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In-depth analysis of RBI Circulars for September 2026
RBI Circulars September 2025
This lesson covers the key regulatory updates and circulars issued by the Reserve Bank of India in September 2025.
1. Returns - Department of Payment and Settlement Systems - Submission in CIMS
What is CIMS? (The Background)
- Full Form: Centralised Information Management System.
- What is it?: It is the RBI's Next-Generation Data Warehouse.
- Function: It is a centralized, cloud-based platform where banks upload their data. It allows RBI to process large volumes of data for better analysis and supervision.
- Think of it as a giant, high-tech Dropbox where all banks must drop their homework (reports) for the RBI to check.
The New Update: Moving Returns to CIMS
The RBI has decided to move two specific reports (returns) from old systems to this new CIMS portal.
The Two Returns (Memorize the Codes from the Table):
| Return Name | Return Code | Frequency |
|---|---|---|
| Internet Banking Return | R065 | Monthly |
| Mobile Banking Return | R102 | Monthly |
Important Timelines (Exam Fodder)
- Start Date: This reporting starts for the period of August 2025 onwards.
- Submission Deadline: Banks must submit these returns by the 7th of the succeeding month.
- Example: For the month of August 2025, the report must be submitted by September 07, 2025.
Who needs to do this? (Applicability)
This rule applies to almost every banking entity handling payments:
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RBI Circulars September 2025
This lesson covers the key regulatory updates and circulars issued by the Reserve Bank of India in September 2025.
1. Returns - Department of Payment and Settlement Systems - Submission in CIMS
What is CIMS? (The Background)
- Full Form: Centralised Information Management System.
- What is it?: It is the RBI's Next-Generation Data Warehouse.
- Function: It is a centralized, cloud-based platform where banks upload their data. It allows RBI to process large volumes of data for better analysis and supervision.
- Think of it as a giant, high-tech Dropbox where all banks must drop their homework (reports) for the RBI to check.
The New Update: Moving Returns to CIMS
The RBI has decided to move two specific reports (returns) from old systems to this new CIMS portal.
The Two Returns (Memorize the Codes from the Table):
| Return Name | Return Code | Frequency |
|---|---|---|
| Internet Banking Return | R065 | Monthly |
| Mobile Banking Return | R102 | Monthly |
Important Timelines (Exam Fodder)
- Start Date: This reporting starts for the period of August 2025 onwards.
- Submission Deadline: Banks must submit these returns by the 7th of the succeeding month.
- Example: For the month of August 2025, the report must be submitted by September 07, 2025.
Who needs to do this? (Applicability)
This rule applies to almost every banking entity handling payments:
- Scheduled Commercial Banks (SCBs) – including RRBs (Regional Rural Banks).
- Co-operative Banks: UCBs (Urban), StCBs (State), DCCBs (District Central).
- Payment Banks and Small Finance Banks (SFBs).
Legal Basis
This directive is issued under Section 12 read with Section 19 of the Payment and Settlement Systems Act, 2007.
- Note: Non-compliance leads to penal action.
Summary Cheat Sheet for Revision
| Feature | Details |
|---|---|
| System Name | CIMS (Centralised Information Management System) |
| Return Code R065 | Internet Banking Return |
| Return Code R102 | Mobile Banking Return |
| Frequency | Monthly |
| Due Date | 7th of the next month |
| Act | Payment and Settlement Systems Act, 2007 |
2. Master Direction on Regulation of Payment Aggregator (PA)
What is a Payment Aggregator (PA)?
Think of a Payment Aggregator (PA) as the middleman between a Shop/Website and the Bank.
- Role: They collect money from customers (you) via various methods (Cards, UPI, Net Banking) and pool it together to pay the Merchant (Seller).
- Example: Razorpay, BillDesk, Pine Labs.
Key Difference: PA vs. Payment Gateway (PG)
- PA: Handles the actual money. They collect it and settle it. (Requires RBI License).
- PG: Only provides the technology to route the transaction. They do not touch the money. (Does not require authorization, just technology compliance).
Categories of PAs (New Exam Topic)
RBI has classified PAs into three distinct types:
- PA – Online (PA-O): Facilitates e-commerce transactions where the buyer and seller are not physically present (e.g., Buying from Amazon).
- PA – Physical (PA-P): New Category. Facilitates transactions where the device and card/phone are physically present in close proximity (e.g., Point of Sale machines at a supermarket).
- PA – Cross Border (PA-CB): Handles Import/Export payments.
- Inward: For Exports (Money coming in).
- Outward: For Imports (Money going out).
Who Needs a License? (Authorization)
- Banks: Do not need separate authorization. They are already regulated.
- Non-Banks: Must apply to RBI for a Certificate of Authorisation (CoA).
- Existing Physical PAs: Companies already doing Physical POS business must apply to RBI by December 31, 2025. If they fail, they must wind up business by February 28, 2026.
- Pending Applications: Entities whose application for PA-O or PA-CB is pending must also intimate RBI about any existing PA-P business by December 31, 2025.
- New Business Lines: Existing authorized PAs wanting to start a new category of business must intimate RBI at least 30 days in advance.
Capital Requirements (Very Important Numbers)
To start or run a PA business, a company must have deep pockets (Net Worth) to ensure financial stability.
| Milestone | Net Worth Requirement |
|---|---|
| At the time of Application | ₹15 Crore |
| By end of 3rd Financial Year | ₹25 Crore |
| Ongoing Basis | Must maintain ₹25 Crore always |
- Note: Net Worth includes Equity, Reserves, and Compulsorily Convertible Preference Shares (CCPS).
Governance & Conduct
- Fit and Proper: Directors must be honest, have no criminal record, and be financially sound.
- Nodal Officer: PA must appoint a Nodal Officer for handling grievances and display their details on the website.
- Transaction Limits (PA-Cross Border): For Cross-Border PAs, the maximum value per transaction is capped at ₹25 Lakh.
- ATM PIN: PAs cannot use ATM PIN as a factor of authentication for online (Card Not Present) transactions.
Merchant Onboarding (KYC)
PAs are responsible for checking who they are doing business with.
- Due Diligence: PA must check the Merchant's background (KYC).
- Small Merchants (Turnover < ₹40 Lakh): Simplified KYC is allowed (Just PAN verification + One Official Document).
- Marketplace Rule: A Marketplace (like Flipkart) cannot collect money for a seller who is not onboarded/verified by them.
Escrow Account (The "Piggy Bank" Rules)
A PA cannot mix the merchant's money with its own money. It must be kept in a separate Escrow Account with a Scheduled Commercial Bank.
Types of Accounts:
- Escrow Account: For Domestic transactions.
- Inward Collection Account (InCA): For Exports (PA-CB).
- Outward Collection Account (OCA): For Imports (PA-CB).
Key Operational Rules
| Feature | Rule |
|---|---|
| Pre-funding | Allowed for Domestic Escrow (PA puts own money to speed up settlement). Not allowed for Cross-Border. |
| Cash on Delivery (CoD) | Escrow account cannot be used for CoD transactions. |
| Interest | Generally, No Interest is paid on Escrow. Exception: Interest can be earned on the "Core Portion" (a fixed stable amount) if maintained for one year. |
| Time Limit | Funds must be moved to the merchant within T+0 or T+1 days usually. |
Permitted Debits (What can the money be used for?)
- Payment to Merchants.
- Refunds to Customers.
- Payment of commission to the PA itself.
- Restricted: Payment to other third parties is strictly regulated.
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| Act | Payment and Settlement Systems Act, 2007 & FEMA 1999 |
| Capital | ₹15 Cr (Start) → ₹25 Cr (3rd Year) |
| Deadline for PA-Physical | Apply by Dec 31, 2025 |
| Max Txn for Cross Border | ₹25 Lakh |
| Escrow | Mandatory. No CoD allowed in Escrow. |
| New Category | PA-Physical (POS machines) is now regulated. |
3. Participation of Standalone Primary Dealers in Non-deliverable Rupee Derivative Markets
This circular is regarding Forex Markets.
The Core Concept: What are we talking about?
To understand this circular, you need to know two terms:
A. Standalone Primary Dealers (SPDs)
- Primary Dealers (PDs) are entities whose main job is to buy and sell Government Securities (G-Secs) directly from the RBI.
- Types:
- Bank PDs: Regular banks (like SBI, HDFC) that also do PD business.
- Standalone PDs (SPDs): Specialized Non-Banking Financial Companies (NBFCs) that only do business in Capital Markets. eg. Goldman Sachs (India)
B. Non-Deliverable Derivative Contracts (NDDCs)
-
The "Bet": Imagine you want to trade in Rupee vs Dollar, but you are outside India (Offshore) or in an IFSC (GIFT City).
-
The Catch: You cannot actually deliver or exchange Rupees because Rupees are not fully convertible globally.
-
The Solution (NDDC): You enter a contract where you don't exchange the actual money. You just pay the difference (profit/loss) in Dollars. This is Cash Settled.
Example: Understanding NDDC
Imagine an Indian importer needs to pay $1 Million to a US supplier in 3 months. They are worried the Rupee will get weaker (e.g., from ₹83 to ₹85). They want to fix the rate at ₹84.
The Problem: Since this is an "Offshore" market (outside India), they cannot actually exchange Rupees for Dollars because Rupees are not fully convertible there.
The Solution (NDDC): They enter an NDDC contract to "buy" Dollars at ₹84.
Outcome after 3 Months:
- Scenario A (Rupee Weakens to ₹86): The market price is ₹86. They win the bet! The bank pays them the difference: (₹86 - ₹84) = ₹2 per dollar.
- Result: They get ₹20 Lakhs profit, which offsets the extra cost they pay in the real market.
- Scenario B (Rupee Strengthens to ₹82): The market price is ₹82. They lose the bet. They pay the bank the difference: (₹84 - ₹82) = ₹2 per dollar.
Key Point: No actual $1 Million was exchanged. Only the difference (Profit/Loss) was paid in Dollars.
- Scenario A (Rupee Weakens to ₹86): The market price is ₹86. They win the bet! The bank pays them the difference: (₹86 - ₹84) = ₹2 per dollar.
The New Update
- Before this Circular: Only Banks (specifically Authorised Dealer Category-I banks) operating in the IFSC (International Financial Services Centre) were allowed to trade in these Rupee NDDCs.
- Now (The Update): Standalone Primary Dealers (SPDs) are now ALSO allowed to trade in these Non-deliverable Derivative Contracts (NDDCs) involving the Rupee.
Condition:
- The SPD must be registered as an Authorised Dealer Category-III (AD Cat-III).
Static Banking Awareness: Categories of Authorised Dealers
This is often asked in the "Static" section of the exam. The RBI authorizes entities to deal in forex under FEMA, 1999.
| Category | Who are they? | What can they do? |
|---|---|---|
| AD Category-I | Commercial Banks (SBI, ICICI, etc.) | All current & capital account transactions (Full Power). |
| AD Category-II | Upgraded Money Changers, Co-op Banks | Specified non-trade transactions (Travel, Gifts, etc.). |
| AD Category-III | Financial Institutions & SPDs | Specific forex transactions incidental to their main business (e.g., Forex for hedging G-Secs). |
| FFMC | Full Fledged Money Changers | Only purchase of forex and sale for private/business travel. |
Why SPDs? Since SPDs trade heavily in government bonds, they face currency risks. Allowing them to trade in NDDCs helps them hedge (protect) their foreign currency risks better.
Legal Basis
- Act Permitting this: Section 45W of the Reserve Bank of India Act, 1934.
- Forex Authorization: Section 10(1) of the Foreign Exchange Management Act (FEMA), 1999.
Summary Cheat Sheet for Exams
| Feature | Details |
|---|---|
| Who is newly permitted? | Standalone Primary Dealers (SPDs) |
| Which Category must they hold? | AD Category-III |
| What can they trade? | Non-deliverable Derivative Contracts (NDDCs) involving the Rupee |
| With whom can they trade? | 1. Users (Clients) >2. AD Cat-I banks in IFSC (IBUs) >3. Banks overseas |
4. Reserve Bank of India (Authentication mechanisms for digital payment transactions) Directions, 2025
The Core Concept: Until now, "Two-Factor Authentication" (2FA) mostly meant Password + SMS OTP. The RBI now wants to modernize this. They are saying: "We don't care which technology you use, but it must follow these strict safety principles."
The "2-Factor" Rule
- Mandatory: Every digital payment must have at least Two factors.
- What counts as a "Factor"?
- Something you HAVE: Card, Phone, Token.
- Something you KNOW: PIN, Password, OTP.
- Something you ARE: Fingerprint, Face ID (Biometrics).
The "Dynamic" Rule (Crucial for Exams)
- For online transactions (Card Not Present), at least one of the two factors must be Dynamic.
- Meaning: It must be generated fresh for that specific transaction (like an OTP or a dynamic token). You cannot use two static passwords.
Important Deadlines (Memorize These!)
| Type of Transaction | Compliance Deadline |
|---|---|
| Domestic Digital Payments | April 01, 2026 |
| Cross-Border (Card Not Present) | October 01, 2026 |
Special Mention: DigiLocker
- The RBI has suggested that banks may explore using DigiLocker as a secure channel to notify customers about high-risk transactions.
Liability
- If a fraud happens because the bank/issuer did not follow these rules, the Issuer must compensate the customer in full without arguing ("without demur").
Summary Cheat Sheet for Revision
| Feature | Details |
|---|---|
| Auth Regulation Name | RBI (Authentication mechanisms) Directions, 2025 |
| Domestic Deadline | April 01, 2026 |
| Cross-Border Deadline | October 01, 2026 |
| Dynamic Factor | Mandatory for at least 1 factor (except card-present) |
5. Investment by Co-operative Banks in Shared Service Entity (SSE)
The Background:
- NABARD (the boss of rural development) is setting up a Shared Service Entity (SSE).
- Purpose: To provide technology support (like Core Banking Solutions) to State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs).
- The Circular: RBI is allowing these Co-operative banks to invest money (buy shares) in this SSE.
The Exam Rule (The 5% Limit)
- Who can invest?: StCBs and CCBs.
- How much?: They can invest up to 5% of their Owned Funds (Paid-up Capital + Reserves).
- The Exemption: Usually, banks have strict limits on investing in "Non-SLR" (Non-Government) securities. This specific investment in SSE is EXEMPT from those general limits.
6. Special Clearing in Cheque Truncation System on October 3, 2025
This circular is an operational directive to manage the technical switch over to the new "Continuous Clearing" system. For exams, the dates, codes, and timings are the most likely objective questions.
The Event: Special Clearing Session
The Context: As you learned in the previous topic, the RBI is switching CTS from "Batch Processing" to "Continuous Clearing".
- Phase 1 Start Date: October 4, 2025.
- The Problem: Before starting the new system on Oct 4, the RBI needs to clear all pending work and test the transition.
- The Solution: A Special Clearing Session will be held on October 3, 2025 (Friday).
Implementation Phases (Important Dates)
The transition to Continuous Clearing will happen in Two Phases:
- Phase 1: Starts from October 4, 2025 (Rollout of new system).
- Phase 2: Starts from January 3, 2026 (Full implementation).
Schedule for October 3, 2025 (Memorize the Timings)
On this specific day, regular clearing will not happen after the morning return session. Instead, a "Special Session" will run.
| Session Type | Purpose | Timing |
|---|---|---|
| Regular Return Session | To process returns for cheques presented on Oct 1. | 08:00 AM – 10:00 AM |
| Special Presentation | To present new cheques for clearing. | 11:00 AM – 03:00 PM |
| Special Return | To return unpaid cheques from the special presentation. | 05:00 PM – 08:00 PM |
Exam-Specific Technical Codes
Banks use specific codes in their software to identify sessions. These are often asked in "Banking Technology" questions.
- Clearing Type Code: "99" (Used specifically for this Special Clearing).
- Presentation Session Number: "21"
- Return Session Number: "22"
Note: If a bank uses any other code, the cheques will be rejected for this session.
Static Banking Awareness: CTS Revision
A. What is Truncation?
- Stopping the physical movement of the cheque. The Presenting Bank scans it and sends only the Image + Data to the Clearing House.
B. Security Features
- PKI: End-to-end Public Key Infrastructure is used to encrypt data.
- Cheque Images: Three images of each cheque are captured:
- Front Grey Scale
- Front Black & White
- Back Black & White
- Alterations: Cheques with material alterations are NOT accepted under CTS.
- Exception: Only a validation of a date correction is allowed. No other changes (like name or amount) are permitted.
- CTS-2010 Standards: Mandatory security features like Watermark, Void Pantograph (shows "VOID" if photocopied), and Bank Logo in invisible ink.
C. Positive Pay System (PPS)
- Purpose: To prevent fraud by verifying details before clearing.
- Limits:
- ₹50,000+: Banks must offer the facility.
- ₹5,00,000+: Banks may make it mandatory.
D. Retention of Cheque
- Who keeps the physical cheque?: The Presenting Bank.
- For how long?: 10 Years.
Summary Cheat Sheet for Revision
| Feature | Details |
|---|---|
| Special Clearing Date | Oct 3, 2025 |
| Clearing Type Code | 99 |
| Phase 1 (Continuous) Starts | Oct 4, 2025 |
| Physical Cheque Retention | 10 Years |
| Mandatory PPS Discretion Limit | ₹5 Lakhs |
7. Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025
Overview & Applicability
- Objective: To make it easier for families to claim money when a customer dies, reducing paperwork and delays.
- Who must follow this?: All Commercial Banks and Co-operative Banks.
- Deadline: Banks must implement these instructions by March 31, 2026.
- Exclusions: These rules do NOT apply to Government schemes like PPF or Senior Citizen Savings Scheme (SCSS). Those follow their own specific rules.
Key Definitions (The Numbers You Must Know)
For the "Simplified Procedure" of settlement, the RBI has defined a "Threshold Limit".
| Bank Type | Threshold Limit |
|---|---|
| Co-operative Banks | ₹5 Lakh |
| Commercial Banks (and others) | ₹15 Lakh |
Scenario A: If there is a Nominee (or Survivor)
This is the easiest path. If the deceased person had appointed a nominee:
- The Rule: Paying the nominee is a valid discharge of the bank's liability.
- Trustee Role: The bank must inform the nominee in writing that they are receiving the money as a Trustee for the legal heirs (meaning they hold the money, but the actual owners are the heirs).
- What the Bank CANNOT Ask:
- Succession Certificate, Probate of Will, or Letter of Administration.
- Bond of Indemnity or Surety.
- Documents Required: Just the Claim Form, Death Certificate, and KYC of the nominee.
Scenario B: No Nominee (Simplified Procedure)
If there is no nominee, but the amount is below the Threshold Limit (₹5L/₹15L) and there is no dispute:
- Bond of Indemnity: Required (Signed by the claimant). Indemnity Bond means: "Please give me the money now. If, in the future, any dispute arises or another claimant proves they are the true owner, I promise to pay the bank back for any loss it suffers because it paid me."
- Bond of Surety: NOT Required (The bank cannot ask for a third-party guarantee for small amounts).
- Other Documents: Death Certificate, KYC, and a Letter of Disclaimer from other legal heirs.
Scenario C: Claims Above Threshold
If the amount is above the threshold limit (₹5L/₹15L):
- Documents: The bank will ask for legal proof like a Succession Certificate or Legal Heir Certificate.
- Surety: In this case, the bank CAN ask for a Bond of Surety from a third party.
Special Case: Missing Persons
Usually, if a person goes missing, the family needs a court order declaring "Civil Death".
- The Exemption: To help common people, if the claim amount is less than ₹1 Lakh, the bank can settle it without a court order.
- Alternate Document: A copy of the FIR and the Non-Traceable Report from the police is enough.
Safe Deposit Lockers
- Inventory: Before handing over contents, an inventory must be made.
- Witnesses: The inventory must be made in the presence of Two Independent Witnesses (who are not bank employees).
- Valuation: The contents must be valued by an independent valuer.
Timelines & Penalties (Most Likely Exam Question)
The RBI has set strict penalties if banks delay the settlement.
| Feature | Rule |
|---|---|
| Settlement Timeline | Claims must be settled within 15 Days of receiving all documents. |
| Penalty (Deposits) | If delayed, bank pays interest at Bank Rate + 4%. |
| Penalty (Lockers) | If delayed, bank pays compensation of ₹5,000 per day. |
Premature Withdrawal of Term Deposits
- No Penalty: If a depositor dies, the bank must allow premature withdrawal of the FD without any penal charge.
- Joint Accounts: If there is a "Survivorship Clause" (like Either or Survivor), the survivor can withdraw the FD prematurely without needing consent from the legal heirs of the deceased.
Summary Cheat Sheet
| Feature | Details |
|---|---|
| Threshold | ₹15L (Commercial) / ₹5L (Co-op) |
| Missing Person Limit | ₹1 Lakh |
| Settlement Time | 15 Days |
| Penalty Interest | Bank Rate + 4% |
| Locker Delay Fine | ₹5,000/day |
8. Reserve Bank of India (Interest Rate on Advances) (Amendment Directions), 2025
This specific circular introduces two major changes to how banks handle interest rates on loans.
Reducing the "Spread" for Customer Retention
The Concept: When you take a loan linked to an external benchmark (like the Repo Rate), your interest rate has two parts:
- External Benchmark (Repo Rate): Decided by RBI.
- Spread: The extra margin added by the bank (Profit + Risk + Operating Cost).
The Old Rule: Banks could change the "Spread" components (like operating costs) only once in three years. They couldn't change it frequently.
The New Amendment (The Change): Banks are now allowed to reduce the spread earlier than 3 years specifically for "Customer Retention."
- Why? If a good customer wants to leave your bank because another bank is offering a cheaper loan, you can now legally lower their "Spread" immediately to make them stay.
- Condition: It must be done on justifiable grounds and in a non-discriminatory manner.
Switching from Floating to Fixed Rate
The Context: In 2023, RBI issued rules saying borrowers must be given a choice to switch from Floating (Variable) rates to Fixed rates when interest rates are reset.
The Change (One Word Makes a Difference):
- Previous Wording: Banks "shall" (must) provide the option to switch to a fixed rate.
- New Wording: Banks "may, at its option" provide the choice to borrowers.
What does this mean for exams? Offering a switch to a "Fixed Rate" is now discretionary (optional) for the bank. They are not legally forced to offer it if their Board policy decides against it.
Important Date
- Effective Date: These amendments come into force from October 1, 2025.
Summary Cheat Sheet for Exams
| Feature | Old Rule | New Rule (2025) |
|---|---|---|
| Spread Reset Frequency | Once in 3 years. | Can reduce earlier for Retention. |
| Switch to Fixed Rate | Mandatory ("Shall"). | Optional ("May") for the bank. |
| Effective Date | - | October 1, 2025 |
9. Lending Against Gold and Silver Collateral (Amendment 2025)
The Context: The RBI wants to ensure that banks do not encourage speculation (gambling) on gold prices. They want gold loans to be used for productive purposes, not just for hoarding gold.
The General Prohibition (What is Banned?)
Lenders (Banks/NBFCs) strictly CANNOT give loans for:
- Buying Gold: You cannot take a loan to purchase gold (coins, jewellery, ETFs, or Mutual Funds backed by gold).
- Against Primary Gold: You cannot pledge "Primary Gold" (like 24-carat gold bars, biscuits, or bullion) to get a loan.
- Why? Primary gold is usually held for investment/speculation. Lenders usually accept ornaments/jewellery as collateral, not bars.
The Important Exception (Exam Question Material)
There is an exception for businesses that need gold to run their factory (e.g., Jewellery manufacturers).
- Who can lend?
- Scheduled Commercial Banks (SCBs).
- Tier 3 and Tier 4 Urban Co-operative Banks (UCBs).
- For what purpose?
- Need-based Working Capital Finance.
- Borrowers must use the gold/silver as Raw Material or Input (e.g., a goldsmith making jewellery).
- Condition: The bank must ensure the borrower is not just holding the gold for "Investment" or "Speculation".
Exam Tip: Remember that Tier 1 and Tier 2 UCBs are NOT mentioned in this permission. Only Tier 3 & 4 (larger UCBs) can extend this facility along with SCBs.
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