 "RBI, Reserve Bank of India")
The Reserve Bank of India (RBI) on Thursday eased its proposed risk-weight framework for infrastructure lending by non-banking financial companies (NBFCs) following industry feedback, as it retained key lender protection norms.
It has broadened the definition of “high-quality” infrastructure projects eligible for lower risk weights to include those where revenues arise from concessions or contracts granted by the Centre, state governments, public sector entities, or statutory and regulatory bodies.
However, RBI denied requests to dilute termination protection clauses, calling them critical for safeguarding lenders’ interests in the event of early project termination.
The central bank has also significantly relaxed repayment thresholds linked to lower risk weights. The repayment requirement for assigning a 75 per cent risk weight has been reduced to 2 per cent from the earlier proposed 5 per cent, while the threshold for a 50 per cent risk weight has been cut to 5 per cent from 10 per cent. Repayments will continue to serve as a key indicator of risk reduction, with the regulator rejecting calls to scrap the thresholds altogether.
Repayment thresholds will be measured against the original sanctioned project debt, with any additional debt clubbed for calculation purposes, RBI said.
Additionally, NBFCs will be allowed to apply the revised risk weights either at the next review of an exposure or by March 31, 2027, whichever is earlier, it said. The amended norms will take effect from April 1, 2026, unless adopted earlier by an NBFC in full.
The RBI also declined suggestions to adopt a credit rating-based risk-weight framework for NBFC infrastructure loans or extend benefits to construction-stage assets, citing scope limitations.
