India: Finance and Banking

On July 27, 2026, the Reserve Bank of India (“RBI”) issued four draft amendment directio ns pertaining to Commercial Banks, Small Finance Banks, Non-Banking Financial Companies (“NBFCs”) and All India Finan cial Institutions (“AIFIs”), proposing changes to the respective Securitisation Transactions Directions, 2025 governing each category of regulated entity.

The Reserve Bank of India’s Scale Based Regulation (“SBR”) framework has fundamentally changed the way India regulates its largest non-banking financial companies (“NBFCs”). What began in 2021 as a framework built around size, complexity, interconnectedness, and systemic importance has evolved into a substantially more predictable regime following the RBI’s June 2026 amendments.

The Reserve Bank of India has introduced a new classification system for Non-Banking Financial Companies, fundamentally changing registration requirements based on public funding access, customer interface, and asset size thresholds. These regulatory changes create distinct compliance pathways for different NBFC categories while introducing new rules for group entities and overseas investments.

SEBI has floated a consultation paper dated August 10, 2026, proposing two distinct sets of amendments affecting issuers of privately placed, listed non-convertible debt securities .

In a significant move to deepen foreign participation in India’s sovereign debt market, the Government of India promulgated the Income-tax (Amendment) Ordinance, 2026 on 5 June 20261, introducing a comprehensive tax exemption for eligible foreign investors investing in Government securities. Effective retrospectively from 1 April 2026, the Ordinance exempts specified income arising from Government securities from withholding tax and long-term capital gains tax, thereby addressing one of the principal tax-related barriers to foreign investment in Indian debt markets.

The Supreme Court, in Anjani Technoplast Ltd. v. Shubh Gautam (2026 INSC 410) ('Anjani Technoplast'), has set aside the admission of a Section 7 petition filed by a decree holder against a solvent and functioning company. A Bench of P.S. Narasimha and Alok Aradhe, JJ. held that a decree holder who has the full machinery of civil execution available to him cannot invoke the insolvency jurisdiction as a substitute for execution proceedings.

Stamp duty is one of the oldest forms of fiscal legislation in India, yet it remains one of the most frequently underestimated sources of risk in corporate and commercial transactions. Parties tend to focus on the substantive commercial terms, tax implications, and regulatory approvals, relegating stamp duty analysis to the execution stage.

The 2026 IBC amendments have fundamentally altered the dynamics of personal guarantor insolvency proceedings by eliminating automatic interim stays. What was once a powerful tool for promoters to halt recovery actions through a simple filing now requires substantive judicial scrutiny, shifting the balance of power back toward creditors and forcing lenders to reassess their enforcement strategies across multiple forums.

SEBI has restored the open market buy-back route through stock exchanges effective August 1, 2026, after suspending it in April 2025. The amendment introduces significant changes including a fixed 66-working-day execution window, ISIN-level freeze on promoter shareholding, mandatory minimum public shareholding compliance, and makes merchant banker appointment discretionary while reallocating their functions among company officers and auditors.

With a view to mitigate the impact of external economic headwinds, provide stability to the domestic economy and support key sectors of strategic importance, the Government has introduced the Taxation and Other Laws (Amendment) Bill, 2026 (‘the Bill’) [in supersession of the earlier Income Tax (Amendment) Ordinance, 2026]. The Bill, as passed by the Lok Sabha on 6.08.2026, proposes amendments, inter-alia, to the Income-tax Act, 2025 (‘2025 Act’).

India's Reserve Bank has fundamentally restructured how cross-border guarantees are regulated under FEMA, shifting from transaction-specific permissions to a principles-based framework that tracks guarantees throughout their entire lifecycle.

The Securities and Exchange Board of India (SEBI) issued a consultation paper on 23 July 2026 (Consultation Paper). The Consultation Paper proposes a comprehensive review of the SEBI (Portfolio Managers) Regulations, 2020 (PMS Regulations).