The Reserve Bank of India (RBI) has proposed a reduction in risk weights for high-quality infrastructure project loans extended by Non-Banking Financial Companies (NBFCs), a move aimed at encouraging greater private investment in India’s infrastructure sector. The proposal seeks to align risk assessment standards with the quality and performance of underlying projects, promoting more efficient capital allocation within the financial system.
Under the proposed framework, NBFCs offering loans to infrastructure projects that meet specific criteria — such as strong credit ratings, proven cash flow stability, and adherence to environmental and social governance norms — may be allowed to assign lower risk weights. This adjustment would effectively reduce the amount of regulatory capital that lenders must set aside against such loans, improving their lending capacity.
The RBI’s proposal is expected to boost funding for sectors like renewable energy, transport, logistics, and urban infrastructure, which are key pillars of India’s long-term economic growth strategy. Industry experts have welcomed the move, noting that it could lower borrowing costs for developers while incentivizing lenders to back sustainable and financially sound projects.
The central bank has invited comments from stakeholders before finalizing the guidelines. Once implemented, the revised norms could play a pivotal role in bridging the financing gap for India’s ambitious infrastructure pipeline, supporting the government’s vision of building a $5-trillion economy.
