What changed
The RBI modified its directions on concentration risk management for small finance banks. Banks must now have policies to manage exposure to single counterparties, groups of interconnected counterparties, and specific sectors. The amendment also repeals instructions on enhancing credit supply for large borrowers through market mechanisms.
What it means for you
The changes aim to improve risk management practices among small finance banks. By monitoring and addressing concentration risks, banks can reduce their exposure to potential losses. The repeal of certain instructions may also simplify regulatory requirements for banks.
What you must do
- Review and update concentration risk management policies
- Implement amended directions by January 1, 2026
- Consider implementing changes earlier than the effective date
Who it affects
Small finance banks, Banking system, Ultra-large borrowers
What is the effective date of the amendment?
January 1, 2026
What type of policies must banks have?
Policies on concentration risk management
What is repealed by the amendment?
Instructions on enhancing credit supply for large borrowers through market mechanisms