RBI's New Norms Boost Financial Stocks, Power Financers Set to Benefit

Financial stocks like PFC and HUDCO soared as RBI introduced a harmonized framework for project financing, effective October 2025. This is positive news for power financiers such as PFC and REC, due to their significant exposure to power sector projects. The new guidelines aim to ensure structured resolutions of financing stress.

Shares of major financial institutions including Power Finance Corporation (PFC) and HUDCO saw a notable increase following the Reserve Bank of India's announcement of new norms. These guidelines are to provide a harmonised approach for financing projects across both infrastructure and non-infrastructure sectors by banks and other financial entities.

The BSE observed significant gains in these stocks, with PFC surging 4.92 percent, HUDCO climbing 4.72 percent, and Indian Renewable Energy Development Agency jumping 4.03 percent. These movements were part of a broader rally, driven by relaxed provisioning norms, set to take effect in October 2025, which were particularly advantageous for power financiers with substantial project exposure.

The RBI's newly released directions focus on a principle-based regime intended to streamline resolutions of financial stress in project finance. This includes specific exposure guidelines for lenders and mandates the acquisition of necessary clearances before the financial closure of projects.

(With inputs from agencies.)