RBI – NBFC Concentration Risk & Tier 1 Capital Amendment Directions
The Reserve Bank of India issued the Non-Banking Financial Companies (Concentration Risk Management) Amendment Directions, 2026, to refine the treatment of infrastructure exposures under the 2025 framework. The amendment allows certain infrastructure loans to qualify as “high-quality infrastructure projects” if they satisfy strict conditions, including at least one year of successful operations after commercial commencement, standard asset classification, stable revenues backed by government or public-sector concessions, and strong lender protections.
Required safeguards include escrow or trust and retention mechanisms for cash-flow protection, pari-passu security over assets, and contractual protections such as step-in rights or minimum termination payments in case of early termination. Borrowers must also maintain adequate funding arrangements and comply with restrictions on actions that could harm lenders, such as taking additional debt or creating encumbrances without approval. The amendment becomes applicable from the date NBFCs adopt the Capital Adequacy Amendment Directions, 2026, or from April 1, 2026, whichever is earlier.
