Introduction
The Reserve Bank of India, vide notification RBI/2026-27/183 dated July 15, 2026, has issued the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Second Amendment Directions, 2026. These amendments modify the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025, by inserting two Explanations addressing project financing structures and right of way requirements in the power sector.
Statutory Basis
The Amendment Directions have been issued in exercise of powers conferred under:
Statute Relevant Provisions Reserve Bank of India Act, 1934 Sections 45JA, 45L, 45M National Housing Bank Act, 1987 Sections 30A, 32 Factoring Regulation Act, 2011 Section 3 read with Sections 31A and 6 Key Amendments
1. Explanation to Paragraph 70 — Financing of Independent Project Units
An Explanation has been inserted in paragraph 70 clarifying that where a project is capable of being operationalised as multiple independent viable units, an NBFC may, at its discretion, finance such units as separate projects, each with its own financial closure. This flexibility is subject to the condition that each independent unit is appraised ex-ante for standalone viability.
This amendment provides NBFCs greater structural flexibility in project appraisal and financing, particularly for large infrastructure projects that are capable of phased or modular execution, rather than requiring the project to be financed and appraised as a single composite unit.
2. Explanation to Paragraph 72 — Right of Way for Power Generation-cum-Transmission Projects
An Explanation has been inserted in paragraph 72 clarifying that for projects in electricity generation where the project scope also involves transmission (evacuation infrastructure), the right of way requirement for the transmission component may be determined in accordance with sub-paragraph (3) of paragraph 72.
This clarification addresses the specific circumstance of composite generation-cum-transmission projects, aligning the right of way norm applicable to the evacuation infrastructure with the framework already prescribed under sub-paragraph (3).
Effective Date
The amendments come into force with immediate effect, i.e., from July 15, 2026.
Implications for NBFCs
NBFCs engaged in project finance, particularly in the infrastructure and power sectors, should review their internal appraisal and financial closure frameworks to align with the flexibility now permitted under paragraph 70, and should factor the clarified right of way treatment under paragraph 72 into due diligence for generation-cum-transmission projects.
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