step-in rights.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All NBFCs subject to concentration risk directions, Infrastructure lending teams in NBFCs, Risk management and compliance departments of NBFCs, Borrowers in infrastructure projects with government/concession contracts), your first concrete step on “RBI eases concentration norms for high-quality infra projects” is: “Review your current infrastructure loan portfolio to identify projects that may qualify as high-quality under the new criteria.” (RBI issued this 01 Jan 2026).

  1. Circular: RBI/2025-26/169 -- RBI eases concentration norms for high-quality infra projects
  2. Issued: 01 Jan 2026
  3. Action required: Review your current infrastructure loan portfolio to identify projects that may qualify as high-quality under the new criteria.
  4. Action required: Update internal credit policies and risk management frameworks to incorporate the classification and monitoring requirements.
  5. Action required: Train credit and risk teams on the six eligibility conditions, especially the need for escrow, pari-passu charge, and step-in rights.
  6. Action required: Prepare for implementation by April 1, 2026, or earlier if adopting new capital adequacy norms, and ensure systems can flag qualifying exposures.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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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=13245&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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