NBFC Infrastructure Lending: RBI Cuts Risk-Weight Thresholds
Why in the news
The Reserve Bank issued final guidelines for infrastructure financing by NBFCs. They are gentler than the draft, giving capital relief but still linking it to repayment.
Key facts
- Repayment hurdles for reduced risk weights on high-quality infrastructure projects were lowered.
- Test uses the original sanctioned debt; extra borrowing is added to it.
| Risk weight | Draft: repayment needed | Final: repayment needed |
|---|---|---|
| 75% | 5% | 2% |
| 50% | 10% | 5% |
Wider definition
High-quality projects now also cover those earning revenue from rights given through a concession or contract by governments, public sector bodies or statutory/regulatory authorities. Termination protection clauses remain, to protect lenders.
Exam angle
- Regulator: RBI; entities: NBFCs.
- Risk weight decides the capital a lender holds.