RBI issues Amendment Directions on Capital Market Exposure

**Executive Summary** On February 13, 2026, the Reserve Bank of India (RBI) issued amendment directions on Capital Market Exposure (CME) for both Commercial Banks and Small Finance Banks. These amendments follow the draft directions issued on October 24, 2025, and incorporate feedback from stakeholders. The directions aim to provide an enabling framework for banks to finance acquisitions by Indian corporates, enhance lending limits against shares, and establish a principle-based framework for lending to capital market intermediaries. **Key Points / Main Content** * **Background:** * RBI issued draft directions on CME for Commercial and Small Finance Banks on October 24, 2025, seeking stakeholder feedback. * The final Directions incorporate modifications based on received feedback, detailed in an Annex. * **Objectives of the Draft Directions (2025):** * Enable banks to finance acquisitions by Indian corporates. * Increase lending limits against shares, units of REITs, and InvITs. * Remove regulatory ceilings on lending against listed debt securities. * Implement a principle-based lending framework for Capital Market Intermediaries (CMIs). * **Amendment Directions Issued:** * Reserve Bank of India (Commercial Banks – Credit Facilities) Amendment Directions, 2026. * Reserve Bank of India (Commercial Banks – Concentration Risk Management) Amendment Directions, 2026. * Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026. * Reserve Bank of India (Commercial Banks – Financial Statements: Presentation and Disclosures) Third Amendment Directions, 2026. * Reserve Bank of India (Commercial Banks – Undertaking of Financial Services) – Amendment Directions, 2026. * Reserve Bank of India (Small Finance Banks - Credit Facilities) Amendment Directions, 2026. * Reserve Bank of India (Small Finance Banks – Concentration Risk Management) Amendment Directions, 2026. * Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026. * Reserve Bank of India (Small Finance Banks – Financial Statements: Presentation and Disclosures) Second Amendment Directions, 2026. **Impact Analysis** **Commercial Banks** * **Impact:** Affected by amendments to directions on credit facilities, concentration risk management, prudential norms on capital adequacy, financial statement presentation, and undertaking of financial services related to capital market exposure. * **Action Required:** Review and implement the updated directions. **Small Finance Banks** * **Impact:** Affected by amendments to directions on credit facilities, concentration risk management, prudential norms on capital adequacy, and financial statement presentation related to capital market exposure. * **Action Required:** Review and implement the updated directions. **Capital Market Intermediaries (CMIs)** * **Impact:** Affected by the implementation of a more principle-based framework for lending. * **Action Required:** Understand and adapt to the new lending framework. **Indian Corporates** * **Impact:** Potentially benefit from the enabling framework that allows banks to finance acquisitions more readily. * **Action Required:** Assess opportunities for financing acquisitions through banks.

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