RBI Annual Report FY 2025-26 covers major banking regulation changes including ECL, Basel III, digital lending, gold loans, KYC, co-lending, LCR, AIFs and climate risk.
The RBI Annual Report FY 2025-26 records one of the most extensive phases of regulatory consolidation and reform in India’s banking and financial sector. During the year, the Reserve Bank worked simultaneously on credit-risk management, liquidity standards, digital lending, KYC, co-lending, project finance, gold and silver collateral, AIF exposure, climate risk, digital banking, NBFC regulation and regulatory simplification. For the RBI Grade B Promotion Exam, RBI Grade B, UPSC, IBPS and banking interviews, the important task is not merely remembering circular names—it is understanding what changed, why RBI changed it and what risk or problem the reform addresses.
1. The Big Regulatory Theme of FY 2025-26
The RBI’s regulatory agenda during 2025-26 was built around two broad objectives:
- Harmonisation and consolidation of existing regulatory instructions; and
- Establishing clear prudential and conduct-related guardrails for evolving credit-intermediation models and financial instruments.
The scale was enormous:
- more than 11,000 circulars/instructions were consolidated;
- into 244 Master Directions;
- covering 30 functions/areas;
- across 11 types of regulated entities.
This is perhaps the single most important structural fact from this chapter.
Remember
11,000+ instructions → 244 Master Directions → 30 areas → 11 types of REs
2. Why Did RBI Consolidate Regulations?
Over time, financial regulation had accumulated through numerous:
- circulars;
- notifications;
- master circulars;
- directions; and
- amendments.
This created two problems:
Problem 1: Compliance burden
Regulated entities had to navigate a very large volume of regulatory material.
Problem 2: Accessibility
Finding the applicable rule for a particular type of regulated entity could itself become difficult.
Therefore, RBI undertook consolidation on an “as-is” basis.
That qualification is extremely important.
“As-is” means:
The exercise was primarily consolidation, not a wholesale substantive review of every regulation.
A separate regulatory review mechanism was established for systematic review of the substance of regulations.
3. 244 Master Directions — Entity-Wise Distribution
| Regulated Entity | Master Directions |
|---|---|
| Commercial Banks | 32 |
| Small Finance Banks | 30 |
| Payments Banks | 17 |
| Local Area Banks | 25 |
| Regional Rural Banks | 22 |
| Urban Co-operative Banks | 26 |
| Rural Co-operative Banks | 25 |
| All India Financial Institutions | 19 |
| NBFCs | 35 |
| Asset Reconstruction Companies | 4 |
| Credit Information Companies | 2 |
| Digital Banking Channels Authorisation | 7 |
| Total | 244 |
The consolidation also resulted in the repeal of 9,445 circulars, including master circulars and Master Directions in the relevant regulatory area.
4. Public Consultation and Regulatory Review
The RBI did not simply publish the consolidated framework without consultation.
Draft Master Directions were uploaded for public comments.
More than 770 comments were received from stakeholders.
Suggestions relating to:
- drafting errors;
- duplication;
- minor omissions; and
- other issues
were examined before the final consolidated Master Directions were released on November 28, 2025.
The RBI subsequently established a Regulatory Review Cell and an external Advisory Group on Regulation (AGR).
A new Connect 2 Regulate platform was also launched to broaden stakeholder participation in policy formulation and regulatory review.
5. Framework for Formulation of Regulations
The Framework for Formulation of Regulations was issued on May 7, 2025.
It establishes broad principles for:
- formulation;
- amendment; and
- review
of RBI regulations.
The objective is to make the regulatory process:
standardised + transparent + consultative.
The institutional review mechanism became operational from October 1, 2025.
Exam Insight
This represents a shift from:
Regulate → issue circular → amend
towards:
Formulate → consult → review → consolidate → periodically reassess
6. Digital Lending Directions, 2025
Digital lending was one of the major areas of regulatory attention.
Final consolidated Digital Lending Directions, 2025 were issued on May 8, 2025.
The purpose was to streamline existing instructions while strengthening consumer protection.
Two particularly important reforms were introduced.
Reform 1: Comprehensive display of loan offers
Digital lending platforms must provide a comprehensive digital view of matched loan offers with standardised disclosures.
The names of unmatched lenders also have to be displayed.
Reform 2: Public directory of Digital Lending Apps
A public directory of Digital Lending Apps (DLAs) was operationalised.
Its objective is to:
- help borrowers verify apps; and
- curb unauthorised lending applications.
Exam Memory
Digital Lending → transparency + verification + consumer protection
7. Lending Against Gold and Silver Collateral
The RBI issued final directions on June 6, 2025 addressing prudential and conduct-related gaps in lending against gold and silver collateral.
The framework also aimed at improving credit availability for small-value borrowers.
Revised LTV ratios
| Loan amount | Maximum LTV |
|---|---|
| Up to ₹2.5 lakh | 85% |
| Above ₹2.5 lakh to ₹5 lakh | 80% |
| Above ₹5 lakh | 75% |
The framework also removed restrictions on co-operative banks and RRBs regarding bullet repayment of loans against gold collateral.
Exam Trap
Do not remember merely “gold loan LTV.”
Remember the three slabs:
85% → 80% → 75%
as loan size rises.
8. KYC Directions, 2025 — Making Compliance Easier
The RBI issued instructions on June 12 and August 14, 2025 to ease KYC and KYC-updation processes for both customers and regulated entities.
Major reforms included:
- CKYCR as the first reference point for KYC;
- use of Business Correspondents (BCs) for KYC updation;
- no denial of services to the public, particularly economically/socially disadvantaged persons and PwDs;
- all transactions permitted for low-risk individual customers;
- KYC updation within one year from the due date or June 30, 2026, whichever is later;
- mandatory intimation for periodic KYC updation.
The policy logic
KYC compliance should protect the system without unnecessarily excluding legitimate customers.
That balance is crucial.
9. Project Finance Directions, 2025
Final Project Finance Directions, 2025 were issued on June 19, 2025.
They establish a principle-based framework for dealing with stress in project finance.
One important provision concerns the Date of Commencement of Commercial Operations (DCCO).
Deferment of DCCO could be permitted without asset-classification downgrade up to:
- 2 years for non-infrastructure projects;
- 3 years for infrastructure projects.
The framework also included risk-mitigation requirements such as:
- common loan agreements;
- minimum land availability before disbursal; and
- enhanced lender participation.
Why this matters
Project finance is particularly vulnerable to:
- construction delays;
- land issues;
- cost overruns;
- regulatory problems; and
- delays in commencement of operations.
The framework therefore attempts to permit viable projects to absorb genuine delays without weakening prudential discipline.
10. Co-Lending Framework Expanded Beyond Priority Sector
Earlier co-lending guidelines were limited to priority sector loans.
On August 6, 2025, RBI issued revised directions expanding the framework to all loans.
The revised framework:
- clearly delineated the roles of originating and partner regulated entities;
- reduced the minimum share of individual loans that an RE must retain from 20% to 10%;
- permitted first-loss default guarantee cover up to 5%.
Exam Numbers
Minimum retained share: 20% → 10%
First-loss default guarantee: up to 5%
11. Why Co-Lending Matters
Co-lending attempts to combine the respective strengths of different financial intermediaries.
For example, a bank may have:
- lower-cost funding;
- regulatory infrastructure; and
- balance-sheet capacity,
while another lender may have:
- specialised origination;
- customer reach; or
- expertise in particular segments.
The regulatory challenge is to ensure that the partnership does not result in:
- unclear responsibility;
- excessive risk transfer; or
- weakened underwriting.
Hence the importance of clearly defining the roles of the participating REs.
12. Non-Fund Based Credit Facilities
Comprehensive guidelines on non-fund based (NFB) credit facilities were issued on August 6, 2025.
They cover instruments such as:
- guarantees;
- letters of credit; and
- co-acceptances.
The guidelines explicitly recognised electronic guarantees.
They also introduced prudential safeguards, including specific limits for guarantees issued by:
- cooperative banks;
- RRBs; and
- LABs.
The list of REs permitted to issue Partial Credit Enhancement (PCE) was expanded and capital requirements for PCE were rationalised.
13. AIF Investment by Regulated Entities
Final guidelines on regulated-entity investment in Alternative Investment Funds (AIFs) were issued on July 29, 2025.
The framework capped:
- individual RE contribution at 10% of the AIF corpus;
- aggregate contribution by REs at 20% of the corpus.
Certain flexibility was provided for RE investment in AIFs having downstream investment in debtor companies.
Easy Recall
AIF exposure: 10% individual / 20% collectively
14. Pre-Payment Charges on Loans
Final instructions issued on July 2, 2025 removed pre-payment charges on specified floating-rate loans to:
- individuals; and
- Micro and Small Enterprises (MSEs),
subject to applicable thresholds.
The RBI also addressed restrictive contractual practices.
Policy Objective
The reform improves borrower mobility.
If borrowers can shift lenders without facing excessive pre-payment penalties, competition among lenders can increase.
15. Deceased Customers — Standardised Claim Settlement
Final instructions issued on September 26, 2025 created a harmonised framework for settlement of claims relating to deceased customers.
It standardised documentation for claims involving:
- deposit accounts;
- safe-deposit lockers; and
- articles held in safe custody.
The objective was to make the process easier for:
- nominees; and
- legal heirs.
This is a classic example of customer-centric regulation.
16. Floating-Rate Loans: Spread Reset
The framework governing interest rates on advances was amended on September 29, 2025.
Banks were allowed to reduce certain spread components, excluding the credit-risk premium, at a frequency shorter than once in three years for customer retention, subject to:
- justifiable grounds;
- non-discriminatory treatment; and
- the bank’s policy.
Regulated entities may also provide borrowers an option to switch to a fixed rate at the time of reset, subject to their Board-approved policy.
Key Distinction
Credit-risk premium is excluded from the flexibility relating to reduction of spread components.
17. Accelerated Payout Scheme for Inoperative Accounts
RBI launched the:
Scheme for Facilitating Accelerated Payout – Inoperative Accounts and Unclaimed Deposits
The scheme ran from:
October 1, 2025 to September 30, 2026.
Its objectives were to:
- reactivate inoperative accounts;
- return unclaimed amounts to customers; and
- reduce both existing unclaimed deposits and fresh accretion to the DEA Fund.
This complements RBI’s broader emphasis on:
re-KYC + financial inclusion + customer protection + return of unclaimed money.
18. Trade Relief Measures, 2025
Against the backdrop of global trade disruptions, RBI issued Trade Relief Measures Directions, 2025 on November 14, 2025.
For eligible borrowers, measures included:
- moratorium on instalments of principal and/or interest falling due between September 1 and December 31, 2025;
- deferment of recovery of interest on working-capital facilities during the specified period;
- interest application on an accrual but simple-interest basis during the moratorium/deferment period.
Why important?
This is an example of regulatory flexibility during an external shock, while maintaining a defined prudential framework.
19. Gold Metal Loans
Revised instructions were issued on December 4, 2025.
The eligible borrower base was expanded to include a wider category of jewellers engaged in:
- manufacturing; and/or
- sale of jewellery
in domestic and/or export markets.
For non-exporters, repayment tenor was extended:
180 days → 270 days
to align better with working-capital cycles.
20. Large Borrowers: Existing Guidelines Repealed
The guidelines on enhancing credit supply to large borrowers through a market mechanism were repealed on December 4, 2025, effective January 1, 2026.
The RBI’s reasoning was that the broader objective of reducing dependence of large borrowers on bank funding had largely been achieved.
Going forward, banks were required to internally monitor risks arising from highly leveraged large exposures.
Regulatory Philosophy
The RBI did not simply retain a rule after its objective had largely been achieved.
Instead:
Objective achieved → regulation reconsidered → internal risk monitoring strengthened
21. Cooperative Bank Business Authorisation
Final directions on business authorisation for cooperative banks were issued on December 4, 2025.
The approach sought to balance:
greater operational autonomy + stronger safeguards
The calibrated relaxation was intended to support:
- wider credit outreach;
- technology-driven solutions; and
- localised development priorities.
22. Basic Savings Bank Deposit Accounts
Revised BSBD Account guidelines were issued on December 4, 2025.
The reforms enhanced customer benefits through:
- expanded free services;
- digital banking access;
- simplified conversion; and
- removal of restrictions on holding other accounts.
Why it matters for financial inclusion
BSBD accounts are part of the basic banking-access infrastructure.
Therefore:
More flexibility → greater usability → deeper financial inclusion
23. Current Accounts, Cash Credit and Overdraft Accounts
Revised instructions were issued on December 11, 2025 to strengthen:
- credit discipline;
- transaction monitoring; and
- utilisation monitoring.
A bank having at least 10% share of either:
- the banking system’s aggregate exposure to the borrower; or
- aggregate fund-based exposure to the borrower
could maintain current and overdraft accounts without restrictions.
Banks not meeting the criterion could maintain collection accounts.
Exam Number
10% share = important threshold
24. Lending to Related Parties
Revised directions were issued on January 5, 2026 to strengthen governance and conflict management.
Important changes included:
- overall responsibility on the Board;
- mandatory recusal of interested parties; and
- introduction of “Reciprocally Related Person”.
The latter addresses risks of quid-pro-quo lending.
Core Principle
Related-party lending → conflict-of-interest risk → stronger Board responsibility and recusal
25. Cooperative Bank Director Tenure
Draft amendment directions for UCBs and rural cooperative banks were issued on January 8, 2026.
They proposed:
10 years continuous tenure → 3-year cooling-off period
before a director could rejoin the same bank’s Board.
The cooling-off requirement was intended to strengthen corporate governance while allowing eligible directors to serve on other banks’ Boards during the period.
26. Natural-Calamity Relief Framework
Draft revised directions were issued on January 27, 2026 concerning exposures affected by natural calamities.
The framework allowed REs to design and implement resolution plans with prescribed windows for invoking the resolution framework.
Restructured exposures could retain:
- Standard classification;
- accrual-based income recognition; and
- lower additional provisioning compared with other restructured assets,
subject to the framework.
The final directions were issued after FY-end, on April 29, 2026.
Exam Caution
The draft was part of FY 2025-26 activity, but the final directions came after March 31, 2026.
Do not incorrectly describe the April 29 finalisation as a FY 2025-26 final regulatory measure.
27. UCB Lending Norms
Draft directions on UCB lending norms were issued on February 10, 2026.
The proposals covered:
- rationalisation of the definition of unsecured advances;
- enhanced limits for unsecured advances;
- disclosure requirements;
- housing-loan tenor and moratorium requirements for Tier 3 and Tier 4 UCBs.
Final directions were issued on April 29, 2026, after examination of public feedback.
28. Capital Market Exposure Directions
Revised Capital Market Exposure Directions, 2026 were issued on March 30, 2026, with effectiveness from July 1, 2026.
Key changes included:
- rationalised limits for lending against securities to individuals;
- updated exposure norms for capital-market intermediaries;
- permission for commercial banks, excluding SFBs, to finance acquisition of control in companies, subject to prudential safeguards.
Timeline Trap
Issued: March 30, 2026
Effective: July 1, 2026
29. Customer Liability in Digital Transactions
RBI reviewed the framework governing customer liability for unauthorised electronic banking transactions.
Draft instructions issued on March 6, 2026 proposed:
- expanding coverage to additional categories of fraudulent electronic banking transactions;
- reducing the time banks take to process fraud-related complaints;
- introducing compensation for small-value fraudulent electronic banking transactions.
This reflects the growing importance of consumer protection in digital finance.
30. Dividend Declaration by Commercial Banks
Revised instructions on declaration of dividends by commercial banks were issued on March 10, 2026.
Banks with:
- higher net profits;
- lower net NPAs; and
- stronger capital-adequacy cushions
would be eligible to declare higher dividends, subject to the applicable framework.
Regulatory Principle
Stronger balance sheet → greater dividend flexibility
The framework therefore links shareholder distributions with financial strength.
31. Liquidity Coverage Ratio — Basel III
RBI amended the Liquidity Coverage Ratio (LCR) guidelines through a circular dated April 21, 2025, effective April 1, 2026.
Important changes included:
1. Additional run-off factor
A 2.5% additional run-off factor was introduced for:
- retail deposits; and
- unsecured wholesale funding from non-financial small-business customers
with internet/mobile banking access.
2. HQLA haircuts
Haircuts on market values of G-secs classified as Level 1 High Quality Liquid Assets (HQLA) were aligned with margin requirements under:
- LAF; and
- MSF.
3. Other Legal Entities
The OLE category was clarified to include funding/deposits from:
- banks;
- insurance companies;
- financial institutions; and
- entities engaged in financial services.
32. Why LCR Is Important
The Liquidity Coverage Ratio is fundamentally about short-term liquidity resilience.
The regulatory objective is to ensure that banks have sufficient high-quality liquid assets to withstand stressed liquidity outflows.
The FY 2025-26 changes therefore need to be understood as part of the RBI’s broader effort to strengthen:
short-term liquidity resilience + realistic stress assumptions + Basel III alignment.
33. Expected Credit Loss — ECL Framework
The ECL framework was one of the major regulatory developments planned during the year.
The final RBI Commercial Banks – Asset Classification, Provisioning and Income Recognition Directions, 2026, incorporating the ECL framework, were issued on April 27, 2026.
The framework provides for:
- a staging framework for asset classification;
- forward-looking provisioning; and
- adoption of the Effective Interest Rate (EIR) method.
The stated objectives are to:
- strengthen credit-risk management;
- improve comparability across regulated entities; and
- bring the regulatory framework closer to internationally accepted financial-reporting principles.
Exam Caution
The agenda and preparatory work belong to FY 2025-26, but the final Directions were issued April 27, 2026, after the financial year.
34. Basel III — Credit Risk Standardised Approach
Draft directions on capital charges for credit risk under the Basel III standardised approach were issued on October 7, 2025.
The final directions were released on April 27, 2026 after considering feedback.
Important proposed changes included:
- more granular and risk-sensitive risk weights;
- lower risk weight for unrated MSMEs, with expanded MSME coverage;
- realignment of credit conversion factors for non-market off-balance-sheet exposures.
The revised standards are to become effective from:
April 1, 2027.
35. Counterparty Credit Risk — SA-CCR
Draft guidelines on the Standardised Approach for Counterparty Credit Risk (SA-CCR) were under finalisation.
A detailed impact study had already been completed.
This forms part of RBI’s continuing effort to align the prudential framework with Basel III standards.
36. Model Risk Management
The RBI also developed draft directions on Model Risk Management.
The framework applies to models generally, including models based on:
- Artificial Intelligence; and
- Machine Learning.
The framework also incorporates recommendations of the FREE-AI Committee.
At the time of the Annual Report, the draft directions were in the final stages of completion.
Why this matters
As banks increasingly rely on models for:
- credit assessment;
- fraud detection;
- risk measurement;
- pricing; and
- decision-making,
model failure can become a financial risk.
Hence:
AI risk is also model risk.
37. Climate Risk Regulation
The RBI’s climate-risk agenda covered several components:
- climate-related disclosures;
- climate scenario analysis;
- stress testing;
- Reserve Bank–Climate Risk Information System (RB-CRIS);
- principles for effective management and supervision of climate-related financial risks;
- review of green-deposit regulations; and
- sustainability-linked loan guidelines.
These initiatives were at advanced stages of implementation, subject to ecosystem capacity and maturity.
This connects directly with Part 15’s discussion of climate transition risk and financial stability.
38. Mis-Selling of Financial Products
The RBI proposed amendments to directions concerning:
Advertising, Marketing and Sales of Financial Products and Services by Regulated Entities
Draft amendment directions were issued on February 11, 2026 for public consultation.
The objective was to address concerns relating to mis-selling of financial products and services, including products of the regulated entity and third-party products.
This demonstrates that RBI’s regulatory framework increasingly covers not just prudential safety but also conduct risk.
39. Digital Banking Channels
Draft directions on Digital Banking Channels Authorisations, 2025 were issued on July 21, 2025.
They updated prudential and technological criteria for digital banking channels, including:
- mobile banking; and
- internet banking.
Following stakeholder feedback, entity-wise final Master Directions were issued on November 28, 2025, effective January 1, 2026.
Core Idea
Digital banking requires two types of safeguards:
Prudential safeguards + technological safeguards
40. Type I NBFCs
The RBI comprehensively reviewed the regulatory framework for NBFCs that:
- do not access public funds; and
- do not have customer interface.
Draft amendment directions were issued on February 10, 2026.
One proposal was exemption from registration for such NBFCs having asset size below ₹1,000 crore, subject to specified conditions.
Final Amendment Directions were issued after feedback on April 29, 2026.
Again, distinguish:
FY 2025-26 review/draft → post-year-end finalisation.
41. RAMS — Regulatory Application Management System
RBI also pursued internal digital transformation through the:
Regulatory Application Management System (RAMS).
The platform is designed for end-to-end digital transformation of regulatory applications.
Its objective is to provide a lifecycle approach to regulation of regulated entities.
By the end of FY 2025-26:
- Phase I requirement gathering and technical development had been completed;
- Phase I was ready for deployment;
- Phase II requirement gathering had commenced.
Exam Connection
RAMS = internal regulatory-process digitisation
Do not confuse it with the Regulatory Sandbox.
42. Regulatory Sandbox vs RAMS
| Feature | Regulatory Sandbox | RAMS |
|---|---|---|
| Main purpose | Test innovative financial products/services | Digitise regulatory applications |
| External ecosystem | FinTechs/innovators | RBI’s regulatory processing |
| Focus | Innovation | Regulatory workflow |
| Nature | Controlled experimentation | End-to-end digital processing |
This distinction can easily become an objective-question trap.
43. What Is the Bigger Story Behind All These Reforms?
At first glance, the chapter appears to be a long list of circulars.
That is the wrong way to study it.
The reforms fall into six major themes.
Theme 1 — Prudential resilience
Examples:
- ECL;
- LCR;
- Basel III;
- SA-CCR;
- AIF exposure limits.
Theme 2 — Credit-market development
Examples:
- co-lending;
- project finance;
- gold/silver collateral;
- NFB facilities.
Theme 3 — Digital finance
Examples:
- digital lending;
- digital banking;
- digital guarantees;
- digital customer-liability framework.
Theme 4 — Consumer protection
Examples:
- KYC;
- pre-payment charges;
- deceased customer claims;
- mis-selling;
- unclaimed deposits.
Theme 5 — Emerging risks
Examples:
- climate risk;
- model risk;
- AI/ML;
- cyber risk.
Theme 6 — Ease of doing business
Examples:
- regulatory consolidation;
- RAMS;
- rationalisation of regulatory processes.
44. Cause → Development → Effect → Significance
| Problem/Risk | RBI Response | Expected Effect |
|---|---|---|
| Excessive regulatory complexity | 244 Master Directions | Lower compliance burden |
| Digital lending opacity | DLA directory + standardised offers | Better borrower protection |
| Gold-loan prudential gaps | Revised LTV framework | Safer collateral-based lending |
| KYC compliance burden | CKYCR/BC-based updation | Easier compliance and inclusion |
| Project-finance delays | Principle-based resolution framework | Better stress management |
| Co-lending expansion | Roles + 10% retention + 5% FLDG | Controlled credit partnerships |
| Liquidity stress | Revised LCR | Stronger liquidity resilience |
| Climate transition | Disclosure + stress testing + RB-CRIS | Better climate-risk management |
| AI/model risk | Model Risk Management | Stronger model governance |
| Digital fraud | Liability framework + security controls | Consumer protection |
| Mis-selling | Conduct-related directions | Better customer outcomes |
45. The Most Important Numbers to Memorise
Regulation
11,000+ instructions consolidated
244 Master Directions
9,445 circulars repealed
770+ stakeholder comments
Gold/Silver Loans
85% LTV — up to ₹2.5 lakh
80% — above ₹2.5 lakh to ₹5 lakh
75% — above ₹5 lakh
Co-Lending
20% → 10% minimum retained share
5% maximum first-loss default guarantee cover
AIF
10% individual RE contribution
20% aggregate RE contribution
Current/OD Accounts
10% banking-system exposure threshold
Gold Metal Loans
180 → 270 days repayment tenor for non-exporters
Capital Market Exposure
Issued March 30, 2026
Effective July 1, 2026
Basel III Credit Risk
Final standards effective:
April 1, 2027
Type I NBFC proposal
Asset threshold:
₹1,000 crore
LCR
Additional run-off factor:
2.5%
46. Important Dates — Revision Table
| Date | Development |
|---|---|
| April 21, 2025 | LCR amendment circular |
| May 7, 2025 | Framework for Formulation of Regulations |
| May 8, 2025 | Digital Lending Directions |
| June 6, 2025 | Gold/Silver collateral lending directions |
| June 12, 2025 | KYC-related instructions |
| June 19, 2025 | Project Finance Directions |
| July 2, 2025 | Pre-payment charge instructions |
| July 21, 2025 | Draft Digital Banking Channels Directions |
| July 29, 2025 | AIF investment guidelines |
| August 6, 2025 | NFB facilities + co-lending directions |
| August 14, 2025 | Further KYC instructions |
| September 26, 2025 | Deceased customer claims framework |
| September 29, 2025 | Interest Rate on Advances amendment |
| November 14, 2025 | Trade Relief Measures |
| November 28, 2025 | Consolidated MDs + final digital banking MDs |
| December 4, 2025 | Gold Metal Loans + large-borrower repeal + cooperative business authorisation + BSBD |
| December 11, 2025 | Current/Cash Credit/OD account instructions |
| January 5, 2026 | Related-party lending directions |
| January 8, 2026 | Cooperative-bank director tenure draft |
| January 27, 2026 | Natural-calamity resolution draft |
| February 10, 2026 | UCB lending + Type I NBFC drafts |
| March 6, 2026 | Digital transaction customer-liability draft |
| March 10, 2026 | Dividend directions |
| March 30, 2026 | Capital Market Exposure Directions |
47. What Should You NOT Confuse in the Exam?
1. Consolidation vs review
The 244-MD exercise was initially conducted on an as-is basis.
2. Draft vs final
Several important frameworks were drafted during FY 2025-26 but finalised after March 31, 2026.
3. Prudential vs conduct regulation
ECL/LCR/Basel III → prudential
Mis-selling/KYC/customer liability → conduct/consumer protection
4. Digital Lending vs Digital Banking
They are related but distinct regulatory areas.
5. AIF limit vs Co-lending limit
AIF = 10% individual / 20% aggregate
Co-lending retention = 10%
6. Gold-loan LTV vs Gold Metal Loan tenor
Gold/silver collateral: 85/80/75%
Gold Metal Loan: non-exporter tenor 270 days.
48. Probable Exam Questions
Q1. How many regulatory instructions were consolidated into Master Directions?
More than 11,000.
Q2. Into how many Master Directions?
244.
Q3. How many circulars were repealed?
9,445.
Q4. What is the LTV for loans against gold/silver up to ₹2.5 lakh?
85%.
Q5. What is the revised minimum retained share under co-lending?
10%.
Q6. What is the maximum first-loss default guarantee cover under co-lending?
5%.
Q7. What is the individual RE investment limit in an AIF?
10% of corpus.
Q8. What is the aggregate RE investment limit in an AIF?
20% of corpus.
Q9. What is the additional LCR run-off factor?
2.5%.
Q10. What is the threshold for a bank to maintain current/OD accounts without restriction under the revised framework?
10% share of the relevant banking-system exposure measure.
Q11. What is the new gold metal loan repayment tenor for non-exporters?
270 days, up from 180 days.
Q12. When did the consolidated Master Directions become available?
November 28, 2025.
Q13. What is RAMS?
Regulatory Application Management System, intended for end-to-end digital transformation of regulatory applications.
Q14. What are the key components of the revised project-finance framework?
A principle-based stress-resolution framework, including specified DCCO deferment limits and risk-mitigation requirements.
Key Takeaways
- FY 2025-26 witnessed a major consolidation of RBI regulations.
- More than 11,000 instructions were consolidated into 244 Master Directions.
- 9,445 circulars were repealed in the regulation-consolidation exercise.
- The consolidation was initially done on an “as-is” basis.
- The Regulatory Review Cell, Advisory Group on Regulation and Connect 2 Regulate strengthened the review process.
- Digital Lending Directions strengthened transparency and created a public DLA directory.
- Gold/silver loan LTVs became 85% / 80% / 75% across the three loan slabs.
- CKYCR was made the first reference point for KYC, with BC-assisted KYC updation.
- Co-lending was expanded from priority-sector loans to all loans.
- Co-lending retention was reduced from 20% to 10%, with first-loss default guarantee cover up to 5%.
- AIF investment limits were 10% for an individual RE and 20% collectively.
- LCR reforms introduced an additional 2.5% run-off factor for specified funding categories.
- Project-finance rules introduced a principle-based framework and permitted specified DCCO deferment without asset-classification downgrade.
- RBI increasingly incorporated climate risk, model risk, AI and digital resilience into regulation.
- Customer protection expanded through reforms concerning pre-payment charges, deceased customers, mis-selling and digital fraud.
- The regulatory framework for related-party lending was strengthened through Board responsibility and mandatory recusal.
- RAMS represents RBI’s move towards end-to-end digital regulatory processing.
- Several FY 2025-26 initiatives were drafts or preparatory measures whose final implementation occurred after March 31, 2026—an important exam distinction.
One-Minute Revision Sheet
Regulatory Consolidation
11,000+ → 244 MDs → 9,445 repealed
Gold/Silver Collateral
85% → 80% → 75%
Co-Lending
20% → 10% retained share
FLDG → 5%
AIF
10% individual
20% aggregate
LCR
+2.5% additional run-off
Current/OD Accounts
10% exposure-share threshold
Gold Metal Loan
180 → 270 days
Digital Lending
Matched offers + DLA public directory
KYC
CKYCR first reference + BC updation
Project Finance
DCCO deferment: 2 years non-infra / 3 years infra
Regulatory Architecture
Formulation → Consultation → Consolidation → Review → Digital processing
Core Philosophy
Simplify the rulebook without weakening prudential safeguards; encourage innovation without allowing regulatory arbitrage; and improve customer access without compromising financial stability.
Part 16 complete.
