These draft directions apply to a wide array of Regulated Entities (REs), including Commercial Banks, Small Finance Banks, Cooperative Banks, NBFCs, and All India Financial Institutions. The key proposals include introducing scale-based materiality thresholds that mandate Board or Committee approval for related-party lending exceeding set limits. It also excludes Independent Directors of other banks from being considered ‘related persons,’ offers principle-based exemptions from Banking Regulation for specific loans, and mandates detailed supervisory reporting and disclosure requirements for all REs regarding related party transactions. The feedback/comments from stakeholders are invited.
(Link: RBI Press Release Dated 01/10/2025, Commercial, Small Finance, Regional Rural, Local Area, Urban Cooperative, Rural Cooperative, NBFC, All India Fin Institutions)