RBI norms on intra-group exposures amended

– Payal Agarwal | payal@vinodkothari.com

– Aligns intra group exposure norms with Large Exposure Framework; junks a 2016 framework for “large borrowers”

On 4th December, 2025,  less than a week after the massive consolidation exercise of RBI regulations, the RBI carried out amendments vide Reserve Bank of India (Commercial Banks – Concentration Risk Management) Amendment Directions, 2025, thus amending the recently consolidated Reserve Bank of India (Commercial Banks – Concentration Risk Management) Directions, 2025. 

Applicability of the Amendment Directions 

• 1st January, 2026 – for Repeal of provisions on Enhancing Credit Supply for Large Borrowers through Market Mechanism. 
• 1st April, 2026 – for other amendments
  • Banks may decide to implement such amendments from an earlier date
  • In case of any breach in exposure limits pursuant to the Amendment Directions, the exposures to be brought down within 6 months from the date of issuance of the Amendment Directions, i.e., 3rd June, 2026. 

Intent behind the Amendments and Key changes 

• Repeal of requirements pertaining to credit supply to Large Borrowers through Market Mechanism (draft Circular proposing such repeal can be accessed here)
  • This is based on the Statement on Developmental and Regulatory Policies dated 1st October, 2025, wherein the extant guidelines pertaining to Large Borrowers were proposed to be withdrawn, in view of the reduced share of credit from the banking system to such large borrowers, and existence of LEF to address the concentration risks at an individual bank level. 
  • The repeal relates to a 2016 Notification (forming part of Chapter IV of the existing Concentration Risk Management Directions), whereby certain “specified borrowers” were identified, meaning those entities which had borrowed, on an aggregate from the banking system, including by way of private placed debt instruments, in excess of Rs 10000 crores.
  • There is a notable difference between LEF and the “specified borrowers” as covered by the 2016 Notification – the latter relates to large borrowers on an aggregate basis, whereas LEF still looks at the size of exposure relative to the Tier 1 capital of a single lender. However, the “specified borrower” regime is said to have lost its relevance. 
• Alignment of requirements w.r.t. Intra-group transactions and exposures (ITEs) with the Large Exposure Framework (LEF) [see press release on the proposed amendments here]
  • Computation of exposure under ITEs to be made consistent with that under LEF 
  • Linking exposure thresholds for ITEs with Tier 1 capital instead of existing paid-up capital and reserves. 
• Clarifications w.r.t. prudential treatment of exposures of foreign bank branches operating in India to their group entities

A track change version of the Reserve Bank of India (Commercial Banks – Concentration Risk Management) Directions, 2025, as amended vide the present Amendment Directions can be accessed here. 

Refer to our other resources here:

1. 2025 RBI (Commercial Banks – Governance) Directions – Guide to Understanding and Implementation
2. RBI Master Directions 2025:Consolidated RegulatoryFramework for NBFCs
3. New NBFC Regulations: A ready reckoner guide