The Reserve Bank of India issued the Non-Banking Financial Companies (Concentration Risk Management) Amendment Directions, 2026, amending the 2025 framework to refine the treatment of certain infrastructure exposures. The amendment introduces a proviso classifying specified infrastructure lending as “high-quality infrastructure projects” if stringent conditions are met. These include completion of at least one year of operations post commercial commencement without covenant breaches, standard asset classification, revenues derived from protected government or public-sector concessions, and strong contractual safeguards for lenders. Mandatory protections include escrow or trust and retention mechanisms to ringfence cash flows, pari-passu security over assets, and risk-mitigation provisions for early termination such as step-in rights or minimum termination payments. Borrowers must also demonstrate adequate funding arrangements for working capital and future needs, and accept restrictions preventing actions detrimental to lenders, including limits on additional debt or encumbrances without consent. The amendment applies when NBFCs adopt the Capital Adequacy Amendment Directions, 2026 or from April 1, 2026, whichever is earlier.
RESERVE BANK OF INDIA
RBI/2025-26/169
DOR.CRE.REC.372/07-03-008/2025-26 | Dated: January 1, 2026
Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Amendment Directions, 2026
The Reserve Bank had issued the Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Directions, 2025 (hereinafter referred to as ‘the Directions’).
2. On a review, in exercise of the powers conferred by Chapter III B of the Reserve Bank of India Act, 1934 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Amendment Directions hereinafter specified.
3. These Amendment Directions modify the Directions as under:
(1) The following shall be inserted as a proviso to sub-paragraph 4(4) of the Directions:
“Provided that infrastructure lending to projects that meet all the following criteria shall be classified as lending to ‘high-quality infrastructure projects’
(i) The infrastructure project has completed at least one year of operations post achievement of the date of completion of commercial operations, without breach of any material covenants stipulated by the lenders.
(ii) The exposure is classified as ‘standard’ in the books of the lender.
(iii) The borrower’s revenue depends on rights granted under concession / contract by the Central Government, a State Government, a public sector entity, or a statutory or regulatory body, and the contractual provisions provide for protection of these rights for the entire period of concession/ contract as long as the borrower fulfils its obligations under the contract.
(iv) The concession / contractual provisions provide for a high degree of protection for a lender, which shall, at a minimum, include: (i) provisions of an escrow / Trust and Retention Account mechanism for ringfencing the cash flows; (ii) pari-passu charge in favour of the lender over all movable and immovable assets; and (iii) mitigation of risk for lenders in case of early termination (eg. step-in rights for the lenders, minimum termination payments etc).
(v) The borrower 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.
(vi) The borrower is restricted from acting to the detriment of the lender, eg. being restricted from issuing additional debt against or further encumbering the cashflows and assets of the project without consent of the existing lenders.”
4. The Amendment Directions shall be applicable when the 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.
(Vaibhav Chaturvedi)
Chief General Manager
