TITLE: India's Reserve Bank Amends Non-Banking Financial Company Credit Facility Directions
BODY:
On July 15, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Second Amendment Directions, 2026, modifying the existing credit facility framework for non-banking financial companies (NBFCs).
The amendment introduces two key explanations to the original Directions. First, it clarifies that where a project can be operationalised as multiple independent viable units, an NBFC may finance such independent units as separate projects, provided each unit is appraised ex-ante for standalone viability. This allows greater flexibility in project structuring and financing approaches for NBFCs. Second, the amendment addresses electricity generation projects involving both generation and transmission components, specifying that the right of way requirement for transmission infrastructure may be determined according to existing sub-paragraph (3) provisions. This clarification streamlines the regulatory treatment of complex energy projects with integrated generation and evacuation infrastructure.
The RBI exercised its authority under sections 45JA, 45L, and 45M of the Reserve Bank of India Act, 1934; sections 30A and 32 of the National Housing Bank Act, 1987; and section 3 read with sections 31A and 6 of the Factoring Regulation Act, 2011, to issue these amendments in the public interest.
The amendments came into force with immediate effect on July 15, 2026. NBFCs should ensure compliance with these modified provisions when structuring and appraising project financing arrangements, particularly for multi-unit projects and electricity generation ventures.