RBI Issues New Co-Lending Directions for 2026

The Reserve Bank of India (RBI) has expanded the related party transaction guidelines to include promoters, key management persons (KMPs), shareholders with equity of over 5%, and entities with influence and their relatives, according to a draft circular released on Friday. RBI also introduced scale-based thresholds beyond which banks and non-banking financial companies (NBFCs) will need board approval for lending to related parties. At the same time, RBI has barred foreign bank branches in India from lending to Indian firms where a director on the foreign bank's board abroad has an interest in the firm or its parent company. RBI has set 'materiality thresholds' for loans to related parties, based on the asset size of the bank. Banks with assets over Rs 10 lakh crore can extend loans up to Rs 50 crore, those with Rs 1-10 lakh crore up to Rs 10 crore, and smaller banks up to Rs 5 crore. Loans above these thresholds must be approved by the board or a designated committee, which will result in oversight of large exposures. #rbi #funding #relatedparty #companysecretary

Karthik Srinivasan, Senior VP & Group Head – Financial Sector Ratings at ICRA, shares his expert take in The Hindu businessline on the recent MPC policy announcements and their implications for the banking and NBFC sectors. From enabling banks to finance corporate acquisitions to easing provisioning norms and introducing risk-based deposit insurance premiums — the RBI’s latest measures aim to boost credit growth, deepen market participation, and strengthen sector resilience. 🔍 Key highlights: - Policy rates unchanged, stance remains neutral - ECL-based provisioning deferred to April 2027 - Expanded lending scope for banks - Withdrawal of restrictive circulars for large corporate funding - Risk-based pricing for deposit insurance These reforms mark a significant shift in empowering Indian banks and NBFCs to play a more dynamic role in the economy. 📖 Read the full article: https://lnkd.in/dzwDvRtU #NBFC #MPCPolicy #ICRA #CreditGrowth #FinancialSector #RBI #PolicyInsights #ICRAInNews #ICRAViews #Policy #MPC #banks #bfsi

💡 RBI Tightens Rules on Unsecured Personal Loans - Focus on Responsible Lending The Reserve Bank of India (RBI) has issued fresh directions to banks and NBFCs to strengthen credit discipline in unsecured personal loans. 🔹 Key Highlights: • Lenders must assess aggregate exposure to each borrower, including all credit cards and personal loans. • RBI has urged banks to set internal limits for unsecured portfolios to manage default risk. • Enhanced disclosure norms will improve borrower transparency and reduce hidden leverage. RBI’s move aims to balance credit growth with financial stability - ensuring borrowers don’t fall into over leverage traps while maintaining healthy banking practices. #RBI #Finance #Banking #CreditRisk #FinancialStability #NBFC #Compliance #CA

Reserve Bank of India (RBI) today invited comments on the Draft “Reserve Bank of India (Lending to Related Parties) Directions, 2025”. Excerpt: “The draft Directions provide a harmonised, principle-based framework to be adopted by REs for inter alia lending to related parties, suitably rationalising the existing provisions. The key provisions of the proposed framework entail the following: a) Introduction of scale-based materiality thresholds beyond which lending to related parties of a RE shall need approval of the Board or its Committee. b) Exclusion of Independent Directors of other banks from the scope of ‘related persons’ of a RE for the purpose of these Directions. c) Principle based exemption from Section 20 (1) (b) of the Banking Regulation Act, 1949 for certain types of loans. d) Suitable supervisory reporting and disclosure requirements by REs on transactions with related parties. The Comments on the draft Direction are invited from public/stakeholders by October 31, 2025.” Press Release: https://lnkd.in/dNU5taFd

Reserve Bank of India (RBI) MPC October 2025 a step toward Strengthening the Resilience and Competitiveness of Indian Banks The Reserve Bank of India has announced a series of measures aimed at enhancing the stability, resilience, and global competitiveness of the Indian banking system. A robust and well-capitalised banking sector is essential for sustainable economic growth, and these policy steps represent a significant stride in that direction. 🔹 Marching towards Ind AS implementation in Banks in India - Expected Credit Loss (ECL) Framework: To be implemented for all Scheduled Commercial Banks (excluding SFBs, PBs, RRBs) and AIFIs with effect from April 1, 2027. A glide path up to March 31, 2031 has been provided to smoothen the one-time impact of higher provisioning on existing books. 🔹 Revised Basel III Capital Adequacy Norms Effective from April 1, 2027 for commercial banks (excluding SFBs, PBs, RRBs). A draft Standardised Approach for Credit Risk will be released shortly, with lower risk weights proposed for MSMEs and residential real estate (including home loans). This is expected to reduce overall capital requirements. 🔹 Operational and Market Risk Capital requirements for operational risk were finalised in 2023. Market risk requirements are under finalisation after public consultation. Further RBI has also addressed the Key issue for Infrastructure Financing NBFC like REC Limited IREDA Ltd.Power Finance Corporation Ltd. India Infrastructure Finance Company Limited (IIFCL): To better reflect the lower risk of operational infrastructure projects compared to those under construction, a principle-based framework is being introduced. This will rationalize risk weights for NBFC lending to operational projects, align capital requirements with actual risk profiles, and promote efficient capital allocation. Draft regulations will be issued shortly for public consultation. These measures are designed to align India’s banking regulations with international standards, adapted to our domestic conditions and priorities. They will: -Strengthen capital adequacy frameworks, -Improve provisioning practices, and -Enhance competitiveness while supporting key sectors such as MSMEs and housing finance. Reserve Bank of India (RBI) #banking Bank for International Settlements – BIS #Basell The Institute of Chartered Accountants of India (ICAI) #ECL #IndAS #IFRS9 #FinancialStability #RiskManagement

RBI Penalises The Sultan’s Battery Co-operative Urban Bank Limited for Non-Compliance with Director Loan Norms 📅 Date: 29 September 2025 📍 Source: Reserve Bank of India (RBI) 🛡 Subject: Co-operative Banks Key Highlights: 🔧 Case Overview: The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 lakh on The Sultan’s Battery Co-operative Urban Bank Limited, Wayanad, Kerala for non-compliance with directions on loans and advances to directors, their relatives, and related concerns. 🔍 Findings: RBI’s inspection (reference date: March 31, 2024) revealed that the bank had sanctioned director-related loans in contravention of regulatory directions. Despite opportunities to explain, the charge was sustained after review of written and oral submissions. 💼 Regulatory Implications: This enforcement action highlights RBI’s strict stance on conflict-of-interest lending practices within co-operative banks. While the penalty does not affect customer transactions, it signals a zero-tolerance approach to governance lapses and misuse of lending powers by directors. 📌 Strategic Insight: For co-operative banks, compliance extends beyond operational risk management—it requires robust governance structures that prevent insider influence in lending decisions. Any breach of director-related lending restrictions undermines financial discipline and can invite supervisory penalties. Strong adherence to RBI’s prudential norms is essential to safeguarding trust and ensuring institutional integrity. Link: https://lnkd.in/grfGD-By 🔔 Follow RegLex for updates on co-operative bank regulations, governance frameworks, and enforcement actions shaping India’s financial sector. #RBI #RegLexUpdates #CooperativeBanks #RegulatoryCompliance #Governance #RiskManagement #BankingRegulation #IndiaFinance

The Reserve Bank of India (RBI) has released its draft “ #Lending to Related Parties Directions, 2025” for public comments. Why is this significant? Because lending to related parties — whether promoters, directors, group entities, or connected persons — has always been a grey area in banking and finance. It raises concerns about conflict of interest, governance, and systemic risk. 🔑 What’s new in the draft framework? 1️⃣ Harmonised approach across entities – Applies not just to commercial banks, but also SFBs, RRBs, Co-ops, #NBFCs , AIFIs. 2️⃣ Scale-based thresholds – Lending above defined limits to related parties will now require Board / Committee approval, strengthening oversight. 3️⃣ Clarity on related persons – Independent directors of other banks are excluded, reducing unnecessary compliance burden. 4️⃣ Targeted exemptions – Principle-based carve-outs from Section 20 (1)(b) of the Banking Regulation Act for certain loan types. 5️⃣ Transparency push – Stricter reporting & disclosure requirements to supervisors. 🗓️ RBI is inviting comments till October 31, 2025 via its Connect2Regulate platform. 💭 Why it matters: This draft is more than just #compliance — it’s about balancing prudence with flexibility. For #startups , NBFCs, and cooperative banks, it could reshape intra-group funding strategies. For boards, it raises the bar on governance. For the sector at large, it’s a chance to prevent “related-party lending” from becoming tomorrow’s NPA crisis.

The Reserve Bank of India (RBI) has issued new guidelines capping bank funding for corporate takeovers at 70% of the acquisition deal value, requiring the remaining 30% to be funded by the acquiring company’s own equity. This move allows banks to finance up to 70% of corporate acquisitions, a shift from previous prohibitions on such funding in India. The acquirer must be a listed company with a profit track record for at least three years, and the acquisition value should be determined based on regulatory frameworks. The RBI has asked banks to establish clear norms for acquisition financing, including borrower eligibility, security, and margin requirements, as well as risk management mechanisms. Financial intermediaries such as NBFCs and AIFs are excluded from acquiring company structure; only corporate bodies are eligible. Lending should only be for primary acquisition of shares, and the acquired or target company cannot be related parties, except in certain defined conditions. The aggregate exposure of a bank to acquisition financing should not exceed 10% of its Tier 1 capital, and total group exposure limits apply. Acquisition finance must be fully secured by shares of the target company, and banks must adopt stringent credit monitoring practices for such loans. #corporatelending #corporatefinancing #Takeovercredit #takeoverfinance #megerfinance

📰✨ Finance News Update | RBI Cheque Clearing Reform ✨📰 📌 Starting October 4, 2025, the RBI will launch Phase 1 of the Continuous Cheque Clearing System: 🔹 Cheques will now be cleared continuously (10 AM – 4 PM) instead of the old batch system. 🔹 Drawee banks must confirm by 7 PM, else the cheque is auto-approved. 🔹 Outcome → Faster credit of funds and near real-time processing for depositors. A major step towards modernizing India’s banking system! 🚀 Shree Ganga Finance – keeping you informed, always. 💼 #FinanceNews #RBIUpdate #ChequeClearing #ShreeGangaFinance #BankingReform Vikas Katoda Ravinder Rathore