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Message from BHUSHAN BHATIA Advocate M: 9501130600Â
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Banking & RBI Updates: July – October 2026
Compiled by Bhushan Bhatia, Advocate  | Updated 31.10.2026
1. Policy Rates
- 05.08.2026: Repo rate held at 5.25%; stance neutral. FY27 GDP forecast 6.7%, CPI inflation forecast 5.0%.
- 07.10.2026: Repo rate raised by 25 bps to 5.50%, the first increase in this cycle.
- Stance changed from neutral to “calibrated tightening” (4–2 vote).
- Reasons: higher crude prices (West Asia tensions), weak monsoon, rising core inflation.
- Penal interest on CRR/SLR shortfall raised to 8.75% and 10.75%.
- Banks raised repo-linked lending rates by 25 bps from 08.10.2026; floating-rate EMIs rise at each loan’s reset date.
- Minimum daily CRR maintenance raised from 90% to 99%, from the fortnight beginning 16.10.2026.
2. Recovery / SARFAESI: Specified Non-Financial Assets (SNFA)
Framework issued in July 2026, effective 01.10.2026, for immovable property acquired by a lender while resolving a stressed loan. Applies to commercial banks, RRBs, co-operative banks, SFBs, LABs and NBFCs.
- Maximum holding period of 7 years; disposal by public auction.
- Pre-acquisition unrealised interest cannot be recognised as income.
- Such income already booked must be reversed by 30.09.2027.
3. Housekeeping and Compliance
- Circulars withdrawn: 31.07.2026: 64 Consolidated Directions issued and 628 old circulars repealed. 01.10.2026: 260 currency-management circulars withdrawn.
- Counterfeit notes: All cash-handling staff to be trained by 31.10.2026. New Master Direction on Note Sorting Machines (02.10.2026) mandates an authenticity check before fitness sorting.
- Sanctions screening: Screen accounts against the updated UAPA Schedule (July) and UNSC ISIL/Al-Qaida list (28.09.2026); report matches to FIU-IND and MHA.
- NRI deposits: Temporary relaxations on FCNR(B) and NRE deposits ended early on 31.08.2026 instead of 30.09.2026.
- Reporting: More returns moved to the CIMS portal. NRD-CSR (R012) due by the 10th of each month; natural-calamity relief reporting now half-yearly.
- Project finance: Independently viable project units may be financed separately.
4. Customer Protection (October 2026)
- Automatic compensation of â‚ą100 to â‚ą5,000 per day for specified service delays, including failed digital transactions.
- Failed UPI transfers to be auto-reversed within set timelines, failing which â‚ą100 per day is payable.
5. Capital and Risk Rules (mostly from 01.04.2027)
- New minimum capital requirements for market risk and revised operational-risk capital (Business Indicator approach).
- SA-CCR method for counterparty credit risk on derivatives; 2% risk weight on clearing members’ trade exposures to a QCCP.
- Leverage ratio: minimum 4% for D-SIBs and 3.5% for other banks.
- Valuation of REIT/InvIT units: quoted at market price, unquoted at declared NAV.
6. Forex and Markets
- Special Rupee Vostro Accounts: consolidated framework (17.07.2026), superseding five earlier circulars.
- October curbs on INR forex derivatives: no rebooking of cancelled contracts; no-underlying limit cut from USD 100 million to USD 5 million; 20% Foreign Exchange Risk Reserve on large hedges.
- Special USD window for three state-run oil marketing companies.
- FEMA export/import and Form A2 remittance rules revised; compounding of certain FEMA contraventions moved to RBI Regional Offices.
7. Other
- Paytm Payments Bank removed from the Second Schedule of the RBI Act (no longer a scheduled bank).
- Mutual funds, insurers and pension funds may obtain one-time approval for further acquisitions of up to 10% in a bank.
- Master Circular on credit facilities to Scheduled Castes and Scheduled Tribes.
- Account Aggregator interoperability and inclusion of bank deposits in consolidated account statements, targeted by 31.12.2026.
Compiled from secondary regulatory roundups; some dates differ across sources. Please verify against the original circulars on rbi.org.in before relying on them.
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Per RBI (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026 — issued 27 April 2026, effective 1 April 2027. The 90-day NPA test is retained; a separate ECL three-stage provisioning framework is layered on top.
| Facility | When classified as NPA |
|---|---|
| Term Loan | Interest and/or principal remains overdue for more than 90 days (also applies to bills purchased and discounted). |
| Cash Credit / Overdraft (CC/OD) | When the account is “out of order” — see criteria below. Also NPA if drawings are permitted for a continuous 90 days on a drawing power based on stock/receivable statements older than three months. |
| Agricultural Loans (specified facilities) | Crop-season basis: overdue for two crop seasons for short-duration crops (up to 12 months); overdue for one crop season for long-duration crops. Applies to crop loans, agri term loans, KCC, etc. |
| Other Agricultural Loans | Loans outside the specified agri list follow the ordinary 90-day delinquency norm. |
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“Out of order” test for CC/OD
A CC/OD account is “out of order” if any one of the following holds:
- the outstanding balance remains continuously in excess of the sanctioned limit / drawing power for 90 days; or
- there are no credits continuously for 90 days; or
- credits during the previous 90 days are not enough to cover the interest debited in that period.
Agricultural loans — key points
- Short-duration crop = up to 12 months from sowing to marketing; longer = long-duration crop.
- Crop-season norm covers specified facilities: loans to individual farmers (incl. SHG/JLG), agri term loans, pre/post-harvest loans, pledge against produce, KCC, corporate farmers/FPOs up to â‚ą4 crore, and PACS/FSS/LAMPS on-lending.
- On natural calamities: converted or rescheduled loans are treated as current dues and not classified NPA, subject to the RBI calamity-relief directions.
Common rules across all facilities
- Borrower-level classification: if any one exposure to a borrower is NPA, all exposures to that borrower are NPA.
- Sub-categories: Sub-standard (NPA up to 12 months), Doubtful (in sub-standard for 12 months), Loss (loss identified but not written off).
- Upgrade to standard only after the entire arrears of interest and principal across all facilities are repaid; borrower and co-borrower are jointly and severally liable.
- Date of NPA is the calendar date for which the day-end process is run.
Visit: Revised guidelines NPA applicable w.e.f. 01-04-2027 for summary of the guidelines
Reference: Chapter II, RBI/DOR/2026-27/398, DOR.STR.REC.No.6/21.06.011/2026-27. For general reference only — not legal advice.