The Reserve Bank of India, vide its revised Amendment Directions dated March 30, 2026, has updated the Concentration Risk Management framework for Small Finance Banks (SFBs) in alignment with the revised credit facilities regime. The amendments introduce key definitional linkages such as Capital Market Intermediaries (CMIs), collateral, non-debt mutual funds, and primary security, and comprehensively redefine Capital Market Exposure (CME) to include both fund-based and non-fund-based exposures such as investments, advances against securities, financing to mutual funds, credit facilities to CMIs, underwriting commitments, Irrevocable Payment Commitments (IPCs), and trade exposures. Revised prudential ceilings have been prescribed, capping aggregate CME at 40% of Tier 1 capital and direct exposures at 20%, along with requirements for intra-day exposure limits. Certain exposures, including investments in critical financial infrastructure and specified instruments, have been excluded from CME computation. The Directions also introduce detailed norms for exposure computation, including treatment of derivatives, IPCs, and netting mechanisms, while rationalising earlier provisions through deletions and restructuring. These amendments will come into effect from July 1, 2026 or earlier upon adoption, ensuring strengthened prudential oversight and consistency with the revised regulatory framework.
Link – https://rbidocs.rbi.org.in/rdocs/notification/PDFs/260NT734AEA8B4A484FDABC91603C0076ED67.PDF
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