RBI Final Related-Party Lending Norms: Key Relaxations
Why in the news
The Reserve Bank of India notified its final related-party lending guidelines in January 2026, relaxing several draft provisions for regulated entities (REs).
Key facts
- The earlier draft proposed only a one-year run-off for legacy exposures.
- ‘Senior officer’ becomes ‘specified employee’: staff up to two levels below the board.
- RBI refused to lift materiality thresholds; a scale-based framework makes larger REs face tighter limits.
| Area | Final position |
|---|---|
| Related party definition | Repeated references to relatives removed; ₹5 crore shareholding threshold dropped |
| NBFCs | Exempt: those not using public funds, and Core Investment Companies (CICs) |
| Urban Cooperative Banks | Scale-based; Tier-4 UCBs may lend to related parties in a limited way with board approval |
| AIFIs | Bans on lending to directors and interested entities continue |
| Board approval | Not needed if fully secured by government securities, fixed deposits or life insurance policies, LTV at most 100% |
Exam angle
- Regulator: RBI.
- Term replaced: senior officer by specified employee.
- Exempt NBFCs: no public funds, and CICs.