Navigating the New Financial Landscape: A Deep Dive into Recent RBI and SEBI Regulations
The Indian financial sector is in a constant state of evolution, shaped by the dynamic interplay of market forces, technological advancements, and regulatory oversight. The Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI), the two key regulatory bodies, play a pivotal role in ensuring the stability, integrity, and growth of the banking and securities markets, respectively. 2025 has been a particularly active year on the regulatory front, with both the RBI and SEBI introducing a slew of new rules and guidelines aimed at strengthening the financial system, protecting consumer interests, and fostering a more resilient and competitive market environment. This blog post provides a comprehensive overview of the most significant recent regulatory changes and their implications for banks, investors, and the broader economy.
RBI’s Blueprint for a Resilient Banking Sector
The RBI has been at the forefront of driving regulatory reforms in the banking sector, with a clear focus on building long-term resilience and aligning with global best practices. The central bank’s October 2025 policy review, in particular, unveiled a forward-looking blueprint for the future of Indian banking. Key highlights of the RBI’s recent regulatory initiatives include:
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Implementation of the Expected Credit Loss (ECL) Framework: In a major move to enhance the resilience of the banking sector, the RBI is set to roll out the ECL model for provisioning. This new framework requires banks to make provisions for potential future credit losses, rather than waiting for loans to turn sour. This proactive approach is expected to lead to more accurate risk assessment and a stronger capital base for banks, thereby reducing the likelihood of systemic shocks.
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Updated Basel III Capital Norms: The RBI has also announced updated Basel III capital norms, further strengthening the capital adequacy requirements for banks. These norms are in line with international standards and are designed to ensure that banks have sufficient capital to absorb unexpected losses and continue lending even during times of economic stress.
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Revised Credit Risk Rules and Acquisition Finance Norms: The RBI has proposed revised rules for acquisition finance, suggesting that banks can finance a maximum of 70% of a deal’s value. This is part of a broader effort to manage the risks associated with large corporate lending and to ensure that banks’ exposure to the capital markets remains within prudent limits. The proposed rules also stipulate that a bank’s total direct capital market and acquisition finance exposures should not exceed 20% of its tier 1 capital.
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Deposit Tokenisation and Real-Time Cheque Settlement: On the operational front, the RBI is piloting deposit tokenisation in the wholesale segment to digitize and secure deposits. Additionally, starting from October 4, 2025, Indian banks will begin clearing cheques within hours, a significant improvement from the previous 1-2 day settlement cycle.
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Foreign Exchange Management Act (FEMA) Compliance: The RBI has been emphasizing strict compliance with FEMA regulations, particularly with regard to overseas investments and external commercial borrowings (ECBs). This includes timely filing of the Annual Performance Report (APR) and adherence to the all-in-cost ceiling for foreign borrowings.
SEBI’s Measures to Safeguard the Stock Market
SEBI, the capital markets regulator, has also been proactive in introducing measures to enhance market integrity, protect retail investors, and curb excessive speculation. Recent regulatory changes from SEBI include:
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New Framework for Monitoring Intraday Positions: Following concerns about manipulative trading practices, SEBI has issued a new framework for monitoring intraday positions in equity derivatives, which took effect on October 1, 2025. This includes an intraday net position limit of 50 billion rupees per entity for index options and a total intraday exposure limit of 100 billion rupees for both long and short positions. To ensure compliance, stock exchanges will conduct multiple random checks throughout the trading day.
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Rules for F&O Contracts on New Indices: SEBI has also introduced new rules for futures and options (F&O) contracts on new indices, which will apply from November 3, 2025. These rules aim to ensure that new indices are well-diversified and not dominated by a few large-cap stocks. For instance, a new non-benchmark index must have at least 14 constituents, with no single stock having more than a 20% weightage.
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Debate on Weekly F&O Expiries: The discontinuation of weekly expiries for Bank Nifty and Bankex by the NSE and BSE, respectively, from November 2024, has sparked a debate in the market. While SEBI has indicated that weekly F&O remains for now, the industry has called for a greater focus on long-term investor education rather than a reduction in the number of expiries.
The Road Ahead: A More Transparent and Robust Financial System
The recent regulatory changes from the RBI and SEBI are a clear indication of their commitment to building a more transparent, robust, and resilient financial system in India. By proactively addressing emerging risks, aligning with global best practices, and leveraging technology to enhance regulatory oversight, the RBI and SEBI are laying the foundation for a financial sector that can support India’s ambitious economic growth agenda. For individuals and businesses, staying abreast of these regulatory developments is crucial for navigating the evolving financial landscape and making informed decisions about their investments and financial planning. As the Indian financial sector continues to mature, we can expect to see further regulatory reforms aimed at fostering innovation, protecting consumers, and ensuring the long-term stability of the economy.