The Reserve Bank of India has issued the Credit Risk Management Amendment Directions, 2026 for Small Finance Banks, Local Area Banks, Regional Rural Banks, Urban Co-operative Banks, Rural Co-operative Banks, Non-Banking Financial Companies and All India Financial Institutions, amending the respective Credit Risk Management Directions applicable to these entities.
The Amendment Directions introduce additional definitions and modify existing definitions, including those relating to related party, related person, control, promoter, key managerial personnel, specified employees and lending, by aligning them with the provisions of the Companies Act, 2013 and the Insolvency and Bankruptcy Code, 2016.
Regulated entities are required to put in place a comprehensive Board-approved Credit Risk Management Policy, which shall, inter alia, contain specific provisions relating to lending to related parties, aggregate and sub-limits, approval mechanisms, recusal of interested persons, reporting, monitoring and internal audit review.
A separate framework for lending to related parties has been prescribed, covering general principles, regulatory prohibitions, materiality thresholds, sanctioning authority, disclosure, monitoring, whistle-blower mechanisms and enforcement actions. Loans above the prescribed materiality thresholds are required to be approved by the Board or a Board-level committee, as applicable.
The Directions also provide that existing related party transactions not in conformity with the amended framework may continue till maturity but shall not be renewed, reviewed or enhanced unless brought into compliance with the amended Directions.
The above amendments shall come into force from April 1, 2026. Banks, NBFCs and All India Financial Institutions may, however, decide to implement the amendments in entirely from an earlier date.
Link – https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT173F05694DEF361460C844D54AD4C908A87.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT174B6567DC94D0C4542A6B08B1F3916FA6B.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT175A4E1C0D637A3478A82A9BB5EF3308349.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT176A02DF87734FD4B01BB922EA99A11E8B5.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT177F75338772AAE4E6B8EA41A49AEC8FB09.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT178B1FF8BF029554D7BB04EC472AE5A03EE.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT179E8A0C46758CC48778CD80D7D52D1463A.PDF
Link- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT1808BCC3640F32F46C2BA789CB2604FBE63.PDF
