RBI Updates ECB Reporting Rules Under FEMA (2026)

The Reserve Bank of India has revised reporting requirements for External Commercial Borrowings (ECB) under the Foreign Exchange Management Act, 1999.

Key Highlights

• Form Classification: ECB 1 forms treated as non-flow returns, affecting Late Submission Fee (LSF).
• LSF Calculation: Charged per return; each delayed ECB 2 filing counted separately.
• Submission Timeline: AD banks must submit returns within 7 days of receipt.
• LSF Payment: Payable via NEFT/RTGS after RBI acknowledgment.
• Bank Responsibility: AD banks must monitor LSF payments for delays.

Effective Date

Applicable from April 1, 2026.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13345

 RBI Overhauls Credit Facility Framework for Banks (2026)

The Reserve Bank of India has issued the Revised Credit Facilities Amendment Directions, 2026, introducing a comprehensive framework covering acquisition finance, loans against securities, and lending to capital market intermediaries.

Key Highlights

• Expanded Definitions:
  Introduction of key terms such as Acquisition Finance, Bridge Finance, CMIs, Eligible Securities, LTV, Margin, and Primary Security, bringing clarity to lending practices.
• Acquisition Finance Framework:
  • Permitted for acquiring control in domestic or overseas non-financial companies
  • Bank funding capped at 75% of acquisition value
  • Borrower must contribute own funds; leverage capped at 3:1 (Debt-Equity)
  • Requires board-approved policy, valuation norms, and corporate guarantees
• Loans Against Securities:
  • Lending allowed against defined eligible securities (shares, mutual funds, bonds, REITs, InvITs)
  • Prescribed LTV limits (e.g., 60% for shares, up to 85% for debt instruments)
  • Restrictions on lending against certain securities (e.g., partly paid shares, locked-in securities)
  • Mandatory monitoring of valuation and margins
• Retail Lending Limits:
  • Loans to individuals capped at ₹1 crore (with sub-limits for market investments and IPO financing)
  • IPO/FPO/ESOP funding allowed with margin requirements
• Lending to CMIs:
  • Credit allowed for operational needs like working capital and settlement mismatches
  • Fully secured lending required (generally 100% collateral)
  • Restrictions on funding proprietary trading
• Risk & Governance Controls:
  • Mandatory board-approved policies across lending categories
  • Defined collateral, margin, and haircut requirements
  • All such exposures linked to Capital Market Exposure (CME) norms

Effective Date: Applicable from July 1, 2026, or earlier if adopted by banks.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13346

 RBI Updates Concentration Risk Norms for Banks (2026)

The Reserve Bank of India has issued revised Concentration Risk Management Amendment Directions, 2026, aligning them with the updated Credit Facilities framework.

Key Highlights

• Standardized Definitions: Introduction of terms such as Acquisition Finance, Bridge Finance, CMIs, Collateral, and Non-debt Mutual Funds.
• Capital Market Exposure (CME): Expanded to include both investment and credit exposures, covering equities, mutual funds, REITs/InvITs, loans, underwriting, and derivative-related exposures.
• Exposure Limits:
  • Total CME capped at 40% of eligible capital
  • Direct exposure capped at 20%
  • Acquisition finance capped at 20% within overall limits
  • Mandatory intra-day exposure controls
• Exemptions: Certain exposures (e.g., subsidiaries, select financial infrastructure entities, specific debt instruments) excluded from CME calculation.
• Computation Norms: Clear methodology for calculating exposures, including treatment of credit limits, derivatives, and intraday positions, with permitted offsets using cash and government securities.
• Governance: Banks must implement board-approved policies for exposure management.

Effective Date: Applicable from adoption of the 2026 Credit Facilities Directions or July 1, 2026, whichever is earlier.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13347

RBI Revises Capital Adequacy Norms Linked to Market Exposures (2026)

The Reserve Bank of India has issued the Second Amendment Directions, 2026 (Revised) under the Prudential Norms on Capital Adequacy, aligning them with the updated Credit Facilities framework.

Key Update

• Treatment of Payment Commitments:
  Irrevocable payment commitments issued by banks to clearing corporations on behalf of clients are classified as financial guarantees with a Credit Conversion Factor (CCF) of 100%.
• Capital Requirement:
  • Capital is required only on the portion classified as Capital Market Exposure (CME)
  • Applicable risk weight: 125% on such exposure

Regulatory Alignment

This revision links capital requirements directly with CME norms under concentration risk guidelines, ensuring consistency across regulatory frameworks.

Effective Date: Applicable from adoption of the Credit Facilities Amendment Directions, 2026 (Revised) or July 1, 2026, whichever is earlier.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13348

RBI Streamlines Capital Market Exposure Disclosures (2026)

The Reserve Bank of India has issued the Third Amendment Directions, 2026 (Revised) under the Financial Statements: Presentation and Disclosures Directions, 2025, aligning them with the updated Credit Facilities Amendment Directions, 2026 (Revised).

Key Update

• Introduction of a revised disclosure table for capital market exposures under Notes to Accounts
• Deletion of an existing exposure-related sub-paragraph

Coverage

Banks must disclose exposures across categories such as:

• Investments in equity and related instruments
• Loans for investment in capital markets (IPO/FPO/ESOP)
• Advances secured by market instruments
• Credit to Capital Market Intermediaries (CMIs)
• Acquisition and bridge financing
• Underwriting commitments and payment guarantees
• Clearing member and derivative-related exposures

A total capital market exposure figure must also be reported.

Effective Date

Applicable from the earlier of:

• Adoption of the Credit Facilities Amendment Directions, 2026 (Revised), or
• July 1, 2026

This revision supersedes the February 13, 2026 amendment.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13349

RBI Revises Guidelines on Financial Services Activities (2026)

The Reserve Bank of India has issued the Amendment Directions, 2026 (Revised) under the Commercial Banks – Undertaking of Financial Services Directions, 2025, aligning them with the updated Credit Facilities Amendment Directions, 2026 (Revised).

Key Amendments

The revisions modify provisions under General Guidelines relating to permitted financial services activities:

• Acquisition & Bridge Finance
  Updated to include financing for promoters’ stake in new companies
• Lending Against Securities
  Revised to cover lending to individuals against eligible securities

Regulatory Alignment

These changes align the scope of permissible financial services with the revised framework under the Credit Facilities Amendment Directions, 2026 (Revised), ensuring consistency across regulatory guidelines.

Effective Date

The amendments will take effect from:

• The date of adoption of the Credit Facilities Amendment Directions, 2026 (Revised), or
• July 1, 2026,
  whichever is earlier

These directions supersede the earlier amendment issued on February 13, 2026.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13350

RBI Tightens Credit & Securities Lending Framework for SFBs (2026)

The Reserve Bank of India has issued the Small Finance Banks – Credit Facilities Amendment Directions, 2026 (Revised), introducing a structured framework for lending against financial assets and capital market exposures.

Key Highlights

• Standardized Definitions
  Introduction of terms such as collateral, eligible securities, LTV, margin, and Capital Market Intermediaries (CMIs)
• Loans Against Securities
  Permitted against approved instruments (shares, bonds, mutual funds, REITs, InvITs) with defined LTV limits and ongoing monitoring
• Restrictions
  Prohibition on lending against certain securities (e.g., own securities, locked-in shares, short-term instruments) and for specific purposes like buybacks
• IPO/FPO/ESOP Financing
  Allowed up to ₹25 lakh per individual, with a maximum 75% funding and mandatory pledge of shares
• Exposure Limits
  Loans to individuals capped at ₹1 crore, with sub-limits for market investments
• CME Classification
  All such exposures treated as Capital Market Exposure, linking them to prudential norms
• Lending to CMIs
  Permitted for operational needs and guarantees, with restrictions on proprietary trading
• Collateral Requirements
  Most facilities must be fully secured, with prescribed margins and haircuts

Effective Date

Applicable from July 1, 2026, or earlier upon adoption by banks, replacing the February 2026 amendment.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13351

Revised Capital Market Exposure Norms for Small Finance Banks

The Reserve Bank of India has issued the Concentration Risk Management Amendment Directions, 2026 (Revised) for Small Finance Banks, aligning them with the updated Credit Facilities framework.

Key Highlights

• Unified Definitions: Key terms such as CMIs, collateral, and non-debt mutual funds are aligned with existing credit regulations.
• Expanded CME Scope: Capital Market Exposure (CME) now includes investment, credit, underwriting, IPCs, and derivative-related exposures.
• Exposure Limits:
  • Total CME capped at 40% of Tier 1 capital
  • Direct investment exposure capped at 20% of eligible capital
• Exclusions: Certain exposures, including investments in critical financial infrastructure and select interbank instruments, are excluded.
• Standardised Computation: Clear rules introduced for calculating exposures, including treatment of intra-day exposures and IPCs.
• Board Oversight: Banks must define internal policies for managing exposure limits.

Effective Date

Applicable from adoption of the Credit Facilities Amendment Directions, 2026 (Revised) or July 1, 2026, whichever is earlier.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13352

Updated Capital Rules for Payment Commitments by Small Finance Banks

The Reserve Bank of India has revised capital adequacy norms for Small Finance Banks under the Second Amendment Directions, 2026 (Revised).

Key Highlights

• IPCs as Financial Guarantees: Irrevocable Payment Commitments (IPCs) carry a 100% CCF
• Capital Requirement: Applicable only on the Capital Market Exposure (CME) portion
• Risk Weight: 125% on the CME amount

Effective Date

Applicable from adoption of the Credit Facilities Amendment Directions, 2026 (Revised) or July 1, 2026, whichever is earlier.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13353

Revised Disclosure Norms for Capital Market Exposure

The Reserve Bank of India has updated disclosure requirements for Small Finance Banks under the Second Amendment Directions, 2026 (Revised).

Key Highlights

• Detailed CME Disclosure: Banks must report a structured break-up of capital market exposures in Notes to Accounts
• Coverage Includes: Investments, loans for market activities (IPO/FPO/ESOPs), collateral-backed lending, exposure to CMIs, underwriting, IPCs, and derivative-related exposures
• Standardised Reporting: Total exposure must be computed as per Concentration Risk and Credit Facilities Directions

Effective Date

Applicable from adoption of the Credit Facilities Amendment Directions, 2026 (Revised) or July 1, 2026, whichever is earlier.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13354

RBI Trade Relief Measures for Export Financing

The Reserve Bank of India has issued the Trade Relief Measures Directions, 2026 to support exporters facing disruptions.

Key Highlights

• Extended Credit Period: Export credit tenor increased up to 450 days for facilities disbursed till June 30, 2026
• Repayment Flexibility: Existing packing credit can be settled through alternate sources, including domestic sales or other export orders
• Applicability: Covers banks, co-operative banks, NBFCs (Factors), and All-India Financial Institutions

Effective Date: Effective immediately.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13355

Lead Bank Assigned for Newly Formed Kushavati District in Goa

The Reserve Bank of India has notified the assignment of Lead Bank responsibility following the formation of a new district, Kushavati, in the state of Goa.

Key Update

• New District: Kushavati
• Lead Bank Assigned: State Bank of India
• District Working Code: 02W

Additional Information

There is no change in the Lead Bank assignments for the other districts in Goa.

This update follows the Government of Goa’s notification dated December 31, 2025, regarding the creation of the new district.

https://www.rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=13356