Date of Issue: January 01, 2026
Reference: Press Release 2025-2026/1824
Effective Date: Immediate / April 01, 2026 (for full implementation)
Executive Summary
The Reserve Bank of India has issued two Amendment Directions to align the regulatory capital framework for NBFCs with the actual risk profile of operational infrastructure projects. The amendments introduce a granular risk-weighting mechanism based on repayment history and project stability, effectively reducing the capital charge for high-quality operational assets.
1. Prudential Norms on Capital Adequacy Amendment Directions, 2026
Applicable Entity
- NBFC-ICC (Investment and Credit Companies)
- NBFC-IFC (Infrastructure Finance Companies)
- NBFC-IDF (Infrastructure Debt Funds)
- Generally applicable to all NBFCs (Middle Layer and Upper Layer) with exposure to the Infrastructure Sector.
Specific Changes Required
The amendment modifies the risk weights assigned to infrastructure exposures under the Capital Adequacy norms. It introduces a definition for “High-Quality Infrastructure Projects” and assigns lower risk weights based on repayment performance.
| Category of Exposure | Old Risk Weight | Revised Risk Weight |
|---|---|---|
| High-Quality Infra Projects (Repaid ≥ 10% of sanctioned amount) |
100% / 50%* | 50% |
| High-Quality Infra Projects (Repaid 5% to < 10% of sanctioned amount) |
100% | 75% |
| General Infrastructure (Under construction or non-qualifying) |
100% | 100% (Unchanged) |
*Note: Certain PPP projects previously attracted 50%; this amendment standardizes the benefit across operational projects meeting specific “High-Quality” criteria (e.g., 1 year post-COD, Escrow mechanism, PSE/Govt counterparty).
Management Action Plan
- Portfolio Segmentation: Immediately segregate the infrastructure loan book into “Construction Phase” and “Operational Phase”.
- Eligibility Review: Screen operational projects against the “High-Quality” definition:
- Verify Commercial Operations Date (COD) was >1 year ago.
- Confirm “Standard” asset classification.
- Validate existence of Escrow mechanisms and First Charge on assets.
- Repayment Calculation: Calculate the exact percentage of principal repaid for each eligible borrower to determine if they fall into the 50% or 75% risk weight bucket.
- CRAR Computation: Update the internal Capital Adequacy Ratio calculation logic to apply the new risk weights, potentially releasing capital for fresh lending.
2. Concentration Risk Management Amendment Directions, 2026
Applicable Entity
NBFCs – Middle Layer (NBFC-ML) and Upper Layer (NBFC-UL) subject to credit concentration norms.
Specific Changes Required
This amendment harmonizes the definition of infrastructure exposures within the Concentration Risk framework to ensure consistency with the new Capital Adequacy definitions.
- Definition Alignment: The criteria for determining “Infrastructure Exposure” for single/group borrower limits now aligns with the “High-Quality” classification logic where applicable.
- Exposure Calculation: Ensures that the benefits of the “High-Quality” status (which implies lower default risk) are recognized, although the limits (as a % of Tier 1 Capital) generally remain at statutory caps (e.g., 25% / 40%).
Management Action Plan
- Update Loan Policy: Amend the Credit / Loan Policy to reflect the unified definition of High-Quality Infrastructure Projects across both Capital Adequacy and Large Exposure Frameworks.
- MIS Reporting: Enhance Management Information Systems (MIS) to flag these projects distinctively. Ensure that reports to the Risk Management Committee (RMC) highlight the concentration levels in “High-Quality” vs. “General” infrastructure assets.
- Pricing Strategy: Given the lower capital consumption, Management should evaluate if interest rates for qualifying High-Quality Infrastructure borrowers can be made more competitive to attract better assets.
Disclaimer: This report is based on the Press Release and the referenced Amendment Directions. Entities are advised to refer to the official gazette notification for the exact legal text.