The Reserve Bank of India issued the Reserve Bank of India (Project Finance) Directions, 2025, setting a harmonised prudential framework for regulated entities financing infrastructure and non-infrastructure projects, including commercial real estate (CRE) and CRE residential housing (CRE-RH). The framework also revises the regulatory treatment of changes in the date of commencement of commercial operations (DCCO) for projects under implementation, and will replace a range of prior RBI instructions on projects under implementation and time overruns. The Directions apply to commercial banks (including small finance banks but excluding payments banks, local area banks and regional rural banks), non-banking financial companies (including housing finance companies), primary (urban) cooperative banks and all India financial institutions. They do not apply to projects where financial closure is achieved as of 1 October 2025, which remain under existing project finance guidelines, although any resolution of a fresh credit event and/or subsequent material change in loan terms in those projects must follow the new Directions. Core requirements include documenting financial closure and the original DCCO before disbursement, limiting repayment tenor (including moratorium) to no more than 85% of a project’s economic life, keeping DCCO aligned across lenders, and setting minimum lender exposure floors during construction of 10% of aggregate exposure for projects up to INR 1,500 crore, or 5% or INR 150 crore (whichever is higher) for larger projects. Disbursements are conditioned on minimum land/right-of-way availability of 50% for infrastructure public-private partnership projects and 75% for other projects, with additional conditions for PPP disbursement linked to the “Appointed Date”. For stress resolution during construction, a defined “credit event” (including default, the need to extend DCCO, or other specified triggers) requires collective resolution aligned to the 7 June 2019 Prudential Framework for Resolution of Stressed Assets, with a 30-day prima facie review period and reporting to the Central Repository of Information on Large Credit (CRILC), for which further reporting instructions will be issued in due course. A resolution plan that extends DCCO can preserve standard classification within permitted deferment limits of up to three years for infrastructure and up to two years for non-infrastructure (including CRE and CRE-RH), subject to conditions on cost overruns and, where relevant, scope changes. The Directions also introduce revised provisioning, including general provisions (construction phase: 1.25% for CRE, 1.00% for CRE-RH and 1.00% for others; operational phase after repayment starts: 1.00% for CRE, 0.75% for CRE-RH and 0.40% for others) and additional quarterly provisions for DCCO-deferred standard assets of 0.375% (infrastructure) or 0.5625% (non-infrastructure), reversed upon commencement of commercial operations. Lenders must establish a project finance database with updates within 15 days of changes, with systems to be put in place within three months of the effective date, and provide specified financial statement disclosures on implemented resolution plans.

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