Understanding Key Amendments - September 2026
SECURITIES AND EXCHANGE BOARD OF INDIA
IT Resilience Index for Market Infrastructure Institutions
On August 24, 2026, the Securities and Exchange Board of India (“SEBI”) introduced the IT Resilience Index for Market Infrastructure Institutions (“MIIs”). The framework forms part of SEBI's broader efforts to strengthen technology resilience and operational continuity within India's securities-market infrastructure.
Key Highlights
IT Resilience Assessment: The framework introduces an index-based mechanism to assess the technological resilience of MIIs. An index-based assessment provides a structured mechanism for evaluating technology resilience against identified parameters. It can also assist regulators and institutions in identifying areas where resilience measures may require strengthening. The IT Resilience Index (“ITRI”) is intended to measure the robustness of the Critical Systems of MIIs, including systems feeding into or otherwise related to such Critical Systems. The ITRI is to be computed based on nine parameters, with the following weightages: Availability (20%), Security (20%), Integrity (10%), Governance (10%), Reliability and Monitoring (10%), Business Continuity (10%), Modularity and Flexibility (10%), Scalability (5%), and Other parameters, including incident handling (5%).
Focus on Critical Infrastructure: The framework is relevant to market infrastructure entities such as stock exchanges, clearing corporations and depositories. These institutions operate systems that are central to securities-market functioning. The resilience of their infrastructure is consequently important from both market stability and investor protection perspectives. The framework reinforces the importance of ensuring that critical technology systems remain available, reliable and capable of recovering within appropriate timeframes when disruptions occur. The scope of the ITRI shall include Critical Systems as defined under the relevant Master Circulars for Stock Exchanges and Clearing Corporations, Depositories and the Commodity Derivatives Segment, as well as other systems feeding / related to such Critical Systems.
Operational Resilience: The initiative seeks to strengthen the ability of MIIs to prevent, withstand and recover from technology-related disruptions. Operational resilience extends beyond conventional cybersecurity. It involves an institution’s ability to maintain critical functions despite disruptions and restore normal operations in an effective and timely manner.
MIIs may therefore need to consider the relationship between technology infrastructure, business continuity, disaster recovery, incident response and organisational governance. MIIs shall also develop an Early Warning System to detect possible deterioration in any of the parameters of ITRI leading to possible performance issue, slowness etc. in their systems and framework to remedy these.
Technology Risk Governance: The framework increases regulatory focus on governance, risk management and resilience of critical IT systems. Effective technology governance requires appropriate oversight at the organisational level. Senior management and governing bodies may need to understand the institution’s technology risks, resilience capabilities and incident-response arrangements. The ITRI shall be system-driven, with ITRI computed automatically from IT systems or data extracted from such systems without manual intervention. The Industry Standards Forum (“ISF”) of MIIs constituted by SEBI shall finalize sub-parameters and detailed measurement criteria for each parameter and shall formulate baseline parameters, acceptable threshold scores as well as the SOP for calculating ITRI along with an objective system-driven scoring methodology.
Cybersecurity and Continuity: The initiative complements SEBI's broader technology and cybersecurity framework applicable to market institutions. MIIs shall build systems providing continuous visibility into service delivery to market participants, including consolidated dashboards to assist in monitoring system/application performance and continuous service delivery as well as any deviation / anomalies thereof. MIIs shall also formulate SOPs to monitor availability of systems and continuity of service delivery to all market participants and flag any disruption / deviation thereof.
Implementation Timeline: MIIs have already implemented the beta version of the ITRI framework. MIIs shall operationalize the ITRI framework, including the Early Warning System and Real Time Monitoring of Service Delivery, by February 28, 2027. The detailed Standard Operating Procedures (“SOP”) shall be submitted to SEBI after review by the Standing Committee on Technology (“SCOT”) of MIIs by January 31, 2027. The first submission of ITRI computation under this framework shall be for the half-year ending March 31, 2027.
The introduction of the IT Resilience Index reflects the increasing importance of technology-risk management in India's securities markets. MIIs will need to assess their existing technology governance, resilience mechanisms, incident-response capabilities and business-continuity arrangements against the new regulatory expectations.
SEBI Framework for Online Bond Platform Providers Modified
On August 14, 2026, SEBI modified the regulatory framework applicable to Online Bond Platform Providers (“OBPPs”), including measures intended to promote ease of doing business. The framework modifies provisions of the SEBI Master Circular for issue and listing of Non-Convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper dated October 15, 2025 (“NCS Master Circular”).
Key Highlights
Regulatory Framework Modified: SEBI revised the existing regulatory framework governing OBPPs. The modification is intended to improve the functioning of online bond platforms within the regulated securities-market environment. For platform operators, the changes may require review of existing policies, procedures and compliance systems to ensure that their operations remain aligned with the revised framework. OBPPs may now offer products or securities or services regulated by the International Financial Services Centres Authority (“IFSCA”) and Bonds issued under Section 54EC of the Income Tax Act, 1961 or Section 85 of the Income-tax Act, 2025.
Ease of Doing Business: The changes seek to simplify regulatory requirements applicable to online bond platforms. Simplification of regulatory requirements can reduce operational friction and enable regulated entities to focus resources on core compliance and investor-facing functions. For digital platforms, where processes are often technology-driven, clarity and efficiency in regulatory requirements can also facilitate smoother implementation. The modification also changes the compliance officer requirements for OBPPs. The entity shall appoint a Compliance Officer as per the SEBI (Stock Brokers) Regulations, 2026, who shall comply with certification requirements, including the NISM-Series-III-A: Securities Intermediaries Compliance (Non-Fund) Certification Examination for stock brokers, as prescribed from time to time.
Investor Protection: The revised framework continues to maintain regulatory safeguards applicable to the distribution and trading of securities through online platforms. Investor protection remains a central component of SEBI’s regulatory approach. The digital nature of online bond platforms makes appropriate disclosures, compliance controls and investor-facing safeguards particularly important. For products, securities or services regulated by IFSCA, the grievance redressal mechanism shall be specified by the OBPPs on their platform and such products, securities or services shall be clearly labelled as international or overseas instruments, to prevent confusion with domestic debt securities. OBPPs shall also offer such products, securities or services in the manner specified for SEBI-registered stock brokers operating within the GIFT-IFSC and in compliance with applicable guidelines under the Foreign Exchange Management Act (“FEMA”), 1999, including Overseas Investment Rules and limits under Liberalised Remittance Scheme (“LRS”).
Digital Fixed-Income Market: The amendments are relevant to the growing ecosystem of technology-enabled bond distribution platforms. Digital platforms have the potential to broaden investor participation in the fixed-income market by improving accessibility and simplifying investment processes. A clear regulatory framework can support this development while ensuring that platforms operate within appropriate market-conduct and investor-protection standards. OBPPs may offer Bonds issued under Section 54EC of the Income Tax Act, 1961 or Section 85 of the Income-tax Act, 2025 either under a different tab on their online bond platform or on any other website/ platform. OBPPs shall provide a disclaimer that these are tax specific instruments and that the grievance redressal mechanism for these instruments does not lie with SEBI but lies with the issuer.
The amendments seek to balance regulatory oversight and investor protection with greater operational flexibility for online bond platforms.
For existing and prospective OBPPs, the changes may require an internal assessment of regulatory policies, operational processes and technology-enabled compliance mechanisms. In relation to 54EC bonds, OBPPs shall disclose features including eligible issuers, lock-in period, investment limit, non-transferable status, tax features, application size and exemption from listing requirements under SEBI (LODR) Regulations, 2015. OBPPs shall also prominently disclose that investment in these instruments is intended for investors seeking to avail the tax benefits associated therewith, subject to satisfaction of the eligibility criteria and other conditions prescribed under the applicable provisions of the Income-tax Act. The development also reflects SEBI’s continuing efforts to adapt securities-market regulation to increasingly digital modes of investment and distribution. The circular shall come into force with immediate effect. All other provisions of the NCS Master Circular shall remain unchanged.
Acceptance of Digitally Signed Power of Attorney from Foreign Portfolio Investors
On August 20, 2026, SEBI issued a circular permitting the acceptance of digitally signed Power of Attorney (“PoA”) documents from Foreign Portfolio Investors (“FPIs”) in accordance with the provisions of the Information Technology Act, 2000.
Key Highlights
Digital Documentation: FPIs may submit digitally signed PoA documents in accordance with the revised framework. The acceptance of digitally signed documents provides greater flexibility in the execution and submission of documentation. For investors operating across different jurisdictions, this can reduce logistical difficulties associated with physical execution and transmission. The digitally signed PoA may be given by the FPI to Custodians specifying the address and shall be executed using digital signature in accordance with the provisions of the Information Technology Act, 2000.
Reduced Physical Documentation: The measure reduces reliance on physical execution and transmission of PoA documents. Reducing physical documentation can help streamline administrative processes for both FPIs and intermediaries. It can also reduce the time associated with couriering documents between jurisdictions and maintaining physical records. The acceptance of digitally signed PoA eliminates the need for notarisation, apostillisation or consularisation of the Power of Attorney.
Ease of Doing Business: The change is intended to simplify operational processes for foreign investors. For foreign investors, administrative efficiency is an important component of market access. Simplifying documentation requirements can reduce onboarding friction and enable investors and intermediaries to complete regulatory processes more efficiently. The measure is part of SEBI’s continued efforts to digitalise the FPI onboarding process and is intended to reduce the overall time taken for FPI onboarding and improve ease of doing business for FPI applicants.
FPI Onboarding: The measure may facilitate smoother documentation and onboarding processes for FPIs and their intermediaries. FPI onboarding involves multiple documentation and verification requirements. The ability to use digitally signed PoA documents may help reduce delays associated with documentation and improve operational coordination between investors, custodians, intermediaries and other relevant parties. The amendment modifies Para 9(B)(iv) of Part B of the FPI Master Circular, which specifies the Power of Attorney given by FPI to Custodians.
The amendment represents a further step towards digitisation of securities-market processes and reducing administrative friction for foreign investors.
The development also demonstrates the increasing acceptance of technology-enabled documentation within the Indian securities regulatory framework. FPIs and intermediaries should nevertheless ensure that digitally executed documents comply with the applicable requirements before relying upon them for regulatory or operational purposes.
MINISTRY OF CORPORATE AFFAIRS
Companies (Indian Accounting Standards) Amendment Rules, 2026
On August 12, 2026, the Ministry of Corporate Affairs (“MCA”) notified the Companies (Indian Accounting Standards) Amendment Rules, 2026 through G.S.R. 725(E). The amendments modify several Indian Accounting Standards, including Ind AS 101, Ind AS 107, Ind AS 109, Ind AS 110 and Ind AS 7.
The amendments seek to align Indian accounting standards more closely with developments under International Financial Reporting Standards and address practical issues relating to financial instruments, electronic payments, ESG-linked arrangements and nature-dependent electricity contracts.
The amendments are relevant to companies preparing financial statements under Ind AS and may require finance, accounting, legal, compliance and audit teams to review existing accounting policies and disclosures.
Key Highlights
Financial Instruments with Contingent Features: Amendments have been introduced to Ind AS 109 and Ind AS 107 concerning financial instruments containing contingent features. Financial instruments containing contractual features that cause payments to vary depending on specified events or conditions can present complex accounting questions. The amendments seek to provide greater clarity regarding their recognition, measurement and disclosure. Under the amendments, an entity is required to assess whether contractual cash flows that could arise both before and after a change in contractual cash flows are solely payments of principal and interest, irrespective of the probability of the change occurring. The nature of the contingent event may also be considered as an indicator. Where the contingent event does not relate directly to changes in basic lending risks and costs, such as where an interest rate is adjusted based on a specified reduction in carbon emissions, the entity may be required to perform a qualitative or quantitative assessment. Ind AS 107 also requires disclosure of the nature of the contingent event, quantitative information about possible changes to contractual cash flows and the gross carrying amount of financial assets and amortised cost of financial liabilities subject to such contractual terms.
Electronic Payments: Ind AS 109 has been amended to provide greater clarity on the accounting treatment of liabilities settled through electronic payment systems. Electronic payments are now an integral part of corporate financial operations. The timing of derecognition of financial liabilities and recognition of corresponding transactions can therefore become relevant in determining the appropriate accounting treatment. An entity may deem a financial liability, or part of a financial liability, to be discharged before the settlement date where it has initiated a payment instruction and has no practical ability to withdraw, stop or cancel the payment instruction, has no practical ability to access the cash to be used for settlement as a result of the payment instruction, and the settlement risk associated with the electronic payment system is insignificant. An entity applying this treatment to a financial liability through an electronic payment system shall apply it to all settlements made through the same electronic payment system.
Nature-Dependent Electricity Contracts: Amendments to Ind AS 109 and Ind AS 107 address accounting and disclosure issues relating to contracts for electricity generated from nature-dependent sources. The increasing use of renewable-energy arrangements has created new accounting considerations for companies entering into electricity purchase agreements and similar contractual structures. Contracts involving electricity generated from renewable or other nature-dependent sources may contain characteristics that require specific consideration under financial instrument accounting principles. The amendments seek to address these practical issues and provide greater clarity in accounting and disclosure. Contracts referencing nature-dependent electricity expose an entity to variability in electricity generation due to uncontrollable natural conditions, such as weather. The amendments apply to contracts to buy or sell such electricity and financial instruments referencing it. An entity shall assess whether such contracts are held for receipt of electricity in accordance with expected usage requirements. Where electricity must be bought and taken when generated, the entity must be a net purchaser for the contract period, based on reasonable and supportable information on past, current and expected future electricity transactions over a period not exceeding 12 months. Ind AS 107 requires disclosures in a single note on contractual features exposing the entity to variability, risks of buying unusable electricity, unrecognised commitments, estimated future cash flows, whether a contract might become onerous, and effects on financial performance, including purchase costs and proceeds from sales of unused electricity. Certain contracts may also be designated as hedging instruments in hedges of forecast electricity transactions, subject to specified requirements.
Annual Improvements: Changes have also been introduced across Ind AS 101, Ind AS 107, Ind AS 109, Ind AS 110 and Ind AS 7 as part of the annual improvements to Ind AS. Annual improvements are intended to address relatively focused issues, clarify requirements and improve consistency in the application of accounting standards. The amendments to Ind AS 110 clarify the consideration of a de facto agent’s decision-making rights and its indirect exposure, or rights, to variable returns through the de facto agent when assessing control of an investee. The amendments to Ind AS 7 also address the reporting of cash flows between an investor and an associate, joint venture or subsidiary accounted for at cost, including dividends and advances.
ESG-Linked Financing: The amendments provide greater clarity regarding financial instruments containing contractual terms linked to environmental or sustainability-related conditions. ESG-linked and sustainability-linked financing arrangements are increasingly used by companies seeking to align financing terms with specified environmental or sustainability objectives. Such instruments may include contractual terms under which interest rates or other financial conditions change depending on achievement of identified sustainability-related targets. For example, where the interest rate on a loan is adjusted by a fixed number of basis points if the debtor achieves a contractually specified reduction in carbon emissions, the contractual cash flows may continue to be solely payments of principal and interest where, in all contractually possible scenarios, the contractual cash flows would not be significantly different from those of a financial instrument with identical contractual terms but without the contingent feature. Conversely, where the interest rate is adjusted to track a market-determined carbon price index, the contractual cash flows are not solely payments of principal and interest because they are indexed to a variable that is not a basic lending risk or cost.
Effective Date: The amendments apply to annual reporting periods beginning on or after April 1, 2026.
The amendments relating to the Classification and Measurement of Financial Instruments are to be applied retrospectively in accordance with Ind AS 8, subject to specified transition requirements. An entity is not required to restate prior periods and, where prior periods are not restated, the effect of initially applying the amendments is recognised as an adjustment to the opening balance of financial assets and financial liabilities and the cumulative effect, if any, as an adjustment to the opening balance of retained earnings or other component of equity.
For Contracts Referencing Nature-Dependent Electricity, specified amendments are to be applied retrospectively in accordance with Ind AS 8 using the facts and circumstances at the date of initial application. Prior periods need not be restated, and the amendments relating to hedge accounting are to be applied prospectively to new hedging relationships designated on or after the date of initial application.
The amendments are particularly relevant for companies preparing financial statements under Ind AS, especially entities with complex financial instruments, ESG-linked financing arrangements, electronic payment structures or renewable-energy contracts. Companies should assess whether their existing accounting policies, systems and disclosures require modification.
The amendments also reinforce the importance of coordination between finance, legal and compliance functions. Contractual terms increasingly have accounting consequences, particularly in relation to financing arrangements, sustainability-linked conditions and energy contracts. Early legal and accounting review can therefore help companies identify potential reporting implications at the time agreements are negotiated.
Companies Compliance Facilitation Scheme, 2026 Extended to September 15, 2026
On August 31, 2026, the Ministry of Corporate Affairs further extended the validity of the Companies Compliance Facilitation Scheme, 2026 (“CCFS-2026”) up to September 15, 2026. The Ministry of Corporate Affairs had introduced the Companies Compliance Facilitation Scheme, 2026 (CCFS-2026) vide General Circular No. 01/2026 dated 24th February, 2026, to, inter alia, provide an opportunity to companies to complete their pending statutory filings. The Scheme was initially operational up to 15th July, 2026. Subsequently, the last date of the Scheme was extended up to 31st August, 2026, vide General Circular No. 03/2026 dated 8th July, 2026.The Scheme was originally introduced to provide companies with an opportunity to complete pending statutory filings, and its validity had earlier been extended to August 31, 2026.
The further extension provides eligible companies with additional time to regularise pending statutory compliance and complete outstanding filings under the Scheme.
Delayed statutory filings can create continuing compliance issues for companies and may affect their corporate records and regulatory standing. A facilitation mechanism therefore provides an opportunity for eligible companies to address outstanding filings within the prescribed framework rather than allowing historical defaults to remain unresolved.
The extension is particularly relevant to companies that may have been unable to complete their pending filings within the earlier deadline. The revised deadline should, however, be treated as a final compliance opportunity by affected companies, with internal teams expected to prioritise identification and completion of all eligible outstanding filings.
Key Highlights
Further Extension: The validity of CCFS-2026 has been extended from August 31, 2026 to September 15, 2026. The further extension provides companies with additional time to take advantage of the Scheme. Companies that have not yet completed their pending filings should use the additional period to identify outstanding compliance requirements and complete the necessary filings.
Regularisation Opportunity: Eligible companies have additional time to complete pending statutory filings under the Scheme. The Scheme provides a mechanism through which eligible companies can address delayed statutory filings within the specified framework. The additional time may assist companies in bringing their corporate records up to date and reducing the risk associated with continuing non-compliance.
Existing Conditions Unchanged: The extension does not modify the existing eligibility criteria, concessions or other terms and conditions of the Scheme. The extension therefore primarily changes the period during which the Scheme remains available. Companies should not assume that the extension alters the substantive eligibility conditions or concessions applicable under the Scheme.
Stakeholder Representations: The extension follows representations received from various stakeholders seeking additional time for compliance. The extension reflects the practical compliance challenges faced by companies in addressing pending statutory filings. Additional time may assist businesses that require professional support, internal approvals or document reconstruction before completing historical filings. The extension provides companies with a further opportunity to regularise delayed statutory filings and address outstanding MCA compliance issues before the revised deadline.
The extension provides companies with a further opportunity to regularise delayed statutory filings and address outstanding MCA compliance issues before the revised deadline.
From a corporate governance perspective, regularisation of historical filings can also improve the accuracy and completeness of a company's statutory records. Directors and management should ensure that outstanding obligations are identified promptly and that the relevant filings are completed within the extended period.
RESERVE BANK OF INDIA
Priority Sector Lending Framework Amended – Treatment of Advances Against FCNR(B) and NRE Deposits
On August 7, 2026, the Reserve Bank of India (“RBI”) issued the Reserve Bank of India (Priority Sector Lending – Targets and Classification) (Second Amendment) Directions, 2026, introducing changes to the treatment of certain advances against FCNR(B) and NRE deposits for the purpose of calculating Adjusted Net Bank Credit (“ANBC”) for Priority Sector Lending (“PSL”) requirements.
The amendment forms part of RBI’s ongoing efforts to align the PSL framework with the regulatory treatment of foreign currency and non-resident deposits and provides greater clarity on the advances that are to be considered while determining a bank’s PSL lending obligations.
The PSL framework requires banks to direct a specified proportion of their lending towards identified priority sectors of the economy. The calculation of the relevant lending base is therefore an important component of regulatory compliance. Any change in the manner in which ANBC is computed can consequently affect the quantum against which PSL targets are determined.
Key Highlights
Exclusion of Certain Advances from ANBC: Advances against certain fresh FCNR(B) and NRE deposits have been excluded from the computation of ANBC for the purpose of determining a bank’s PSL targets. The excluded advances are advances extended in India against the fresh FCNR(B) / NRE deposits, including deposits that are renewed upon maturity, qualifying for exemption from Cash Reserve Ratio (“CRR”) and Statutory Liquidity Ratio (“SLR”) requirements, as per the Reserve Bank of India (Cash Reserve Ratio and Statutory Liquidity Ratio) Second and Third Amendment Directions dated June 08, 2026 and June 19, 2026, as applicable to various banks. The exclusion is relevant because ANBC serves as an important base for calculating the PSL targets applicable to banks. Where certain advances are excluded from ANBC, the amount used for determining the PSL requirement may correspondingly be affected. The amount to be excluded from ANBC for computation of priority sector targets shall not exceed the fresh FCNR(B) / NRE deposits eligible for exemption from maintenance of CRR / SLR. Banks with material exposure to lending against eligible FCNR(B) or NRE deposits may therefore need to examine the impact of the amendment on their internal PSL calculations. This may require coordination between treasury, credit, regulatory reporting and compliance functions to ensure that the revised treatment is appropriately incorporated.
Impact on PSL Calculations: Since ANBC forms the basis for determining the applicable PSL targets for banks, the revised treatment will affect the manner in which eligible banks calculate their PSL obligations. The targets and sub-targets set under priority sector lending are computed on the basis of the ANBC/CEOBSE, as applicable, as on the corresponding date of the preceding year. The practical effect of the amendment will depend on the nature and volume of relevant advances maintained by individual banks. Banks may need to review their existing portfolios and determine whether advances previously considered for ANBC calculations are now required to be treated differently.
Alignment with Deposit Regulations: The amendment brings the PSL computation framework in line with the regulatory treatment applicable to advances against specified FCNR(B) and NRE deposits. The relevant FCNR(B) / NRE deposits are those qualifying for exemption from CRR and SLR requirements under the Reserve Bank of India (Cash Reserve Ratio and Statutory Liquidity Ratio) Second and Third Amendment Directions dated June 08, 2026 and June 19, 2026. The alignment is intended to improve consistency between the treatment of such advances under the broader RBI regulatory framework and their treatment for PSL purposes. A consistent regulatory approach can reduce interpretational uncertainty and help banks apply the relevant provisions more efficiently.
Immediate Effect: The amendment came into effect from the date of its issuance, i.e., August 7, 2026. Banks will need to factor the revised treatment into their ANBC calculations and related PSL compliance processes. The Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025 were updated as on August 07, 2026, and the relevant provision under paragraph 6.1 was modified by the Reserve Bank of India (Priority Sector Lending - Targets and Classification) Second Amendment Directions, 2026 dated August 07, 2026. Internal policies, regulatory reporting mechanisms and monitoring systems may need to be reviewed to ensure that the revised methodology is appropriately implemented.
The amendment is relevant for banks in assessing their PSL compliance and internal lending strategies, particularly where advances are secured against FCNR(B) or NRE deposits. Banks will need to factor the revised treatment into their ANBC calculations and related PSL compliance processes.
From a broader regulatory perspective, the amendment demonstrates RBI’s continuing focus on maintaining consistency between different elements of the banking regulatory framework. Banks should accordingly ensure that changes to regulatory calculations are reflected not only in reporting but also in internal governance, compliance reviews and relevant operational processes.
Large Exposure Limits Extended to IDF-NBFCs
On August 25, 2026, the Reserve Bank of India (“RBI”) issued the Reserve Bank of India (Non-Banking Financial Companies – Concentration Risk Management) Fourth Amendment Directions, 2026, revising the large exposure framework applicable to Infrastructure Debt Fund-Non-Banking Financial Companies (“IDF-NBFCs”) forming part of the Upper Layer. The amendment revises the Reserve Bank of India (Non-Banking Financial Companies - Concentration Risk Management) Directions, 2025 dated November 28, 2025.
The amendment introduces a specific provision for IDF-NBFCs that are subject to the Upper Layer regulatory framework, bringing them within the scope of the large exposure limits applicable to Infrastructure Finance Companies (“NBFC-IFCs”).
By extending the relevant large exposure framework to qualifying IDF-NBFCs, RBI seeks to strengthen consistency in the prudential treatment of infrastructure-focused NBFCs operating within the Upper Layer.
Key Highlights
Large Exposure Limits Extended to IDF-NBFCs: The amendment provides that the large exposure limits applicable to NBFC-IFCs shall also apply to IDF-NBFCs that are subject to Upper Layer regulations. This applies to IDF-NBFCs that are subject to Upper Layer regulations in terms of paragraph 60A of the Reserve Bank of India (Non-Banking Financial Companies - Undertaking of Financial Services) Directions, 2025 read together with paragraph 18(4)(i) of the Reserve Bank of India (Commercial Banks - Undertaking of Financial Services) Directions, 2025. The extension brings qualifying IDF-NBFCs within a framework that is designed to monitor and control concentration of exposures. The requirement is particularly relevant for institutions whose business models involve financing large infrastructure projects, where individual exposures can be substantial.
IDF-NBFCs falling within the Upper Layer will therefore need to assess their existing lending and investment portfolios in light of the revised framework. This assessment may include reviewing borrower-level exposures, group-level concentrations and internal exposure limits.
Insertion of Paragraph 39A: A new paragraph 39A has been inserted into Chapter IV of the RBI’s Non-Banking Financial Companies – Concentration Risk Management Directions, 2025, specifically addressing IDF-NBFCs in the Upper Layer. Paragraph 39A has been inserted after paragraph 39 in Chapter IV - Guidelines Applicable to NBFC - Upper Layer. The insertion provides a specific regulatory reference point for the application of large exposure requirements to the relevant IDF-NBFCs. This improves clarity within the concentration risk framework and formally incorporates the applicable treatment into the regulatory directions.
For compliance and risk-management functions, the insertion also provides a basis for reviewing internal policies and exposure monitoring systems.
Upper Layer Applicability: The revised requirement applies to IDF-NBFCs that are subject to Upper Layer regulations under the relevant RBI framework. The applicability of the amendment is therefore linked to the regulatory classification of the NBFC. Entities within the Upper Layer will need to determine the extent to which the revised large exposure requirements affect their existing operations.
The classification also underscores the importance of maintaining appropriate regulatory monitoring, as changes in an NBFC’s regulatory layer can have consequences for prudential requirements, governance standards and risk-management obligations.
Concentration Risk Management: The amendment brings the exposure framework for qualifying IDF-NBFCs in line with the large exposure limits applicable to NBFC-IFCs, strengthening prudential oversight of concentrated exposures. Concentration risk management is particularly important in infrastructure finance because projects may involve significant financing requirements and long repayment periods. A high concentration in a limited number of borrowers or projects can expose a financial institution to heightened risks in the event of project delays, financial stress or changes in market conditions.
The revised framework therefore places greater emphasis on disciplined exposure management. IDF-NBFCs may need to assess whether their internal risk-management mechanisms adequately capture concentration risks and whether existing exposure limits remain appropriate.
Immediate Effect: The amendment came into force with immediate effect from August 25, 2026. The amendment is particularly relevant for IDF-NBFCs falling within the Upper Layer, as their exposure limits will now be subject to the large exposure framework applicable to NBFC-IFCs. Such entities may therefore need to review their existing exposure levels, portfolio concentration and internal risk-management mechanisms to ensure compliance with the revised regulatory requirements. The Amendment Directions were issued in exercise of the powers conferred by Chapter III B of the Reserve Bank of India Act, 1934, and all other provisions / laws enabling the Reserve Bank of India in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do.
From a broader perspective, the amendment reflects RBI’s continued emphasis on differentiated but strengthened prudential regulation for NBFCs. As financial institutions become more integrated into infrastructure financing and other systemically important sectors, regulatory oversight of concentration risk is likely to remain an important area of focus.
The amendment is particularly relevant for IDF-NBFCs falling within the Upper Layer, as their exposure limits will now be subject to the large exposure framework applicable to NBFC-IFCs. Such entities may therefore need to review their existing exposure levels, portfolio concentration and internal risk-management mechanisms to ensure compliance with the revised regulatory requirements.
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.
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