RBI issues Draft NBFC Scale Based Regulation Amendment Directions, 2025

The Reserve Bank of India (RBI) has issued Draft NBFC (SBR) Amendment Directions, 2025. The Reserve Bank had issued Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023. Based on a review, it is proposed to amend certain provisions relating to the applicable risk weights for infrastructure exposures of NBFCs.

The proposed amendments noted that in Master Direction Chapter II, infrastructure projects that meet all the following criteria shall be classified as high-quality infrastructure projects:
a. The infrastructure project has completed at least one year of satisfactory operations post achievement of the date of completion of commercial operations.
b. The exposure is classified as ‘standard’ in the books of the lender.
c. The obligor's revenue depends on one main counterparty, which shall be a Central Government or a Public Sector Entity, and the contractual provisions provide for certainty regarding payments from the counterparty, for eg. availability-based revenues or take-or-pay provisions.
d. The contractual provisions provide for a high degree of protection for creditors, such as escrow of cash flows; legal first claim of the lender over all movable and immovable assets; and protection of interest of the creditors in case of early termination.
e. The obligor has sufficient internal or external financial arrangements to cover current and future working capital and other funding requirements of the project as per the assessment of the lender.
f. The obligor is restricted from acting to the detriment of the creditors, eg. being restricted from issuing additional debt against the cashflows and assets of the project without consent of the existing creditors.

Further, In Chapter IX – Prudential Regulations under Section III, Sr. no. 2 (e) of the Table under paragraph 84 shall stand modified. The paragraph was about Weighted risk assets - On-balance Sheet items and noted that All assets covering PPP and post commercial operations date (COD) infrastructure projects in existence over a year of commercial operation shall have a Percentage Weight of 50%. RBI now states that loans to ‘High-quality infrastructure projects’ as defined in sub-subparagraph 5.1.14 (A) and where the obligor has repaid at least 10 percent of the sanctioned amount shall have Percentage Weight of 50%. Loans to ‘High-quality infrastructure projects’ as defined in sub-subparagraph 5.1.14 (A) and where the obligor has repaid at least 5 percent but less than 10 percent of the sanctioned amount shall have Percentage Weight of 75%.

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