In pursuance of the announcement made in the Statement on Developmental and Regulatory Policies dated December 08, 2023, the Reserve Bank of India (RBI) has today issued the draft regulatory framework, for public comments, on lending to related parties by various regulated entities (REs), as enumerated below: 

1. Reserve Bank of India (Commercial Banks – Lending to Related Parties) Directions, 2025

2. Reserve Bank of India (Small Finance Banks – Lending to Related Parties) Directions, 2025

3. Reserve Bank of India (Regional Rural Banks – Lending to Related Parties) Directions, 2025

4. Reserve Bank of India (Local Area Banks – Lending to Related Parties) Directions, 2025

5. Reserve Bank of India (Urban Co-operative Banks – Lending to Related Parties) Directions, 2025

6. Reserve Bank of India (Rural Co-operative Banks – Lending to Related Parties) Directions, 2025

7. Reserve Bank of India (Non-Banking Financial Companies – Lending to Related Parties) Directions, 2025

8. Reserve Bank of India (All India Financial Institutions – Lending to Related Parties) Directions, 2025

The draft Directions provide a harmonised, principle-based framework to be adopted by REs for inter alia lending to related parties, suitably rationalising the existing provisions. The key provisions of the proposed framework entail the following:

1. Introduction of scale-based materiality thresholds beyond which lending to related parties of a RE shall need approval of the Board or its Committee.

2. Exclusion of Independent Directors of other banks from the scope of ‘related persons’ of a RE for the purpose of these Directions.

3. Principle based exemption from Section 20 (1) (b) of the Banking Regulation Act, 1949 for certain types of loans.   

4. Suitable supervisory reporting and disclosure requirements by REs on transactions with related parties.

The Comments on the draft Direction are invited from public/stakeholders by October 31, 2025. The comments/ feedback may be submitted through the link under the ‘Connect2Regulate’ Section available on the Reserve Bank’s website. Comments may alternatively be forwarded to The Chief General Manager, Credit Risk Group, Department of Regulation, Central Office Reserve Bank of India, 12th/ 13th Floor Shahid Bhagat Singh Marg, Fort Mumbai – 400 001 or by email.

(Brij Raj)               
Chief General Manager

Press Release: 2025-2026/1249