Understanding Key Amendments - May 2026
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SECURITIES AND EXCHANGE BOARD OF INDIA
SEBI Introduces Fast-Track Mechanism for AIF Placement Memorandum
The Securities and Exchange Board of India (SEBI), through its circular dated April 30, 2026, has introduced a fast-track mechanism for processing Placement Memorandums (PPMs) of Alternative Investment Funds (AIFs). The move directly addresses longstanding delays in fund launches caused by iterative regulatory review cycles. By shifting towards a time-bound framework, SEBI is attempting to balance regulatory oversight with the need for speed and certainty in private capital deployment. This initiative also builds on SEBI’s earlier regulatory framework mandating standardized PPM templates (introduced in February 2020) and compulsory filing of PPMs through SEBI-registered Merchant Bankers (introduced in October 2021), which were aimed at ensuring minimum disclosure standards and streamlining scheme launch processes. This has been introduced as an Ease of Doing Business measure, considering factors such as the sophistication level of AIF investors and the due diligence and experience gained by Merchant Bankers.
Key Highlights:
30-day deemed approval framework: AIFs (excluding Large Value Funds for Accredited Investors) can now launch schemes and circulate PPMs 30 days after filing, unless SEBI raises objections within this period This is in line with Regulation 12 and 19 of the SEBI (AIF) Regulations, 2012.Reduced regulatory lag: Earlier, SEBI’s detailed review process often led to multiple rounds of comments and extended timelines, delaying fund mobilisation. The new framework eliminates this uncertainty by introducing a defined outer timeline.
Applicability: The mechanism applies to Angel Funds and most AIF schemes, while Large Value Funds (LVFs) continue to operate under separate regulatory relaxations (hereinafter collectively referred to as “non-LVF schemes”).
Special provision for first-time schemes: For newly registered AIFs, scheme launch is permitted after SEBI registration or expiry of 30 days from filing -whichever is later.
Conditional autonomy: Any observations issued by SEBI within the 30-day window must be incorporated before launch, ensuring that the fast-track route does not dilute disclosure or compliance standards. Comments, if any, provided by SEBI during this period of 30 days shall be complied with by Merchant Banker/AIF prior to launch of the scheme/circulation of PPM.
Shift in accountability: The framework places greater responsibility on AIF managers and merchant bankers to ensure accuracy and completeness of disclosures at the time of filing. The Merchant Banker and the Manager of the AIF shall be responsible for ensuring the accuracy and completeness of all disclosures made in the PPMs of non-LVF schemes, as well as in declarations submitted by them.
Timeline for first close: The first close of the scheme shall be declared not later than 12 months from the date on which the AIF becomes eligible to launch its scheme. Para 2.3.1 of SEBI Master Circular for AIFs dated May 07, 2024 stands modified to this extent.
Filing requirements: PPM of non-LVF schemes shall be filed on SEBI intermediary portal along with the following documents in addition to payment of applicable (scheme) fee: (i) duly signed Merchant Banker Due Diligence Certificate; (ii) duly signed Fit and Proper declarations with respect to the AIF, Sponsor, Manager of the AIF as specified in Schedule II of SEBI (Intermediaries) Regulations, 2008; (iii) Sponsor/Manager declarations with respect to minimum continuing interest commitment in AIF/scheme; (iv) copies of PANs of AIF, its scheme (if available), Sponsor, Manager, Trustee, directors/partners of Sponsor, Manager & Trustee, key investment team members.
Mandatory disclaimer in PPM: The prescribed disclaimer clarifies that (i) the Merchant Banker has independently exercised due diligence regarding the information in the PPM; (ii) submission of the PPM to SEBI should not be deemed or construed as approval by SEBI; and (iii) the Manager and Merchant Banker are responsible for ensuring that disclosures are true, fair, adequate and not misleading.
Liability for lapses: In case of any irregularity or lapse in the PPM, concerned entities shall be liable for action.
The introduction of a streamlined processing framework reflects SEBI’s continued efforts to facilitate efficient fund formation while maintaining regulatory discipline within the AIF ecosystem. This circular shall come into force with immediate effect and would also apply to all PPMs of non-LVF schemes pending as on date with SEBI.
SEBI Extends Compliance Timeline for Debenture Trustees
The Securities and Exchange Board of India (SEBI), through its circular dated April 28, 2026, has extended the timeline for Debenture Trustees (DTs) to comply with conditions governing activities carried out outside SEBI’s regulatory purview. This extension follows industry representations highlighting operational and structural challenges in implementing the segregation framework introduced under the 2025 amendments. While the regulatory intent remains unchanged, SEBI has acknowledged the complexity involved in restructuring business operations and has granted additional time to ensure meaningful compliance rather than rushed implementation. The circular has been issued in exercise of powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Regulation 2A of the SEBI (Debenture Trustees) Regulations, 1993, to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market.
Key Highlights:
Six-month extension granted: The original compliance deadline of April 27, 2026 has been extended by six months to October 27, 2026, providing DTs additional time to align with the prescribed framework.
Regulation 9C framework remains intact: Introduced through the October 27, 2025 amendment, Regulation 9C mandates that DTs must segregate non-SEBI regulated activities into separate business units operating on an arm’s length basis. The provision inter-alia stipulates that a debenture trustee holding a valid certificate of registration may transfer its activities that are not regulated by SEBI to separate business unit(s) within a period of six months from the date of notification of the amendment in the Official Gazette, or within such extended period as may be specified by the Board.
Operational framework unchanged: The detailed terms and conditions issued in November 2025—including ring-fencing of operations, separate records, and conflict mitigation mechanisms—continue to apply without modification. All other provisions of the SEBI Circular dated November 25, 2025 shall remain unchanged.
Reason for extension: Industry participants cited practical challenges in setting up systems, processes, and internal segregation structures, prompting SEBI to grant additional time. Based on representations received from the industry highlighting operational challenges in establishing the necessary systems and processes for effective implementation, it has been decided to grant additional six months for compliance by the DTs.
Objective of segregation: The framework seeks to eliminate conflicts of interest and ensure regulatory clarity by clearly demarcating SEBI-regulated trustee functions from other financial or advisory activities.
The measure reflects SEBI’s pragmatic approach in facilitating compliance while ensuring that market integrity and investor protection standards are maintained.
SEBI Introduces Net Settlement Framework for Foreign Portfolio Investors (FPIs)
The Securities and Exchange Board of India (SEBI), through its circular dated April 24, 2026, has introduced a framework permitting net settlement of funds for Foreign Portfolio Investors (FPIs) in the cash market. This is in modification of the existing framework under SEBI’s Master Circular for Stock Exchanges and Clearing Corporations dated December 30, 2024. This marks a fundamental shift from the existing gross settlement model, which required FPIs to meet full pay-in obligations for both buy and sell trades separately. The reform is aimed at reducing funding requirements, lowering transaction costs, and improving operational efficiency—particularly during high-volume trading periods such as index rebalancing.
Under the extant framework, no institutional investor is permitted to undertake day trading (i.e., square off transactions intra-day), and accordingly, all transactions carried out by FPIs are required to be grossed at the custodian level and obligations fulfilled on a gross basis, while custodians settle their deliveries on a net basis with the Clearing Corporations (CCs).
This circular has been issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 44 of the SEBI (Foreign Portfolio Investors) Regulations, 2019 to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market.
Key Highlights:
Netting of funds permitted for outright transactions: FPIs can now offset sale proceeds against purchase obligations within the same settlement cycle, resulting in a single net fund obligation.
Limited applicability to ‘outright’ trades: Net settlement is allowed only where there is either a buy or a sell in a security (not both) during a settlement cycle; mixed transactions continue under the gross settlement framework.
Treatment of residual and excess amounts clarified: In case the value of outright sale is less than the value of outright purchase, the residual amount along with non-outright purchase obligations shall be funded by the FPI. However, if the value of outright sale exceeds the value of outright purchase, such excess shall not be adjusted towards non-outright purchase obligations
Securities settlement remains unchanged: While funds can be netted, delivery of securities will continue on a gross basis between FPIs and custodians, preserving settlement integrity.
Statutory levies unaffected: Charges such as Securities Transaction Tax (STT) and stamp duty will continue to apply as per the existing delivery-based system.
Standards and implementation mechanism: The implementation standards for the framework shall be formulated by the Custodians and Designated Depository Participants Standards Setting Forum (CDSSF), in consultation with relevant stakeholders. Custodians, FPIs and all relevant stakeholders are required to make necessary changes in their systems to give effect to the framework.
Implementation timeline: The framework is to be operationalised on or before December 31, 2026, with intermediaries required to update systems and processes accordingly.
Rationale for reform: The earlier gross settlement model led to higher liquidity requirements, increased funding costs, and foreign exchange exposure, particularly where offsetting trades existed within the same cycle. The introduction of net settlement is expected to enhance efficiency for FPIs by reducing operational complexities while retaining safeguards through gross settlement of securities.
SEBI Grants One-Time Relaxation on MPS Non-Compliance
The Securities and Exchange Board of India (SEBI), through its circular dated April 7, 2026, has granted a one-time relaxation from the applicability of the SEBI Master Circular governing enforcement actions under the Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015 in cases of non-compliance with Minimum Public Shareholding (MPS) requirements. The SEBI Master Circular dated July 11, 2023, inter alia, prescribes the procedure to be followed by recognized stock exchanges and depositories in respect of listed entities not complying with MPS requirements, including levy of fines, freezing of promoter shareholding, and other consequential actions. The move comes against the backdrop of market conditions that have made promoter dilution and public shareholding compliance difficult within prescribed timelines. SEBI has received representation from an Industry body highlighting the difficulties faced by listed entities in achieving compliance with MPS requirements, inter alia, on account of capital market volatility arising from ongoing geopolitical tensions in the Middle East. While the underlying obligation to maintain the mandated 25% public shareholding remains unchanged, SEBI has temporarily recalibrated its enforcement approach to prevent punitive consequences in a constrained market environment.
Key Highlights:
One-time relaxation window: The relief applies to listed entities whose MPS compliance deadlines fall between April 1, 2026 and September 30, 2026, covering a defined six-month period.
Suspension of penal actions: Recognised stock exchanges and depositories have been directed not to initiate penal measures for non-compliance during this period, including fines and restrictions typically triggered under the Master Circular.
Withdrawal of existing penalties: Any penal actions already initiated from April 1, 2026 onwards are to be withdrawn, effectively resetting enforcement for the specified period.
No dilution of core obligation: The requirement to maintain minimum 25% public shareholding remains intact, and the relaxation does not constitute a waiver of compliance.
Context for relaxation: Achieving MPS compliance typically involves market-linked mechanisms such as OFS, QIPs, or secondary dilution, which are dependent on investor appetite and prevailing market conditions.
Temporary regulatory recalibration: The relaxation is strictly time-bound and non-recurring, signalling that enforcement will resume once the specified window closes.
The stock exchanges are advised to bring the provisions of this circular to the notice of all the entities whose securities are listed in the stock exchange and also to disseminate the same on its website. The stock exchanges are further advised to make amendments to the relevant bye-laws, rules and regulations for the implementation of the terms of this circular, if necessary.
This Circular is issued in exercise of powers conferred under Section 11 and Section 11A of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
The relaxation reflects SEBI’s balanced regulatory approach in addressing transitional challenges while preserving the objective of maintaining adequate public shareholding in listed entities. The circular shall be applicable with immediate effect.
MINISTRY OF CORPORATE AFFAIRS
Ministry of Corporate Affairs issues a draft notification proposing amendments to the Companies (Incorporation) Rules, 2014
The Ministry of Corporate Affairs (MCA), through its April 2026 draft amendments to the Companies (Incorporation) Rules, 2014—including changes to e-Form INC-35 (AGILE-PRO)—has proposed a significant restructuring of the incorporation and post-incorporation compliance framework. The reforms are part of a broader effort to rationalise filings, eliminate duplication, and align incorporation processes with a digital-first regulatory architecture. By consolidating forms and simplifying documentation requirements, the MCA is attempting to reduce procedural friction while maintaining core compliance safeguards.
Notably, the existing framework governing e-Form INC-35 has previously been expanded pursuant to the Companies (Incorporation) Fourth Amendment Rules, 2021, issued vide G.S.R. 392(E) dated 7th June, 2021, in exercise of the powers conferred under sub-sections (1) and (2) of section 469 of the Companies Act, 2013.
Under the said amendment, rule 38A of the Companies (Incorporation) Rules, 2014 was modified, including substitution of the marginal heading to include “Opening of Bank Account and Shops and Establishment Registration”, and replacement of the term “AGILE-PRO” with “AGILE-PRO-S”. Further, clauses relating to integrated registrations were expanded to include “Profession Tax Registration with effect from the 23rd February, 2020; Opening Bank Account with effect from the 23rd February, 2020; and Shops and Establishment Registration”.
Key Highlights:
Shift towards consolidated e-forms: Multiple incorporation-related filings are proposed to be merged into simplified forms (such as E-CON and E-CHNG), reducing fragmentation across existing e-forms.
Revisions to AGILE-PRO (INC-35): The framework governing integrated registrations (GST, EPFO, ESIC, bank accounts, etc.) is being streamlined, with a view to improving ease of doing business during incorporation. This builds on the earlier expansion of AGILE-PRO-S to include additional registrations such as Profession Tax and Shops and Establishment Registration.
Rationalisation of documentation: The draft proposes removal of redundant declarations, affidavits, and duplicative KYC requirements, particularly in areas such as OPC conversions and director-related filings.
Simplification of name reservation rules: Greater clarity is proposed on trademark-based objections, name approvals, and withdrawal of reserved names, reducing procedural uncertainty at the entry stage.
Flexibility in incorporation processes: Proposed changes include expanded documentation options for registered offices, revised rules for shifting offices, and introduction of provisions addressing liability of deceased subscribers.
Consultation-driven reform: The amendments are currently in draft stage, with stakeholder comments invited until May 9, 2026, indicating that further refinements may follow before final notification.
What this signals is a structural shift rather than a procedural tweak. The MCA is moving away from a form-heavy, verification-driven incorporation model towards a trust-based, digitally integrated compliance ecosystem. For businesses, this could significantly reduce entry barriers and timelines. However, the flip side is equally important—simplification at the front end typically translates into greater backend accountability and data integrity expectations, making accuracy at the time of filing more critical than ever.
MCA & IICA Launch Consultation on Filing Architecture Overhaul
The Ministry of Corporate Affairs (MCA), in collaboration with the Indian Institute of Corporate Affairs (IICA), has released a concept note (April 2026) initiating stakeholder consultations on the rationalisation of the filing architecture under the Companies Act, 2013. This consultation is part of a structured multi-city stakeholder engagement process aimed at co-creating the next chapter of India’s corporate compliance architecture. Positioned within the broader “Viksit Bharat @2047” vision, the initiative seeks to fundamentally redesign corporate compliance from a form-based system to a data-centric, technology-driven architecture. Rather than incremental tweaks, the consultation signals a structural rethink—covering the entire corporate lifecycle from incorporation to exit, with a focus on reducing duplication, enabling automation, and improving regulatory interoperability. The reform effort also seeks to set new international benchmarks in digital corporate governance by building a framework anchored in transparency, efficiency, and regulatory excellence.
The consultation specifically seeks stakeholder inputs on key reform areas including consolidation of forms, transition to a data-centric architecture, expansion of Straight Through Processing (STP), and adoption of an interaction-based, pre-filled filing interface under MCA21 Version 3. It is also intended to harness practitioner expertise, unlock automation potential through intelligent system integration, and ensure inclusive, evidence-based reform grounded in stakeholder experience.
Key Highlights:
Comprehensive overhaul across lifecycle: The consultation spans entry, ongoing compliance, and exit processes, covering filings across incorporation, capital structuring, governance, audit, and closure stages. This includes a chapter-wise review of forms prescribed under the Companies Act, 2013, across domains such as incorporation (e.g., SPICe+, RUN), capital and securities (PAS, SH series), governance (MGT series), accounts and audit (AOC, ADT series), director-related filings (DIR series), restructuring (CAA series), and strike-off/winding up (STK, WIN series).
Shift to ‘file once, use everywhere’ model: A core proposal is transitioning to a data-centric architecture, where information is reused across filings instead of repeatedly submitted.
Consolidation and reduction of forms: The framework explores merging forms with overlapping data fields and statutory purposes, aiming to reduce compliance burden and eliminate duplication.
Expansion of Straight Through Processing (STP): Increased adoption of automated, approval-free processing for standard filings is being considered to reduce manual intervention and delays.
Pre-filled, modular filings under MCA21 V3: The proposed system would enable auto-population of existing company data, combined with modular filings (core form + conditional annexures).
Interoperability with regulators: Integration with systems such as GSTN, CBDT, SEBI, and RBI is proposed to eliminate repetitive cross-regulatory reporting. The consultation further envisages API-based data sharing across MCA, UIDAI, banks, depositories, and other interconnected government systems to enable seamless validation and reduce duplication.
Risk-based and proportionate compliance: The consultation considers differentiated compliance thresholds (e.g., MSMEs vs large corporates) and risk-based regulatory scrutiny. This includes calibration of compliance obligations based on entity size, sector, and risk profile, ensuring that MSMEs, startups, and small entities are not disproportionately burdened.
Stakeholder-driven reform process: Inputs are invited across industry and advisory ecosystems, with the last date for submissions set as May 15, 2026, following which recommendations will be submitted to MCA. Stakeholders are encouraged to provide specific, evidence-based inputs, distinguish between immediate, near-term, and long-term recommendations, and identify potential legal risks or unintended consequences. Submissions will be used solely for policy analysis and reform design.
Platform and technology focus: The reform emphasises platform excellence by strengthening MCA21’s performance, resilience, and user experience through robust infrastructure and zero-downtime architecture, alongside adoption of AI-driven validation, intelligent pre-filling, and error-minimised compliance workflows.
This is one of the more consequential policy signals in recent times. If implemented as envisioned, it would move India from a form-heavy compliance regime to a system-driven regulatory architecture, where data integrity replaces repetitive filings as the core compliance metric. For businesses and advisors, this shifts the focus from procedural filing to accuracy of underlying data and system alignment. It also signals a transition towards a globally benchmarked, technology-enabled compliance ecosystem that integrates multiple regulatory touchpoints into a unified digital framework.
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
IBBI Mandates International Valuation Standards
The Insolvency and Bankruptcy Board of India (IBBI), through its circular dated April 1, 2026, has mandated the adoption of International Valuation Standards (IVS) for all valuation exercises conducted under the Insolvency and Bankruptcy Code, 2016. This replaces the earlier reference to “internationally accepted valuation standards” with a clearly defined and binding framework. The move is aimed at bringing consistency, transparency, and global alignment to valuation practices—an area that has often been a source of dispute in insolvency proceedings. The circular reiterates that one of the objectives of the Code is the maximisation of value of assets of the corporate debtor in a time bound manner, and that valuation serves as a critical input for evaluation of resolution plans and facilitates informed decision-making by stakeholders, including the committee of creditors, resolution applicants, and adjudicating authorities.
Key Highlights:
IVS made mandatory across all IBC processes: Valuations under CIRP, liquidation, voluntary liquidation, pre-pack, and personal guarantor insolvency frameworks must now comply with IVS issued by the International Valuation Standards Council (IVSC). This mandate is issued in exercise of the powers conferred under clause (c) of sub-regulation (1) of regulation 35 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; sub-regulation (3) of regulation 35 of the IBBI (Liquidation Process) Regulations, 2016; clause (b) of sub-regulation (1) of regulation 3 of the IBBI (Voluntary Liquidation Process) Regulations, 2017; clause (c) of sub-regulation (1) of regulation 39 of the IBBI (Pre-packaged Insolvency Resolution Process) Regulations, 2021; and sub-regulation (2) of regulation 30 of the IBBI (Bankruptcy Process for Personal Guarantors to Corporate Debtors) Regulations, 2019.
Effective immediately: The framework came into force from April 1, 2026, leaving no transition window for adoption. The circular clarifies that it shall come into force from the date of its issue and shall apply to all valuation conducted under the Code and regulations made thereunder.
Replacement of ambiguous standards: The earlier requirement of following “internationally accepted standards” has been replaced with a specific, codified benchmark, eliminating interpretational inconsistencies. The Board has notified the International Valuation Standards, as issued and updated from time to time by the IVSC, as the applicable valuation standards until further orders.
Enterprise-level valuation approach: The framework moves beyond fragmented asset valuation towards a more holistic “enterprise value” assessment, capturing synergies and going-concern considerations.
Standardised reporting and methodology: Valuers are required to follow uniform reporting formats and structured methodologies, improving comparability across cases.
Increased rigour in valuation process: Requirements such as physical verification of assets and structured documentation are expected to enhance credibility and reduce disputes. The circular underscores that transparent, objective, and credible valuation of assets of the corporate debtor is fundamental to the effective functioning of the insolvency framework.
This is a substantive shift in the insolvency ecosystem. Valuation has historically been one of the most litigated and contested aspects of resolution processes, often influencing creditor recoveries and bidder behaviour. By mandating IVS, IBBI has moved towards a rules-based, globally aligned valuation regime, reducing discretion and subjectivity.
Insolvency and Bankruptcy Code (Amendment) Act, 2026
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 received Presidential assent on April 6, 2026 and has now been notified, marking a significant legislative update to India’s insolvency regime. It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act. Unlike incremental regulatory changes, this amendment introduces structural modifications across definitions, processes, and institutional roles under the Code. The objective is clear—enhance speed, strengthen creditor control, and improve procedural clarity in insolvency and resolution mechanisms.
Key Highlights:
Expansion of definitional framework: The Act introduces new definitions, including “registered valuer”, aligned with the Companies Act, 2013, ensuring uniformity across valuation regimes. The term ‘registered valuer’ shall have the same meaning as assigned to it under Chapter XVII of the Companies Act, 2013.
Clarification on security interest: An explanation has been inserted to clarify that security interest must arise from a contractual arrangement, not merely by operation of law—reducing interpretational disputes. For the removal of doubts, it is hereby clarified that the security interest shall exist only if it creates a right, title or interest or a claim to a property pursuant to an agreement or arrangement, by the act of two or more parties, and shall not include a security interest created merely by operation of any law for the time being in force.
Strengthening institutional ecosystem: The amendments broaden the concept of “service providers”, covering insolvency professionals, agencies, information utilities, and other regulated entities under a unified framework.
Shift towards creditor-driven processes: The legislative changes reinforce creditor primacy in insolvency resolution, with parallel developments such as creditor-initiated resolution frameworks being operationalised through subordinate regulations. A creditor-initiated insolvency resolution process may be initiated in respect of such corporate debtors as may be notified, and a financial creditor may initiate the process by appointing a resolution professional, subject to prescribed conditions.
Flexibility through delegated regulation: Certain procedural and documentation requirements are being shifted from the statute to regulations, allowing IBBI greater flexibility to adapt based on implementation experience. References to requirements such as “any other information, as may be specified” have been introduced across provisions, replacing earlier prescription-based language.
Objective of reform: The amendments aim to improve timelines, reduce ambiguity, and strengthen enforcement mechanisms, aligning the Code with evolving market and institutional realities. The Adjudicating Authority is now required to pass orders within specified timelines, and where such timelines are not met, it shall record the reasons for such delay in writing.This amendment is not about fixing isolated issues—it reflects a broader transition in the insolvency framework. By moving operational detail into regulations and strengthening creditor control, the law is becoming more adaptive but also more execution-dependent. Further, provisions relating to avoidance transactions, fraudulent or wrongful trading, and continuation of proceedings have been clarified to ensure that such proceedings do not affect the corporate insolvency resolution process or liquidation process, and may continue independently.
RESERVE BANK OF INDIA
RBI Rationalises Settlement and Clearing Framework
The Reserve Bank of India, through its April 2026 notification, has introduced refinements to the settlement and clearing framework applicable to regulated entities. The notification is part of RBI’s broader push towards improving payment system efficiency, reducing settlement risks, and aligning operational processes with evolving transaction volumes in India’s financial ecosystem. While not a headline-grabbing reform, the changes are aimed at strengthening the underlying infrastructure that supports high-frequency and large-value financial transactions.
In this context, the Reserve Bank, in exercise of the powers conferred by Section 26A and Section 35A of the Banking Regulation Act, 1949, and being satisfied that it is necessary and expedient in the public interest so to do, has issued the Amendment Directions to the Reserve Bank of India (Local Area Banks – Miscellaneous) Directions, 2025. The Amendment Directions shall come into force with immediate effect.
Key Highlights:
Focus on settlement efficiency: The framework seeks to streamline fund settlement cycles and reduce operational frictions, particularly in high-volume transaction environments.
Strengthening risk controls: Enhanced emphasis has been placed on mitigating settlement and counterparty risks, ensuring stability in payment and clearing systems.
Operational clarity for intermediaries: The notification provides clearer procedural guidelines for banks and financial institutions, reducing ambiguity in execution.
Alignment with digital transaction growth: The move is contextualised within the rapid increase in digital payments and real-time settlement systems, requiring more robust backend infrastructure.
System-wide standardisation: RBI continues its broader approach of harmonising practices across participants, ensuring consistency in settlement processes.
Incremental but foundational reform: Unlike structural regulatory changes, this notification focuses on improving existing systems rather than introducing new frameworks.
Targeted amendment to existing Directions: The Amendment Directions modify the Directions by adding to Annex XII the following: “2. AgriSURE - Agri Fund for Start Ups & Rural Enterprises”.
The amendment reflects RBI’s approach towards strengthening grassroots financial systems and enabling credit access for rural and agri-based enterprises.
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