RBI moots revised norms for related-party lending

THE RESERVE BANK of India on Friday proposed a framework with objectives of ensuring prudence while allowing operational flexibility to banks when they lend to related parties.

- PRESS TRUST OF INDIA

The RBI has issued draft ‘Reserve Bank of India (Lending to Related Parties) Directions, 2025’ with the aim to provide a harmonised, principle-based framework to be adopted by regulated entities (REs) for inter alia lending to related parties.

The draft introduces scale-based materiality thresholds beyond which lending to related parties of an RE would need approval of the board or its committee.

According to the proposal, lenders with an asset size of ₹10 lakh crore would require an approval from the board approval to sanction loans beyond ₹50 crore.