Reserve Bank of India amends NBFC concentration risk directions by defining high-quality infrastructure project lending

The Reserve Bank of India has issued amendments to its 2025 concentration risk management framework for non-banking financial companies (NBFCs), adding a definition for when infrastructure lending can be treated as lending to “high-quality infrastructure projects”. The change is inserted as a proviso to sub-paragraph 4(4) of the Directions. To qualify, the infrastructure project must have completed at least one year of operations after the date of completion of commercial operations without breach of material lender covenants, and the exposure must be classified as “standard” in the lender’s books. The borrower’s revenues must rely on concession or contractual rights granted by the Central Government, a State Government, a public sector entity, or a statutory or regulatory body, with contractual protection of those rights for the concession or contract term. Minimum lender protections must include escrow or Trust and Retention Account mechanisms to ringfence cash flows, pari-passu charge over movable and immovable assets, and risk mitigation on early termination such as step-in rights or minimum termination payments, alongside adequate working capital and funding arrangements and restrictions on additional debt or further encumbrance without existing lenders’ consent. The amendments apply when an 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.