RBI publishes its Statement on Developmental and Regulatory Policy

The Reserve Bank of India (RBI) has announced certain key developments in the banking and foreign exchange space, as part of its Statement on Developmental and Regulatory Policies published on October 1, 2025 (“RBI Press Release”).

The key aspects announced by the RBI include, inter alia, the following: 

1. Review of Capital Market Exposures Guidelines for banks: 

Capital market exposures of the regulated entities which include, inter alia, lending against securities to individuals and lending to capital market intermediaries, have been subject to prudential regulations relating to sectoral exposure limits, single borrower limits, margin requirements, etc. Further, bank finance for acquisition of shares has been generally disallowed. There has been significant growth and development in the capital market structure, along with strengthening of the banking system in recent years. With the objective of rationalizing the extant guidelines and broadening the scope for capital market lending by banks and other regulated entities, it has been proposed to, inter alia: (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, units of 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. The draft guidelines in this regard shall be issued shortly by the RBI.

2. Review of External Commercial Borrowing Framework: 

With an objective to rationalize and simplify the regulations governing External Commercial Borrowings (“ECB”), the RBI has undertaken a review of the existing provisions under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. Based on the review, a revised framework that provides for expansion of eligible borrower and recognized lender base, rationalization of borrowing limits, rationalization of restrictions on average maturity period, removal of restrictions on the cost of borrowing for ECBs, review of end-use restrictions and simplification of reporting requirements, had been proposed to be introduced.

3. Consolidation of Regulatory Instructions

The evolution of regulatory framework administered by the RBI has resulted in proliferation of several circulars and directions. In order to provide ease of access and reduce the compliance cost faced by the regulated entities, the RBI has undertaken an exercise of consolidating the regulatory instructions administered by the Department of Regulation of the Reserve Bank into a set of Master Directions on an ‘as is’ basis. The drafts of about 250 Master Directions consolidating extant instructions on up to 30 areas for 11 types of regulated entities were placed on the website of the RBI for comments on their completeness and accuracy.

For more details, kindly refer to the RBI Press Release by clicking on this link.