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RBI Draft: Lower Risk Weights for NBFC Infrastructure Loans

27 October 20251 min read
BANKING & FINANCERBI Draft: Lower RiskWeights for NBFCInfrastructure Loans27 October 2025safalsetu.com

Why in the news

RBI’s draft guidelines aim to cut financing costs and match capital rules to real project risk.

Proposed weights

RepaymentRisk weight
10% or more repaid50% (from 100%)
5% to 10% repaid75%

Eligibility

  • One year of satisfactory running after the COD; exposure standard.
  • Revenue mainly from one counterparty: the Central Government or a PSE.
  • Safeguards: escrow, first charge, borrowing limits; adequate working capital.

Background

  • Follows an MPC announcement to rationalise NBFC capital norms; operational PPP projects already enjoy lower weights.

Exam angle

  • COD: Commercial Operations Date.

Test yourself

1. Under RBI's October 2025 draft, what risk weight applies if the borrower has repaid at least 10% of the sanctioned amount?

The risk weight falls to 50% from 100%.

2. In the RBI draft on NBFC infrastructure loans, what does COD stand for?

COD is the Commercial Operations Date, after which a year of satisfactory operation is needed.

3. What risk weight does the RBI draft propose where the borrower has repaid between 5% and 10% of the sanctioned amount?

The proposed risk weight is 75%.

This topic is part of Daily Current Affairs 25 October 2025 (15 topics).

All topics of the dayDay quizOctober 2025

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