Updates

The Reserve Bank of India had on October
07, 2025, issued the draft Master Direction

• Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2025, seeking feedback from the stakeholders and the public. Accordingly, the Reserve Bank of India has issued the following Master Directions, specific to each category of regulated
  entity:
• Reserve Bank of India (Commercial Banks – Internal Ombudsman) Directions, 2026
• Reserve Bank of India (Small Finance Banks – Internal Ombudsman) Directions, 2026
• Reserve Bank of India (Payments Banks Internal Ombudsman) Directions, 2026
• Reserve Bank of India (Non-Banking Financial Companies – Internal Ombudsman) Directions, 2026
• Reserve Bank of India (Non-Bank Prepaid Payment Instruments Issuers – Internal Ombudsman) Directions, 2026
• Reserve Bank of India (Credit Information Companies – Internal Ombudsman) Directions, 2026

In reference to FMRD Master Direction No. 1/2016-17 – Master Direction

Risk Management and Inter-Bank Dealings and the Prudential Normson Capital Adequacy Directions,2025 applicable to the different Regulated Entities (REs) which inter alia specify the methodology for computation of Net Open Position and calculation of capital charge on foreign exchange risk. Reserve Bank has released the following draft Amendment Directions which modify the aforementioned instructions.

1. Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026
2. Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026
3. Reserve Bank of India (Regional Rural Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026
4. Reserve Bank of India (Local Area Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026
5. Reserve Bank of India (Urban Co-operative Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026
6. Reserve Bank of India (Rural Co-operative Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2026
7. Reserve Bank of India (All India Financial Institutions (AIFIs) – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026
8. Reserve Bank of India (Standalone Primary Dealers) Amendment Directions, 2026
   The comments on the draft Amendment Directions are invited from the Regulated Entities, market participants, and other interested parties till February 3, 2026. The comments / feedback may be submitted through the link under the ‘Connect 2 Regulate’ Section available on the Reserve Bank’s website or may alternatively be forwarded to The Chief General Manager Market Risk Group Or by email With the subject line ‘Feedback on Net Open Position – Revised Instructions’.

In compliance with Section 36 (2) of the Banking Regulation Act, 1949, the Reserve Bank of India released the Report on Trend and Progress of Banking in India 2024-25. This Report presents the performance of the banking sector, including commercial banks, co-operative banks and non-banking financial
institutions, during 2024-25 and 2025-26 so far.
Highlights

• The Indian commercial banking sector remained resilient during 2024-25, supported by double-digit balance sheet expansion. Deposits and credit of scheduled commercial banks (SCBs) grew in double digits, albeit with a moderation from the previous year.
• The capital to risk weighted assets ratio of SCBs was 17.4 per cent at endMarch 2025 and 17.2 per cent at end-September 2025.
• Asset quality strengthened further, with the gross non-performing assets (GNPA) ratio declining to a multi-decadal low of 2.2 per cent at end-March 2025 and 2.1 per cent at end-September 2025.
• Profitability of the SCBs remained robust with the return on assets (RoA) at 1.4 per cent and return on equity (RoE) at 13.5 per cent in 2024-25. During H1: 2025-26, RoA and RoE of the SCBs stood at 1.3 per cent and 12.5 per cent, respectively.
• The consolidated balance sheet of urban co-operative banks recorded higher growth in 2024-25 than that in the previous year. Their asset quality improved for the fourth consecutive year, alongside strengthening of their capital buffers and profitability.
• The non-banking financial companies continued to record double digit credit growth along with robust capital buffers. Their asset quality also improved during the year.

To enhance transparency in the foreig exchange market, in January 2024, Authorised Dealers were mandated to provide the mid-market mark / bid and ask price of the foreign exchange derivative contract / foreign currency interest rate derivative contract before entering into the contract with a retail user and include the same in the deal confirmation / term sheet. It is proposed to mandate Authorised Dealers to provide the details of transaction cost (remittance fees, foreign exchange rate, currency conversion charges etc.), associated with foreign exchange cash, foreign exchange tom and foreign exchange
spot contracts offered to retail users. The Reserve Bank of India placed on its website the Draft Circular on Disclosure of Transaction Cost for Foreign Exchange Transactions. Comments on the draft circular are invited from banks, market participants and other interested parties by January 09, 2026.

Attention of Authorised Persons is invited to A. P. (DIR Series) Circular No. 16 dated September 06, 2024, in terms of which, Authorised Dealer(AD) Category-I banks are required to submit ‘LRS daily return’(return code in CIMS:R010) on Centralised Information Management System (CIMS) (URL: https://cims.rbi.org.in), on the next working day. Further, the AD – Category–I banks are also required to include the details of LRS transactions undertaken by AD- Category–II banks / entities and FFMCs attached to them / maintaining an account with them, in their ‘LRS daily return’.

It has now been decided to introduce the submission of ‘LRS daily return’ by AD Category-II banks / entities and FFMCs also, by providing them access to CIMS. With this, AD Category-II banks/ entities and FFMCs shall be able to check the cumulative amount remitted by a resident individual (PAN-wise) under LRS during the current financial year, before facilitating their next requested LRS transaction.

Accordingly, all AD Category-II banks / entities and FFMCs are advised to submit the ‘LRS daily return’ (including ‘nil’ report, if applicable) with effect from January 01, 2026. Consequently, AD Category-II banks/ entities and FFMCs may discontinue submitting the LRS transactions through AD category-I banks.

All Authorised Persons, including the AD Category-II banks/ entities and FFMCs are advised to follow the instructions provided in the User Manual for submission of ‘LRS daily return’- under ‘Downloads’ on CIMS portal. It is further advised that AD Category-II banks/entities and FFMCs, who have been newly on-boarded onto CIMS may approach the Foreign Exchange Department of the concerned Regional Office of the Reserve Bank of India for resolving any issues in this regard. The Master Direction – Reporting under Foreign Exchange Management Act, 1999 is being updated to reflect this change.

The Reserve Bank through its public awareness initiatives, has been encouraging members of public to activate their inoperative accounts and claim their unclaimed deposits from the banks. In this endeavour, to encourage the banks to actively pursue customers/ depositors for re-activation of their inoperative accounts and return of their unclaimed amounts lying with Depositor Education and Awareness (DEA) Fund, the Reserve Bank of India today announced a ‘Scheme for Facilitating Accelerated Payout – Inoperative Accounts and Unclaimed Deposits’. The Scheme aims to reduce both the stock of existing unclaimed deposits and fresh accretion of flows to the DEA Fund. It will run for a period of one year, viz., October 01, 2025 to September 30, 2026.

The Reserve Bank of India (RBI) has issued seven Directions/Circulars, proposing to amend some of the extant Directions/Circulars applicable to banks and other regulated entities. While three of these amendments come into effect immediately (Part A), public comments are solicited on
the other four (Part B).

A. Directions which come into force from October 01, 2025
 Reserve Bank of India (Interest Rate on Advances) (Amendment Directions), 2025
 Reserve Bank of India (Lending Against Gold and Silver Collateral) – (1st Amendment) Directions, 2025
 Reserve Bank of India (Basel III Capital Regulations – Perpetual
Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas) Directions, 2025

B. Directions/Circulars which are being issued as drafts for public feedback
 Reserve Bank of India (Gold Metal Loans) Directions, 2025
 Large Exposures Framework (Amendment Circular), 2025; and Guidelines on Management of Intragroup Transactions and Exposures (Amendment Circular), 2025
 Draft Reserve Bank of India (Credit Information Reporting) (1st Amendment) Directions, 2025

The Reserve Bank of India (RBI) has issued a comprehensive regulatory framework titled the Reserve Bank of India (Co-Lending Arrangements) Directions, 2025, aimed at expanding and streamlining co-lending arrangements (CLAs) between banks, Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs), and certain other regulated entities. These guidelines will come into effect from January 1, 2026, though entities may voluntarily adopt them earlier.

The RBI says the move is intended to broaden the scope of co-lending beyond its earlier focus on priority sector lending, provide regulatory clarity, and address prudential as well as customer protection concerns.

RBI has issued updated Master Directions for Electronic Trading Platforms (ETPs), effective June 16, 2025, replacing the 2018 framework. These directions strengthen authorization, governance, risk management, and reporting norms for entities operating non-exchange trading platforms in India.

Premji Invest is set to acquire a 20% stake in a new-age NBFC being launched by former ICICI Bank executive Bijith Bhaskar. The venture will focus on secured, tech-backed MSME lending, aiming to raise ₹500 crore.

Key Amendments Summary:

1. Low-risk individuals get more time – Transactions may continue, with KYC due within one year of the due date or by June 30, 2026—whichever is later. Accounts remain under regular monitoring.
2. Empowerment of Business Correspondents (BCs) – Authorized BCs can collect KYC self-declarations, via biometrics or in person, and submit them electronically or physically to banks. Banks must update records and notify customers once processed
3. Mandatory advance notices & reminders – Regulated Entities (REs) must issue at least three advance notices (one via letter) before KYC expiry, and three reminders (one via letter) if due date passes. Communication should explain instructions, escalation mechanisms, and possible consequences; implementation deadline is Jan 1, 2026
   Why this matters:
   • Simplifies KYC for low-risk customers and those in underserved regions
   • Strengthens financial inclusion by leveraging BC networks Reinforces compliance by ensuring proactive communication.
   For details, please refer to the Master Direction attached

The Reserve Bank of India (RBI) issued the “Digital Lending Directions, 2025” on May 8, 2025, to regulate digital lending practices. These guidelines aim to enhance transparency, protect borrowers, and ensure ethical conduct in digital lending operations.