RBI Circulars & Notifications – August 2025

International Trade Settlement in Indian Rupees (INR)

• Provision: RBI allows AD Category-I Banks to open Special Rupee Vostro Accounts (SRVAs) of foreign banks without prior RBI approval.
• Effective: Immediate.
• Purpose: To promote INR-based international trade settlement.

Reserve Bank of India (Co-Lending Arrangements) Directions, 2025

Applicability:

• Commercial Banks (excluding SFBs, LABs, RRBs), All-India FIs, NBFCs (including HFCs).

Effective Date:

• From January 1, 2026 (or earlier if decided by the entity).

Definition:

• Co-lending: Two regulated entities jointly fund loans in agreed proportions, sharing risks and revenues.

Key Guidelines:

• Each RE must retain minimum 10% of each loan on its books.
• Must include co-lending provisions in credit policy.
• Borrower must know single point of contact.
• Priority Sector Loans: Each RE can claim PSL status for its share.
• NBFCs to deduct unrealised profit from capital till maturity.

Interest & Charges:

• Borrower pays blended interest rate (weighted average of both REs’ rates).
• Extra charges to be disclosed in Key Facts Statement (KFS).
• No hidden credit enhancements or guarantees unless permitted.

Operational Arrangements:

• Partner RE must take share within 15 days of disbursement.
• All transactions via escrow account.
• Both REs maintain separate borrower accounts.
• Must ensure business continuity for borrowers even if CLA ends.

Default Loss Guarantee (DLG):

• Originating RE may give up to 5% DLG of outstanding loans (as per Digital Lending rules).

Asset Classification:

• Borrower-level classification mandatory.
• If one marks SMA/NPA → other must do the same.

Disclosures:

• Must publish list of CLA partners on website.
• In financial statements, report: total CLAs, interest rate, fees, sectors, DLG, etc. (Quarterly/Annual).

Reserve Bank of India (Non-Fund Based Credit Facilities) Directions, 2025

Applicability:

• Commercial Banks (incl. RRBs, LABs), Co-operative Banks (UCBs, StCBs, CCBs), AIFIs, and NBFCs/HFCs (Middle Layer & above) for PCE only.

Coverage:

• Guarantees, Letters of Credit, Co-acceptances, etc. (Excludes derivatives).

General Rules:

• Must be part of RE’s credit policy.
• Usually given only to borrowers with fund-based facility (exceptions allowed).
• Not to guarantee deposits/bonds unless permitted.
• If devolves into fund-based exposure → apply loan norms.

Guarantees:

• Must be irrevocable, unconditional, and incontrovertible.
• For UCBs/RRBs etc.:
  • Total guarantees ≤ 5% of assets.
  • Unsecured guarantees ≤ 1.25% (to comply by April 1, 2027).
• Electronic guarantees allowed with SOPs and audit checks.

Co-Acceptances:

• Only genuine trade bills; goods must be received and verified.

Partial Credit Enhancement (PCE):

• Allowed for corporate/SPV/municipal bonds and large NBFC/HFC bonds (₹1,000+ crore).
• Bonds must be rated BBB- or above (by 2 agencies).
• Single RE ≤ 50%, all REs combined ≤ 50% of issue.
• Total PCE ≤ 20% of Tier 1 capital.
• PCE repayment due within 30 days, else NPA after 90 days.

Disclosures:

• Split secured/unsecured, domestic/overseas guarantees, acceptances, and PCE details in financial statements.

Investment in Government Securities via SRVAs

• Foreign entities with Special Rupee Vostro Accounts can invest surplus INR in Central Government Securities, including T-Bills.
• Promotes rupee internationalization and capital inflow.

Continuous Clearing & Settlement in Cheque Truncation System (CTS)

New System: Continuous clearing instead of batch processing.

Phases:

• Phase 1: Oct 4, 2025
• Phase 2: Jan 3, 2026

Process Highlights:

• Cheques scanned & sent continuously (10 AM–4 PM).
• Real-time confirmation (10 AM–7 PM).
• Phase 1: Confirm by 7 PM → else deemed approved.
• Phase 2: Confirm within T+3 hours → else deemed approved.
• Hourly settlement from 11 AM onwards.
• Customers to receive credit within 1 hour of settlement.

Compliance with Supreme Court Orders on Accessibility (April 30, 2025)

Cases:

• Pragya Prasun & Ors. vs Union of India (W.P.(C) 289/2024)
• Amar Jain vs Union of India & Ors. (W.P.(C) 49/2025)

Ruling:

• Inaccessible digital KYC systems violate Article 21 (Right to Life & Dignity).
• RBI & regulators to ensure reasonable accommodation for PwDs in digital services.

RBI (KYC) (2nd Amendment) Directions, 2025

Key Changes:

• Accessibility for Persons with Disabilities (PwDs).
• Mandatory reasons for KYC rejection.
• Introduced Aadhaar Face Authentication.
• Safeguards to avoid exclusion during liveness checks.
• Clarified coverage for large/connected transactions.

Implementation of Section 51A of UAPA, 1967

• Updated UNSC 1267/1989 ISIL (Da’esh) & Al-Qaida Sanctions List – 5 entries amended.
• REs must ensure real-time compliance with updated lists.

Monetary Policy Committee (MPC) – August 2025 Review

Rates (Unchanged):

• Repo Rate: 5.50%
• SDF: 5.25%
• MSF & Bank Rate: 5.75%

Projections:

• GDP Growth (2025–26): 6.5%
  • Q1: 6.5%, Q2: 6.7%, Q3: 6.6%, Q4: 6.3%
• CPI Inflation (2025–26): 3.1% (Q2: 2.1%, Q3: 3.1%, Q4: 4.4%)
• CAD: 0.6% of GDP (↓ from 0.7% last year)
• System Liquidity: Surplus ₹3.0 lakh crore/day (vs ₹1.6 lakh crore earlier).