Corporate And Commercial Updates - July 2026

1. SECURITIES EXCHANGE BOARD OF INDIA (SEBI) UPDATES

SEBI Revises Investor Protection Fund Utilisation Framework for Depositories

Circular dated July 7, 2026

SEBI has revised the framework governing the utilisation of interest and income earned on the Investor Protection Fund (IPF) maintained by Depositories, introducing greater operational flexibility while continuing to prioritise investor protection.

Under the earlier framework, Depositories were required to transfer the entire interest or income earned from IPF investments back into the IPF corpus. Pursuant to the revised norms, Depositories must now credit at least 95% of the annual interest or income to the corpus. The remaining up to 5% may be utilised towards specified administrative expenses of the IPF Trust, including costs relating to dedicated personnel, statutory levies, audit fees, and other regulatory expenses.

SEBI has clarified that any expenditure exceeding the prescribed 5% threshold must be borne by the Depository itself, while any unutilised portion of the permissible allocation must be transferred back to the IPF corpus at the end of the financial year.

The revised framework has been introduced follow-ing industry representations, recommendations of the Secondary Market Advisory Committee (SMAC), public consultation, and SEBI's internal deliberations. The objective is to align the treatment of Investor Protection Funds maintained by Depo-sitories with the framework already applicable to Stock Exchanges, thereby ensuring greater regulat-ory consistency across Market Infrastructure Instit-utions (MIIs).

The revised provisions shall come into force on 1 September 2026. Depositories have been directed to amend their bye-laws, rules, and operational proce-sses wherever necessary and ensure appropriate diss-emination of the revised framework among market participants.

Why it matters

The amendment provides limited administrative fle-xibility without diluting the primary objective of strengthening investor protection. Depositories, co-mpliance teams and legal advisors should review internal governance mechanisms, budgeting proce-sses and trust administration arrangements to ensu-re readiness before the revised framework becomes operational.

SEBI Relaxes Certification Require-ments for Non-Advisory Personnel of Investment Advisers

Circular dated June 24, 2026

 As part of its continuing ease of doing business initiatives, SEBI has rationalised the certification framework applicable to Persons Associated with Investment Advice (PAIA) by introducing a differentiated compliance regime based on the nature of functions performed.

Under the revised framework, individuals engaged exclusively in sales and other non-core activities such as relationship managers and client servicing personnel who do not render investment advice will now be required to obtain only the newly introduced NISM Series XXV-B certification.

Personnel involved in providing investment advice will continue to be required to possess both the NISM Series X-A (Level 1) and Series X-B (Level 2) certifications prescribed under the SEBI (Invest-ment Advisers) Regulations, 2013.

SEBI has also clarified the transitional position for existing certified personnel. Individuals who already hold the existing Level 1 and Level 2 certifications will not be required to immediately obtain the new certification and may do so upon expiry of their current certifications.

The circular takes immediate effect, and the Inves-tment Adviser Administration and Supervisory Body (IAASB) has been directed to amend its bye-laws and communicate the revised requirements to all registered Investment Advisers.

Why it matters

The revised framework adopts a more functional approach to competency requirements by distinguis-hing advisory personnel from employees performing purely commercial or client-facing roles. Investment Advisers should review employee classifications, certification records and training programmes to ensure compliance with the revised regulatory fram-ework while reducing unnecessary certification bur-dens for non-advisory staff.

SEBI Consolidates Regulatory Framework for Merchant Bankers through Master Circular

Master Circular dated July 14, 2026

 SEBI has issued a comprehensive Master Circular consolidating all operative circulars applicable to Merchant Bankers registered under the SEBI (Merchant Bankers) Regulations, 1992. The circular incorporates regulatory amendments introduced through the revised Merchant Bankers Regulations and supersedes earlier circulars, while preserving actions already taken and rights accrued under the previous framework.

The Master Circular serves as a single reference document governing the registration, operational compliance, governance and regulatory obligations of Merchant Bankers.

Registration and Capital Framework

The circular streamlines procedures relating to registration, change in control, transfer of business and investor grievance mechanisms. It also prescrib-es the phased implementation of revised capital ad-equacy and liquid net worth requirements for Cate-gory I and Category II Merchant Bankers, with co-mpliance milestones extending through 31 March 2028. Further guidance has been provided regarding the eligibility criteria for principal officers, indepen-

dence requirements applicable to compliance officer-s, deployment of surplus funds, and regulatory appr-ovals required for corporate restructuring.

Operational Compliance Requirements

Merchant Bankers are required to continue filing half-yearly compliance reports through the SEBI Intermediary Portal and maintain enhanced public disclosures, including three-year issue management track records, Investor Charters and periodic investor complaint statistics.

The Master Circular also reiterates advisory measu-res concerning cybersecurity and data protection, particularly in relation to the use of cloud-based Software-as-a-Service (SaaS) platforms for compl-iance functions.

Governance, Risk Management and Business Conduct The consolidated framework introduces or reiterates several important governance obligations, including:

• phased implementation of underwriting exposu-re limits linked to liquid net worth;
• minimum revenue thresholds from permitted merchant banking activities;
• disclosure obligations where a Merchant Banker undertakes only marketing activities in an issue due to prescribed shareholding thresholds;
• segregation of non-SEBI regulated businesses through appropriately ring-fenced business units;
• restrictions on outsourcing core merchant ban-king functions, compliance and KYC activities; and
• strengthened conflict management standards, in-cluding restrictions on dealing in securities while in possession of unpublished price sensit-ive information and enhanced controls over disse-mination of market-sensitive information.

The circular also reinforces compliance obligations relating to investor grievance redressal through SCORES and contains detailed reporting formats through multiple annexures.

Why it matters

The Master Circular streamlines the regulatory framework by consolidating SEBI's requirements into a single reference document. Merchant Bankers should review their compliance frameworks, govern-ance processes and capital planning to align with the phased implementation timeline through 2029, as the circular will serve as the primary compliance reference for capital markets activities.

2.  MINISTRY OF CORPORATE AFFAIRS (MCA) UPDATES

MCA Notifies the New Development Bank as a Specified Financial Institution under the Companies Act

Notification dated June 16, 2026

 The Ministry of Corporate Affairs (MCA) has notified the New Development Bank (NDB) as an institution under Section 2(11)(ii) of the Companies Act, 2013 through Notification S.O. 3140(E) dated 16 June 2026.

The notification recognises the NDB as the multi-lateral development bank established pursuant to the Fortaleza Agreement dated 15 July 2014 among the BRICS nations that are Brazil, Russia, India, China and South Africa, together with any subseq-uent amendments to that agreement.

Why it matters

The inclusion of the NDB within the definition of a specified financial institution under the Companies Act aligns the statutory framework with India's recognition of the BRICS multilateral lending instit-ution.

The notification may have implications whe-rever the Companies Act refers to financial institut-ions for regulatory, financing or corporate governa-nce purposes.

MCA Grants One-Time Relaxation for Filing Form DPT-3 without Additional Fees

General Circular No. 02/2026 | June 19, 2026

The MCA has issued General Circular No. 02/2026, granting companies a one-time relaxation from pay-ment of additional fees for delayed filing of Form DPT-3 (Return of Deposits) for the financial year ended 31 March 2026. The relaxation has been necessitated by the capacity enhancement and restoration activities undertaken at the MCA Data Centre following the fire incident of 5 June 2026, which impacted the availability of filing services. While the statutory due date for filing Form DPT-3 continues to remain 30 June 2026, companies may submit the form up to 31 July 2026 without payment of additional fees.

The relief is limited to the waiver of additional filing fees under Section 403 of the Companies Act, 2013, and does not alter the prescribed statutory filing timeline.

Why it matters

The circular provides practical compliance relief to companies affected by the disruption in MCA's electro-nic filing infrastructure. Companies that were unable to complete their DPT-3 filings due to system-related constraints have been afforded additional time to reg-ularise compliance without incurring late filing fees, thereby mitigating financial hardship arising from circu-mstances beyond their control.

3.  RESERVE BANK OF INDIA UPDATES

A.   FEMA & Cross-Border Investment Reforms

RBI Liberalises Foreign Portfolio Investment Framework under Sched-ule III of FEMA (Non-Debt Instrum-ents) Rules

Circular dated June 15, 20263

The Reserve Bank of India (RBI) has operationa-lised the Foreign Exchange Management (Non-Debt Instruments) (Third Amendment) Rules, 2026,

significantly liberalising the investment framework under Schedule III of the FEMA (Non-Debt Instruments) Rules, 2019.

Under the revised framework, all individuals resid-ent outside India, and not merely Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), are now permitted to invest in the equity instruments of listed Indian companies through rec-ognised stock exchanges, subject to the applicable

investment limits. The amendment considerably expands the class of eligible investors and is expec-ted to facilitate greater foreign portfolio particip-ation in Indian capital markets.

To operationalise the revised regime, RBI has auth-orised Authorised Dealer (AD) Category-I Banks to open repatriable INR accounts for eligible invest-ors. Reporting and monitoring of such investments will continue to follow the existing framework applicable to NRI and OCI investments. The circ-ular also clarifies that any subsequent reclassif-ication of investments from Foreign Portfolio Inves-tment (FPI) to Foreign Direct Investment (FDI) shall be governed by the RBI framework issued on 11 November 2024.

The directions came into force with immediate effect, and AD Category-I Banks have been advised to strengthen their internal compliance and monito-ring systems to ensure adherence to the applicable FEMA and SEBI framework.

Why it matters

The amendment marks a significant liberalisation of India's foreign investment regime by expanding Schedule III eligibility beyond the traditional NRI/ OCI investor base. Banks, custodians and market intermediaries should review their onboarding, rep-orting and compliance processes to align with the revised FEMA framework.

RBI Rationalises FEMA Reporting Requirements for Authorised Persons

Circular dated June 24, 2026

RBI has rationalised the reporting framework under the Foreign Exchange Management Act, 1999 (FEMA) by simplifying several reporting obligatio-ns applicable to Authorised Persons.

The revised framework introduces updated reporting formats, expands the scope of the FLM-8 return to include write-offs of foreign currency notes, and removes the requirement for prior RBI approval for write-offs exceeding USD 2,000. Entit-ies maintaining Nostro accounts and reporting through FETERS have also been exempted from filing FLM-8 returns.

In addition, RBI has introduced quarterly reporting requirements for franchisee arrangements and

Money Transfer Service Scheme (MTSS) sub-agents, while simultaneously discontinuing a numb-er of legacy reporting requirements, including the FLM-1 to FLM-7 registers and certain obsolete MTSS returns.

Notwithstanding these simplifications, Full-Fledged Money Changers (FFMCs), non-bank AD Categ-ory-II entities and MTSS Indian Agents must continue to maintain prescribed records and colla-teral requirements for supervisory purposes.

Why it matters

The revised framework substantially reduces compl-iance burden by eliminating redundant reporting requirements while strengthening risk-based superv-ision. Authorised Persons should review their inter-nal FEMA reporting processes to align with the revised reporting architecture.

RBI Liberalises the Special Non-Resident Rupee (SNRR) Account Framework

Notification dated June 29, 2026

RBI has further liberalised the regulatory framework governing Special Non-Resident Rupee (SNRR) Acco-unts through the Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026.

The amendments permit non-residents to open and maintain SNRR Accounts with Authorised Dealer ban-ks, including their overseas branches and branches located in International Financial Services Centres (IFSCs). The Regulations also expand the permissible use of SNRR Accounts by allowing bona fide transact-ions between non-residents and expressly permitting transfers from NRO Accounts to NRE and SNRR Accounts within the limits prescribed under the FEMA (Remittance of Assets) Regulations.

Several legacy restrictions governing SNRR Accounts have also been removed, simplifying account operations while retaining appropriate regulatory safeguards for cross-border transactions.

Why it matters

The amendments significantly enhance the flexibility of SNRR Accounts and are expected to facilitate cross-border treasury operations, international business trans-actions and fund management for non-residents. The reforms also complement RBI's broader objective of

improving the ease of doing business under India's foreign exchange regime.

B.    Responsible Business Conduct & Consumer Protection

RBI Strengthens Responsible Business Conduct Framework Across Regulated Entities

Directions dated June 15, 2026 | Effective from January 1, 2027

 The Reserve Bank of India (RBI) has significantly strengthened the Responsible Business Conduct Di-rections, 2025 by introducing a comprehensive framework governing the advertising, marketing and sale of financial products and services, includ-ing third-party products. The revised framework is aimed at promoting fair customer outcomes, strengthening governance standards and curbing mis-selling across regulated entities.

The amendments introduce several new regulatory concepts, including compulsory bundling, dark patterns, explicit consent, mis-selling, Direct Selling Agents (DSAs), Direct Marketing Agents (DMAs) and Third-Party Products and Services (TPPS).

Key Regulatory Changes

 Board Oversight and Governance

Banks are now required to adopt a Board-approved policy governing the sale and distribution of financial products. The policy must address product suitability, customer grievance redressal, compens-ation for mis-selling, oversight of DSAs and DMAs, due diligence requirements, employee training, audit mechanisms and disciplinary measures for non-compliance.

Customer Consent and Product Disclosures

The Directions place significant emphasis on info-rmed customer consent. Financial products may be offered only after obtaining the customer's explicit consent through approved channels. Where multiple products are presented together, customers must be able to independently select each product. Banks are also required to maintain consent records for at least one year following termination of the customer relationship.

Further, banks must clearly disclose product feat-ures, applicable charges, risks, lock-in periods and exit conditions. Digital interfaces must require

customers to review the applicable terms before consent is obtained, with "No" or "I do not agree" appearing as the default option.

Advertising and Marketing Practices

The revised framework prohibits banks from presenting third-party products as their own and requires all promotional material to be fair, balanced and factually accurate. Promotional communications may only be sent with the customer's explicit consent and must provide a simple mechanism to unsubscribe.

Conduct of Employees, DSAs and DMAs

Banks are required to strengthen oversight over employees, DSAs, DMAs and third-party representat-ives. Representatives must clearly identify themselves, communicate only approved product information, avoid misleading statements, respect customer privacy and Do-Not-Disturb preferences, and refrain from coercive sales practices or unauthorised commitments.

Product Suitability and Prevention of Mis-selling

Before selling financial products that are not universally suitable, banks must assess customer suitability by considering factors such as age, income, financial literacy, investment objectives and risk appetite.

The Directions also prohibit compulsory bundling of third-party products, funding product purchases through customer loans without explicit consent, deplo-yment of dark patterns on digital interfaces and incentive structures that encourage mis-selling. Banks are additionally required to comply with the CCPA Guidelines for Prevention and Regulation of Dark Patterns, 2023.

Customer Feedback and Compensation

Banks must establish mechanisms to obtain customer feedback within thirty days of a product sale and prepare half-yearly reports for policy review. Where mis-selling is established, banks are required to refund the consideration received, cancel the transaction where appropriate and compensate customers for losses in accordance with their Board-approved policy.

Why it matters

The amendments represent one of RBI's most significa-nt consumer protection reforms in recent years. Regulated entities should review their product

distribution frameworks, Board-approved policies, digital customer journeys, DSA/DMA arrangements, incentive structures and customer consent mechanisms well in advance of the 1 January 2027 implementation date.

Similar amendments have been issued for Small Finance Banks, Payments Banks, Local Area Banks, Regional Rural Banks, Urban Co-operative Banks, Rural Co-operative Banks, All India Financial Institutions, Non-Banking Financial Companies and Housing Finance Companies.

RBI Introduces Enhanced Customer Protection Framework for Fraudul-ent Electronic Banking Transactions

Directions dated June 24, 2026 | Effective from January 1, 2027

RBI has further strengthened consumer protection by replacing the existing framework governing unauthorised electronic banking transactions with a comprehensive regime addressing fraudulent electronic banking transactions.

The revised framework extends protection to both Card Present and Card Not Present transactions and introduces new regulatory concepts relating to fraudulent transactions, bank negligence, customer negligence, third-party breaches and shadow reversals.

Banks are required to implement robust fraud prevention systems, maintain round-the-clock fraud reporting channels, verify customer contact details, issue mandatory SMS alerts for transactions exceeding ₹500, and provide email alerts wherever available. The revised Directions also require banks to strengthen customer awareness programmes and ensure prompt acknowledgement and resolution of fraud complaints.

A significant feature of the framework is the reversal of the evidentiary burden. Banks must now establish customer negligence before imposing liability on customers. Customers will enjoy zero liability in cases involving bank negligence or timely reporting of third-party breaches. The framework also introduces a one-time compensation mechanis-m of up to ₹25,000 for eligible individuals affected by specified low-value fraudulent transactions, subject to prescribed conditions.

Why it matters

The revised framework substantially enhances customer protection while placing greater responsibility on regulated entities to strengthen fraud prevention, transaction monitoring and grievance redressal mechan-isms. Banks should review their fraud management systems, customer communication protocols and internal investigation procedures before the revised framework becomes effective.

Corresponding amendments have also been issued for Small Finance Banks, Payments Banks, Local Area Banks, Regional Rural Banks, Urban Co-operative Banks and Rural Co-operative Banks, thereby establishing a uniform customer protection framework across RBI-regulated banking entities.

C.    Prudential Regulation & Capital Adequacy

RBI Strengthens Prudential Capital Framework

Directions issued between June 16 and June 24, 2026

RBI has introduced a series of amendments to the Prudential Norms on Capital Adequacy Directions, refining the treatment of guaranteed exposures and foreign exchange risk while further aligning India's prudential framework with international standards.

Capital Relief for ECLGS 5.0 Exposures

Through the Ninth Amendment Directions, 2026, RBI has inserted Paragraph 34A into the Commercial Banks - Prudential Norms on Capital Adequacy Directions, 2025, providing capital relief for exposures covered under Emergency Credit Line Guarantee Scheme (ECLGS) 5.0.

Under the revised framework, banks may assign a 0% risk weight to up to 75% of the guaranteed portion of eligible exposures where the guaranteed amount is expected to be settled within thirty days of invocation. The remaining exposure will continue to attract the applicable risk weight under the existing prudential norms. The amendment came into effect immediately.

Revised Framework for Net Open Position (NOP)

RBI has also issued the Tenth Amendment Directions, 2026, introducing a revised methodology for computing the Net Open Position (NOP) and the corresponding capital charge for foreign exchange risk, effective 1 April 2027.

The revised framework aligns domestic regulations with the Basel Committee on Banking Supervision (BCBS) standards and replaces the existing methodology by:

• eliminating separate computation of onshore and offshore Net Open Positions;
• requiring overseas capital investments and accum-ulated or unremitted surplus of overseas operations to be included in NOP calculations;
• permitting exclusion of specified structural foreign exchange positions, subject to prescribed conditio-ns; and
• treating gold as a separate position for capital

The Directions also prescribe detailed treatment for spot, forward and derivative positions, guarantees, accrued income and expenses, while requiring banks to maintain the prescribed capital charge for foreign exchange risk on both a standalone and consolidated basis.

Why it matters

The amendments refine RBI's prudential capital framework by providing targeted capital relief for government-backed lending schemes while simulta-neously strengthening the measurement of foreign exchange risk in line with global regulatory standards. Banks should review their capital adequacy models, treasury systems and foreign exchange risk management frameworks to ensure timely compliance with the revised requirements.

Corresponding amendments have also been issued for Small Finance Banks, Regional Rural Banks, Local Area Banks, Urban Co-operative Banks, Rural Co-operative Banks, All India Financial Institutions and Non-Banking Financial Companies, wherever applicable.

RBI Rationalises Scale-Based Regula-tion Framework for NBFCs

Directions dated June 24, 2026

RBI has introduced important amendments to the Scale Based Regulation (SBR) framework for Non-Banking Financial Companies (NBFCs), simpli-fying the identification of Upper Layer entities while strengthening the prudential concentration risk framework.

Simplified Identification of Upper Layer NBFCs Under the revised framework, the Upper Layer (NBFC-UL) will comprise NBFCs having an asset size of ₹1,00,000 crore or more, based on their latest audited financial statements. Such entities will be identified annually by RBI.

The amendments dispense with the earlier parametric methodology for identifying NBFC-ULs and provide for:

• periodic review of the identification criteria;
• review of the asset-size threshold every three years; and
• additional compliance requirements for NBFCs forming part of banking groups where both the parent bank and the NBFC undertake similar financial

Importantly, these additional requirements do not affect the entity's classification under the Scale Based Regula-tion framework.

Revised Concentration Risk Framework

RBI has simultaneously strengthened the prudential exposure norms applicable to NBFCs. The amend-ments:

• withdraw the special concentration-risk exemptions previously available to Government-owned NBFCs, while grandfathering existing excess exposures until maturity;
• require any future exposures beyond prescribed prudential limits to be fully supported by eligible credit risk transfer instruments;
• treat exposures backed by State Government guarantees as exposures to the guaranteeing State Government, subject to a 20% risk weight;
• remove the concentration-risk exemption previou-sly available to Middle Layer NBFCs; and
• revise the exposure limits applicable to Infrastruct-ure Finance Companies (IFCs), permitting exposures to groups of connected counterparties up to 45% of Tier I Capital.

Why it matters

The amendments simplify regulatory classification while strengthening risk management expectations across the NBFC sector. NBFCs should review their capital planning, concentration risk policies and governance frameworks, particularly where they form part of larger banking groups or fall within the revised Upper Layer classification criteria.

D.    Banking Operations, Deposits & Payment Systems

RBI Introduces Temporary Measures to Encourage Long-Term NRI Deposits

Directions issued between June 17 and June 19, 2026

In a coordinated policy initiative aimed at encouraging foreign currency inflows and strengthening long-term deposit mobilisation, the Reserve Bank of India (RBI) has introduced a series of temporary relaxations relating to interest rates, Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) applicable to eligible Non-Resident External (NRE) deposits.

Relaxation of Interest Rate Restrictions

Effective from 17 June 2026 until 30 September 2026, RBI has relaxed the interest rate framework applicable to certain non-resident deposits.

For NRE term deposits with a tenure of three years and above, banks are now permitted to offer interest rates up to those applicable to comparable domestic rupee term deposits, removing the earlier tenor-based restrictions.

For Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, the ceiling for fresh deposits with a maturity of three to five years has been enhanced from Alternative Reference Rate (ARR)/Swap + 250 basis points to ARR/Swap + 350 basis points, while the existing ceiling for deposits with maturities between one and three years remains unchanged.

Temporary CRR and SLR Exemption

Complementing the interest rate liberalisation, RBI has exempted eligible fresh NRE term deposits with a tenure of three years or more from the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).

The exemption applies to eligible deposits mobilised or renewed between 19 June 2026 and 30 September 2026, and continues for the original amount of the deposit for its entire tenure. Transfers from NRO Accounts to NRE Accounts remain outside the scope of this relaxation.

Why it matters

These measures are intended to encourage mobilisation of long-term NRI deposits by improving returns for depositors while simultaneously reducing the regulatory reserve burden on banks. Banks should review their deposit products, treasury planning and operational systems to take advantage of the temporary regulatory relaxations.

Similar amendments have also been issued for Small Finance Banks, Regional Rural Banks, Local Area Banks, Urban Co-operative Banks and Rural Co-operative Banks.

RBI Consolidates Authorisation Framework for Payment System Operators

Master Directions dated June 15, 2026

RBI has issued the Master Directions on Authorisation to Operate a Payment System, consolidating the regulatory framework governing the authorisation, operation and supervision of Payment System Operators (PSOs) under the Payment and Settlement Systems Act, 2007.

The Master Directions replace multiple earlier circulars with a unified framework covering the entire lifecycle of authorisation. They prescribe comprehensive require-ments relating to:

• eligibility and net worth criteria;
• fit and proper requirements for promoters and promoter groups;
• restrictions on investments from FATF non-compliant jurisdictions;
• perpetual validity of Certificates of Authorisation (CoA), subject to continued regulatory compliance;
• voluntary surrender and revocation of authorisa-tion; and
• detailed procedures for settlement of customer liabilities, escrow management, public disclosures and regulatory reporting upon surrender of

Why it matters

The Master Directions consolidate a fragmented regulatory landscape into a single reference document, enhancing regulatory certainty for both existing and prospective Payment System Operators. The move simplifies compliance while reinforcing RBI's super-visory oversight of India's rapidly evolving payments ecosystem.

RBI Issues Comprehensive Framework for Trade Receivables Discounting System (TReDS)

Directions dated June 23, 2026

RBI has issued the Trade Receivables Discounting System (TReDS) Directions, 2026, replacing the earlier TReDS Guidelines with a consolidated regulatory framework governing electronic receivables financing platforms.

Among the key reforms, the Directions prescribe a minimum net worth requirement of ₹25 crore for TReDS platform operators, simplify the onboarding process for MSME sellers, and expand the range of eligible participants to include insurance companies and Government-notified Credit Guarantee Fund Trusts.

The framework also permits financiers to obtain credit guarantee cover and credit insurance for eligible TReDS exposures, recognises accepted electronic factoring units as legally enforceable, mandates registration of receivable assignments with CERSAI, and permits re-discounting of receivables. In addition, the Directions strengthen buyer due diligence, settlement mechanisms and reporting requirements applicable to TReDS participants.

Why it matters

The revised framework strengthens India's receivables financing ecosystem by expanding participation, impro-ving credit enhancement mechanisms and simplifying MSME access to working capital. The reforms are expected to improve liquidity for MSMEs while enhancing transparency and risk management across TReDS platforms.

E.    Priority Sector Lending & Financial Market Reforms

RBI Issues Consolidated Directions for the Kisan Credit Card (KCC) Scheme

Directions dated June 19, 2026 | Effective from January 1, 2027

The Reserve Bank of India (RBI) has issued the Reserve Bank of India (Commercial Banks - Kisan Credit Card (KCC) Scheme) Directions, 2026, replacing the existing circular-based framework with a comprehensive and consolidated regulatory regime for agricultural credit.

The new Directions introduce a six-year composite credit facility covering crop cultivation, allied agricultural activities, post-harvest expenses, household consumption, maintenance of agricultural assets, insurance, produce marketing loans and investment credit.

A significant reform is the expansion of eligibility to include tenant farmers, oral lessees, sharecroppers, Self-Help Groups (SHGs) and Joint Liability Groups (JLGs), thereby broadening institutional credit access beyond traditional land-owning cultivators.

The Directions also revise the methodology for determining credit limits based on the Scale of Finance (SoF) and introduce additional credit components towards post-harvest expenses, household consumption and technology-enabled agricultural services. A new Flexi KCC has also been introduced for marginal farmers, together with the concept of a Composite Maximum Permissible Limit (CMPL).

To improve ease of access, the framework dispenses with collateral and margin requirements for agricultural loans up to ₹2 lakh, extendable to ₹3 lakh in specified cases, and provides for one-time documentation, optional insurance based on the borrower's explicit consent and digital operations through UPI, debit cards, internet banking, NEFT, RTGS, CBDC and other regulated payment channels.

Why it matters

The Directions represent a significant modernisation of the Kisan Credit Card framework by expanding borrower eligibility, simplifying documentation and strengthening digital delivery of agricultural credit. Banks should review their lending policies and operational systems before the revised framework becomes effective on 1 January 2027.

RBI Modernises India's Credit Derivatives Framework

Master Directions dated June 25, 2026

RBI has issued the Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2026, superseding the earlier Credit Derivatives Directions, 2022 and establishing a comprehensive regulatory framework for both over-the-counter (OTC) and exchange-traded credit derivatives.

The new framework substantially broadens India's credit derivatives market by permitting Credit Default Swaps (CDS), Total Return Swaps (TRS) and exchange-traded derivatives on credit indices, including futures on credit indices.

The Directions also expand market participation by permitting specified banks, Standalone Primary Dealers, eligible NBFCs, All India Financial Institu-tions, insurance companies, mutual funds, pension funds, Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs) to participate, subject to prescribed prudential requirements.

In addition, the framework introduces comprehensive provisions governing eligible reference entities, settlement mechanisms, valuation, accounting standar-ds, prudential treatment, customer protection, reporting to CCIL and regulatory disclosures. RBI has also established a Credit Derivatives Determinations Committee to determine credit events and oversee settlement-related issues.

Why it matters

The Directions represent a major milestone in the development of India's corporate debt market. By expanding product offerings and broadening market participation while strengthening governance and settlement mechanisms, RBI has aligned India's credit derivatives framework more closely with international market practices.

RBI Strengthens Trade Finance and Foreign Exchange Market Infrastructure

Through the Trade Receivables Discounting System (TReDS) Directions, 2026, RBI has consolidated the regulatory framework governing receivables financing platforms. The Directions simplify MSME onboarding, prescribe a minimum net worth of ₹25 crore for platform operators, expand eligible participants to include insurance companies and Government-notified Credit Guarantee Fund Trusts, permit credit guarantee and insurance for eligible receivables, recognise electronic factoring units and strengthen settlement, reporting and due diligence requirements.

Why it matters

The revised framework is expected to deepen receivables financing for MSMEs by expanding market participa-tion, improving credit enhancement mechanisms and enhancing regulatory certainty for TReDS platform operators and financiers.

F.   Governance & Regulatory Oversight

RBI Simplifies Board Governance Framework for Banks

Amendment Directions dated July 14, 2026 | Effective from October 1, 2026

The Reserve Bank of India (RBI) has amended the Commercial Banks – Governance Directions, 2025 with the objective of enabling Boards to focus on strategic oversight, risk governance and long-term value creation by reducing the volume of routine operational matters requiring Board consideration.

The amendments replace several existing provisions with a streamlined governance framework centred on the Board's oversight of:

• the bank's overall risk management framework, policies and strategy;
• exposures to related entities, including subsidiaries and group companies; and
• compliance with applicable corporate governance standards.

The revised Directions also clearly distinguish between:

• matters requiring approval or review by the Board;
• matters that may be delegated to Board Commi-ttees; and
• policies that require Board approval versus those that may be approved through delegated

In addition, the amendments reaffirm that the Board retains ultimate responsibility for the bank's business strategy,         financial soundness,                  risk            management framework and key managerial appointments. They also emphasise the Chairperson's role in determining Board agendas, the need for timely information flow from management, and periodic review of matters placed before the Board to ensure effective governance. The revised governance framework has also been extended to Private Sector Banks, ensuring greater consistency across the banking sector.

Why it matters

The amendments reflect RBI's continuing shift towards principles-based corporate governance by enabling Boards to focus on strategic decision-making and enterprise-wide risk oversight, while delegating routine operational matters to specialised committees. Banks should review their governance charters, Board and Committee mandates, delegation matrices and internal approval processes before the revised framework becomes effective on 1 October 2026.

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