On August 12, 2026, the Reserve Bank of India issued draft directions proposing a harmonized, principles-based framework for setting interest rates on fixed and floating rate loans. The proposed rules apply to all regulated entities—including commercial banks, Non-Banking Financial Companies, cooperative banks, Regional Rural Banks, and All India Financial Institutions—commensurate with the scale and complexity of each institution's operations.
Why it matters
The draft framework targets existing regulatory gaps, such as divergent practices among commercial banks when calculating internal benchmarks like MCLR, sparse guidance on fixed-rate loans, and conduct-only rules for non-bank lenders. By establishing broader standards, the central bank seeks to enhance monetary policy transmission, encourage proper credit risk pricing, and ensure fair treatment for borrowers across all credit categories.
Bigger picture
Transitioning from fragmented, sector-specific instructions toward a single overarching framework aligns regulatory expectations across India's entire financial sector. Scaling standards to operational complexity allows the RBI to maintain strict governance over interest rate setting while accommodating structural differences between commercial banks, non-banking financial companies, and cooperative lenders.
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Regulated entities, stakeholders, and the public can submit feedback on the draft directions until September 11, 2026. After reviewing comments, the RBI will issue final directions tailored to each category of regulated entity.
India's road ministry revises model concession agreement for BOT projects
Photo: Ian Brown from San Franciso, United States / Wikimedia CommonsCC BY 2.0
What happened
India's Ministry of Road Transport has revised its model concession agreement for build-operate-transfer projects, according to ET Government. The updated policy framework introduces several key provisions into standard project contracts, including a buyback option, revenue support for private concessionaires, and shared traffic risk between operators and the government to make projects more bankable and attractive.
Why it matters
The contractual changes are designed to improve project bankability in private infrastructure development. By offering government revenue support and absorbing a portion of traffic risk, the revised framework aims to reduce downside exposure for private concessionaires while making build-operate-transfer assets more viable for institutional lenders and private sector investors evaluating public works.
Bigger picture
The initiative reflects an effort by Indian regulators to reboot private capital participation in public-private partnerships. By codifying concrete risk-sharing mechanisms directly into standard concession terms, policymakers are attempting to overcome past investor hesitation, encourage private infrastructure investment, and create more balanced risk allocation across major development projects.
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Lenders and private developers will monitor how the buyback and risk-sharing provisions are implemented in upcoming infrastructure tenders to evaluate whether the new terms make prospective project bids commercially viable.
