RBI Lowers Policy Repo Rate Under Liquidity Adjustment Facility

Pursuant to the Monetary Policy Statement dated December 05, 2025, the Monetary Policy Committee (MPC) has reduced the policy repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points, from 5.50 per cent to 5.25 per cent, with immediate effect.

Following this change, the Standing Deposit Facility (SDF) rate has been adjusted to 5.00 per cent, and the Marginal Standing Facility (MSF) rate to 5.50 per cent, effective immediately.

All other terms and conditions of the existing LAF Scheme remain unchanged.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13206

RBI Revises Standing Liquidity Facility Rate for Primary Dealers

Pursuant to the Monetary Policy Statement for 2025–26, the Monetary Policy Committee (MPC) has reduced the policy repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points, from 5.50 per cent to 5.25 per cent, with immediate effect.

Consequently, the Standing Liquidity Facility (SLF) provided by the Reserve Bank of India to Primary Dealers (PDs), in the form of collateralised liquidity support, will now be available at the revised repo rate of 5.25 per cent, effective immediately.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13207

Revision in Penal Interest Rates for CRR and SLR Shortfalls

Following the Monetary Policy Statement 2025–26 dated December 5, 2025, the Reserve Bank of India has reduced the Bank Rate by 25 basis points, from 5.75 per cent to 5.50 per cent, with immediate effect.

Consequently, the penal interest rates applicable on shortfalls in Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) requirements, which are linked to the Bank Rate, have been revised. With effect from the date of revision, penal interest will be charged at Bank Rate plus 3.0 percentage points (8.50 per cent) or Bank Rate plus 5.0 percentage points (10.50 per cent), depending on the duration of the shortfall.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13208

RBI Revises Framework for Banks’ Financial Services Activities

The Reserve Bank of India has issued the Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) (Amendment) Directions, 2025, effective December 5, 2025, amending the Master Directions dated November 28, 2025.

The amendments clarify the scope of financial services that banks may undertake departmentally and those that must be carried out through group entities, and update definitions relating to agency business, referral services, and group entities. They also extend specified provisions to NBFCs, including HFCs, within bank groups.

Revised norms prescribe investment limits, approval requirements, and prudential conditions for banks’ investments in subsidiaries, group entities, AIFs, REITs and InvITs. Additional provisions govern lending through group entities, portfolio management services, broking and clearing activities, overseas operations, and compliance reporting.

The Directions also specify timelines for regulatory compliance and reporting of breaches.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13209

RBI Revises Financial Services Rules for Small Finance Banks

The Reserve Bank of India has issued the Small Finance Banks – Undertaking of Financial Services (Amendment) Directions, 2025, effective December 5, 2025.

Key updates include:

• Agency and Referral Services: Clarifies SFBs’ role with third-party financial products and limits operational involvement.
• Departmental Activities: Requires RBI approval, risk management policies, and capital allocation for new activities.
• Subsidiaries & Group Entities: Non-banking financial services must be offered only through group entities under NOFHC.
• Investment Limits: Sets caps on equity investments, Alternative Investment Funds (AIFs), REITs, and InvITs, with reporting and compliance requirements.
• Derivatives Participation: SFBs may act as Professional Clearing Members in equity derivative segments under prudential conditions.

These amendments streamline regulatory compliance and define operational and investment boundaries for Small Finance Banks.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13210

RBI Updates on Payments Banks – New Amendment Directions 2025

The Reserve Bank of India (RBI) has issued the Payments Banks – Undertaking of Financial Services (Amendment) Directions, 2025, effective December 5, 2025. These amendments update the earlier Master Directions issued on November 28, 2025.

Key highlights include:

• Agency Business: Payments banks may act as agents for third-party product or service providers (TPPSPs) to facilitate the sale of regulated financial products, including insurance, mutual funds, and pension funds, without assuming any risk. Activities may cover marketing, sales, customer support, and grievance redressal.
• Referral Services: Banks can refer customers to TPPSPs by sharing information about their products or services. Under this arrangement, the bank is not involved in the TPPSP’s operational processes, and its branding is not used in third-party product documentation.

These amendments aim to streamline the operations of payments banks in offering third-party financial

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13211

RBI Updates for NBFCs – Amendment Directions 2025

The Reserve Bank of India (RBI) has issued the Non-Banking Financial Companies – Undertaking of Financial Services (Amendment) Directions, 2025, effective December 5, 2025.

Key update:

• NBFC Group Entities of Banks: NBFCs that are part of a Scheduled Commercial Bank group must comply with the applicable provisions under the Commercial Banks – Undertaking of Financial Services Directions, 2025, for any business or activity undertaken jointly by the NBFC and its parent bank.

These amendments aim to align NBFC operations with their parent banks’ regulatory framework.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13212

RBI Updates for Non-Operative Financial Holding Companies – Amendment Directions 2025

The Reserve Bank of India (RBI) has issued the Non-Operative Financial Holding Company (NOFHC) Amendment Directions, 2025, effective December 5, 2025.

Key updates:

• Bank Activities: All activities permitted under the Banking Regulation Act, 1949, must be carried out directly by the bank.
• Specialized Activities: Businesses like mutual funds, insurance, pension fund management, investment advisory, portfolio management, and broking must be conducted only through a subsidiary, joint venture, or associate.
• Regulatory Approval: NOFHCs need not seek prior RBI approval for these specialized activities but must notify RBI within 15 days. Prior approval is required for any other form of business.
• Restrictions: Activities not allowed for the parent bank are also prohibited for entities under the NOFHC.

These amendments clarify the organizational structure and business scope for NOFHCs and their group entities.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13213

RBI Updates: Export & Import of Indian Currency to Nepal and Bhutan

The Reserve Bank of India (RBI) has revised rules for the export and import of Indian currency to and from Nepal and Bhutan, effective November 28, 2025.

Key points:

• Currency up to ₹100: No limit on the amount of Indian currency notes that can be taken to or brought from Nepal or Bhutan.
• Currency above ₹100:
  • Maximum ₹25,000 can be taken out of India to Nepal or Bhutan.
  • Maximum ₹25,000 can be brought into India from Nepal or Bhutan.
• Exclusions: Citizens of Pakistan and Bangladesh are not permitted.
• These amendments are notified under the Foreign Exchange Management (Export and Import of Currency) Amendment Regulations, 2025.

Authorized Persons are required to inform their constituents and customers about these changes.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13215