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In-depth analysis of RBI Circulars for June 2026
RBI Circulars June 2025
This lesson covers the key regulatory updates and circulars issued by the Reserve Bank of India in June 2025.
Review of Qualifying Assets Criteria
This circular updates the rules for Non-Banking Financial Companies - Microfinance Institutions (NBFC-MFIs) regarding what counts as their core business assets.
1. The "60%" Rule (Qualifying Assets)
- Requirement: An NBFC-MFI is required to hold a minimum of 60% of its total assets as "Qualifying Assets"
- These are core loans as per Microfinance Loan criteria
- Old vs. New: Previously, this limit was higher (85%). The reduction to 60% gives MFIs more flexibility to lend for non-microfinance purposes (up to 40%)
2. What is a "Qualifying Asset"?
The circular aligns the definition of "Qualifying Assets" simply with the definition of "Microfinance Loans".
Definition of Microfinance Loan (Memorize This!):
A loan is considered a Microfinance Loan (Qualifying Asset) if it meets these criteria:
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RBI Circulars June 2025
This lesson covers the key regulatory updates and circulars issued by the Reserve Bank of India in June 2025.
Review of Qualifying Assets Criteria
This circular updates the rules for Non-Banking Financial Companies - Microfinance Institutions (NBFC-MFIs) regarding what counts as their core business assets.
1. The "60%" Rule (Qualifying Assets)
- Requirement: An NBFC-MFI is required to hold a minimum of 60% of its total assets as "Qualifying Assets"
- These are core loans as per Microfinance Loan criteria
- Old vs. New: Previously, this limit was higher (85%). The reduction to 60% gives MFIs more flexibility to lend for non-microfinance purposes (up to 40%)
2. What is a "Qualifying Asset"?
The circular aligns the definition of "Qualifying Assets" simply with the definition of "Microfinance Loans".
Definition of Microfinance Loan (Memorize This!):
A loan is considered a Microfinance Loan (Qualifying Asset) if it meets these criteria:
- Collateral-Free: It must be given without any security
- Income Limit: The borrower's household annual income must be up to ₹3,00,000
- End Use: It can be for any purpose (consumption, business, housing, etc.)
- Household Definition: Household = Husband, Wife, and their Unmarried Children
3. Consequence of Non-Compliance
- Trigger: If an NBFC-MFI fails to maintain this 60% ratio for 4 consecutive quarters
- Action: It must approach the RBI with a Remediation Plan to explain how it will fix the issue
Summary Cheat Sheet for Exams
| Feature | Requirement / Limit |
|---|---|
| Min Qualifying Assets Ratio | 60% of Total Assets |
| Max Household Income | ₹3,00,000 per annum |
| Collateral Requirement | Collateral-Free |
| Household Members | Husband, Wife, Unmarried Children |
| Non-compliance Threshold | 4 Consecutive Quarters |
Practice Question
Q. As per the RBI's revised criteria for NBFC-MFIs, "Qualifying Assets" must constitute a minimum of what percentage of the total assets on an ongoing basis?
A) 50%
B) 60%
C) 75%
D) 85%
E) 90%
Answer: B) 60%
Bank Rate & Penal Interest Revision
Following the Monetary Policy Statement on June 06, 2025, the RBI has lowered the Bank Rate. Since penal interest rates for default are linked to the Bank Rate, they have also decreased.
- Bank Rate Cut: Reduced by 50 basis points (0.50%)
- Old Rate: 6.25%
- New Rate: 5.75%
- Effective Date: Immediate Effect
Revised Penal Interest Rates (for Shortfall in Reserves)
When banks fail to maintain required CRR/SLR, they pay a penalty based on the Bank Rate. The new effective rates are:
| Condition | Formula | Old Rate | New Rate |
|---|---|---|---|
| Standard Shortfall | Bank Rate + 3.0% | 9.25% | 8.75% |
| Severe/Extended Shortfall | Bank Rate + 5.0% | 11.25% | 10.75% |
CRR Reduction Schedule (The "100 bps" Cut)
The RBI has decided to inject liquidity by reducing the Cash Reserve Ratio (CRR) of all banks by a total of 100 basis points (1%). This will not happen all at once but in four equal tranches.
- Final Target: 3.0% of Net Demand and Time Liabilities (NDTL)
- Method: Four cuts of 25 bps each
The Schedule (Memorize the Dates)
| Effective Date (Reporting Fortnight) | CRR Rate |
|---|---|
| September 06, 2025 | 3.75% |
| October 04, 2025 | 3.50% |
| November 01, 2025 | 3.25% |
| November 29, 2025 | 3.00% |
Summary Cheat Sheet for Exams
| Metric | Value |
|---|---|
| New Bank Rate | 5.75% |
| Penal Rate (Standard) | 8.75% (Bank Rate + 3%) |
| Total CRR Cut | 100 bps (1%) |
| Final CRR Target | 3.0% |
| Target Date for 3.0% CRR | Nov 29, 2025 |
Practice Question
Q. As per the RBI circular dated June 2025, the Cash Reserve Ratio (CRR) of banks will be reduced to a final target of 3.0% of NDTL in four tranches. The final tranche becomes effective from the reporting fortnight beginning:
A) September 06, 2025
B) October 04, 2025
C) November 01, 2025
D) November 29, 2025
E) December 31, 2025
Answer: D) November 29, 2025
Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025
This Master Direction consolidates and standardizes the rules for Gold and Silver Loans across the entire financial sector. It replaces previous scattered guidelines for banks and NBFCs.
1. Scope & Applicability
- Applies to: Commercial Banks (including RRBs, SFBs), Co-operative Banks (UCBs, StCBs, DCCBs), and NBFCs (including HFCs)
- Effective Date: Lenders must comply by April 1, 2026
- Prohibition: Lenders cannot grant loans against Primary Gold/Silver (i.e., bullion, bars, or raw gold). Loans are only for ornaments/jewellery and coins
2. Loan-to-Value (LTV) Ratios (Crucial for Exams)
The LTV ratio determines how much loan a customer can get against their gold. The new directions introduce tiered LTV limits based on the loan amount for Consumption Loans.
Key LTV Limits:
- Loans up to ₹2.5 Lakh: Max 85% LTV
- Loans > ₹2.5 Lakh to ₹5 Lakh: Max 80% LTV
- Loans > ₹5 Lakh: Max 75% LTV
Valuation Rule: The gold/silver must be valued at the lower of:
- Average closing price of the past 30 days
- Closing price of the previous day
3. Operational Limits (Weight & Amount)
| Category | Limit per Borrower |
|---|---|
| Credit Assessment Trigger | Detailed assessment required for loans > ₹2.5 Lakh |
| Gold Ornaments Limit | Max 1 Kilogram |
| Silver Ornaments Limit | Max 10 Kilograms |
| Gold Coins Limit | Max 50 Grams |
| Silver Coins Limit | Max 500 Grams |
4. Bullet Repayment Loans
- Definition: Loans where the entire Principal and Interest are paid at the end of the tenure (maturity)
- Max Tenor: 12 Months
- Renewal Condition: Can only be renewed if the borrower pays all accrued interest first
5. Auction & Recovery Rules
When a borrower defaults, and the lender auctions the gold:
- Notice: Public notice in 2 newspapers (1 National, 1 Regional)
- Reserve Price:
- First 2 attempts: Minimum 90% of current value
- Subsequent attempts: Minimum 85% of current value
- Surplus Refund: Any extra money from the auction must be refunded to the borrower within 7 working days
6. Customer Protection & Penalties
- Release of Collateral: Must be returned within 7 working days of full repayment
- Penalty for Delay: If the lender delays beyond 7 days, they must pay ₹5,000 per day to the borrower
- Unclaimed Gold: If collateral is not claimed for 2 years after repayment, it is treated as "Unclaimed"
Summary Cheat Sheet for Exams
| Feature | Limit / Rule |
|---|---|
| Max LTV (Small Loans) | 85% (upto ₹2.5L) |
| Max LTV (Large Loans) | 75% (> ₹5L) |
| Max Gold Coins | 50 gms |
| Max Bullet Repayment Tenure | 12 Months |
| Assessment Threshold | ₹2.5 Lakh |
| Collateral Return Penalty | ₹5,000 / day |
Practice Question
Q. As per the RBI (Lending Against Gold and Silver Collateral) Directions, 2025, what is the maximum weight of gold coins that can be accepted as collateral from a single borrower?
A) 20 grams
B) 50 grams
C) 100 grams
D) 200 grams
E) 500 grams
Answer: B) 50 grams
Large Exposures Framework – Amendment in the list of exempted exposures
The Update: Exempted Exposures
- The Context: Under the Large Exposures Framework (LEF), banks have strict limits on how much they can lend or expose themselves to a single entity to avoid risk. However, certain "safe" exposures are exempted from these limits
- Previous Rule: Only deposits maintained with NABARD (due to Priority Sector Lending shortfalls) were exempted from these limits
- The Amendment: The RBI has expanded this list. Now, contributions made by Scheduled Commercial Banks to all the following institutions (due to PSL shortfalls) are exempted from LEF limits:
- NABARD (National Bank for Agriculture and Rural Development)
- NHB (National Housing Bank)
- SIDBI (Small Industries Development Bank of India)
- MUDRA Ltd. (Micro Units Development & Refinance Agency)
- Any other entity specified by the RBI
Why does this matter?
- Reasoning: When banks fail to meet their Priority Sector Lending (PSL) targets, they are forced to park funds with these institutions. Since this is a regulatory compulsion and not a voluntary commercial risk, counting it towards "Exposure Limits" was unfair. This amendment fixes that
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| Framework Updated | Large Exposures Framework (LEF) |
| Old Exemption | NABARD only |
| New Exemptions | NABARD, NHB, SIDBI, MUDRA |
| Reason for Exposure | Shortfall in Priority Sector Lending (PSL) |
Practice Question
Q. As per the recent amendment to the Large Exposures Framework, contributions made by banks to which of the following institutions on account of PSL shortfall are now exempted from exposure limits?
A) NABARD only
B) SIDBI and NHB only
C) MUDRA Ltd only
D) NABARD, NHB, SIDBI, and MUDRA Ltd
E) None of the above
Answer: D) NABARD, NHB, SIDBI, and MUDRA Ltd
Non-achievement of PSL targets – Prudential treatment of contribution towards eligible funds
This circular clarifies how Urban Co-operative Banks (UCBs) should treat the money they deposit with institutions like NABARD or SIDBI when they fail to meet their Priority Sector Lending (PSL) targets.
1. The Exemption (Exposure Norms)
- The Rule: Normally, UCBs have strict limits on how much they can lend or expose themselves to a single entity or group to prevent risk
- Single Borrower Limit: 15% of Tier-I Capital
- Group Borrower Limit: 25% of Tier-I Capital
- The Problem: When UCBs miss their PSL targets, they are forced to park funds with institutions like NABARD, NHB, SIDBI, or MUDRA. If these forced deposits were counted towards the limits above, UCBs might breach the 15%/25% rule involuntarily
- The Solution: The RBI has decided that these specific contributions (made due to PSL shortfall) will be EXCLUDED from the exposure limits. They will not be counted towards the 15% or 25% caps
2. The Risk Weight (Capital Adequacy)
- Classification: Even though they are exempt from exposure limits, for the purpose of calculating Capital Adequacy (CRAR), these contributions are classified as "All Other Assets"
- Risk Weight: They carry a Risk Weight of 100%
- Exam Tip: This means UCBs must set aside full capital against these deposits, treating them as standard risk assets
Summary Cheat Sheet for Exams
| Feature | Limit / Rule |
|---|---|
| Applicable to | Urban Co-operative Banks (UCBs) |
| UCB Single Borrower Limit | 15% of Tier-I Capital |
| UCB Group Borrower Limit | 25% of Tier-I Capital |
| PSL Shortfall Contributions | EXEMPT from Exposure Limits |
| Eligible Institutions | NABARD, NHB, SIDBI, MUDRA |
| Risk Weight assigned | 100% |
Practice Question
Q. As per the RBI clarifications for UCBs, contributions made towards eligible funds with NABARD or SIDBI on account of shortfall in PSL targets attract a risk weight of:
A) 0%
B) 20%
C) 50%
D) 75%
E) 100%
Answer: E) 100%
Basel III Capital Regulations - External Credit Assessment Institution (ECAI)
1. The Core Update (Brickwork Ratings)
- Previous Status: In July 2024, banks were allowed to use ratings from Brickwork Ratings India Private Limited (BRIPL) but with certain restrictions/limits
- New Decision: The RBI has removed all restrictions/limits. Banks can now fully use BRIPL ratings for risk weighting their claims for capital adequacy purposes
2. Eligible Domestic Credit Rating Agencies
Banks can use ratings from the following domestic agencies to assign risk weights to their loans/claims:
- Acuite Ratings & Research Limited (Acuite)
- Brickwork Ratings India Private Limited (Now fully eligible)
- CARE Ratings Limited
- CRISIL Ratings Limited
- ICRA Limited
- India Ratings and Research Private Limited (India Ratings)
- INFOMERICS Valuation and Rating Ltd. (INFOMERICS)
3. Eligible International Credit Rating Agencies
For international claims, banks can use ratings from:
- Fitch
- Moody's
- Standard & Poor's (S&P)
4. Static Concept: What is an ECAI?
- ECAI: External Credit Assessment Institution
- Role: These are Credit Rating Agencies (CRAs) that assess the "ability and willingness" of a borrower to repay debt
- Usage in Basel III: Banks use these external ratings to decide the Risk Weight of a loan. A better rating means lower risk weight, which means the bank needs to set aside less capital
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| Topic | Basel III Capital Regulations (ECAI) |
| Agency in Focus | Brickwork Ratings India Pvt Ltd |
| Latest Action | Restrictions Removed |
| Total Domestic Agencies | 7 (CRISIL, CARE, ICRA, India Ratings, Acuite, Brickwork, INFOMERICS) |
| International Agencies | 3 (Fitch, Moody's, S&P) |
Practice Question
Q. As per the recent RBI review on Basel III Capital Regulations, the restrictions previously placed on the use of ratings from which Credit Rating Agency have been removed?
A) CRISIL Ratings
B) ICRA Limited
C) Brickwork Ratings India Private Limited
D) CARE Ratings
E) INFOMERICS
Answer: C) Brickwork Ratings India Private Limited
Reserve Bank of India (Know Your Customer (KYC)) (Amendment) Directions, 2025
This amendment to the KYC Directions focuses on Consumer Protection and simplifying the KYC update process for low-risk customers.
1. Major Relaxation for "Low Risk" Customers
- The Issue: Many customers face account freezing if they miss their periodic KYC update deadline
- The New Rule: For individual customers categorized as "Low Risk", banks must allow all transactions and give them more time to update their KYC
- Extended Deadline: The customer must update their KYC within One Year of the due date OR by June 30, 2026, whichever is later
- Condition: The bank must continue to subject these accounts to regular monitoring during this period
2. KYC Updates via Business Correspondents (BCs)
To make updates easier in rural/remote areas, banks can now use Business Correspondents (BCs) for certain updates:
- Allowed Activities: BCs can accept Self-Declarations from customers where there is "No Change" in KYC information or only a change in address
- The Process:
- The BC must use biometric-based e-KYC to authenticate the customer
- The declaration/documents must be digitally recorded in the bank's system
- The BC must provide an acknowledgement to the customer
- Liability: Even though the BC collects the documents, the Ultimate Responsibility for correctness lies with the Bank (Regulated Entity), not the BC
3. Mandatory Advance Notices (The "3+3" Rule)
Banks can no longer just freeze accounts without warning. They must follow a strict communication protocol:
- Advance Intimation: Banks must send at least Three (3) advance notices before the KYC due date
- Requirement: At least one of these must be a physical Letter
- Reminders: If the customer still doesn't comply, the bank must send Three (3) reminders after the due date
- Requirement: Again, at least one of these must be a physical Letter
- Implementation Date: Banks must implement this notice system by January 1, 2026
Summary Cheat Sheet for Exams
| Feature | New Rule / Deadline |
|---|---|
| Low Risk KYC Extension | 1 Year or June 30, 2026 (whichever is later) |
| BC Update Mode | Biometric e-KYC + Digital Record |
| Advance Notices Required | 3 Notices (Must include 1 Letter) |
| Post-Due Reminders | 3 Reminders (Must include 1 Letter) |
| Notice System Deadline | Jan 01, 2026 |
Practice Question
Q. As per the recent RBI amendment to KYC Directions, 2025, Regulated Entities must allow transactions for "Low Risk" individual customers and ensure updation of KYC within one year of its falling due or up to which date, whichever is later?
A) December 31, 2025
B) January 01, 2026
C) April 01, 2026
D) June 30, 2026
E) September 30, 2026
Answer: D) June 30, 2026
Inoperative Accounts/Unclaimed Deposits in Banks - Revised Instructions (Amendment) 2025
This circular is a consumer-friendly amendment aimed at making it easier for customers to reactivate their dormant/inoperative bank accounts.
1. The Problem (Background)
- Unclaimed Deposits: When a deposit account is not operated for 10 years or more, the money is transferred to the DEA Fund (Depositor Education and Awareness Fund) maintained by the RBI
- The Goal: To help customers reclaim this money or reactivate these accounts easily, without needing to visit their specific "home branch"
2. The New Facilitation Channels
The RBI has amended the rules to allow three easier ways to update KYC and activate inoperative accounts:
- Any Branch Access: Banks must allow customers to update KYC for account activation at All Branches (including non-home branches)
- Video-KYC (V-CIP): Banks must endeavour to provide the Video-Customer Identification Process (V-CIP) for activating these accounts, allowing customers to do it from home
- Business Correspondents (BCs): This is the major new addition. Banks can now utilize authorized Business Correspondents to facilitate the activation of inoperative accounts. This is crucial for reaching customers in rural or remote areas
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| Topic | Inoperative Accounts / Unclaimed Deposits |
| Unclaimed Period | 10 Years (Transfer to DEA Fund) |
| DEA Fund Manager | RBI |
| New Activation Channel | Business Correspondents (BCs) |
| Digital Activation Mode | Video-KYC (V-CIP) |
| Physical Access | Any Branch (Home or Non-home) |
Practice Question
Q. As per the revised RBI instructions (Amendment 2025), apart from branches and Video-CIP, banks are now permitted to utilize the services of which intermediaries for the activation of inoperative accounts?
A) Direct Selling Agents (DSAs)
B) Payment Aggregators
C) Business Correspondents (BCs)
D) Chartered Accountants
E) Local Area Representatives
Answer: C) Business Correspondents (BCs)
Updation/Periodic Updation of KYC – Revised Instructions
This circular streamlines the KYC (Know Your Customer) process to reduce the massive backlog of pending updates, especially for government benefit accounts (DBT/EBT).
1. The Core Update: Easing the Process
- The Problem: Huge pendency in periodic KYC updates for DBT, Scholarship, and PMJDY accounts
- The Solution: The RBI has amended rules to allow Business Correspondents (BCs) to facilitate KYC updates
- CKYCR Rule: The "KYC Identifier" is now the First Reference Point. Banks should download records from CKYCR and not ask customers for documents again unless there is a change
2. Modes of Onboarding & Updation
A. Face-to-Face Mode
- Method: Aadhaar Biometric e-KYC or Digital KYC
- Address Flexibility: If the customer's current address is different from the Aadhaar address, a simple Self-Declaration is sufficient
B. Non-Face-to-Face (NFTF) Mode
- Method: Aadhaar OTP-based e-KYC
- Restriction: Accounts opened via OTP (without meeting an official) are subject to Strict Monitoring
- Deadline: Full Customer Due Diligence (CDD) must be completed within 1 Year
C. Video-KYC (V-CIP)
- Status: It is treated On Par with Face-to-Face onboarding. It is a valid method for both onboarding and periodic updation
3. Simplified Updation Process (Crucial for Exams)
How can customers update their KYC now?
- Self-Declaration: If there is "No Change" or only a "Change in Address", customers can submit a self-declaration
- Channels: This declaration can be sent via:
- Email / Registered Mobile
- ATMs
- Net Banking / Mobile App
- Business Correspondents (BCs) (New Addition)
- Location: Updates can be done at Any Branch (not just the home branch)
Summary Cheat Sheet for Exams
| Feature | Rule / Limit |
|---|---|
| New Facilitator for KYC | Business Correspondents (BCs) |
| First Reference Point | KYC Identifier (CKYCR) |
| Current Address Proof | Self-Declaration (if diff from Aadhaar) |
| OTP-based Account Validity | 1 Year (Must do full CDD by then) |
| V-CIP Status | Treated as Face-to-Face |
| Updation Location | Any Branch |
Practice Question
Q. As per the revised KYC instructions, if a customer is onboarded using the "Non-Face-to-Face" mode via Aadhaar OTP-based e-KYC, the full Customer Due Diligence (CDD) procedure must be completed within:
A) 3 Months
B) 6 Months
C) 1 Year
D) 2 Years
E) 3 Years
Answer: C) 1 Year
Stripping/Reconstitution in State Government Securities
This circular introduces a new facility for State Government Securities (SGS), allowing them to be "Stripped" and "Reconstituted" just like Central Government bonds.
1. What is STRIPS? (Static Concept)
- Full Form: Separate Trading of Registered Interest and Principal of Securities
- Stripping: The process of separating the interest payments (Coupons) from the main loan amount (Principal) of a bond
- Example: A 5-year bond is stripped into 10 Coupon securities (2 payments x 5 years) + 1 Principal security. Each part becomes a separate, tradable Zero-Coupon Bond
Example Bond (₹100 with 8% interest):
| Piece # | What is it? | Value | When do you get money? |
|---|---|---|---|
| Strip 1 | Coupon Year 1 | ₹8 | After 1 Year |
| Strip 2 | Coupon Year 2 | ₹8 | After 2 Years |
| Strip 3 | Coupon Year 3 | ₹8 | After 3 Years |
| Strip 4 | Coupon Year 4 | ₹8 | After 4 Years |
| Strip 5 | Coupon Year 5 | ₹8 | After 5 Years |
| Strip 6 | Principal | ₹100 | After 5 Years |
- Reconstitution: The reverse process of assembling the coupons and principal back into the original bond
2. The New Regulation (SGS STRIPS)
- Previous Status: STRIPS were allowed only for Central Government Securities (since 2010)
- New Status: Now, State Government Securities (SGS) are also eligible for Stripping/Reconstitution
3. Eligibility Criteria (Memorize These Limits!)
Not every State bond can be stripped. It must meet these conditions:
- Type: Fixed coupon securities issued by State Govts/UTs
- Liquidity (Outstanding): Minimum outstanding amount of ₹1,000 Crore
- Residual Maturity: Must be Up to 14 Years
- Status: Must be SLR Eligible and transferable
4. Operational Details
- Platform: Requests must be placed in the RBI's e-Kuber system
- Who places the request?
- SGL Account Holders: Can place requests directly
- Gilt Account Holders: Must go through their Custodians
Summary Cheat Sheet for Exams
| Feature | Requirement |
|---|---|
| New Asset Class for STRIPS | State Govt Securities (SGS) |
| Minimum Outstanding Amount | ₹1,000 Crore |
| Residual Maturity Limit | Up to 14 Years |
| Platform Used | e-Kuber |
| Original Launch (Central G-Sec) | April 1, 2010 |
Practice Question
Q. As per the recent RBI circular, State Government Securities (SGS) are eligible for "Stripping" provided they have a minimum outstanding stock of __ and a residual maturity of up to __.
A) ₹500 Crore; 10 Years
B) ₹500 Crore; 14 Years
C) ₹1,000 Crore; 10 Years
D) ₹1,000 Crore; 14 Years
E) ₹2,000 Crore; 20 Years
Answer: D) ₹1,000 Crore; 14 Years
Import of Shipping Vessel – Relaxation
This relaxation is aimed at the maritime sector to improve the "Ease of Doing Business" by reducing the documentation burden for large imports.
1. The Relaxation (The "USD 50 Million" Rule)
- The Context: Normally, when importers send large amounts of money in advance (Advance Remittance) to buy goods, banks require a Bank Guarantee or a Standby Letter of Credit (SBLC) to ensure the money is safe
- The New Rule: For the specific purpose of Importing Shipping Vessels, the RBI has waived this requirement for higher amounts
- The Limit: Importers can now make advance remittances of up to USD 50 Million without submitting a Bank Guarantee or an unconditional, irrevocable Standby Letter of Credit
2. Why this matters?
- Sector Specific: Shipping vessels are huge capital investments. Getting a Bank Guarantee for such large amounts ties up the importer's credit lines and adds cost
- Benefit: Removing this requirement for up to $50 Mn makes it faster and cheaper for Indian companies to buy ships from abroad
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| Purpose | Import of Shipping Vessels |
| Transaction Type | Advance Remittance |
| Relaxation | No Bank Guarantee or Standby LC required |
| Max Limit for Waiver | USD 50 Million |
Practice Question
Q. As per the recent RBI relaxation to enhance ease of doing business, importers are permitted to make advance remittances for the import of "Shipping Vessels" without a bank guarantee or standby letter of credit up to a limit of:
A) USD 5 million
B) USD 10 million
C) USD 25 million
D) USD 50 million
E) USD 100 million
Answer: D) USD 50 million
Master Circular - Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs)
This Master Circular consolidates the instructions to banks on increasing credit flow to Scheduled Castes (SCs) and Scheduled Tribes (STs). It emphasizes specific targets, relaxed norms, and special monitoring mechanisms.
1. Planning & Strategy
- Coordination: The District Level Consultative Committees (DLCC) under the Lead Bank Scheme act as the main coordination mechanism
- Focus Areas: District/Block credit plans must give special weightage to SC/STs. Special focus should be given to villages or "bastis" with a high concentration of SC/ST communities
- Rejection Rule: Loan applications of SCs/STs under government programs cannot be rejected at the branch level. They must be rejected at the next higher level, with clear reasons provided
2. Operational Guidelines for Banks
- No Deposits: Banks should not insist on deposits for loan applications under government-sponsored poverty alleviation or self-employment schemes for SC/STs
- Subsidy Release: Applicable subsidies should not be held back; doing so amounts to "under-financing"
- Priority Sector Status: Loans to State Sponsored Organisations for SCs/STs (for input purchase/output marketing) are eligible for Priority Sector Classification
3. Key Schemes & Targets (Memorize These!)
A. Differential Rate of Interest (DRI) Scheme
- Target Group: Weaker sections engaging in productive activities
- Interest Rate: 4% per annum
- Loan Limit: Up to ₹15,000
- Reservation for SC/ST: Banks must ensure that at least 40% (2/5th) of their total DRI advances go to SCs/STs
- Housing Loan: SC/ST members can get an additional housing loan of ₹20,000 over and above the ₹15,000 individual loan
- Land Exemption: The usual land holding criteria (1 acre irrigated / 2.5 acres unirrigated) does not apply to SC/STs
B. Credit Enhancement Guarantee Scheme for Scheduled Castes (CEGSSC)
- Objective: To promote entrepreneurship among SCs by providing credit guarantees
- Nodal Agency: IFCI Ltd. (Industrial Finance Corporation of India)
- Eligibility: Entities with >51% shareholding and management control by SC entrepreneurs for the previous 6 months
- Guarantee Amount: Min: ₹0.15 Crore | Max: ₹5.00 Crore
- Guarantee Tenure: Maximum 7 Years
C. DAY-NRLM (National Rural Livelihoods Mission)
- Target: The scheme mandates adequate coverage such that 50% of beneficiaries are SCs/STs
4. Monitoring Mechanism
- Special Cell: A special cell must be set up at the Head Office to monitor credit flow to SC/STs
- Review Frequency: Banks should review measures to enhance credit flow on a Quarterly basis
- Board Reporting: Any major gap/variation in credit flow must be reported to the Board annually under the "Financial Inclusion" theme
Summary Cheat Sheet for Exams
| Scheme/Feature | Requirement / Limit |
|---|---|
| DRI Interest Rate | 4% p.a. |
| DRI SC/ST Quota | 40% of total DRI advances |
| DRI Housing Add-on | ₹20,000 |
| NRLM SC/ST Target | 50% of beneficiaries |
| CEGSSC Nodal Agency | IFCI Ltd. |
| CEGSSC Guarantee Max | ₹5.00 Crore |
| Rejection Authority | Next Higher Level (Not Branch) |
Practice Question
Q. Under the Differential Rate of Interest (DRI) Scheme, what is the minimum percentage of total DRI advances that banks must grant to eligible borrowers belonging to Scheduled Castes (SCs) and Scheduled Tribes (STs)?
A) 10%
B) 15%
C) 25%
D) 40%
E) 50%
Answer: D) 40%
Master Direction – Reserve Bank of India (Electronic Trading Platforms) Directions, 2025
This Master Direction outlines the framework for authorization and operation of Electronic Trading Platforms (ETPs) in India. It aims to ensure transparency, safety, and efficient price discovery in financial markets.
1. Scope and Applicability
- What is an ETP? An electronic system (other than a recognized stock exchange) where transactions in "Eligible Instruments" are contracted
- Eligible Instruments: Securities, Money Market Instruments, Forex Instruments, Derivatives, etc.
- Exemption: These directions do not apply to systems operated by Scheduled Commercial Banks or Primary Dealers if they are the sole quote provider (i.e., single-dealer platforms)
2. Eligibility Criteria for ETP Operators
To operate an ETP, an entity must obtain prior authorization from the RBI. The criteria are:
| Criteria | Requirement |
|---|---|
| Incorporation | Must be a company incorporated in India |
| Experience | The entity OR at least 2 Key Managerial Personnel must have 3 Years of experience in financial market trading infrastructure |
| Net-Worth | Minimum ₹5 Crore (maintained at all times) |
| Technology | Must have robust infrastructure for real-time trade dissemination and high availability |
3. Grant and Cancellation of Authorisation
- Application: Must be submitted through the PRAVAAH portal of the RBI
- Transferability: The authorization is Not Transferrable
- Cancellation: RBI can cancel authorization if the operator violates rules or if its continuance is prejudicial to public interest. The operator must then surrender the original authorization letter
4. Operational Framework
- Member On-boarding: ETPs must use LEI (Legal Entity Identifier) and/or PAN to uniquely identify members
- Algo Trading: Operators facilitating Algorithmic Trading must have a framework for testing and on-boarding algo systems to manage model risks
- Data Preservation:
- Standard Period: All trade data must be maintained for at least 10 Years
- Investigation Data: If data is sought for an investigation, it must be kept for 3 Years from the date of completion of the investigation
- IT Audit: Must be conducted at least Once a Year by a CISA-certified auditor or CERT-In empanelled auditor
5. Reporting Requirements
| Report Type | Deadline / Frequency |
|---|---|
| Quarterly Report | By 15th of the month following the quarter |
| Annual Compliance Report | By April 30th of the succeeding financial year |
Summary Cheat Sheet for Exams
| Feature | Requirement / Limit |
|---|---|
| Min Net Worth | ₹5 Crore |
| Experience Required | 3 Years (Entity or 2 KMPs) |
| Application Portal | PRAVAAH |
| Data Preservation | 10 Years |
| Audit Frequency | Yearly |
| Member ID | LEI / PAN |
Practice Question
Q. As per the RBI (Electronic Trading Platforms) Directions, 2025, an ETP operator must maintain all data relating to activities on the platform for a minimum period of:
A) 3 Years
B) 5 Years
C) 7 Years
D) 10 Years
E) 15 Years
Answer: D) 10 Years
Review of instructions on Agency Commission
1. The Update
- Who gets paid? Agency Banks (private or public sector banks authorized to handle government transactions)
- Effective Date: The new rates are applicable from April 1, 2025
- Context: The RBI pays a commission to these banks for collecting revenue (Receipts) and making payments (Pension/Others) on behalf of the Central/State Governments
2. Revised Agency Commission Rates
The circular specifies the following new rates per transaction:
| Type of Transaction | Revised Rate (from April 1, 2025) |
|---|---|
| Receipts (Physical Mode) | ₹40/- per transaction |
| Receipts (e-mode) | ₹12/- per transaction |
| Pension Payments | ₹80/- per transaction |
| Payments (Other than Pension) | 7 paise per ₹100 turnover |
3. Important Condition
- Exclusion: Agency commission will NOT be paid on transactions that are:
- Pre-funded (Money given in advance)
- Where the Government already pays some other compensation to the bank
- Inclusion: Apart from the exceptions above, commission is payable on all payment transactions handled by agency banks
Summary Cheat Sheet for Exams
| Metric | Rate |
|---|---|
| Pension Payment Rate | ₹80 |
| Physical Receipt Rate | ₹40 |
| Digital (e-mode) Receipt | ₹12 |
| Non-Pension Payments | 7 paise / ₹100 |
| Effective Date | April 01, 2025 |
Practice Question
Q. As per the revised instructions on Agency Commission effective from April 1, 2025, what is the commission rate payable to agency banks for handling "Pension Payments"?
A) ₹65 per transaction
B) ₹75 per transaction
C) ₹80 per transaction
D) ₹90 per transaction
E) ₹100 per transaction
Answer: C) ₹80 per transaction
Review of Priority Sector Lending norms - Small Finance Banks
1. The Headline Change: PSL Target Reduced
- Previous Rule: Small Finance Banks (SFBs) were required to lend 75% of their Adjusted Net Bank Credit (ANBC) to Priority Sectors
- New Rule: From Financial Year 2025-26 onwards, the total PSL target for SFBs is reduced to 60% of ANBC (or Credit Equivalent of Off-Balance Sheet Exposures, whichever is higher)
2. Breakdown of the New 60% Limit
The new 60% target is structured as follows:
- Mandatory Sub-Sectors (40%): SFBs must still direct 40% of their lending to specific sub-sectors (like Agriculture, Weaker Sections, Micro Enterprises) exactly as per standard PSL rules
- Flexible Component (20%): The remaining 20% can be lent to any priority sector where the bank has a "competitive advantage" (e.g., Housing, Education, or MSME)
Summary Cheat Sheet for Exams
| Feature | Old Norm | New Norm (from FY 2025-26) |
|---|---|---|
| Total PSL Target | 75% | 60% |
| Mandatory Sub-Sector Portion | 40% | 40% (Unchanged) |
| Flexible Portion | 35% | 20% |
Practice Question
Q. As per the revised Priority Sector Lending norms effective from FY 2025-26, the overall PSL target for Small Finance Banks has been reduced to what percentage of their ANBC?
A) 40%
B) 50%
C) 60%
D) 70%
E) 75%
Answer: C) 60%
The Depositor Education and Awareness (DEA) Fund Scheme, 2014 – Revised Operational Guidelines
1. Basics & Registration
- Effective Date: The revised instructions come into effect from October 01, 2025
- Applicability: All Commercial Banks (including RRBs, SFBs, Payments Banks) and Co-operative Banks
- The e-Kuber System:
- Member Banks: Must register on the e-Kuber system and share 2 email IDs with RBI
- Non-Member Banks: Must route their transactions through a Sponsor Bank
- Authorized Signatories: Banks must designate officials to operate the DEA Fund account. The list can have a maximum of 10 signatories
2. The Transfer Process (Moving Money TO the Fund)
When accounts remain inoperative or amounts remain unclaimed for 10 years or more, banks must transfer this money to the DEA Fund.
- When to Transfer? The transfer window is open only during the Last 5 Working Days of the subsequent month
- Frequency: Banks are permitted to make only one transfer per month
- What is transferred? The unclaimed amount plus any interest accrued up to the date of transfer
- Tax Compliance: Banks must ensure all tax obligations (TDS etc.) are met before transferring the net amount
3. The Refund Process (Claiming Money FROM the Fund)
If a customer returns to claim their old deposit, the bank must first pay the customer and then claim a refund from the RBI.
Procedure:
- Pay First: The bank repays the customer (Principal + Interest)
- Claim Later: The bank lodges a claim with the DEA Fund for the equivalent amount
- When to Claim? The claim window is open only during the First 10 Working Days of every month
- Partial Claims: If a customer claims only part of the money, the bank must reactivate the account, pay the customer, and then claim the entire remaining balance back from the DEA Fund to the operative account
4. Reporting and Forms (Crucial for Exams)
| Form Name | Purpose | Submission Frequency/Deadline |
|---|---|---|
| Form I | Monthly Statement of balances | Monthly (Auto-generated on e-Kuber) |
| Form II | Refund Claim Form | Submitted physically/email within 3 working days of online claim |
| Form III | Reconciliation Certificate (matching ledger with RBI) | Half-Yearly (End of March & Sept). Must be ready by April 30 / Oct 31 |
| Annual Certificate | Statutory Auditor certificate of outstanding amounts | Annually (By Sept 30 of the following year) |
| Rectification Form | To correct errors in Form I | Within 2 weeks of detecting discrepancy |
Summary Cheat Sheet for Exams
| Feature | Timeline / Limit |
|---|---|
| Effective Date | Oct 01, 2025 |
| Transfer Window | Last 5 Working Days of the month |
| Claim Window | First 10 Working Days of the month |
| Max Signatories | 10 |
| Reconciliation Freq | Half-Yearly (Form III) |
| Claim Process | Pay Customer First, Claim from RBI Later |
Practice Question
Q. As per the revised DEA Fund Scheme guidelines (effective Oct 2025), the window for banks to submit claims for refund from the Fund through the e-Kuber system shall be kept open during which period?
A) The last 5 working days of every month
B) The first 5 working days of every month
C) The first 10 working days of every month
D) The last 10 working days of every month
E) Any working day of the month
Answer: C) The first 10 working days of every month
Aadhaar Enabled Payment System – Due Diligence of AePS Touchpoint Operators
1. Context & Applicability
- Objective: To enhance the robustness of AePS and protect customers from fraud
- Effective Date: These directions come into effect from January 01, 2026
- Legal Basis: Issued under the Payment and Settlement Systems (PSS) Act, 2007
2. Key Definitions
- AePS (Aadhaar Enabled Payment System): A system allowing cash withdrawal, deposit, and fund transfer using Aadhaar + Biometrics/OTP
- AePS Touchpoint Operator (ATO): The individual who operates the terminal/machine
- Acquiring Bank: The bank responsible for onboarding these operators
3. Due Diligence Rules (The Core Update)
The Acquiring Bank is solely responsible for verifying the ATOs.
- Onboarding Check: Banks must carry out due diligence before onboarding any ATO
- Exception: If the ATO is already a verified Business Correspondent (BC), that existing verification is accepted
- The Inactivity Rule (Crucial for Exams):
- If an ATO remains Inactive (no financial or non-financial transactions) for a continuous period of 3 Months, the bank must re-verify their KYC before allowing them to transact again
4. Risk Management
- Ongoing Monitoring: Banks must monitor ATO activities based on risk parameters like Location, Volume of transactions, and Velocity (speed/frequency) of transactions
- System Control: Banks must ensure that technological integrations (like APIs) are used only for enabling valid AePS operations and not misused
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| System | AePS (Aadhaar Enabled Payment System) |
| Target Entity | ATO (AePS Touchpoint Operator) |
| Responsible Entity | Acquiring Bank |
| Inactivity Threshold | 3 Months (Requires fresh KYC to reactivate) |
| Effective Date | Jan 01, 2026 |
Practice Question
Q. As per the RBI directions on AePS Touchpoint Operators, if an operator (ATO) remains inactive for a continuous period of __, the acquiring bank must carry out their KYC again before enabling them to transact further.
A) 1 Month
B) 3 Months
C) 6 Months
D) 12 Months
E) 24 Months
Answer: B) 3 Months
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