Select RBI circulars update Feb 2026

BLOG 16/2026 DATED 2ND MARCH 2026

In this document we have covered the select RBI notifications and directives for the month of Feb 2026 and produced a gist of it. For detailed and full study, readers may refer to the link below the subject of each notification.

NOTIFICATIONS

1.

RBI/2025-26/206 FIDD.MSME & NFS.BC.No.12/06.02.31/2025-26 dated 9^th  Feb2026

Subject: Lending to Micro, Small & Medium Enterprises (MSME) Sector (Amendment) Directions, 2026

https://website.rbi.org.in/documents/d/rbi/amendmentdirections09022026

Gist: Effective date: 01.04.2026

• Banks are mandated not to accept Collateral Security upto the loan of Rs. 20 lakh to MSME units.
• However, accepting gold and silver as collateral, pledged voluntarily by borrowers for loans sanctioned by the banks upto the collateral free limit, will not be construed as a violation of the above mandate.

RBI/2025-26/211 DOR.CRE.REC.402/07-01-001/2025-26  dated 13^th Feb 2026

Subject: Reserve Bank of India (Commercial Banks – Credit Facilities) Amendment Directions, 2026

https://website.rbi.org.in/documents/d/rbi/1cbs_credit-facilities_amendment_directions_cme-20260213-rev-1

Gist: Effective date: 01.04.2026

• “Acquisition Finance” shall mean a financial facility or assistance provided to an eligible borrower entity for the purpose of acquiring equity shares or compulsorily convertible debentures (CCDs) in a target company or its holding company, resulting in the borrower entity acquiring control over the target company.
• Bridge Finance “shall mean financing a borrower for an interim period, not exceeding one year, for a legitimate business purpose where the borrower has a firm plan and capability to repay such loans by raising financial resources either through issuance of equity, debt or hybrid instruments or by divestiture/hive-off of a part of existing business/assets within the interim period.
• “Capital Market Intermediaries (CMIs)” shall mean regulated entities undertaking trade execution and market infrastructure services in capital markets, including broking, clearing, custody, market making or other incidental services. Provided that CMIs shall not include Standalone Primary Dealers and Qualified Central Counterparty (QCCPs).
• “Loan to Value (LTV)” shall mean the ratio of the outstanding loan amount to the value of the securities as on any given day.
• “Non-financial company” shall mean a non-banking institution which is a company but not included in the definition of a ‘financial institution’ or a ‘non-banking financial company’ as per the RBI Act, 1934. “Primary Security” shall mean security created on assets which have been financed out of the credit facility extended to the borrower.

LTV REQUIREMENTS:

Following is the LTV requirements for loans against eligible securities.

Eligible Securities	LTV ceilings
Government Securities	As per bank’s policy
Sovereign Gold Bond (SGB)	As for Gold and Silver collateral
Listed shares and convertible debentures	60%
Mutual funds (excluding debt fund), InvITs,REITs,Units of ETF	75%
Debt Mutual Fund	85%
Listed Debt securities AAA AA – BBB	85% 75%

Limit for Loan to individuals against eligible security   : Rs. 1 crore

Acquisition of securities in secondary market                : Rs.25 lakh

For subscription of shares under IPO/FPO/ESOP           : Rs. 25 lakh

3.

Notification No. FEMA 3(R)(5)/2026-RB dated 16^th Feb  2026

Subject: Foreign Exchange Management (Borrowing and Lending) (First Amendment) Regulations, 2026

i-notification_fema-3r-amendment-2026_english

Gist:

External Commercial Borrowing Framework (ECB)

ECB Can be raised from

(a) A person resident outside India;

 (b) A branch outside India of an entity whose lending business is regulated by the Reserve Bank

(c) A financial institution or a branch of a financial institution set up in IFSC.

Currency    INR or FCY

The following funds raised by an eligible borrower shall not be treated as ECB:

(a) Trade Credit with original maturity up to three years, raised in terms of these Regulations;

(b) Export advance received in terms of these Regulations and Foreign Exchange Management (Export of Goods & Services) Regulations, 2015;

(c) Investments received in terms of the Foreign Exchange Management (Debt Instruments) Regulations, 2019;

(d) Investments received through Convertible Notes issued in terms of the Foreign Exchange Management (Non Debt Instrument) Rules, 2019; and

(e) Investments received from Foreign Venture Capital Investor (FVCI) through debt instruments in terms of the Foreign Exchange Management (Non-Debt Instrument) Rules, 2019.

Borrowing Limit  : USD 1 bn (total outstanding borrowing not exceeding 300% of the net worth of the borrower.

Maturity : Min Average Maturity Period 3 years.

POLICY RATES (As per MPC dated 6^th Feb – rates unchanged)

REPO rate under Liquidity Adjustment Facility reduced to 5.25%

Standing Deposit Facility Rate (SDF)                                  5.00%

Marginal Standing Facility Rate (MSF)                               5.50%

Fixed Reverse Repo Rate                                                   3.35%

Bank Rate                                                                           5.50%

Penal interest for shortfall of CRR & SLR                           BR +3% = 8.50% 

                                                                                      BR + 5% = 10.50%

RESERVE RATES                     

CRR                                                                                    3%

SLR                                                                                     18%

Authors Note: For shortfall in CRR and SLR of 3 days or less a rate of Bank Rate + 3% is charged by RBI while for shortfall of above 3 days a of Bank Rate + 5% is charged.