The Reserve Bank of India has issued the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Third Amendment Directions, 2026, vide RBI/2026-27/136 (DOR.STR.REC.115/21-01-002/2026-27) dated June 16, 2026. The amendment provides capital relief to NBFCs in respect of exposures guaranteed under the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.
Background
The amendment is made to the Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy) Directions, 2025. It follows a circular issued by the National Credit Guarantee Trustee Company (NCGTC), Ref No. 0264/NCGTC/ECLGS5.0 dated May 8, 2026, in respect of the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 introduced by the Government of India.
What the Amendment Provides
A new sub-clause, Paragraph 18(2)(iv)(f), has been inserted into the 2025 Directions. The inserted provision states that exposures guaranteed under ECLGS 5.0 shall attract a risk weight of zero percent to the extent of 75% of the guaranteed portion, specifically the portion of the guarantee where the settlement amount is expected to be received within thirty days from the date of invocation. The remaining exposure will continue to attract risk weight as per the extant guidelines applicable to NBFCs.
In effect, NBFCs holding ECLGS 5.0-guaranteed exposures can now apply a zero-risk-weight treatment to three-fourths of the guaranteed portion, provided the relevant settlement timeline condition is met, while the balance continues to be risk-weighted under the existing framework.
Statutory Basis
The Amendment Directions have been issued in exercise of the powers conferred under Section 45L of the Reserve Bank of India Act, 1934, and other enabling provisions, with the Reserve Bank recording that it considers the amendment necessary and expedient in the public interest.
Effective Date
The amendment has come into force with immediate effect.
Key Takeaway
This amendment eases the capital adequacy burden on NBFCs extending credit under the ECLGS 5.0 guarantee framework, by recognising a zero risk weight on a substantial portion of such guaranteed exposures. NBFCs should review their ECLGS 5.0 exposure book, confirm the settlement-timeline criterion for invoked guarantees, and update their capital adequacy computations to reflect the revised treatment under the amended Paragraph 18(2)(iv)(f).
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