Why Are PFC, REC, IREDA, IRFC & Other NBFC Stocks Surging Today? Here's What’s Fueling Rally

NBFC Stocks Surge After RBI Issues Harmonised Project Finance Norms — Here's What Boosted Investor Sentiment

Shares of several non-banking financial companies (NBFCs) rallied on Thursday, following the Reserve Bank of India’s announcement of a harmonised framework for project financing across infrastructure and non-infrastructure sectors.

The new guidelines, called the RBI (Project Finance) Directions, 2025, are set to come into effect from October 1, 2025, and aim to streamline lending practices, manage project risks better, and ensure smoother resolution of stress during project implementation.

NBFC's Shares Zoom

Shares of key NBFCs were trading higher as of 11:30 AM on Friday, following the RBI’s announcement of new project finance guidelines. Power Finance Corporation (PFC) was up 6.25% at Rs 414.20, while REC Ltd traded 3.83% higher at Rs 398.10.

Indian Railway Finance Corporation (IRFC) gained 2.49% to Rs 135.60, and Indian Renewable Energy Development Agency (IREDA) advanced 3.53% to Rs 164.35.

IFCI Ltd rose 3.98% to Rs 59.81, Tourism Finance Corporation of India (TFCI) was up 2.53% at Rs 229.15, and HUDCO climbed 3.02% to Rs 223.55.

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Why Are NBFC Stocks Rallying?

Investors cheered the RBI’s move to bring clarity and uniformity in project financing — a major business line for several of the above-mentioned firms, especially infrastructure-focused NBFCs like PFC, REC, IREDA, and HUDCO.

According to the RBI, the new framework aims to "adopt a principle-based regime for resolution of stress in project finance exposures, harmonised across regulated entities (REs)."

Another important provision is the rationalisation of extensions for the Date of Commencement of Commercial Operations (DCCO) — with a maximum extension of three years for infrastructure and two years for non-infrastructure projects.

This clarity reduces regulatory uncertainty for lenders and investors. Also, larger project finance deals now have stricter exposure requirements, which adds discipline to the lending process. For example:

"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% of the aggregate exposure," the RBI said.
"For projects with aggregate exposure above Rs 1,500 crore, the minimum exposure by a lender must be either 5% or Rs 150 crore—whichever is higher," it added.

This means only serious, well-capitalised lenders will take part in large-scale project finance, improving the overall quality of lending.

On Resolution and Risk Monitoring

Another key feature is how stress in such loans will be handled. The RBI said, “A lender shall monitor the performance of the project and any buildup of stress on an ongoing basis and shall be expected to initiate a resolution plan well in advance.”

If any one lender observes a credit event (like delayed payments) during construction, it will trigger a collective resolution, preventing cascading failures and protecting lender interests. The move signals better risk management for NBFCs and increases their chances of loan recovery, reducing future bad loans.