PFC, HUDCO, IREDA, REC Shares Surge

Shares of financial institutions such as PFC and HUDCO surged on Friday after the Reserve Bank issued norms to provide a harmonised framework for financing of projects in infrastructure and non-infrastructure sectors by banks, NBFCs and other regulated entities.

The stock of Power Finance Corporation surged 4.92 per cent, HUDCO soared 4.72 per cent, Indian Renewable Energy Development Agency jumped 4.03 per cent, REC rallied 2.96 per cent and Indian Railway Finance Corporation climbed 1.47 per cent on the BSE.

"The rally was broad-based, with all sectoral indices ending in the green, led by financials after the RBI eased provisioning norms for project... effective October 2025. This is particularly positive for power financiers like PFC and REC, due to their large exposure to power sector projects," Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said.

The Reserve Bank of India (Project Finance) Directions, 2025 lay down the revised regulatory treatment upon change in the 'date of commencement of commercial operations' (DCCO) of such projects in the backdrop of a review of the extant instructions and analysis of the risks inherent in such financing.

The RBI said the directions entail the adoption of a principle-based regime for resolution of stress in project finance exposures, harmonised across regulated entities (REs).

"In under-construction projects where the aggregate exposure of the lenders is up to Rs 1,500 crore, no individual lender shall have an exposure which is less than 10 per cent of the aggregate exposure," the RBI said.

For projects where aggregate exposure of all lenders is more than Rs 1,500 crore, the exposure floor for an individual lender shall be 5 per cent or Rs 150 crore, whichever is higher.

Further, a lender shall ensure that all applicable approvals/clearances for implementing/constructing the project are obtained before financial closure.

The Reserve Bank of India (Project Finance) Directions, 2025 shall come into force with effect from October 1, 2025, the central bank said.

"Final guidelines on project finance comes as a relief to the lenders..." A M Karthik, Senior Vice President & Co-Group Head, Financial Sector Ratings, ICRA Ltd, said on the RBI guidelines on project loans.