The Reserve Bank of India has removed Section C of Chapter IV, covering limits for non-option derivative contracts, from its 2025 directions for small finance banks. The amendment took effect immediately on October 19, 2026.
BKK Bureau, New Delhi | 20 October 2026 | 5:27 PM IST
The Reserve Bank of India has amended its regulatory directions for small finance banks by deleting the section dealing with limits for non-option derivative contracts. The change was notified through the Reserve Bank of India (Small Finance Banks – Miscellaneous) Amendment Directions, 2026, issued on October 19, 2026.
The amendment specifically removes Section C of Chapter IV of the Reserve Bank of India (Small Finance Banks – Miscellaneous) Directions, 2025. The deleted section is identified in the notification as “Limits for Non-Option Derivative Contracts” and corresponds to paragraph 37 of the 2025 directions.
The RBI said the amendment was issued after a review. It exercised powers under Section 35A of the Banking Regulation Act, 1949, along with other enabling legal provisions. The notification states that the central bank was satisfied that issuing the directions was necessary and expedient in the public interest.
The amended instructions came into force immediately upon issuance. As a result, the change became effective on October 19, 2026, the date printed on the notification and recorded in the RBI’s official release.
The notification is identified by reference number RBI/2026-27/295 and document number DOR.MRG.REC.No.249/00-00-020/2026-27. It was signed by Sunil T S Nair, Chief General Manager, on behalf of the Reserve Bank of India.
The action is narrowly framed around the structure of the 2025 directions for small finance banks. It does not announce a new standalone framework in the notification; instead, it records the deletion of the specified section from Chapter IV. The change therefore concerns the regulatory text governing this category of banks and the treatment of the provision identified in paragraph 37.
Small finance banks are required to refer to the amended directions as applicable from the date of issuance. The RBI’s notification provides the operative instruction and establishes that Section C of Chapter IV no longer forms part of the cited 2025 directions following the amendment.
The amendment is part of the RBI’s continuing process of reviewing and updating regulatory directions issued for banks. In this case, the review has resulted in the removal of a defined provision concerning limits for non-option derivative contracts, with immediate effect and under the authority of the Banking Regulation Act.
Why it matters
The notification changes the applicable RBI directions for small finance banks by removing paragraph 37, including the section titled “Limits for Non-Option Derivative Contracts.” Because the amendment took effect immediately, the revised framework applies from October 19, 2026.
Source: Reserve Bank of India
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