Understanding Key Amendments - March 2026

3 days ago
18 min read

SECURITIES EXCHANGE BOARD OF INDIA

Launch of AI-driven calling campaign to promote ‘SEBI Check’ Tool and Validated UPI Handles

On 13 February 2026, the Securities and Exchange Board of India (SEBI) rolled out a multilingual, AI-enabled public outreach initiative on a pilot basis to strengthen investor awareness around its ‘SEBI Check’ tool and validated UPI handles. The initiative is being carried out in collaboration with Sarvam, which builds AI models tailored for Indian languages. Originally introduced on October 1, 2025, the SEBI Check tool allows investors to verify the authenticity of UPI IDs, QR codes, and bank account details of SEBI-registered intermediaries before transferring funds. Under this pilot, a selected group of investors will receive informational calls explaining the tool, validated UPI handles, and related FAQs.

Key Highlights

Multilingual, AI-powered outreach initiative (Pilot Phase): SEBI has introduced a pilot public awareness campaign that leverages artificial intelligence to communicate with investors in multiple Indian languages. The objective is to make regulatory safeguards more accessible and understandable across diverse linguistic groups.
Collaboration with Sarvam for Indian language AI models: The initiative is being implemented in partnership with Sarvam, a generative AI company focused on building models tailored for Indian languages. This enables region-specific, language-sensitive investor communication at scale.
Promotion of the ‘SEBI Check’ Tool: The campaign focuses on spreading awareness about the ‘SEBI Check’ tool, introduced on October 1, 2025. The tool allows investors to verify the authenticity of payment details provided by SEBI-registered intermediaries before transferring funds.
Verification of UPI IDs, QR Codes and Bank Details: Investors can use the tool to validate UPI IDs, scan QR codes, and cross-check bank account details linked to registered intermediaries. This adds a preventive layer against fraud involving fake accounts or impersonation.
Validated UPI Handle Framework: SEBI has implemented a validated UPI handle mechanism to ensure that intermediaries use authorised and verified payment identifiers. This reduces the risk of fund diversion to unauthorised accounts.

This move signals SEBI’s growing emphasis on tech-backed investor protection. By combining AI with multilingual outreach, the regulator is trying to bridge awareness gaps across regions and languages, especially in a market where digital payment fraud and impersonation risks are rising. The verified UPI handle framework, when actively used by investors, could significantly reduce fund diversion scams involving fake intermediaries. At a broader level, this initiative reflects a shift toward proactive, preventive regulation rather than reactive enforcement using technology not just for supervision, but also for public education and trust-building in capital markets.

SEBI Constitutes Working Group to Review ESG Rating Providers (ERPs) Regulatory Framework

On 18 February 2026, the Securities and Exchange Board of India constituted a Working Group to review the regulatory framework governing ESG Rating Providers (ERPs). The move follows feedback and representations from market participants and other stakeholders regarding the current framework. The Working Group brings together a diverse mix of representatives, including issuers, investors, ESG rating users, domestic and global ERPs, ESG analysts, legal experts, and academics. It has been tasked with conducting a comprehensive review of the existing regulations and recommending policy and regulatory changes to strengthen the ERP ecosystem.

Key Provisions

Securities and Exchange Board of India has constituted a Working Group to review the regulatory framework for ESG Rating Providers (ERPs).
The move follows feedback and representations received from market participants and stakeholders.
The Working Group includes representatives from issuers, investors and ESG rating users, domestic and global ERPs, ESG analysts, legal experts, and academia.
It will undertake a comprehensive review of the existing ERP regulatory framework.
The Group will examine industry suggestions and stakeholder representations.
It will recommend measures to improve transparency, reliability, and investor confidence in ESG ratings.
The review will also assess international regulatory developments and explore alignment with global best practices, keeping Indian market conditions in mind.
The Working Group will submit its findings and recommendations to SEBI for potential policy and regulatory changes.

This step signals a maturing phase in India’s ESG regulatory architecture. As ESG ratings increasingly influence investment decisions, capital allocation, and corporate reputation, concerns around methodology, transparency, and comparability have grown. By initiating a structured review with participation from both domestic and global stakeholders, SEBI appears to be aiming for a more robust, credible, and globally aligned ESG rating framework. The outcome could lead to tighter disclosure norms, clearer governance standards for ERPs, and improved accountability, ultimately strengthening investor trust and enhancing the integrity of sustainable finance in India.

RESERVE BANK OF INDIA

Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026

On February 9, 2026, the Reserve Bank of India issued the Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026, amending the existing Master Direction on MSME lending (updated as on July 23, 2025). Exercising its powers under Sections 21 and 35A of the Banking Regulation Act, 1949, the RBI has revised the norms relating to collateral requirements for Micro and Small Enterprises (MSEs). The amendments primarily enhance the collateral-free lending threshold and provide operational clarity to banks. The revised provisions will apply to all loans to MSE borrowers sanctioned or renewed on or after April 1, 2026.

Key Highlights

Enhanced Collateral-Free Limit: Banks shall not accept collateral security for loans up to ₹20 lakh extended to units in the MSE sector.
Prime Minister Employment Generation Programme (PMEGP) Coverage: Collateral-free loans up to ₹20 lakh must also be extended to all units financed under the Prime Minister Employment Generation Programme (PMEGP) administered by KVIC.
Higher Discretionary Threshold: Banks may increase the collateral-free limit up to ₹25 lakh for MSE units with a good track record and sound financial position, in line with their internal policies.
Credit Guarantee Scheme: Banks may avail coverage under the applicable Credit Guarantee Scheme for eligible loans.
Gold and Silver Clarification: Voluntary pledging of gold and silver as collateral for loans within the collateral-free threshold will not be treated as a breach of the mandate.

The amendment strengthens credit access for micro and small enterprises by expanding the collateral-free lending framework. By raising the threshold and allowing flexibility up to ₹25 lakh for well-performing units, the RBI has given banks more room to support viable businesses without insisting on asset-backed security. This is likely to ease financing constraints for smaller enterprises, particularly first-generation entrepreneurs and government-backed PMEGP beneficiaries. At the same time, the option to use credit guarantee cover balances lender risk, signalling a calibrated approach that promotes credit growth while maintaining prudential safeguards.

Reserve Bank of India (Rural Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026

On February 13, 2026, the Reserve Bank of India issued the Reserve Bank of India (Rural Co-operative Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2026 (RBI/2025-2026/208; DOR.STR.REC.411/21-04-048/2025-26). These amendments revise the 2025 Directions to bring greater uniformity in how Rural Co-operative Banks recognise overdue income on advances. The key objective is to align income recognition norms for Standard advances with those applicable to other regulated entities. The amendments clarify that income on Standard assets may be recognised on an accrual basis without requiring a matching provision, while stricter norms continue to apply to non-performing assets (NPAs). The changes have been notified under the powers conferred by the Banking Regulation Act, 1949 in exercise of the powers conferred by the sections 21, 35A and 56 of the Banking Regulation Act, 1949 and all other laws enabling the Reserve Bank in this regard, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do and come into effect immediately.

Key Amendments

Accrual-Based Recognition for Standard Advances: Rural Co-operative Banks may recognise income (interest, fees, commission, or other income) on an accrual basis for credit facilities classified as ‘Standard’, without making a matching provision.
Cash Basis for Non-Standard Assets: For credit facilities not classified as ‘Standard’, including those guaranteed by the Government, income must be recognised strictly on actual receipt (cash basis).
Deletion of Existing Provisions: Paragraph 52, Paragraphs 53–56, and Paragraph 58 of the 2025 Directions stand deleted.
Insertion of New Paragraph 52A: Introduces a revised policy framework on income recognition linked to recovery records and clarifies treatment of Standard and non-Standard assets.
Insertion of New Paragraph 58A (Reversal Requirement): If a credit facility becomes an NPA, all previously accrued and credited but unrealised income (including interest, fees, commission, etc.) must be reversed. This includes bills purchased/discounted and government-guaranteed facilities.

The amendments simplify and standardise income recognition norms for Rural Co-operative Banks by clearly separating the treatment of Standard and non-performing assets. Allowing accrual-based income recognition for Standard assets without a matching provision improves accounting clarity and aligns these banks with broader regulatory practice. At the same time, the mandatory reversal of unrealised income upon asset classification as NPA reinforces prudential discipline and prevents overstatement of income. Overall, the move enhances transparency, comparability, and regulatory consistency within the cooperative banking sector while maintaining safeguards against income inflation on stressed assets.

Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026

On February 13, 2026, the Reserve Bank of India issued the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026. This amendment follows and aligns with the changes introduced under the NBFC Income Recognition, Asset Classification and Provisioning (IRACP) framework. Exercising its powers under Chapter III-B of the Reserve Bank of India Act, 1934, the RBI has amended the 2025 Credit Facilities Directions to ensure consistency in asset classification and provisioning norms for NBFCs. The amendment takes immediate effect.

Key Highlights

Alignment with IRACP Framework: Asset classification and provisioning for individual loan assets of NBFCs shall now be governed strictly by the RBI’s IRACP Directions, 2025.
Substitution of Para 25(1): Paragraph 25(1) of the 2025 Credit Facilities Directions has been replaced to explicitly link asset classification and provisioning requirements to the IRACP Directions.
Regulatory Consistency: The amendment ensures uniformity between the Credit Facilities framework and the Income Recognition, Asset Classification and Provisioning norms applicable to NBFCs.

This amendment eliminates any ambiguity between credit facility norms and prudential asset classification standards for NBFCs. By clearly tying provisioning and asset classification to the IRACP framework, the RBI reinforces regulatory coherence and reduces the scope for interpretational gaps. For NBFCs, this means stricter alignment with prudential norms on recognition and provisioning, enhancing transparency and comparability across the sector. From a supervisory standpoint, it strengthens credit risk discipline and ensures that provisioning practices are uniformly anchored to the core IRACP regime.

RBI Issues Draft Amendment Directions for ‘Advertising, Marketing and Sales of Financial Products and Services by Regulated Entities’

The Reserve Bank of India has proposed a comprehensive overhaul of the regulatory framework governing advertising, marketing, and sale of financial products and services by banks and services (including third-party products and services) and NBFCs. Until now, customer appropriateness and suitability norms in the context of insurance agency business were applicable only to Scheduled Commercial Banks (excluding RRBs) and Housing Finance Companies. Following a review and pursuant to the Statement on Developmental and Regulatory Policies dated February 6, 2026, RBI has issued draft Amendment Directions across a wide range of regulated entities to introduce uniform standards on responsible business conduct. The proposed framework covers third-party product distribution, activities of Direct Sales Agents (DSAs) and Direct Marketing Agents (DMAs), prevention of mis-selling, and curbing dark patterns in digital interfaces.

Key Amendments

Expanded Regulatory Scope: Comprehensive instructions on advertising, marketing, and sales practices to apply to all banks and NBFCs.
Focus Areas Covered:
- Customer appropriateness and suitability
- Third-party product distribution
- Activities of DSAs and DMAs
- Prevention of mis-selling
- Prohibition of dark patterns in digital channels
Draft Responsible Business Conduct Amendments: Proposed across multiple categories of regulated entities including commercial banks, small finance banks, payment banks, regional rural banks, cooperative banks, All India Financial Institutions, NBFCs, and housing finance companies.
Review of ‘Agency Business and Referral Services’ Framework: The existing framework under the RBI (Undertaking of Financial Services) Directions, 2025 is proposed to be amended to align with the new responsible conduct standards.

The draft directions signal a significant shift toward a unified and consumer-centric regulatory regime across the financial sector. By extending suitability, advertising, and sales conduct norms to all banks and NBFCs, the RBI aims to close regulatory gaps and address risks arising from aggressive cross-selling, digital manipulation, and third-party product distribution. The explicit inclusion of DSAs, DMAs, and dark patterns reflects regulatory attention to evolving sales models and digital interfaces. If implemented in its current form, the framework will require institutions to revisit their marketing practices, incentive structures, digital design architecture, and compliance oversight mechanisms, strengthening accountability and consumer protection across the ecosystem.

RBI Issues Draft Amendment Directions for ‘Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents’

The Reserve Bank of India has proposed a comprehensive framework governing conduct in loan recovery and engagement of recovery agents across all regulated entities. At present, detailed recovery-related instructions apply primarily to Scheduled Commercial Banks (excluding RRBs) and Housing Finance Companies. Following a review and in line with the Statement on Developmental and Regulatory Policies dated February 6, 2026, the RBI has issued draft Second Amendment Directions under the Responsible Business Conduct framework for public consultation. The proposed changes aim to standardise norms on borrower treatment, oversight of recovery agents, due diligence, training, and code of conduct requirements. Comments have been invited until March 6, 2026.

February 12, 2026 – RBI Issues Draft Amendment Directions for ‘Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents’. Accordingly, in pursuance of the announcement made in the Statement on Developmental and Regulatory Policies dated February 6, 2026, the Reserve Bank of India (RBI) has today issued the following draft Amendment Directions for public comments, which propose to amend existing Directions issued by the Department of Regulation, RBI: (i) Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Second Amendment Directions, 2026; (ii) Reserve Bank of India (Small Finance Banks - Responsible Business Conduct) Second Amendment Directions, 2026; (iii) Reserve Bank of India (Local Area Banks - Responsible Business Conduct) Second Amendment Directions, 2026; (iv) Reserve Bank of India (Regional Rural Banks - Responsible Business Conduct) Second Amendment Directions, 2026; (v) Reserve Bank of India (Urban Co-operative Banks - Responsible Business Conduct) Second Amendment Directions, 2026; (vi) Reserve Bank of India (Rural Co-operative Banks - Responsible Business Conduct) Second Amendment Directions, 2026; (vii) Reserve Bank of India (All India Financial Institutions - Responsible Business Conduct) Second Amendment Directions, 2026; (viii) Reserve Bank of India (Non-Banking Financial Companies - Responsible Business Conduct) Second Amendment Directions, 2026; (ix) Reserve Bank of India (Housing Finance Companies) Second Amendment Directions, 2026.

The comments / feedback on the draft Amendment Directions may be submitted by the regulated entities and members of public / other stakeholders on or before March 6, 2026 through the following channels: (i) the ‘Connect 2 Regulate’ section on the website by following the corresponding hyperlink provided against each document in the page where they are hosted; or (ii) by email with the subject line ‘Feedback on (full name of the draft Amendment Directions (including the type of Regulated Entity))’.

Key Highlights

Expanded Applicability: Proposed comprehensive recovery conduct guidelines to apply to all regulated entities, including banks, cooperative banks, NBFCs, All India Financial Institutions, and housing finance companies.
Focus on Fair Treatment: Emphasis on ensuring dignified and fair treatment of borrowers during the recovery process.
Conduct of Recovery Agents and Employees: Clear expectations regarding behaviour, professionalism, and accountability of lender staff and third-party recovery agents.
Due Diligence and Oversight: Mandatory due diligence before engagement of recovery agents and strengthened supervisory controls.
Training and Code of Conduct: Requirement for structured training programs and adherence to a formal code of conduct for recovery agents.
Draft Second Amendment Directions Issued: Proposed amendments under the Responsible Business Conduct framework across multiple categories of regulated entities.

Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026

Key Highlights

Expansion of Eligible Borrowers: Definition of ‘Eligible Borrowers’ has been expanded to include all entities incorporated/ established/ registered in India. Broader categories of Indian entities permitted to access ECBs.
Widened Recognised Lender Base: Most of the restrictions on ‘Recognised Lenders’ have been lifted and the pool of permissible lenders for ECBs has been significantly widened. Further, there is now a requirement for loans to related parties to be only on arm’s length basis. Increased range of overseas lenders allowed to participate in ECB transactions.
Rationalised Borrowing Limits: Recalibration of overall borrowing thresholds to provide greater operational flexibility. Ceiling-based restrictions have been removed, allowing greater flexibility in the pricing of ECBs in line with prevailing market conditions. However, for ECBs with an average maturity period of less than three years, the cost of borrowing shall be subject to the applicable trade credit ceiling.
Relaxation of Average Maturity Restrictions: Adjustments to minimum average maturity period requirements. The MAMP has been harmonised for borrowers and lenders across all sectors. In addition, the Regulations introduce specific exemptions from MAMP compliance, providing enhanced flexibility for restructuring and other corporate actions.
Removal of Cost Restrictions: Elimination of earlier caps on the cost of borrowing under the ECB framework.
Review of End-Use Conditions: Reassessment and modification of restrictions on the utilisation of ECB proceeds. Although the list of end-use restrictions for ECBs remains extensive, key exemptions have now been introduced, including allowing the deployment of ECB proceeds for (a) strategic corporate actions such as M&A and acquisition of assets under the IBC; and (b) specified real estate activities (as discussed below). In addition, the earlier restrictions on the use of ECB proceeds for working capital and general corporate purposes have been done away with.
Simplified Reporting: Streamlined compliance and reporting requirements for ECB transactions.
Real Estate: “Activity” v. “Business”: ECBs may now be utilised for specified real estate activities that are excluded from the definition of “real estate business”. It may be noted that the term “transfer” in relation to real estate business has been accorded a wide meaning, including extinguishment of rights, compulsory acquisition, transactions under Section 53A of the Transfer of Property Act, 1882 (i.e., possession in lieu of part performance), and any transaction which has the effect of transferring, or enabling the enjoyment of, any immovable property.
Borrowing Limits: Eligible borrowers may access higher ECB limits based on their financial position. Additionally, regulated entities such as insurance companies and NBFCs are permitted to raise ECBs in accordance with the norms prescribed by their respective regulators.
Change in currency: The ECB framework has been liberalised to allow INR denominated ECB to be converted into a FCY ECB without any approval requirements.

The amendments mark a liberalisation phase in India’s foreign borrowing regime. By widening eligibility, easing cost and maturity constraints, and simplifying compliance, the RBI has made ECBs more accessible and commercially viable for Indian borrowers. Removal of cost caps enhances pricing flexibility in global capital markets, potentially improving competitiveness for Indian firms seeking offshore funding. At the same time, calibrated changes to end-use norms and reporting aim to balance capital inflows with macro-prudential safeguards. Overall, the revised framework is likely to deepen integration with international funding markets while maintaining regulatory oversight.

The Reserve Bank of India has issued draft Second Amendment Directions under the Responsible Business Conduct framework for public consultation. The proposed changes aim to standardise norms on borrower treatment, oversight of recovery agents, due diligence, training, and code of conduct requirements. Comments have been invited until March 6, 2026.

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Seventh Amendment) Regulations, 2025

On 25 February 2026, the Insolvency and Bankruptcy Board of India notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2026, amending the Insolvency and Bankruptcy Code, 2016 framework governing corporate insolvency resolution. In exercise of the powers conferred by section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following regulations to further amend the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The amendments refine the definition of “fair value,” overhaul the valuation process by introducing structured coordination among registered valuers, prescribe clearer documentation standards, expand disclosure requirements in the information memorandum, and introduce a new provision for treatment of real estate allottees who have not filed claims. The regulations come into force from the date of publication in the Official Gazette.

Key Amendments

Revised Definition of Fair Value: Fair value now expressly includes the total estimated realizable value of all assets, including tangible and intangible assets, along with their underlying synergies. It is provided that, “fair value” means the estimated realizable value of the corporate debtor or the assets of the corporate debtor, as the case may be, if they were to be exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, and where the parties had acted knowledgeably, prudently, and without compulsion. Meaning, the estimated realizable value of the corporate debtor shall be computed after taking into account the total estimated realizable value of all the assets of the corporate debtor including but not limited to tangible and intangible assets, along-with their underlying synergies.
Timelines for Appointment of Valuers: Resolution Professional (RP) must appoint two sets of registered valuers within 7 days of appointment, but not later than the 47th day from insolvency commencement.
Valuation Structure Reworked:
- Each set must include one registered valuer per asset class.
- One valuer in each set designated as “coordinating valuer.”
- Valuers must explain methodology to the Committee of Creditors (CoC) before finalising estimates.
- Physical verification of inventory and fixed assets mandated.
Third Valuer Mechanism: RP may appoint a third set of valuers if:
- The difference between two fair value or liquidation value estimates is 25% or more; or
- The CoC records reasons in writing for such appointment.
Final Determination of Values:
- Fair value: Average of the two closest estimates submitted by coordinating valuers.
- Liquidation value: Average of the two closest estimates for each asset class.
Standardised Valuation Reporting: Registered valuers must prepare reports and maintain documentation in the format prescribed by the Board through circular.
Expanded Disclosure in Information Memorandum (Regulation 36): Additional disclosures now required, including:
- Detailed receivables (trade, inter-corporate, contractual).
- Joint development and similar agreements.
- Assets attached by enforcement agencies.
- Details of allottees who have not filed claims but are reflected in books or RERA records.
New Regulation 38A – Treatment of Non-Claiming Allottees: Resolution plans must provide for treatment of real estate allottees whose details are included in the information memorandum but who have not submitted claims.

These amendments significantly strengthen transparency, consistency, and credibility in the valuation process under the corporate insolvency framework. By mandating asset-class-wise valuers, introducing coordinating valuers, requiring methodology disclosure, and prescribing objective thresholds for third valuations, the Board has reduced subjectivity and potential disputes over valuation outcomes. The expanded information memorandum disclosures enhance visibility into receivables, encumbrances, collaborative arrangements, and regulatory attachments, giving resolution applicants a more complete risk picture. Importantly, the explicit requirement to provide for non-claiming real estate allottees closes a recurring gap in real estate insolvencies, ensuring broader stakeholder protection and reducing post-approval litigation risk. Overall, the amendments reinforce procedural rigour and stakeholder equity in the resolution process.

Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2026

On 25 February 2026, the Insolvency and Bankruptcy Board of India issued the Insolvency and Bankruptcy Board of India (Liquidation Process) (Second Amendment) Regulations, 2026, F. No. IBBI/2025-26/GN/REG136, under the powers conferred by the Insolvency and Bankruptcy Code, 2016. The Regulations have been issued in exercise of the powers conferred by clause (t) of sub-section (1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), to further amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The amendments revise the valuation framework under the Liquidation Process Regulations, 2016, by empowering the Board to prescribe valuation standards through circulars and by mandating a standardised format for valuation reports and documentation. The regulations come into force from the date of publication in the Official Gazette.

Key Highlights

Board-Notified Valuation Standards: Regulation 35(3) has been amended to replace the reference to the Companies (Registered Valuers and Valuation) Rules, 2017 with valuation standards as notified by the Board through circular. It is provided that, in regulation 35, in sub-regulation (3), for the words “Companies (Registered Valuers and Valuation) Rules, 2017”, the words “such valuation standards as notified by the Board through circular” shall be substituted.
Mandatory Reporting Format: A new sub-regulation, 35(8), requires registered valuers to prepare valuation reports and maintain documentation in the format specified by the Board via a circular, after sub-regulation (7), sub-regulation (8) has been inserted, requiring that for the purposes of regulation 35, a registered valuer shall prepare the valuation report and maintain such documentation as per the format notified by the Board through circular.
Immediate Applicability: The amendments take effect from the date of publication in the Official Gazette.

These changes centralise control over valuation standards within the Board, allowing it to update and harmonise standards through circulars without formal regulatory amendments. This approach enhances flexibility and ensures uniformity across insolvency processes. The requirement for standardised reporting strengthens transparency, improves consistency in valuation outcomes, and supports better regulatory oversight in liquidation proceedings.

Insolvency and Bankruptcy Board of India (Pre-Packaged Insolvency Resolution Process) (Amendment) Regulations, 2026

On 25 February 2026, the Insolvency and Bankruptcy Board of India notified the Insolvency and Bankruptcy Board of India (Pre-Packaged Insolvency Resolution Process) (Amendment) Regulations, 2026, amending the Pre-Packaged Insolvency Resolution Process Regulations, 2021 under the framework of the Insolvency and Bankruptcy Code, 2016. The notification has been issued vide F. No. IBBI/2025-26/GN/REG138, in exercise of the powers conferred by clause (t) of sub-section (1) of section 196 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), to further amend the Insolvency and Bankruptcy Board of India (Pre-Packaged Insolvency Resolution Process) Regulations, 2021. The amendments align the valuation mechanism in pre-pack insolvency proceedings with recent changes introduced in the corporate insolvency framework. They refine the definition of “fair value,” introduce a structured valuation process involving multiple sets of registered valuers with designated coordinating valuers, mandate methodology disclosure to the committee, and standardise reporting formats. The amendments take effect from the date of publication in the Official Gazette.

Key Highlights

Revised Definition of Fair Value: Fair value now expressly includes the total estimated realizable value of all assets, both tangible and intangible, along with their underlying synergies. Fair value means the estimated realizable value of the corporate debtor or the assets of the corporate debtor, as the case may be, if they were to be exchanged on the insolvency commencement date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing, and where the parties had acted knowledgeably, prudently, and without compulsion.
Two Sets of Registered Valuers: Regulation 38 now clarifies that the resolution professional must appoint two sets of registered valuers.
Asset-Class Based Valuation Structure:
- Each set must include one registered valuer per asset class. For the purpose of this requirement, “asset class” shall have the meaning assigned to it under the Companies (Registered Valuers and Valuation) Rules, 2017.
- One valuer in each set to be designated as a “coordinating valuer” in consultation with the committee.
Mandatory Methodology Disclosure: Registered valuers must explain the valuation methodology to the committee before finalising estimates.
Physical Verification Requirement: Valuers must conduct physical verification of inventory and fixed assets before submitting reports.
Board-Notified Valuation Standards: Valuations must be computed in accordance with standards notified by the Board through circular.
Computation Mechanism for Final Values:
- Fair value: Average of the two estimates submitted by coordinating valuers.
- Liquidation value: Average of the two estimates submitted by registered valuers for each asset class.
Standardised Documentation: For the purposes of regulation 39, registered valuers must prepare valuation reports and maintain documentation in the format prescribed by the Board.

These amendments strengthen consistency and transparency in valuation under the pre-pack insolvency framework. By introducing asset-class-based valuation sets and coordinating valuers, the Board aims to reduce discrepancies and improve methodological clarity. Mandatory explanation of valuation approaches to the committee enhances oversight and informed decision-making. The alignment of standards and reporting formats with the broader insolvency ecosystem promotes uniformity across resolution mechanisms. Overall, the changes reinforce credibility, reduce valuation-related disputes, and support more structured and predictable pre-pack resolution outcomes.

Disclaimer:-

The content provided in this update is for educational and informational purposes only and should not be construed as legal advice or the opinion of Tempus Law Associates. Tempus Law Associates disclaims any liability in connection with the use of this information without seeking appropriate legal counsel.