What changed
RBI has issued the Reserve Bank of India (Small Finance Banks – Credit Facilities) Amendment Directions, 2026, modifying the 2025 Directions by introducing new definitions and amendments to existing provisions.
What it means for you
These changes aim to provide clarity on credit facilities, including loan-to-value ratios, margin requirements, and eligible securities, which will impact small finance banks' lending practices and risk management.
What you must do
- Review and update internal guidelines and policies to reflect the new definitions and amendments.
- Ensure compliance with the revised Directions, particularly with regards to loan-to-value ratios and margin requirements.
- Update risk management frameworks to account for the new eligible securities and loan types.
Who it affects
Small Finance Banks, Capital Market Intermediaries
What is the new definition of collateral security?
Collateral security refers to an asset on which a security charge is created in favour of the lender for securing a credit facility.
What are Capital Market Intermediaries (CMIs)?
CMIs are regulated entities undertaking trade execution and market infrastructure services in capital markets, including broking, clearing, custody, market making, or other incidental services, but excluding Standalone Primary Dealers and Qualified Central Counterparties (QCCPs).
What are Eligible Securities?
Eligible Securities include listed Group-1 equity shares and preference shares, Government Securities including Treasury Bills and Sovereign Gold Bonds, listed Debt Securities including Convertible Debt Securities rated BBB or higher, Units of Mutual Fund Schemes with repurchase/redemption facility, Units of Exchange Traded Funds (excluding gold, silver and other commodity ETFs), and Units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).