What changed
RBI has modified the definitions related to related party lending in the Reserve Bank of India (All India Financial Institutions – Credit Risk Management) Directions, 2025. Key changes include new definitions for 'Committee on lending to related parties', 'Contract or arrangement', 'Control', and 'Related Party', among others.
What it means for you
These changes aim to enhance transparency and risk management in lending to related parties by AIFIs. They will help AIFIs to better identify and manage related party risks.
What you must do
- Review and update internal policies and procedures for related party lending
- Establish a Committee on lending to related parties, if not already in place
- Ensure compliance with the new definitions and guidelines
Who it affects
All India Financial Institutions (AIFIs)
What is the purpose of the amendment directions?
To enhance transparency and risk management in lending to related parties by AIFIs.
What are the key changes in the amendment directions?
New definitions for 'Committee on lending to related parties', 'Contract or arrangement', 'Control', and 'Related Party', among others.
What action should AIFIs take to comply with the amendment directions?
Review and update internal policies and procedures, establish a Committee on lending to related parties, and ensure compliance with the new definitions and guidelines.