Circular No. DOR.CRE.REC.451, Dated: 30.03.2026
The Reserve Bank of India (RBI) has issued revised Credit Facilities Directions for Small Finance Banks (SFBs), introducing a structured framework for lending against securities and strengthening prudential oversight of such exposures.
1. Framework for Loans Against Eligible Securities
The Directions establish a clear framework for granting loans against eligible securities, prescribing:
- Loan-to-Value (LTV) ceilings to limit excessive leverage
- Prudential limits to manage concentration and systemic risks
This ensures that lending remains aligned with the value and quality of the underlying collateral.
2. Conditions for Lending to Various Borrower Categories
The revised Directions lay down specific conditions governing lending to:
- Individuals
- Non-financial entities
- Capital market intermediaries
These conditions are designed to ensure appropriate credit assessment, monitoring, and end-use compliance across different borrower segments.
3. Classification as Capital Market Exposure (CME)
The RBI has clarified that such exposures, including Irrevocable Payment Commitments (IPCs), shall be treated as Capital Market Exposures (CME).
This classification subjects them to stricter regulatory scrutiny due to their linkage with capital market activities.
4. Collateral, Margin, and Risk Management Requirements
All such exposures shall be governed by applicable:
- Collateral requirements
- Margin norms
- Risk management frameworks
These safeguards aim to mitigate market volatility risks and ensure financial stability.
5. Conclusion
The revised Directions enhance discipline in secured lending practices, align exposures with capital market risk norms, and reinforce the RBI’s focus on robust risk management and prudential regulation within small finance banks.
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