Tuesday, 21 July 2026

SEBI (AIF) (Second Amendment) Regulations, 2026

SEBI notification dated 10 July 2026, titled SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2026.

1. Executive Summary

The amendment represents a procedural and regulatory rationalisation of the framework governing the launch of schemes by Alternative Investment Funds (AIFs). The principal thrust appears to be to:

Revise the scheme filing and fee framework under Regulation 12.
Extend the prescribed period for filing scheme-related documents from thirty days to ten working days, as reflected in the amendment.
Remove the scheme fee requirement for the first scheme launched by an AIF.
Replace the earlier reference to fees under the Second Schedule with documents specified by SEBI, indicating a shift towards a more flexible, document-based filing framework.
Provide a formal mechanism for SEBI to communicate comments on documents filed with it.
Place an explicit responsibility on the merchant banker or Manager to ensure compliance with SEBI's comments.
Make specific modifications for Large Value Funds for Accredited Investors (LVF) and Accredited Investor-only Funds.
Remove certain requirements relating to merchant banker involvement under Regulation 19D and omit Regulation 19D(5).

Overall, the amendment appears intended to streamline AIF scheme launches, reduce procedural friction and costs, and create a more differentiated regulatory framework for sophisticated investor structures, particularly Accredited Investor-focused funds.

2. Key Amendments at a Glance

Area	Position after amendment	Likely significance
Scheme filing requirement	Regulation 12(1) wording revised to refer to filing along with applicable fees as specified in the Second Schedule	Clarifies the filing/fee framework
First scheme of an AIF	Scheme fee not payable	Reduces initial launch cost
Filing timeline	"Thirty days" replaced with "ten working days"	Potentially accelerates scheme launch process
Filing documents	Reference to Second Schedule fees replaced with documents specified by SEBI	Greater flexibility for SEBI-prescribed documentation
SEBI comments	Board may communicate comments to merchant banker or Manager	Formalises regulatory feedback mechanism
Compliance with comments	Merchant banker/Manager must ensure comments are complied with	Creates explicit accountability
LVF	Certain provisions modified/replaced by reference to Accredited Investor-only Fund	Tailors framework to sophisticated-investor structures
Merchant banker requirement	Certain references removed from Regulation 19D	Reduces merchant banker-related procedural requirements

3. Detailed Analysis

A. Exemption from Scheme Fee for the First Scheme

One of the most significant amendments is the insertion of a proviso after Regulation 12(1), providing that payment of scheme fees will not apply in the case of the launch of the first scheme by an Alternative Investment Fund.

Regulatory significance

This is a meaningful cost-relief measure for a newly registered or newly operational AIF launching its first scheme. The first scheme is often the stage at which an AIF Manager incurs substantial establishment and fundraising expenses. Exemption from the scheme fee may therefore:

Reduce the initial cost of commencing operations;
Facilitate quicker operationalisation of newly registered AIFs;
Encourage new fund managers to enter the AIF ecosystem;
Reduce the regulatory cost associated with the initial scheme launch.

Practical implication

AIF Managers should distinguish between:

The first scheme launched by the AIF, for which the fee exemption applies; and
Subsequent schemes, where the applicable scheme fee requirements would continue to apply, subject to the prevailing regulatory framework.

The amendment therefore appears to provide a one-time benefit rather than a blanket exemption from scheme fees.

B. Change in the Timeline from "Thirty Days" to "Ten Working Days"

The amendment substitutes the words "thirty" with "ten working" in Regulation 12(2).

This is potentially one of the most consequential operational changes.

Impact

The change indicates a move towards a shorter, business-day-based regulatory process. For AIF Managers, this may have the effect of:

Accelerating scheme launch timelines;
Reducing uncertainty around regulatory processing;
Improving fundraising and deployment planning;
Enabling fund managers to respond more rapidly to market opportunities.

However, the practical effect will depend on the precise point from which the ten-working-day period is calculated and whether the documents submitted are complete and compliant.

Important compliance consideration

The reduction in the prescribed period should not be interpreted as an automatic approval mechanism. AIF Managers should continue to ensure that all prescribed documents are complete and accurate before filing.

In practice, the compliance team should maintain:

A scheme launch checklist;
A document submission tracker;
Evidence of the date of filing;
Confirmation of completeness of documents;
A mechanism for tracking SEBI comments and their resolution.

C. Introduction of a Formal SEBI Comment Mechanism

The substituted Regulation 12(3) provides that:

After the specified documents are filed with the Board, the Board may communicate its comments, if any, to the merchant banker or the Manager.

This creates a clearer regulatory interface between SEBI and the AIF ecosystem.

Significance

The amendment recognises that SEBI's review may result in comments requiring clarification, modification or rectification.

The key change is that the communication of regulatory comments is now expressly contemplated within the regulatory framework.

This should help establish a more structured process for:

Filing → SEBI review → Comments → Compliance → Scheme launch

4. Increased Accountability of Merchant Banker / Manager

A new Regulation 12(3A) provides that:

"The merchant banker or the Manager shall ensure that the comments provided under sub-regulation (3) are complied with."

This is an important governance enhancement.

Earlier position

The regulatory framework appears to have contemplated SEBI review and comments but did not expressly place the same degree of responsibility on the merchant banker or Manager to ensure compliance.

Position after amendment

The responsibility is now expressly imposed on:

The merchant banker, where applicable; or
The Manager.

This creates a clear accountability framework.

Practical implications for AIF Managers

The Manager should establish a formal process for:

Receiving SEBI comments;
Reviewing each comment;
Assigning responsibility for action;
Making necessary changes;
Obtaining internal approval;
Confirming compliance;
Maintaining documentary evidence of compliance.

The Manager should also ensure that fund marketing documents, placement memoranda and other scheme documents are consistent with the changes made in response to SEBI comments.

5. Special Treatment for Accredited Investor-Only Funds

The amendment makes a specific modification in the proviso after Regulation 12(3), replacing references to "Large Value Fund for Accredited Investors" with "Accredited Investors only fund" in the relevant provision.

This appears to reflect a broader regulatory movement towards differentiating the compliance framework based on the sophistication and financial capacity of investors.

Regulatory rationale

Accredited Investors are generally regarded as investors capable of understanding and assuming higher levels of investment risk.

A framework specifically designed for Accredited Investor-only funds can therefore permit:

Greater flexibility;
Reduced procedural requirements;
Faster fund establishment;
Lower regulatory friction.

The amendment should therefore be viewed as part of the continuing trend towards risk-based and investor-segmented regulation.

6. Removal of Certain Merchant Banker Requirements under Regulation 19D

The amendment provides that in Regulation 19D(4), the words "through a merchant banker" shall be omitted.

Further, Regulation 19D(5) is omitted.

Significance

This appears to reduce the mandatory role of merchant bankers in the relevant process under Regulation 19D.

The broader implication may be a move towards simplification of compliance requirements for certain AIF structures, particularly those involving sophisticated investors.

However, the precise impact should be assessed by reference to the underlying provisions of Regulation 19D and the specific category of AIF to which the provision applies.

For AIF Managers, the key point is that the amendment may reduce dependence on merchant bankers for certain regulatory processes, potentially resulting in:

Lower transaction costs;
Faster execution;
Simplification of procedural requirements;
Greater direct responsibility on the AIF Manager.

7. Governance and Compliance Implications

The amendment appears to shift the regulatory framework towards greater Manager accountability.

While merchant bankers continue to have a role where specifically prescribed, the Manager is increasingly becoming the central point of responsibility for ensuring that:

Scheme documentation is complete;
Regulatory comments are addressed;
Necessary amendments are incorporated;
Scheme documents remain compliant;
The fund launch process is properly documented.

This makes it advisable for AIF Managers to strengthen their internal regulatory governance framework.

8. Recommended Action Points for AIF Managers

In view of the amendment, AIF Managers should consider the following actions:

Immediate Actions

1. Review existing scheme launch SOPs

The internal scheme launch process should be updated to reflect the revised Regulation 12 framework.

2. Update regulatory filing checklists

The compliance checklist should specifically capture:

Applicable scheme fees;
Whether the scheme is the first scheme of the AIF;
Documents prescribed by SEBI;
Filing date;
Ten-working-day timeline;
SEBI comments;
Date of receipt of comments;
Date of compliance.

3. Review first-scheme fee exemption

New AIFs preparing to launch their first scheme should assess whether they qualify for the fee exemption.

4. Establish a SEBI comment tracker

Every SEBI comment should be recorded, assigned, resolved and formally closed.

5. Review agreements with merchant bankers

Existing arrangements should be examined to determine whether any merchant banker functions have become unnecessary following the amendment.

6. Review Accredited Investor fund structures

Managers operating or proposing to operate funds exclusively for Accredited Investors should examine whether the amended provisions provide additional regulatory flexibility.

9. Overall Assessment

The SEBI (Alternative Investment Funds) (Second Amendment) Regulations, 2026 can broadly be viewed as a facilitative and process-oriented amendment aimed at making the AIF regulatory framework more efficient.

The most notable features are:

Fee exemption for the first scheme of an AIF;
Reduction of the prescribed period from thirty days to ten working days;
Formalisation of SEBI's comment process;
Express responsibility of the merchant banker/Manager to ensure compliance with SEBI comments;
Regulatory differentiation for Accredited Investor-only funds; and
Reduction of certain merchant banker-related requirements.

From a compliance perspective, the amendment is likely to be positive for AIF Managers, particularly new fund managers and managers catering to sophisticated investors. At the same time, the increased emphasis on the Manager's responsibility for responding to SEBI comments means that internal compliance controls and documentation will become even more important.

Key takeaway

The amendment appears to pursue a dual objective: facilitating faster and more cost-efficient AIF scheme launches while simultaneously making the AIF Manager more directly accountable for regulatory compliance and the resolution of SEBI's comments.

For professional advisory purposes, I would recommend treating this notification as a regulatory update requiring an impact assessment rather than merely a procedural amendment, particularly for new AIFs, first-time scheme launches, Accredited Investor-only funds, and existing AIFs that use merchant bankers in processes covered by Regulation 19D.

Monday, 20 July 2026

RBI (Small Finance Banks – Governance) Amendment Directions, 2026

1. Executive Summary

The RBI's amendment represents a significant governance rationalisation exercise for Small Finance Banks. It seeks to address the longstanding concern that Boards may spend disproportionate time reviewing routine operational and regulatory matters at the expense of their core responsibilities relating to strategy, risk management, financial soundness, governance and oversight.

The amendment introduces a structured framework under which matters are categorised into three broad groups:

Policies requiring Board approval, with limited scope for delegation;
Non-policy matters that must be placed before the Board for approval, review or information; and
Matters that may be delegated by the Board to appropriate Board or Management Committees.

The framework does not dilute the ultimate responsibility of the Board. Instead, it seeks to distinguish between matters that require direct Board oversight and those that can appropriately be dealt with by specialised committees, subject to suitable reporting and oversight mechanisms.

2. Core Governance Change

A key feature of the amendment is the insertion of paragraphs 33A and 33B, which establish the new architecture for Board agenda management.

The Board is required to determine matters based on the principle that it retains ultimate responsibility for:

Business strategy;
Financial soundness;
Key personnel decisions;
Internal organisation;
Governance structures and practices;
Risk management; and
Compliance obligations.

At the same time, the Board is expressly permitted to delegate appropriate matters to Board Committees or Management Committees, together with necessary reporting requirements.

This is an important distinction: delegation of decision-making does not amount to abdication of accountability.

The amendment also places greater responsibility on the Chairperson of the Board to determine the agenda and requires the Board to ensure that management provides adequate and timely information. The Board is further expected to periodically review not only the matters placed before it but also the matters delegated to committees.

3. Rationalisation of Board-Approved Policies

Appendix I provides a consolidated framework of policies that are required to be placed before the Board.

The important policy areas include:

Credit Policy;
Investment Policy;
Risk Management Policy;
Outsourcing Policy;
Digital Banking Policy;
IT and Information Security Policy;
Responsible Business/Lending Conduct Policy;
Policy relating to Banking Outlets;
Deposits and Liability Products Policy;
Auditor Appointment and Remuneration Policy;
Fit and Proper Policy for Major Shareholders;
Compensation Policy;
CSR Policy;
Compliance Policy;
Protected Disclosure Policy;
Disclosure Policy;
Code of Conduct/Ethics Policy;
KYC Policy; and
Interest Rate Policy.

The overall approach is that core prudential, risk, governance, compliance and conduct policies generally remain within the Board's direct ambit. Delegation is permitted only in specifically identified areas.

This is particularly significant because it prevents the rationalisation exercise from becoming a mechanism for excessive delegation of fundamental governance responsibilities.

4. Greater Role for Board Committees

One of the most consequential changes is the explicit recognition of the role of Board Committees in dealing with matters that need not necessarily consume the full Board's time.

For example, certain matters relating to:

Risk-Based Internal Audit;
Annual Audit Plan;
Lending to related parties;
Annual Banking Outlet Expansion Plan;
Correspondent banking relationships;
Outsourcing;
Investment portfolio;
Cybersecurity;
Customer service;
Liquidity and ALM;
Green deposits; and
Certain operational and risk matters

may be delegated to appropriate committees, including the Audit Committee, Risk Management Committee, Customer Service Committee, Asset Liability Management Committee or other committees specifically authorised by the Board.

The amendment therefore promotes a committee-centric governance model, where technically specialised matters are dealt with by the committee best equipped to handle them, while the Board retains overall supervision.

5. Matters That Cannot Be Delegated

The framework also identifies several matters that continue to require direct Board involvement.

These include, among others:

ICAAP structural design and contents;
Capital Plan;
Acquisition of shares or voting rights in specified circumstances;
Issuance of regulatory capital;
Reclassification of investment portfolio categories;
Declaration of dividend;
Voluntary amalgamation;
Appointment/reappointment of MD & CEO;
Remuneration of Whole-Time Directors;
Appointment of CRO;
Appointment of CCO.

This demonstrates that RBI continues to regard capital adequacy, ownership structure, senior management appointments and fundamental corporate actions as matters requiring direct Board oversight.

6. Risk Management Implications

From a risk governance perspective, the amendment is particularly important.

The Board's oversight responsibility expressly extends to:

The risk management system;
Risk management policy and strategy;
Exposures to related entities;
Corporate governance standards;
Committee composition and functioning; and
Compliance with governance and review requirements.

Thus, although routine risk matters may be delegated, the risk appetite, risk architecture and overall risk governance framework remain fundamentally Board responsibilities.

The framework also requires the Board to receive sufficient information from management and to determine the nature and frequency of information required. This effectively shifts the focus from merely receiving voluminous Board papers to receiving decision-useful management information.

7. Impact on Board Meetings

The amendment is likely to have a meaningful impact on the structure and conduct of Board meetings.

Boards should move away from an agenda dominated by repetitive statutory and regulatory reporting and towards a more strategic agenda covering:

Business performance;
Capital and liquidity;
Emerging risks;
Stress scenarios;
Cyber and operational resilience;
Regulatory developments;
Technology risks;
Customer and conduct risks;
Governance effectiveness; and
Long-term strategy.

The Chairperson's role becomes particularly important, as the amendment places primary responsibility for setting the Board agenda with the Chairperson.

8. Key Compliance and Governance Actions for SFBs

In my view, every Small Finance Bank should undertake the following exercise before 1 October 2026:

A. Conduct a Board Agenda Mapping Exercise

Prepare a comprehensive inventory of all matters currently placed before the Board and classify each as:

Mandatory Board approval;
Mandatory Board review;
Mandatory Board information/reporting;
Delegable to Board Committee; or
Delegable to Management Committee.

B. Review the Delegation of Authority Matrix

The existing delegation matrix should be compared with Appendix II-B. Appropriate amendments should be made to clearly identify:

The delegated authority;
The committee/person to whom authority is delegated;
Monetary and other thresholds;
Reporting requirements;
Frequency of reporting; and
Escalation triggers.

C. Review Board Committee Charters

The terms of reference of the:

Audit Committee;
Risk Management Committee;
Customer Service Committee;
ALCO;
Committee on Lending to Related Parties; and
Other relevant committees

should be reviewed and aligned with the new delegation framework.

D. Review Board and Committee Calendars

The annual Board calendar should be redesigned to ensure that matters continue to reach the Board at the frequency mandated by RBI, while matters eligible for delegation are appropriately routed to committees.

E. Update Board Policies

The Bank should review its policy architecture to ensure that all policies listed in Appendix I are appropriately consolidated or regrouped.

The RBI expressly permits banks to regroup policies, provided all specified aspects are adequately covered in one or more policies.

F. Strengthen Management Information Systems

The Board must receive adequate information to discharge its responsibilities effectively. Consequently, Board reporting formats should be reviewed to ensure that information is:

Relevant;
Concise;
Timely;
Risk-focused;
Exception-oriented; and
Capable of supporting informed decision-making.

9. Key Governance Risk

The principal risk arising from the amendment is over-delegation.

There is a possibility that, in an attempt to reduce Board workload, matters of strategic importance may be pushed down to committees without adequate Board-level visibility.

The RBI framework itself mitigates this risk by requiring the Board to clearly articulate matters reserved for its approval or information and to periodically review both the matters placed before it and those delegated to committees.

Therefore, SFBs should adopt the principle:

"Delegate execution and detailed review, but retain strategic oversight and accountability."

10. Overall Assessment

The amendment should be viewed as a governance enhancement rather than merely a reduction in Board workload.

Its underlying philosophy is that an effective Board should not function as a clearing house for every regulatory or operational matter. Instead, it should focus its collective expertise on matters that genuinely require Board-level judgement.

The success of the framework, however, will depend heavily on how individual SFBs implement it. Merely transferring matters from the Board agenda to committee agendas will not achieve the intended objective. The real benefit will arise only if the Bank simultaneously strengthens:

Committee effectiveness;
Delegation frameworks;
Management reporting;
Risk dashboards;
Escalation mechanisms;
Board information systems; and
Periodic review of delegated authorities.

Conclusion

The RBI's Small Finance Banks – Governance Amendment Directions, 2026 mark a substantive shift towards a more principles-based, risk-focused and strategically oriented Board governance model. Effective from 1 October 2026, the amendment provides SFBs with greater flexibility to allocate regulatory and operational responsibilities between the Board and its committees while preserving the Board's ultimate accountability for strategy, financial soundness, risk management, governance and compliance.

For Company Secretaries and governance professionals, the immediate priority should be to undertake a comprehensive Board and Committee Agenda Rationalisation Exercise, followed by a review of Board policies, committee terms of reference, delegation matrices, annual calendars and reporting protocols. This would ensure that the Bank is fully prepared for implementation from 1 October 2026 and, more importantly, that the revised framework results in better governance rather than simply fewer items on the Board agenda.

Sunday, 19 July 2026

SEBI (LODR) (Second Amendment) Regulations, 2026

Notification No.: SEBI/LAD-NRO/GN/2026/312

Date: 10 July 2026
Published in: Extraordinary Gazette of India

Executive Summary

SEBI has issued the Listing Obligations and Disclosure Requirements (Second Amendment) Regulations, 2026, introducing a significant procedural change relating to the transfer and transmission of securities.

The amendment removes detailed procedural prescriptions from the LODR Regulations and instead empowers SEBI to prescribe such requirements through directions, circulars or other instructions issued from time to time. This provides the regulator with greater flexibility to modify operational procedures without undertaking formal amendments to the Regulations on every occasion.

The amendments came into force on 10 July 2026, the date of publication in the Official Gazette.

Key Amendments

1. Amendment to Regulation 40(7)

Earlier Position

Regulation 40(7) required listed entities to comply with procedural requirements prescribed under the LODR Regulations, including those contained in Schedule VII.

Amended Provision

Regulation 40(7) has been substituted to provide that:

The listed entity shall comply with all procedural requirements relating to transfer and transmission of securities as specified by SEBI from time to time.

Practical Effect

Instead of relying solely upon provisions contained in the Regulations, listed entities must now monitor:

SEBI circulars;
Master Circulars;
Operational guidelines;
Future directions issued by SEBI.

This significantly increases the importance of keeping track of regulatory updates issued outside the Regulations themselves.

2. Amendment to Regulation 61(4)

The reference to compliance with requirements specified in Schedule VII has been substituted.

The revised regulation now requires compliance with requirements specified by the Board from time to time.

Significance

This ensures consistency with the revised Regulation 40(7) and provides SEBI flexibility to revise operational procedures without amending the principal Regulations.

3. Amendment to Schedule VII

Clause C of Schedule VII has been omitted.

Since procedural requirements are now intended to be prescribed by SEBI separately, retaining Clause C within the Schedule became unnecessary.

Regulatory Intent

The amendment reflects SEBI's broader regulatory approach of:

reducing rigid procedural provisions in subordinate legislation;
enabling quicker regulatory responses;
allowing operational requirements to evolve through circulars instead of formal regulatory amendments;
ensuring uniformity across depositories, RTAs and listed entities.

Impact on Listed Companies

Listed entities should now:

periodically review SEBI circulars governing transfer and transmission of securities;
ensure that their Registrar & Share Transfer Agent (RTA) implements revised procedures promptly;
update internal SOPs and compliance manuals;
avoid relying exclusively on the text of the LODR Regulations for procedural compliance.

Impact on Company Secretaries

For Company Secretaries, this amendment means:

greater responsibility to continuously monitor SEBI circulars;
periodic review of transfer and transmission procedures;
updating Board and stakeholder compliance checklists;
ensuring secretarial and investor service teams are aligned with the latest SEBI directions.

Practical Implications

The amendment does not substantially alter the substantive rights of shareholders regarding transfer or transmission of securities. Instead, it changes where the procedural requirements are housed:

Earlier: Detailed procedures were embedded within the LODR Regulations (particularly Schedule VII).
Now: Procedures will be prescribed by SEBI through regulatory directions and circulars, allowing greater flexibility and quicker updates.

Conclusion

The SEBI (LODR) (Second Amendment) Regulations, 2026 represent a procedural rationalisation rather than a substantive policy shift. By replacing references to Schedule VII with the broader phrase "as specified by the Board from time to time", SEBI has created a more agile regulatory framework for transfer and transmission of securities.

For listed entities, the amendment underscores the need for continuous monitoring of SEBI's operational circulars, as regulatory compliance will increasingly depend on directions issued by the Board rather than solely on the text of the LODR Regulations. This approach is expected to facilitate faster regulatory updates while reducing the need for frequent amendments to the principal Regulations.

Saturday, 18 July 2026

RBI (Commercial Banks – Governance) Amendment Directions, 2026

Notification No. RBI/2026-27/177 dated 14 July 2026

Executive Summary

The Reserve Bank of India has issued the RBI (Commercial Banks – Governance) Amendment Directions, 2026 with the objective of streamlining Board governance and reducing the compliance burden on bank Boards. Instead of requiring numerous individual circulars to be placed before the Board, the RBI has consolidated these requirements into a structured framework consisting of:

Policies requiring Board approval;
Matters requiring Board approval, review or information; and
Matters that may be delegated to Board Committees.

The amendments become effective from 1 October 2026.

Background

The RBI observed that Boards were spending excessive time dealing with routine regulatory approvals arising from numerous circulars.

Accordingly, the amended framework seeks to:

improve Board effectiveness;
enable greater focus on strategy, risk and governance;
eliminate duplication across RBI circulars;
clearly distinguish Board responsibilities from management responsibilities; and
promote delegation to specialised Board Committees wherever appropriate.

Major Regulatory Changes

1. New Board Oversight Responsibilities

A new paragraph (11A) has been inserted requiring Boards to exercise oversight over:

Risk management systems and strategy;
Exposure to subsidiaries and related entities;
Compliance with corporate governance standards including committee composition, functioning and periodic reviews.

Practical implication

The emphasis shifts from merely approving policies to continuously supervising governance quality and enterprise-wide risk.

2. Deletion of Existing Board Requirements

Several earlier provisions (Paragraphs 14, 16, 17, 18 and 19) have been deleted and replaced by an entirely new governance architecture.

This eliminates scattered approval requirements under multiple RBI directions.

3. Introduction of a New Governance Framework

The Directions now introduce a dedicated section titled:

"Matters to be placed before the Board."

This framework classifies matters into:

A. Policies requiring Board approval

(Appendix I)

B. Matters requiring Board approval/review/information

(Appendix IIA)

C. Matters which may be delegated

(Appendix IIB)

The Board is also required to periodically review the delegation framework.

Key Governance Principles Introduced

The RBI has laid down important governance principles.

Board retains ultimate responsibility

Even where authority is delegated, responsibility remains with the Board.

Focus on Strategy

Boards should devote greater time to

strategic direction,
financial soundness,
governance,
compliance,
enterprise risk.

Better Board Agendas

The Chairperson now carries primary responsibility for:

agenda setting,
prioritisation,
ensuring quality discussions.

Information Flow

Management must provide timely and adequate information.

Boards may obtain independent external reports wherever required.

Periodic Review

Boards must regularly review

delegated powers,
agenda quality,
adequacy of information,
timeliness of circulation,
Board effectiveness.

Policies requiring Board Approval (Appendix I)

The Directions consolidate almost every major governance policy.

Important examples include:

Credit Policy
Investment Policy
Enterprise Risk Management Policy
Outsourcing Policy
Digital Banking Policy
IT Policy
Responsible Business Conduct Policy
Branch Authorisation Policy
Deposit Policy
Auditor Appointment Policy
Compensation Policy
CSR Policy
Compliance Policy
Whistle Blower Policy
Disclosure Policy
KYC Policy
Interest Rate Policy

For every policy RBI also specifies whether review or approval may be delegated to a committee.

Matters requiring Board Approval

Appendix IIA identifies significant decisions that must continue to come before the Board.

Illustrative matters include:

ICAAP
Capital Plan
Capital Instruments
Dividend declaration
Voluntary amalgamation
Appointment of MD & CEO
Appointment of CRO
Appointment of CCO
Appointment of Whole-Time Directors
Group structure decisions

These remain core Board responsibilities.

Matters for Board Review

The Board is required to periodically review matters such as:

subsidiaries;
concentration risk;
ICAAP;
compensation systems;
exposure management;
investment activities.

Matters for Information

Boards are also to receive regular reporting on:

compromise settlements;
customer service;
donations;
operational resilience;
loans to related parties;
stress testing;
information security;
major shareholder compliance.

Matters which may be Delegated

One of the most significant reforms is the detailed delegation framework.

Examples include delegation to:

Audit Committee
Risk Management Committee
Asset Liability Committee
Committee on Lending to Related Parties
Customer Service Committee
Management Committee
Other Board Committees

Delegable matters include:

Annual Audit Plan
LFAR review
Cyber security review
Branch expansion
Business Correspondent Model
Investment portfolio review
Base Rate review
MCLR review
Outsourcing oversight
Operational risk review
Fraud monitoring
Liquidity reporting

Applicability

The amendments apply to:

Public Sector Banks; and
Private Sector Banks through corresponding amendments, making the Board responsibilities and governance practices equally applicable, with necessary modifications (mutatis mutandis).

Practical Impact on Banks

The amendments are expected to:

reduce repetitive Board agenda items;
strengthen committee-based governance;
improve Board efficiency;
enable Boards to focus on strategic oversight rather than operational approvals;
enhance accountability by clearly defining matters reserved for the Board and those suitable for delegation;
simplify compliance by consolidating requirements dispersed across numerous RBI circulars and directions.

Action Points for Banks

Before 1 October 2026, banks should:

Review the Board Charter and governance framework.
Update the Schedule of Matters Reserved for the Board.
Amend the Charters of all Board Committees.
Revise delegation matrices in line with Appendices I, IIA and IIB.
Rationalise Board agenda templates.
Review all Board-approved policies against the new framework.
Train Directors and senior management on the revised governance architecture.
Align internal governance manuals, secretarial practices and Board calendars with the amended Directions.

Concluding Remarks

These Amendment Directions represent a significant shift in the RBI's approach to bank governance. Rather than increasing regulatory obligations, the RBI has sought to improve governance quality by simplifying procedural requirements and reinforcing the Board's strategic role. The framework encourages Boards to concentrate on long-term strategy, risk oversight, governance effectiveness and organisational resilience, while permitting routine operational matters to be handled by specialised Board Committees under an appropriate delegation framework. This marks a transition towards a more principles-based, efficient and internationally aligned governance model for commercial banks.

Friday, 17 July 2026

Prohibition on Import of Goods Produced Using Forced Labour

Executive Summary

The Directorate General of Foreign Trade (DGFT), through Notification No. 23/2026-27 dated 13 July 2026, has amended the Foreign Trade Policy (FTP), 2023 by inserting:

Paragraph 2.20B – Prohibition on import of goods produced or manufactured using forced labour.
Paragraph 11.64 – Definition of "Forced Labour" based on the ILO Forced Labour Convention, 1930 (No. 29).

The notification becomes effective after the expiry of 30 days from its publication in the Official Gazette, allowing importers a transition period to review their supply chains.

Background

Globally, several jurisdictions—including the United States, European Union and Canada—have strengthened restrictions on products linked to forced labour. India has now incorporated a similar framework into its Foreign Trade Policy.

Rather than imposing an immediate blanket prohibition on all imports, the notification empowers the Central Government to prohibit specific goods after appropriate enquiry and notification.

Key Amendments

1. Insertion of Para 2.20B

The new paragraph provides that:

Imports of goods produced or manufactured, wholly or partly, using forced labour are prohibited.
The Central Government may notify specific goods whose imports are prohibited.
DGFT may conduct enquiries into allegations of forced labour.
The detailed enquiry mechanism will be prescribed separately in the Handbook of Procedures (HBP).

This creates a statutory mechanism rather than a case-by-case administrative restriction.

2. Definition of Forced Labour

A new Paragraph 11.64 defines forced labour by adopting the internationally accepted definition contained in ILO Convention No. 29:

Work or service extracted from any person under the menace of penalty and for which the person has not voluntarily offered himself.

Using the ILO definition avoids ambiguity and aligns India's trade policy with internationally recognised labour standards.

Practical Implications

For Importers

This notification significantly elevates supply-chain compliance.

Importers should begin:

mapping overseas suppliers;
obtaining declarations regarding labour practices;
incorporating contractual clauses prohibiting forced labour;
maintaining documentary evidence of supplier compliance;
conducting enhanced due diligence for high-risk jurisdictions and industries.

Although the notification does not require immediate certifications, businesses should prepare for future enquiries by DGFT.

For Exporters

Indian exporters may indirectly benefit.

Many international buyers increasingly require suppliers to demonstrate ethical sourcing. India's adoption of similar standards may strengthen the credibility of Indian exports in global markets.

For Multinational Companies

Companies with international procurement operations should integrate this requirement into their:

ESG programmes;
supplier onboarding;
procurement policies;
vendor audits;
sustainability reporting.

Compliance Perspective

From a compliance standpoint, this notification shifts responsibility beyond customs documentation.

Organisations should consider:

reviewing procurement policies;
updating vendor due diligence questionnaires;
introducing supplier representations and warranties regarding labour standards;
strengthening internal compliance monitoring;
maintaining audit trails demonstrating reasonable due diligence.

Although the notification presently empowers the Government to prohibit specified imports, companies should not wait until goods are notified.

Legal Significance

The amendment is noteworthy because it:

aligns India's Foreign Trade Policy with international labour conventions;
provides statutory authority for import restrictions;
introduces an objective legal definition of forced labour;
enables DGFT to investigate allegations before imposing restrictions;
lays the foundation for future enforcement through the Handbook of Procedures.

Unlike some foreign regimes that presume certain goods are produced through forced labour, India's framework contemplates an enquiry before prohibiting imports.

Business Impact

Industries likely to face increased scrutiny include:

textiles and garments;
footwear;
agriculture and food processing;
seafood;
mining and minerals;
electronics and solar equipment;
leather products.

Importers sourcing from regions with documented labour concerns may experience enhanced compliance obligations.

Key Takeaways

DGFT has inserted Para 2.20B into the FTP, 2023, prohibiting imports of goods produced wholly or partly using forced labour.
A new Para 11.64 adopts the internationally recognised ILO definition of forced labour.
The Central Government may prohibit imports of specified goods through future notifications after conducting enquiries.
The notification becomes effective 30 days after publication in the Official Gazette.
Importers should use this transition period to strengthen supplier due diligence, contractual safeguards, and ESG compliance frameworks.

Overall Assessment

This notification represents a significant evolution in India's trade policy. While its immediate operational impact is limited by the need for subsequent notifications identifying prohibited goods and prescribing enquiry procedures, it establishes a clear legal basis for ethical trade enforcement. For compliance professionals, company secretaries, and international trade advisors, the focus should now shift from reactive customs compliance to proactive supply-chain governance and responsible sourcing practices.

Thursday, 16 July 2026

SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2026

Document Title: Securities and Exchange Board of India (Foreign Venture Capital Investors) (Amendment) Regulations, 2026

Notification No.: SEBI/LAD-NRO/GN/309

Date of Notification: 3 July 2026

Effective Date: 180 days from the date of publication in the Official Gazette.

Executive Summary

The Securities and Exchange Board of India (SEBI) has issued the SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2026 to rationalize the fee structure applicable to Foreign Venture Capital Investors (FVCIs). The amendment primarily replaces the historical US Dollar-denominated fees with Indian Rupee-equivalent fees, streamlines the timing of fee payment, and places explicit responsibilities upon Designated Depository Participants (DDPs) for remitting such fees to SEBI within prescribed timelines.

The amendment is administrative rather than substantive. It does not alter the eligibility, registration requirements, investment conditions, or regulatory obligations applicable to FVCIs.

Background

The principal regulations are:

SEBI (Foreign Venture Capital Investors) Regulations, 2000.

These regulations govern registration and supervision of Foreign Venture Capital Investors investing in Indian venture capital undertakings.

The present notification amends only the Second Schedule, which prescribes the fee structure, together with a minor amendment in Regulation 3(3).

Key Amendments

1. Removal of Reference to Fee Schedule in Regulation 3(3)

The amendment omits the words:

"by the fee specified in the Second Schedule and"

from Regulation 3(3).

Significance

This is a drafting amendment intended to align the regulation with the revised fee mechanism and eliminate redundant wording.

2. Registration Fee Converted from USD to INR

Earlier:

Registration fee:
US$ 2,500

Revised:

₹2,30,000 (or equivalent eligible foreign exchange)

Further, the fee is now payable:

prior to grant of Certificate of Registration

instead of

at the time of submission of the application form.

Practical Effect

This provides:

better certainty regarding payment timing;
payment only after approval is imminent;
avoidance of upfront fee payment at application stage.

3. Renewal Fee Rationalised

Earlier:

Renewal Fee:
US$100

Now:

₹9,000 (or equivalent eligible foreign exchange).

Impact

This merely converts the fee structure into INR without altering the renewal mechanism.

4. Delay Fees Revised

The amendment substitutes:

Earlier	Revised
US$5 per day	₹500 equivalent
Maximum US$150	Maximum ₹15,000 equivalent

Observation

The amendment standardises penalties in Indian Rupees, making compliance administration easier.

5. Complete Substitution of Clause (6)

The most operationally significant amendment is substitution of Clause (6).

The revised clause requires every Designated Depository Participant (DDP) to remit fees collected from FVCIs to SEBI in INR.

Initial Registration

DDP must remit:

within 5 working days
from grant of Certificate of Registration
together with prescribed information.

Renewal / Late Fees

DDP must remit:

within 5 working days
from receipt of fee
along with prescribed details.

Regulatory Intent

The amendment appears intended to:

simplify fee administration;
reduce dependence upon fluctuating USD values;
strengthen audit trail for fee remittances;
improve reconciliation between DDPs and SEBI;
ensure faster transfer of regulatory fees.

Compliance Implications

For Foreign Venture Capital Investors

FVCIs should:

note revised INR-denominated fee amounts;
budget registration and renewal costs accordingly;
ensure payment before registration is granted.

No additional compliance obligations are imposed.

For Designated Depository Participants

DDPs will need to:

revise internal operating procedures;
ensure remittance within five working days;
maintain documentation in SEBI-prescribed formats;
strengthen internal controls for fee collection and reporting.

The amendment imposes clearer operational responsibilities on DDPs.

Governance Perspective

From a governance standpoint, the amendment improves:

transparency;
accountability;
operational efficiency;
reconciliation of regulatory collections;
ease of supervision.

The revised framework reduces ambiguity regarding:

payment timelines,
payment currency,
remittance obligations.

Comparative Snapshot

Particular	Earlier Position	Amended Position
Registration Fee	US$2,500	₹2,30,000 equivalent
Renewal Fee	US$100	₹9,000 equivalent
Late Fee	US$5/day	₹500 equivalent/day
Maximum Late Fee	US$150	₹15,000 equivalent
Registration Fee Timing	At application	Prior to registration
DDP Remittance Timeline	Less explicit	Within 5 working days

Impact Assessment

Regulatory Impact: Low

Operational Impact: Moderate (primarily for DDPs)

Financial Impact: Minimal (fees are rationalised into INR rather than materially increased or decreased)

Compliance Burden: Neutral

Conclusion

The SEBI (Foreign Venture Capital Investors) (Amendment) Regulations, 2026 represent a targeted administrative reform rather than a substantive policy shift. By replacing US Dollar-based fees with Indian Rupee equivalents, clarifying the stage at which registration fees become payable, and prescribing definitive timelines for Designated Depository Participants to remit fees to SEBI, the amendment enhances administrative efficiency, improves regulatory oversight, and aligns fee collection with contemporary operational practices. It does not modify the regulatory framework governing FVCI eligibility, investment conditions, or registration criteria; instead, it modernises the fee administration process while promoting greater certainty, transparency, and ease of compliance.