RBI Proposes New Lending Guidelines to Related Parties; India Launches New Startup Policy
The Reserve Bank of India (RBI) has proposed new guidelines for lending to related parties. The draft Directions invite public comments until October 31, 2025. Meanwhile, the Government of India has launched a new startup policy, aiming to establish 1,000 companies and generate 10,000 jobs.
The RBI's draft framework introduces scale-based materiality thresholds for lenders when dealing with related parties. These thresholds vary based on the type of institution:
For urban co-operative banks (UCBs), thresholds differ by tier. Non-Banking Financial Companies (NBFCs) have thresholds based on their category. Scheduled commercial banks (SCBs), small finance banks (SFBs), regional rural banks (RRBs), and all India financial institutions (AIFIs) have thresholds based on asset size. Local area banks have a fixed limit of ₹1 crore.
Loans, including personal loans to directors, will be subject to these thresholds. If exceeded, approval from the lender's Board or Committee will be required.
In other news, the Ministry of Commerce and Industry has unveiled a new startup policy. Aiming to found 1,000 companies and create 10,000 jobs, this policy was launched on October 3, 2025.
The RBI's proposed guidelines aim to enhance transparency and control in lending to related parties. The new startup policy, on the other hand, seeks to boost entrepreneurship and employment. Both initiatives are expected to have significant impacts on their respective sectors.
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