Regulating Co-operative Banking

The Reserve Bank of India (RBI), vide order dated February 11, 2026, has cancelled the licence of “Indian Mercantile Co-operative Bank Ltd., Lucknow”, under Section 22 read with Section 56 of the Banking Regulation Act, 1949 (BR Act). Consequently, the bank ceases to carry on banking business, with effect from the close of business on February 13, 2026. The Commissioner and Registrar of Cooperative, Uttar Pradesh has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

The Reserve Bank of India had, on October 24, 2025, issued two draft Directions on Capital Market Exposure (CME), viz.,: (i) Reserve Bank of India (Commercial Banks – Capital Market Exposure) Directions, 2025 and (ii) Reserve Bank of India (Small Finance Banks – Capital Market Exposure) Directions, 2025 seeking feedback from stakeholders. The draft Directions were aimed primarily to (i) provide an enabling framework for banks to finance acquisitions by Indian corporates; (ii) enhance the limit for lending by banks against shares, units of REITs, InvITs while removing the regulatory ceiling altogether on lending against listed debt securities; and (iii) put in place a more principle-based framework for lending to capital market intermediaries (CMIs).

In pursuance of the announcement made in the Statement on Developmental and Regulatory Policies dated February 6, 2026, the Reserve Bank of India has today issued the following draft Amendment Directions for public comments: i) Reserve Bank of India (Commercial Banks – Credit Facilities) Second Amendment Directions, 2026 - Draft for Comments ii) Reserve Bank of India (Commercial Banks – Concentration Risk Management) Second Amendment Directions, 2026 - Draft for Comments iii) Reserve Bank of India (Commercial Banks – Financial Statements: Presentation and Disclosures) Fourth Amendment Directions, 2026 - Draft for Comments iv) Reserve Bank of India (Small Finance Banks – Credit Facilities) Second Amendment Directions, 2026 - Draft for Comments v) Reserve Bank of India (All India Financial Institutions – Credit Facilities) Amendment Directions, 2026 - Draft for Comments