The Reserve Bank of India (RBI) has proposed lowering risk-weights for loans by non-banking financial companies (NBFCs) to high-quality infrastructure projects. 

Being based on project performance and loan repayment history, the RBI’s proposals aim to reduce capital burdens on NBFCs while ensuring financial stability even as it encourages lending to low-risk infrastructure projects.

Under the draft guidelines, loans to projects where borrowers have repaid at least 10% of the sanctioned amount will attract a 50% risk weight. This will potentially free up capital for additional lending. 

For those projects with repayments of 5-10%, NBFCs will carry a 75% risk weight, reduced from the standard 100%. 

Eligible projects must have completed one year of satisfactory commercial operations, be classified as standard assets, derive revenue primarily from a single counterparty (such as the central government or public sector entities), and include safeguards like escrow mechanisms, first charge on assets, and restrictions on additional borrowing.

NBFCs must ensure borrowers have robust arrangements for working capital and other financial obligations.

The RBI has invited public comments on the draft circular until 21 November, which is scheduled to take effect from 1 April 2026.

The proposed risk weight framework for NBFCs is expected to lower funding costs, support competitive financing rates and drive India’s infrastructure development.