Regulating Commercial Banking

The Reserve Bank of India had issued the draft circular on ‘Counterparty Credit Risk: Add-on factors for computation of Potential Future Exposure – Revised Instructions’ on August 20, 2025, seeking inputs from banks and other stakeholders till September 10, 2025. The draft instructions proposed to modify the Counterparty Credit Risk (CCR) related instructions to (i) clarify that banks acting as clearing members of SEBI recognised stock exchanges in the equity derivatives and commodity derivatives segments are required to maintain capital charge for CCR; and (ii) largely align the add-on factors for calculation of Potential Future Exposure (PFE) in the Current Exposure Method (CEM) for ‘Interest Rate Contracts’ and ‘Exchange Rate Contracts and Gold’ with the Basel Committee on Banking Supervision (BCBS) guidelines.

The Reserve Bank of India had, on January 6, 2026, issued the following drafts for stakeholder feedback on prudential norms on declaration of dividend, viz.,: (i) Reserve Bank of India (Commercial Banks – Prudential Norms on Declaration of Dividend and Remittance of Profits) Directions, 2026 (ii) Reserve Bank of India (Small Finance Banks – Prudential Norms on Declaration of Dividend) Directions, 2026 (iii) Reserve Bank of India (Payment Banks – Prudential Norms on Declaration of Dividend) Directions, 2026

The Financial Action Task Force (FATF) vide public document ‘High-Risk Jurisdictions subject to a Call for Action’ – 13 February 2026, has called on its members and other jurisdictions to refer to the statement on Democratic People’s Republic of Korea (DPRK) and Iran adopted in February 2020 which remains in effect. Further, Myanmar was added to the list of High-Risk Jurisdictions subject to a Call for Action in the October 2022 FATF plenary and FATF has called on its members and other jurisdictions to apply enhanced due diligence measures proportionate to the risk arising from Myanmar. When applying enhanced due diligence measures, countries have been advised to ensure that flows of funds for humanitarian assistance, legitimate NPO activity and remittances are not disrupted. The status of Myanmar in the list of countries subject to a call for action, remains unchanged.

Analysis of the performance under the Citizen’s Charter during the month of February 2026 has been carried out, and the summary thereof is given below – Description No. of Applications A Applications pending at the beginning of the month 2,833 B Applications received during the month 20,449 C Referred back to applicants for additional information 517

(Amount in ₹ crore) SCHEDULED COMMERCIAL BANKS (Including RRBs, SFBs and PBs) ALL SCHEDULED BANKS 21-Feb-2025# 31-Jan-2026 15-Feb-2026 21-Feb-2025# 31-Jan-2026 15-Feb-2026 I LIABILITIES TO THE BKG.SYSTEM (A) a) Demand & Time deposits from banks 272677.28 336474.48 345494.05 279042.72 344450.58 353928.33** b) Borrowings from banks 112778.14 81053.24 74299.22 112884.38 81307.96 74367.46 c) Other demand & time liabilities 36706.95 42057.26 36607.16 37065.37 42661.78 37201.53

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

(Amount in ₹ crore) SCHEDULED COMMERCIAL BANKS (Including RRBs, SFBs and PBs) ALL SCHEDULED BANKS 24-Jan-2025# 15-Jan-2026 31-Jan-2026 24-Jan-2025# 15-Jan-2026 31-Jan-2026 I LIABILITIES TO THE BKG.SYSTEM (A) a) Demand & Time deposits from banks 274580.76 334644.10 336474.48 279763.56 342345.34 344450.58** b) Borrowings from banks 144172.70 80440.83 81053.24 144288.99 80507.15 81307.96 c) Other demand & time liabilities 29455.08 32892.14 42057.26 29792.86 33441.63 42661.78

Detailed instructions on matters related to engagement of recovery agents have been issued to Scheduled Commercial Banks (excluding Regional Rural Banks) and Housing Finance Companies currently. Upon a review, it has been decided to issue comprehensive instructions to all regulated entities on conduct related matters in recovery of loans and engagement of recovery agents, which inter alia cover aspects such as fair treatment to borrowers during recovery process, conduct of lender’s employees and recovery agents, due diligence, training, code of conduct for recovery agents, etc.

Currently, instructions on customer appropriateness and suitability and other related matters in the context of insurance agency business have been issued to Scheduled Commercial Banks (excluding Regional Rural Banks) and Housing Finance Companies. Upon a review, it has been decided to issue comprehensive instructions on advertising, marketing and sales of financial products and services (including third-party products and services) to all banks and NBFCs, which shall include various aspects related thereto, such as activities of Direct Sales Agents (DSAs) / Direct Marketing Agents (DMAs), dark patterns, prevention of mis-selling, etc.