Reserve Bank of India (RBI) revises risk-weighting framework for NBFC exposure to high-quality infrastructure projects.

Key facts

• Loans to high-quality infrastructure projects where at least 2% of sanctioned project debt has been repaid will carry a 75% risk weight.
• Loans where at least 5% of sanctioned project debt has been repaid will attract a lower 50% risk weight.
• Exposures initially classified as high-quality that later fail to meet prescribed conditions will revert to higher risk weights under the existing infrastructure lending framework.
• Projects must have completed at least one year of operations after achieving commercial operations without breaching material lender covenants, and the exposure must be classified as 'standard' in the lender's books.
• Project revenues must depend on concession or contractual rights granted by the Centre, state governments, public sector entities, or statutory bodies, with protections throughout the concession period.
• Lenders must have strong contractual safeguards including escrow or trust and retention account mechanisms, pari-passu charge over project assets, and risk-mitigation features such as step-in rights or minimum termination payments.