RBI Tightens Related-Party Lending Rules, Sets New Disclosure & Thresholds

• RBI issues amended directions on related-party lending for banks, NBFCs, cooperative banks, and AIFIs, effective April 1, 2026, to enhance governance and transparency.
• New rules exclude equity investments but cover debt instruments; certain NBFCs and Core Investment Companies are exempted.
• Existing non-compliant transactions can continue until renewal/modification but cannot be renewed if non-compliant; stricter disclosure mandates for related-party contracts.
• Expanded definition of related parties aligns with Companies Act and IBC, including promoters, directors, KMP, and 10%+ shareholders.
• Introduces materiality thresholds for banks (asset-based) and NBFCs (layer-based); fully secured loans (LTV <= 100%) exempt from Board approval.

Why It Matters: RBI's new rules tighten related-party lending, boosting transparency and governance across financial entities.