In finalising its Project Finance Directions, 2025, the Reserve Bank of India has done more than rewrite lending rules. It has implicitly endorsed a new model of infrastructure finance, one led not by commercial banks but by specialised institutions better equipped to handle long-gestation risk. These norms mark the formal recognition of a system where banks no longer occupy centre stage in funding India’s infrastructure ambitions.The direction of change has been clear for years. Scarred by the excesses of the 2010s, when project delays and cost overruns led to a wave of defaults, banks have steadily reduced their exposure to infrastructure. Although asset quality improved significantly in the early 2020s, and corporate balance sheets strengthened post-COVID, banks have remained hesitant.
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