RBI Update - Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026 (Revised)

The Reserve Bank of India, vide its revised Amendment Directions dated March 30, 2026, has introduced comprehensive changes to the credit facilities framework applicable to Small Finance Banks (SFBs), largely aligning it with the revised regime for commercial banks. The amendments expand the definitional scope by introducing key concepts such as Capital Market Intermediaries (CMIs), eligible securities, loan-to-value (LTV), margin, and primary security, while aligning “control” with the Companies Act, 2013. A significant overhaul has been undertaken in the area of loans against financial assets through the introduction of a new framework for lending against eligible securities, prescribing LTV ceilings, prudential limits, valuation norms, and end-use restrictions, along with caps on lending to individuals and norms for IPO/FPO/ESOP financing. The Directions also introduce a new chapter governing credit facilities to CMIs, permitting need-based funding for operational purposes while prohibiting financing for proprietary trading (subject to limited exceptions) and mandating stringent collateral requirements, including 100% security coverage in most cases. Further, enhanced governance requirements have been introduced through Board oversight on lending against financial assets and exposures to CMIs. These amendments will come into effect from July 1, 2026 or earlier upon adoption, with existing exposures allowed to run till maturity and new or renewed facilities required to comply with the revised framework. Link - View Circular