The Lender's Independent Engineer under the RBI Project Finance Directions, 2025
For credit and project-monitoring teams at banks and NBFCs, and for borrowers whose disbursement schedule now depends on stage certification.
Last reviewed 26 September 2026 · reviewed by Mr. Chintan Bavishi
The short answer
The Reserve Bank of India (Project Finance) Directions, 2025 came into force on
1 October 2025. Paragraph 21 makes the link between construction progress and money
explicit: disbursal must be proportionate to the stages of completion of the project, and
the lender's Independent Engineer (LIE) or Architect certifies those stages.
In practice that turns the LIE from a periodic reviewer into a gate on each tranche. A lender that
cannot evidence stage certification cannot evidence that its disbursal was proportionate.
Key facts
Instrument
Reserve Bank of India (Project Finance) Directions, 2025
Reference
RBI/2025-26/59 · DOR.STR.REC.34/21.04.048/2025-26 · dated 19 June 2025
In force from
1 October 2025 - "These Directions shall come into force with effect from October 01, 2025."
Who it applies to
Regulated entities financing projects - scheduled commercial banks, and other RBI-regulated lenders within the scope stated in the Directions.
The LIE requirement (para 21)
"A lender shall ensure that disbursal is proportionate to the stages of completion of the project as also to the progress in equity infusion and other sources of finance... The lender's Independent Engineer (LIE)/Architect shall certify the stages of completion of the project."
TEV trigger (para 20)
A TEV study is required where the aggregate exposure of all lenders is Rs 100 crore or more, in the context of a DCCO revision reflecting a change in the Appointed Date for an infrastructure PPP project.
Who may act as LIE
Not prescribed centrally. Each lender empanels its own LIE against its own criteria - see below.
What actually changed on 1 October 2025
Stage-linked disbursal was already normal commercial practice in project finance. What the
2025 Directions do is make it a supervisory expectation with a named certifier attached, rather
than a matter of each lender's internal credit policy.
Two consequences follow, and they are the ones project teams are actually dealing with:
The certificate becomes part of the disbursement file. If disbursal has
to be proportionate to completion stages, and the LIE certifies those stages, then the
certificate is the evidence that the disbursal was compliant. It is not a formality that can
be caught up on later.
Timing becomes a live constraint. A tranche cannot be released ahead of
the certification that supports it, so LIE site visits and reporting cycles now sit on the
project's critical path rather than beside it.
What a stage-of-completion certificate has to establish
The Directions require certification of the stages of completion; they do not prescribe a
format. What a credit team needs the document to answer, in practice, is:
Physical progress against the sanctioned scope, measured, not
estimated - quantities executed against quantities planned, by work package.
Financial progress alongside it, including progress in equity infusion
and other sources of finance, which paragraph 21 puts on the same footing as physical
completion.
The date, place and manner of inspection, and who carried it out.
A certificate that does not say who went to site and when is difficult to rely on.
Deviations from the approved drawings or specifications, with their
effect on cost and on the DCCO.
Any observation bearing on the completion timeline - because a DCCO
slip has its own regulatory consequences further down the Directions.
Most lenders issue their own template. Where one exists, it governs; the list above is what
the underlying obligation requires the template to capture.
Empanelment: set by the lender, not by RBI
A point worth being precise about, because it is widely misstated: the Directions do not
create a national register of Lenders' Independent Engineers, and there is no RBI licence to
hold. Each lender empanels its own LIE panel against its own published criteria.
Criteria differ between lenders, but empanelment notices commonly ask for some combination
of an engineering degree, a stated minimum number of years in project monitoring or the
relevant sector, demonstrated experience on projects of comparable size, professional
indemnity cover, and named personnel rather than a firm name alone. Sector specialisation
matters: a panel position for road projects does not carry over to solar or to commercial
real estate.
If you are a borrower, the practical question is not "is this firm an approved LIE" but
"is this firm on the panel of the lender funding this project, for this sector".
Check that before appointment, because an appointment the lender cannot accept costs a
disbursement cycle.
Where the TEV study comes in
The LIE and the TEV consultant do different jobs at different moments, and conflating them
causes avoidable delay.
A TEV study is an appraisal question, asked before or around
sanction: is this project technically sound and financially viable on its assumptions?
An LIE answers a monitoring question, repeatedly, after financial
closure: has the project actually reached the stage the borrower says it has?
Paragraph 20 of the Directions requires a TEV study where the original DCCO is revised to
reflect a change in the Appointed Date determined by the concession-granting authority, for
infrastructure PPP projects, where the aggregate exposure of all lenders is Rs 100 crore
or more. Our separate guide on
TEV study requirements covers what that
study needs to contain.
Common failure points we see
A certificate that certifies the wrong thing. A general progress report
is not a stage-of-completion certificate. The document has to certify stages, against the
sanctioned scope, in terms the disbursement schedule is written in.
No named inspector. A certificate issued on a firm's letterhead with
no named engineer and no inspection date is weak evidence, and some lenders reject it.
Panel mismatch. The LIE is empanelled with a different lender, or with
this lender but for a different sector.
Sequencing. The certificate is commissioned after the drawdown request
rather than before it, which guarantees the tranche waits.
Read the Directions themselves before relying on this. The summary above covers the
provisions most relevant to LIE appointment and stage certification. The Directions run considerably
wider - including on DCCO deferment, provisioning and the treatment of stressed project exposures -
and the paragraph numbering and thresholds quoted here were checked on the date shown. For a specific
exposure, work from the circular and your lender's own credit policy, not from this page.
Common questions
When did the RBI Project Finance Directions, 2025 come into force?
1 October 2025. The Directions were issued on 19 June 2025 under reference RBI/2025-26/59, DOR.STR.REC.34/21.04.048/2025-26, and state that they come into force with effect from 1 October 2025.
Does RBI maintain a register of approved Lenders' Independent Engineers?
No. There is no central RBI register or licence for LIEs. Each lender empanels its own LIEs against its own criteria, and panels are usually sector-specific. The relevant question for any project is whether the proposed LIE is on the panel of the lender funding it, for that sector.
What is the difference between an LIE and a TEV consultant?
A TEV study appraises whether a project is technically sound and financially viable, typically before or around sanction. An LIE monitors an already-sanctioned project and certifies the stages of completion as construction proceeds, which under paragraph 21 of the 2025 Directions is what disbursal has to be proportionate to.
Is a TEV study needed on every project above Rs 100 crore?
Not as a blanket rule. The Rs 100 crore aggregate-exposure threshold in paragraph 20 attaches to a specific circumstance: an infrastructure PPP project where the original DCCO is revised to reflect a change in the Appointed Date determined by the concession-granting authority. Lenders may of course require a TEV study in other situations as a matter of their own credit policy.
Can the same firm act as both TEV consultant and LIE on one project?
That is a matter for the lender. Some lenders permit it and some regard it as an independence concern, since the LIE would be monitoring a project against an appraisal it produced. Confirm the lender's position before appointment rather than after.
What happens if a stage certificate is delayed?
Because disbursal must be proportionate to certified stages of completion, a missing certificate generally means the tranche waits. This is why LIE inspection and reporting cycles are best scheduled against the drawdown calendar from the outset rather than requested when a drawdown is already due.
Sources
Everything stated above is checkable. These are the documents it comes from - read them
yourself rather than relying on this summary for anything that carries consequences.
RBI Notifications indexWhere any subsequent amendment or clarification to the Directions would appear. Check here before relying on the position above.
Your lender's empanelment notice The only authoritative statement of who may act as LIE on a given facility. Empanelment criteria are set by each lender, not by RBI.
Reviewed by Mr. Chintan Bavishi · LinkedIn · 26 September 2026.
ValuationZone is not itself a registered valuer and does not sign reports; assignments are carried
out by a panel of 300+ independent registered valuers, Chartered Engineers and Chartered Accountants.
Appointing an LIE, or reviewing a stage certificate
Tell us the lender, the sector and the stage the project is at. We will tell you what the certificate needs to establish for that lender and whether our panel covers that sector.