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
- 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.
- Prepare for implementation by April 1, 2026, or earlier if adopting new capital adequacy norms, and ensure systems can flag qualifying exposures.
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
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.