The Reserve Bank of India (RBI) deferred the implementation of the amendment directions on capital market exposures of banks by three months to July 1, 2026. The lender of last resort said, in a press release, that it received representations from various industry associations to extend new directions.
RBI extends implementation date on request from banks, capital market players
The RBI has provided clarification on several points raised in its February circular. The RBI stated that it had received requests from banks, capital market intermediaries, and various industry associations seeking an extension of the effective date, as well as highlighting some operational and interpretational issues requiring clarification.
“On a review, based on further discussions with the stakeholders and on a review, it has been decided to extend the effective date of the said Amendment Directions by three months to 1 July 2026,” it said.
Establishing enabling framework for banks
The final guidelines were released in February following consideration of feedback gathered during public consultations, as per the RBI. The objective of these directives was primarily to establish an enabling framework for banks to finance the acquisitions made by Indian companies.
Additionally, it aimed to streamline the lending limits for banks concerning individuals borrowing against shares, units of Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and similar assets, while also implementing a more principle-based approach for lending to capital market intermediaries (CMIs).
Further, the press release read that Bank financing to CMIs for proprietary trading may be undertaken against 100% collateral comprising cash or cash equivalents.
The restriction on providing financing to market markers for securities involved in their market-making activities has been eliminated.
The intraday facility for non-debt mutual funds, which is secured by guaranteed receivables that are due on the same day due to the maturity proceeds of government securities, treasury bills, state development loans (SDLs), or interest from G-Sec and SDLs held by those mutual funds, as well as the maturity proceeds from TREPS from CCIL, will not be considered as cumulative monthly earnings (CME).