BLOG 18/2025 4/10/2025
In this document we have covered the select RBI notifications and directives for the month of Sept 2025 and produced a gist of it. For detailed and full study, link is provided that will take us to the RBI communication. (This paper covers circulars issued after 10th Sept . Circulars upto 10th Sept have been already published in earlier Blogs)
NOTIFICATIONS:
- RBI/2025-26/79 CO.DPSS.POLC.No. S 668/02-14-015/2025-2026 dated 25.09.2025
Subject: Reserve Bank of India (Authentication mechanisms for digital payment transactions) Directions, 2025
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NT79258FF36ECA8F4886B3B01F55D166C2B2.PDF
Gist:
Effective date: 01.04.2026
Card Not Present Transaction: A transaction where the card and acceptance infrastructure are not present in close proximity while making the transaction.
Card Present Transaction: A transaction that is carried out through the physical use of card at the point of transaction.
Cross Border Card Not Present: A payment instruction wherein the card, issued by an Indian issuer, is used for undertaking a payment transaction favouring a merchant acquired by an overseas acquirer. For such transactions, outflow of foreign exchange is envisaged.
Factor of Authentication: Credentials of the customer used for authentication.
Principles for authentication of Digital Payment Transactions:
- Two factors of authentication.
- At least one factor should be dynamic other than card present transaction.
- Compromise of one factor shall not affect the reliability of the other.
Author’s note: Card Not Present transactions means where card is not presented physically for transaction i.g an internet transaction with card details.
- RBI/2025-26/82 DoR.MCS.REC.50/01.01.003/2025-26 dated 26.09.2025
Subject: Reserve Bank of India (Settlement of Claims in respect of Deceased Customers of Banks) Directions, 2025
https://website.rbi.org.in/documents/d/rbi/circular_82
Gist:
Effective date: Not later than 31.03.2026
‘Apostille’ refers to a certificate that authenticates the origin of a public document (e.g., a birth, marriage or death certificate, a judgment, an extract of a register or a notarial attestation). Apostilles can only be issued for documents issued in one country party to the Hague Apostille Convention and that are to be used in another country which is also a party to the Convention. In India, such attestations are done by Ministry of External Affairs.
Accounts with nominee:
- Bank to exercise due care in identifying the nominee.
- There is no court order against the nominee in the knowledge of the Bank.
- It is to be made clear in writing to the nominees that they are receiving money as a trustee to the legal hair.
3 documents to be taken:
- Claim form
- Death certificate
- Officially valid document of the nominee to establish his identity and address.
Accounts without Nominee:
Simplified procedure-
- There should be no will.
- No court order.
- No contesting claim
Documents when amount is up-to threshold limit (Rs. 15 lakh):
- Claim form
- Death certificate
- Officially valid document of the nominee to establish his identity and address.
- Bond of indemnity
- No objection by non-claimant heirs.
- Legal heir certificate issued by competent authority OR declaration by an independent person who is a) known to the deceased family, b) not a party to the claim, c) acceptable to bank.
Documents when amount is above threshold limit (Rs. 15 lakh):
- Claim form
- Death certificate
- Officially valid document of the nominee to establish his identity and address.
- Succession Certificate.
If succession certificate is not available:
- Claim form
- Death certificate
- Officially valid document of the nominee to establish his identity and address.
- Bond of indemnity
- No objection by non-claimant heirs
- Legal heir certificate issued by competent authority OR affidavit, sworn before a Notary Public/ Judge/ Judicial Magistrate regarding the legal heir(s) of the deceased depositor, by an independent person who is a) well known to the family of the deceased, b) not a party to the claim, c) acceptable to the bank.
- Bank MAY also call for a Bond of Surety from third party individuals.
Not Simplified Procedure-
Claim with WILL without dispute:
The bank shall settle claims involving ‘Will’ left behind by a deceased depositor on the basis of Probate of Will/ Letter of Administration, in addition to documents 1,2,3 above. In cases where a person other than a legal heir is named as a beneficiary in the Will, applicable documents shall also be obtained from her/ him. However, the bank is free to exercise discretion and act as per ‘Will’ of the deceased without requiring production of the probate of such Will, provided the same is not inconsistent with applicable laws, there is no dispute regarding the Will amongst the legal heir(s) and/ or beneficiaries named in the Will and the bank is otherwise satisfied as to the genuineness of the Will. In such cases, the bank shall additionally call for the documents 1 to 5 above.
Claim with WILL but with disputes:
In case of contesting claims or dispute amongst the legal heir(s) and/ or the beneficiaries named in the Will of the deceased depositor, the bank shall settle claims on the basis of Probate of Will or Letter of Administration or Succession Certificate or Court order/ decree, as applicable, and the documents no 1 to 3 above. Further, where there is an order from a Court restraining the bank from making the payment, the claim shall not be entertained during the period the order is in force. The settlement of claim shall be considered based on subsequent Court order to that effect.
If any amount is received post settlement, bank shall return the amount to sender mentioning depositor deceased and inform the nominees/survivors/legal heirs.
Premature termination of term deposit of the deceased depositor:
- Allowed without any penal charge even in lock in period.
- In case of joint deposit, the consent of survivors and legal heirs are required.
- In case of joint deposit with survivorship clause if a specific mandate is furnished by all the depositors jointly to the bank, either at the time of placing the term deposit or anytime subsequently during the tenure of the deposit, then premature withdrawal option shall be allowed to the survivors on the death of any of the depositors, without seeking the concurrence of the legal heir(s) of the deceased joint deposit holder.
Missing Persons:
- Nominees/Legal heirs to obtain order from Court declaring the civil death of the account holder.
- Subsequent procedure shall be as per death claim
- If amount is less than 1 lakh, an FIR and non-traceable report from the Police shall be acceptable in place of court order (Banks can fix a higher amount also)
Lockers:
With Nominee:
Sole owner: Nominee can be given full access of locker and have liberty to remove the articles.
Joint names with operations Jointly: Nominee and surviving owner jointly have liberty to remove the articles.
Joint names with operations either or survivor: Survivor can operate.
Minor: Articles can be handed over to the guardian of the Nominee.
Documents: 1,2,3.
In case of No Nominee:
- Simplified Procedure as for accounts, if no Will and no dispute.
- Non simplified procedure as for accounts, if Will or Dispute.
- All claims of deposit to be settled in 15 days from the date of receipt of documents.
- All locker claims must be decided and claimant informed within 15 days to finalise the date of operation of locker.
- Claim on deposits not settled within 15 days an interest of Bank Rate + 4% to be paid on balance amount from the date of submission of documents to date of payment.
- In locker claims- a penalty of Rs.5000/- per day of delay.
- Deposit accounts of Sole Proprietary concerns shall also be settled like single account.
Proof of death outside the country- Any one of the following.
- Authorised officials of overseas branches of Scheduled Commercial Banks registered in India
- Branches of overseas banks with whom Indian banks have correspondent banking relationships
- A Court Magistrate or Judge or Notary Public
- Consularised by Indian Embassy/ Consulate General in the country of issuance;
- Apostilled.
Author’s Note: Apostille convention is an international treaty drafted by Hague Conference on International Private Law on 5th Oct 1961 to simplify the procedure of legal certification of documents originated in one country used in another country.
- RBI/2025-26/83 DOR.CRE.REC.51/13.03.00/2025-26 dated 29.09.2025
Subject: Reserve Bank of India (Interest Rate on Advances) (Amendment Directions), 2025
Gist:
Following modifications in respect of interest rates are specified-
| Earlier | Now (w.e.f. 01.10.2025) |
| Spread under External Benchmark- Banks are free to decide the spread over the external benchmark. However, credit risk premium may undergo change only when borrower’s credit assessment undergoes a substantial change, as agreed upon in the loan contract. Further, other components of spread including operating cost could be altered once in three years. | Banks are free to decide the spread over the external benchmark. However, credit risk premium may undergo change only when borrower’s credit assessment undergoes a substantial change, as agreed upon in the loan contract. Further, other components of spread including operating cost could be altered once in three years. [Provided that, the other spread components may be reduced by banks for a loan category earlier than three years for customer retention, on justifiable grounds, in a non-discriminatory manner, and in terms of the bank’s policy.] |
| At the time of reset of interest rates, REs shall provide the option to the borrowers to switch over to a fixed rate as per their Board approved policy. The policy, inter alia, may also specify the number of times a borrower will be allowed to switch during the tenor of the loan. | At the time of reset of interest rates, REs may, at its option, provide a choice to the borrowers to switch over to a fixed rate as per their Board approved policy. The policy, inter alia, may also specify the number of times a borrower will be allowed to switch during the tenor of the loan. |
| Whenever there is a reset of interest rates for an entire class of borrowers in a particular loan category, say home loan, due to increase in the reference benchmark; the RE shall provide the following options to the borrowers: a. Either enhancement in EMI or elongation of number of EMIs, keeping the EMI unchanged or a combination of both options. b. Switch to fixed interest rate for the remaining portion of the loan c. To prepay, either in part or in full, at any point during the residual tenor of the loan. | Whenever there is a reset of interest rates for an entire class of borrowers in a particular loan category, say home loan, due to increase in the reference benchmark; the RE shall provide the following options to the borrowers: a.Either enhancement in EMI or elongation of number of EMIs, keeping the EMI unchanged or a combination of both options. b.Switch to fixed interest rate for the remaining portion of the loan, [where such an option is provided by the RE] c.To prepay, either in part or in full, at any point during the residual tenor of the loan. |
- RBI/2025-26/84 DOR.CRE.REC.52/21.01.023/2025-26 dated 29.09.2025
Subject: Reserve Bank of India (Lending Against Gold and Silver Collateral) – (1st Amendment) Directions, 2025
Gist:
Following modifications in respect of Gold Loan bas been specified:
| Earlier | W.e.f. 01.10.2025 |
| A lender shall not grant any advance or loan: against primary gold or silver or financial assets backed by primary gold or silver. E.g units of ETFs or units of MFs | A lender shall not grant any advance or loan: I) for purchase of gold in any form including primary gold, ornaments, jewellery, or coins, or for purchase of financial assets backed by gold, e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds; and II)against primary gold or silver or financial assets backed by primary gold or silver., e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds Provided that a Scheduled Commercial Bank or a Tier 3 or 4 UCB may extend need-based working capital finance to borrowers who use gold or silver as a raw material, or as an input in their manufacturing or industrial processing activity, for which such gold or silver can also be accepted as security. A bank extending such finance shall ensure that borrowers do not acquire or hold gold for investment or speculative purposes. |
- RBI/2025-26/85 DOR.CAP.REC.No.53/21.01.002/2025-26 dated 29.09.2025
Subject: Reserve Bank of India (Basel III Capital Regulations – Perpetual Debt Instruments (PDI) in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas) Directions, 2025
https://website.rbi.org.in/documents/d/rbi/04-review-of-at1-limits-scheduled-commercial-banks
Gist:
“Perpetual Debt Instruments (PDIs) issued in foreign currency/ rupee denominated bonds overseas shall be eligible for inclusion in Additional Tier 1 (AT1) capital up to a maximum amount of 1.5 per cent of Risk Weighted Assets (RWAs) as per the latest available financial statements (audited or subjected to limited review).”
Author’s Note: What is AT1 Bonds – AT1 Bonds i.e Additional Tier 1 Bonds are unsecured capital instruments banks issue to raise their core capital base. BASEL accord introduced this instrument after 2008 financial crisis. These bonds are perpetual, means that they do not have a maturity. Only interest is paid at specific time. In the times of financial crisis even interest need not be paid. These bonds can be entirely written off without the investor’s consent in the event of capital position of the bank falls below a certain level. However, these bonds are listed and traded on stock exchanges offering liquidity. Further, these bonds offer higher interest rates than other bonds. Issuer also have call option and if the capital position is comfortable, issuer can exercise the call option and mature the bonds.
MASTER DIRECTION:
- RBI/DPSS/2025-26/141 CO.DPSS.POLC.No.S-633/02-14-008/2025-26 dated 15.09.2025
Subject: Master Direction on Regulation of Payment Aggregator (PA)
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/141MD7D7F25DEBF1F48449E20D685E4B014E5.PDF
Gist:
Contact Point Verification (CPV): Physical verification of the address of the merchant.
Payment Aggregator (PA): An entity that facilitates aggregation of payment made by customer.
3 types of PAs
PA – Physical : Facilitates aggregation where acceptance devise and payment devise are present in close proximity.
PA – Cross Border: Who facilitates cross border aggregation.
PA – Online : Facilitates aggregation where acceptance devise and payment devise are NOT present in close proximity
Capital requirement:
Minimum Capital Required at the time of application : 15 crore
By the end of 3rd Financial Year from authorisation : 25 crore (Ongoing)
Other Points:
- A PA shall aggregate funds only for the merchant with whom it has a contractual relationship.
- A PA business shall not carry out marketplace business.
- A PA shall not place limits on transaction amount for a particular payment mode. The responsibility thereof shall lie with the issuing bank / non-bank entity.
- A PA shall not give an option for ATM PIN as a factor of authentication for card not-present transactions.
- All refunds shall be made to the original method of payment, unless specifically instructed by the payer to credit the refund to an alternate mode belonging to the same payer.
- A card transaction, where the foreign exchange settlement is facilitated by a card network and the aggregator receives the payment in local currency, is not part of PA – CB activity.
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