Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Amendment Directions, 2026

Under this notification, the Reserve Bank of India has amended the Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Directions, 2025, with effect from January 1, 2026. The amendment inserts a proviso to sub-paragraph 4(4), introducing a specific framework for classification of certain infrastructure exposures as lending to “high-quality infrastructure projects” (HQIP).

The notification provides that infrastructure lending shall qualify as lending to a high-quality infrastructure project only if all the prescribed conditions are satisfied. First, the infrastructure project must have completed at least one year of operations after achieving the date of commercial operations (DCCO), without any breach of material covenants stipulated by the lenders. Further, the exposure must be classified as a “standard” asset in the books of the lender.

Second, the borrower’s revenue model must be anchored in rights granted under a concession or contract by the Central Government, a State Government, a public sector entity, or a statutory or regulatory authority. The contractual framework must ensure protection of such rights throughout the concession or contract period, provided the borrower continues to fulfil its contractual obligations.

Third, the concession or contractual documentation must provide a high degree of protection to lenders. At a minimum, this includes: (i) an escrow or Trust and Retention Account (TRA) mechanism for ring-fencing project cash flows; (ii) a pari passu charge in favour of lenders over all movable and immovable project assets; and (iii) risk mitigation measures in the event of early termination, such as step-in rights for lenders and minimum termination payment provisions.

Additionally, the borrower must have adequate internal or external financial arrangements to meet current and future working capital requirements and other funding needs of the project, as assessed by the lender. The borrower must also be contractually restricted from undertaking actions detrimental to lenders, including raising additional debt against or further encumbering project assets or cash flows without the consent of existing lenders.

Overall, the amendment formalises a stringent eligibility framework for classification of infrastructure exposures as “high-quality”, thereby ensuring that only operationally stable, contractually secure, and structurally protected projects receive favourable regulatory treatment.