Updates

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.

The Reserve Bank of India’s notification outlines the issuance of power and other bonds totaling ₹12,847 crore by 26 State Governments under a One-Time Settlement Scheme aimed at addressing State Electricity Boards’ dues. This measure significantly impacted the fiscal deficit, with power sector-related expenditures accounting for 29.2% of the Gross Fiscal Deficit in the revised estimates for 2003-04.

The Reserve Bank of India’s Master Circular (dated July 1, 2009) provides guidelines for detecting, reporting, and managing frauds in commercial banks and financial institutions. Key provisions include:

• Mandatory reporting of frauds of ₹1 lakh and above to the RBI.
• Detailed reporting for frauds over ₹1 crore to RBI, CBI, or other authorities.
• Quarterly and annual fraud reports are required.
• Banks must assess staff accountability and strengthen internal controls.
• A special committee should monitor major frauds (₹1 crore+).

The circular aims to enhance transparency and strengthen fraud prevention in the banking sector.

Starting May 1, 2025, the Reserve Bank of India (RBI) will require all regulated entities—including banks, NBFCs, and financial institutions—to submit applications for regulatory authorizations, licenses, and approvals exclusively through its PRAVAAH portal. Launched in May 2024, PRAVAAH (Platform for Regulatory Application, Validation and Authorization) is a centralized, web-based system designed to digitize and streamline communication between the RBI and supervised entities. The portal has processed around 4,000 applications so far and offers features such as real-time tracking, downloadable forms, and user support tools. The move aims to improve efficiency, reduce manual processes, and ensure standardization across the financial sector.

The Master Direction – Core Investment Companies (Reserve Bank) Directions, 2016 (updated as on May 05, 2025) provides a regulatory framework for Core Investment Companies (CICs) in India. It outlines guidelines on registration requirements, capital adequacy, corporate governance, and permissible investments to ensure financial stability and effective supervision of CICs.

The Master Directions – Mortgage Guarantee Companies (Reserve Bank) Directions, 2016 (updated as on May 05, 2025) establish a comprehensive regulatory framework for Mortgage Guarantee Companies (MGCs) in India. These directions outline the requirements for registration, capital adequacy, governance, and operational norms to ensure the financial stability and integrity of MGCs within the housing finance sector.

The Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 (updated as on May 05, 2025) provides a comprehensive regulatory framework for Housing Finance Companies (HFCs). It outlines guidelines on capital adequacy, asset classification, provisioning norms, and corporate governance to ensure the sound functioning of HFCs and protect the interests of stakeholders.

The Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 (updated as on May 05, 2025) introduces a scale-based regulatory framework categorizing NBFCs into four layers based on their size, activity, and risk profile. This approach aims to enhance prudential regulation, ensure financial system stability, and protect the interests of investors and depositors by tailoring oversight to the specific characteristics of each NBFC category.

The Master Direction – Standalone Primary Dealers (Reserve Bank) Directions, 2016 (updated as on May 05, 2025) provides a comprehensive regulatory framework for Standalone Primary Dealers (SPDs) in India. These guidelines establish eligibility criteria, operational norms, capital adequacy requirements, and governance standards to ensure SPDs effectively contribute to the development and stability of the government securities market.

SPDs play a crucial role in the primary and secondary markets for government securities by participating in auctions, market-making, and providing liquidity. The updated directions aim to enhance transparency, risk management, and compliance within the SPD sector, aligning with global best practices and supporting the Reserve Bank of India’s monetary policy objectives.

The Master Direction – Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017 (updated as on February 27, 2025) provides a regulatory framework for NBFC-P2P platforms. These guidelines aim to ensure transparency, protect participants, and mitigate risks in the peer-to-peer lending ecosystem.