January 2, 2026: Mumbai’s infrastructure ecosystem is expected to benefit from the Reserve Bank of India’s decision to ease capital adequacy norms for non-banking financial companies (NBFCs) financing high-quality infrastructure projects. The revised framework, issued under the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Amendment Directions, 2026, is aimed at improving credit flow to operational infrastructure while maintaining safeguards for lenders.
The RBI said the amendment directions are designed to better align risk weights with the actual risk profile of infrastructure assets, encouraging more accurate capital allocation. These directions will come into effect from April 1, 2026, or earlier if an NBFC adopts them in full. For Mumbai, where large-scale transport, urban redevelopment and utility projects depend significantly on NBFC funding, the move could ease financing constraints and lower borrowing costs.
Under the revised norms, loans extended by NBFCs to high-quality infrastructure projects will attract a lower risk weight once a small portion of the sanctioned debt has been repaid. If the borrower has repaid at least 2 per cent of the sanctioned project debt, the loan will attract a 75 per cent risk weight. This threshold is lower than what was proposed in the draft guidelines, where repayment of at least 5 per cent was required.
Further, once a borrower repays at least 5 per cent of the sanctioned project debt, the risk weight falls to 50 per cent. In the draft version, this benefit was available only after repayment of at least 10 per cent. Since risk weight determines how much capital lenders must set aside, lower risk weights reduce capital requirements and can support greater lending to infrastructure projects in and around Mumbai.
The RBI has defined strict conditions for classifying projects as high-quality. Projects must have completed at least one year of operations after commercial commencement without breaching material covenants and must be classified as ‘standard’. Revenues should be backed by concessions or contracts from government or public sector entities, with strong protection of lender rights throughout the concession period.
Additional safeguards include escrow mechanisms to ringfence cash flows, pari-passu charge over project assets, and lender protections in case of early termination. Borrowers must also demonstrate adequate arrangements to meet their working capital needs and are restricted from raising additional debt without the lender’s consent.
By easing capital norms while retaining strong protections, the RBI’s move is likely to support funding for Mumbai’s expanding infrastructure pipeline without diluting financial discipline.
Source: The Hindu BusinessLine
