UCB Credit Facility Amendment: Project Unit Financing & Power Evacuation
Current · Source: Reserve Bank of India · official publication, rbi.org.in · ~1 min read
Quick answerRBI now lets UCBs finance independent viable units of a project as separate loans, each with its own viability check. For power projects, right-of-way for transmission lines follows existing sub-paragraph rules. Effective immediately.
The rule, in the simplest words
If a big project can be split into smaller parts that can work on their own, a bank can give a separate loan for each part, but must check each part's health first.
For power projects that also build power lines to send electricity, the rules for getting land permission for those lines are already in the main directions.
These new rules start right away, with immediate effect.
Banks can now choose to treat each independent part as its own project, not as one big loan.
How it plays out — a real example
Ravi, a credit officer at a UCB, reviews a loan request for a solar park with 10 independent panels. Under the new rule, he can sanction separate loans for each panel after checking each panel's viability, instead of one large loan for the entire park.
What changed
Two clarifications added to the 2025 UCB Credit Directions. First, if a project can be split into multiple independent viable units, banks may finance each as a separate project with its own financial closure, provided each is appraised upfront for standalone viability. Second, for electricity generation projects that include transmission infrastructure, the right-of-way requirement for transmission is determined as per sub-paragraph (3) of paragraph 69.
What it means for you
UCBs gain flexibility to structure project finance for multi-unit ventures without bundling them into a single loan, reducing concentration risk and enabling tailored credit. For power projects, the transmission right-of-way rule is now explicitly linked to the existing framework, removing ambiguity for lenders assessing evacuation infrastructure.
What you must do
Review project proposals to identify if they can be split into independent viable units for separate financing.
Ensure each unit undergoes standalone viability appraisal before sanctioning as a separate project.
For power projects, apply the right-of-way determination as per sub-paragraph (3) of paragraph 69 of the Directions.
Update internal credit policies to reflect these clarifications for UCB lending.
Who it affects
Urban Cooperative Banks (UCBs), Project finance teams at UCBs, Borrowers in multi-unit projects (e.g., real estate, industrial parks), Power generation companies with transmission infrastructure
❓ Common questions
Can we finance a single unit of a larger project as a separate loan?
Yes, if that unit can operate independently and is viable on its own, and you appraise it separately before sanction.
Does this amendment change any existing limits or exposure norms?
No, it only clarifies how to treat multi-unit projects and power transmission right-of-way. Existing exposure norms remain unchanged.
Example: if you are a Compliance officer at a bank this circular applies to (Urban Cooperative Banks (UCBs), Project finance teams at UCBs, Borrowers in multi-unit projects (e.g., real estate, industrial parks), Power generation companies with transmission infrastructure), your first concrete step on “UCB Credit Facility Amendment: Project Unit Financing & Power Evacuation” is: “Review project proposals to identify if they can be split into independent viable units for separate financing.”.
Circular: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13563&Mode=0 -- UCB Credit Facility Amendment: Project Unit Financing & Power Evacuation
Issued: 27 Jul 2026, 11:02 IST
Action required: Review project proposals to identify if they can be split into independent viable units for separate financing.
Action required: Ensure each unit undergoes standalone viability appraisal before sanctioning as a separate project.
Action required: For power projects, apply the right-of-way determination as per sub-paragraph (3) of paragraph 69 of the Directions.
Action required: Update internal credit policies to reflect these clarifications for UCB lending.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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 27 Jul 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=13563&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert review panel. 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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