RBI issues Amendment Directions for Repeal of Market Mechanism Framework

**Executive Summary** The Reserve Bank of India (RBI) has issued amendment directions, dated December 4, 2025, to repeal the 'Guidelines on Enhancing Credit Supply for Large Borrowers through Market Mechanism'. This follows the draft repeal circular issued on October 1, 2025, and the subsequent evaluation of stakeholder feedback. The aim is to recalibrate prudential requirements and improve bank balance sheets. **Key Points / Main Content** * **Background:** * RBI issued a draft repeal circular on October 1, 2025, seeking to repeal extant instructions issued in 2016. * Stakeholder feedback on the draft was reviewed, and a statement on the feedback is provided in the Annex. * **Amendment Directions:** * The following amendment directions have been issued to repeal the guidelines: * Reserve Bank of India (Commercial Banks – Concentration Risk Management) Amendment Directions, 2025 * Reserve Bank of India (Small Finance Banks – Concentration Risk Management) Amendment Directions, 2025 * Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2025 * Reserve Bank of India (Small Finance Banks – Income Recognition, Asset Classification and Provisioning) Amendment Directions, 2025 * Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2025 * Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Amendment Directions, 2025 * **Objective:** * The objective of these Amendment Directions is to recalibrate prudential requirements, strengthen regulatory framework, enhance supervisory oversight, and improve bank balance sheets. **Impact Analysis** **Stakeholder: Commercial Banks** * **Impact:** Changes in concentration risk management, income recognition, asset classification and provisioning, and capital adequacy requirements. * **Action Required:** Review and comply with the updated directions related to concentration risk management, income recognition, asset classification and provisioning, and capital adequacy norms. **Stakeholder: Small Finance Banks** * **Impact:** Changes in concentration risk management, income recognition, asset classification and provisioning, and capital adequacy requirements. * **Action Required:** Review and comply with the updated directions related to concentration risk management, income recognition, asset classification and provisioning, and capital adequacy norms.

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