The Reserve Bank of India (RBI) on November 28, 2025, issued the Reserve Bank of India (Local Area Banks – Credit Risk Management) Directions, 2025.
The following has been stated: -
•The RBI (Local Area Banks – Credit Risk Management) Directions, 2025, aim to strengthen credit risk practices in LABs, covering board-approved policies, statutory restrictions on loans to directors, and valuation of assets.
•They mandate monitoring and management of unhedged foreign currency exposures (UFCE), ensuring proper risk assessment and capital provisioning.
•Banks must obtain Legal Entity Identifiers (LEIs) for large borrowers and maintain records of security interests in CERSAI.
•The Directions repeal previous guidelines but supplement existing laws, with RBI holding final interpretative authority.
•These Directions shall come into effect from November 28, 2025.
[Notification No.: RBI/DOR/2025-26/232 DOR.CRE.REC.151/07-02-003/2025-26]
