 | | | Volume XXII | Issue 2 | May 2026
MONETARY & CREDIT INFORMATION REVIEW |  | | | | | | Note from the Editor The month of May 2026 featured deliberations on key global and domestic macroeconomic and financial sector developments under the aegis of the FSDC Sub-Committee and strategic international engagement for the Reserve Bank. Under the chairmanship of Governor Shri Sanjay Malhotra, the FSDC-SC Sub-Committee convened to deliberate on key macroeconomic and financial sector developments and review progress in several inter-regulatory matters. During the month, the Central Board of RBI also approved the transfer of a surplus of ₹2,86,588.46 crore to the Central Government for FY 2025-26, while maintaining the Contingent Risk Buffer at 6.5%. These domestic milestones were complemented by the signing of a renewed MoU with the ECB in Basel, reinforcing the Bank's commitment to robust governance, enhanced resilience, and deepened global cooperation in central banking. We remain committed to our goal of sharing accurate information and fostering deeper understanding. The MCIR can be accessed at https://mcir.rbi.org.in as well as by scanning the QR Code. We welcome your feedback at mcir@rbi.org.in. Brij Raj
Editor | I. Meeting 33rd Meeting of the FSDC Sub-Committee A meeting of the Sub-Committee of the Financial Stability and Development Council (FSDC-SC) was held on May 14, 2026, at the Reserve Bank of India, Mumbai. The meeting was chaired by Shri Sanjay Malhotra, Governor, Reserve Bank of India. The Sub-Committee deliberated on key global and domestic macroeconomic and financial sector developments, along with emerging issues bearing implications for financial stability. It also reviewed the progress in several inter-regulatory matters including simplification of KYC processes and regulatory impact assessment, with an emphasis on enhancing the quality, transparency and accountability of regulatory processes. The FSDC-SC reaffirmed its commitment to enhancing financial sector resilience through inter-regulatory coordination; and keeping a close watch on emerging challenges including those from heightened geopolitical frictions. The meeting was attended by the members of the Sub-Committee, Shri Tuhin Kanta Pandey, Chairperson, Securities and Exchange Board of India (SEBI); Shri Ajay Seth, Chairperson, Insurance Regulatory and Development Authority of India (IRDAI), Shri S Ramann, Chairperson, Pension Fund Regulatory and Development Authority (PFRDA), Shri K. Rajaraman, Chairperson, International Financial Services Centres Authority (IFSCA), Shri S. Krishnan, Secretary, Ministry of Electronics and Information Technology (MeitY); Shri V Vualnam, Secretary, Department of Expenditure (DoE), Dr. V. Anantha Nageswaran, Chief Economic Adviser; Ms. Aparna Sinha, Adviser, Department of Economic Affairs (DEA); Shri Ansuman Pattnaik, Additional Secretary, Ministry of Corporate Affairs (MCA), Deputy Governors of the Reserve Bank - Shri Swaminathan J, Dr. Poonam Gupta, Shri Shirish Chandra Murmu, Shri Rohit Jain and Dr. Ajit Ratnakar Joshi, Executive Director of the Reserve Bank. 623rd Meeting of Central Board of the Reserve Bank of India The 623rd meeting of the Central Board of Directors of Reserve Bank of India was held on May 22, 2026 in Mumbai under the Chairmanship of Shri Sanjay Malhotra, Governor. The Board reviewed the global and domestic economic scenario, including risks to the outlook. The Board deliberated on the annual accounts of the Reserve Bank for the FY 2025-26. The gross income of the Bank increased by 26.42 percent over the previous year while the expenditure before risk provisions increased by 27.60 percent. The net income, before risk provision and transfer to statutory funds, aggregated ₹3,95,972.10 crore in FY 2025-26 as against ₹3,13,455.77 crore in FY 2024-25. The Balance Sheet of the Bank expanded by 20.61 per cent to ₹91,97,121.08 crore as on March 31, 2026. The revised Economic Capital Framework (ECF) provides flexibility to maintain the Contingent Risk Buffer (CRB) between the range of 4.5 per cent and 7.5 per cent of the size of the Balance Sheet. Taking into consideration the current macroeconomic factors, financial performance of the Bank and maintenance of appropriate risk buffers, the Central Board decided to transfer ₹1,09,379.64 crore towards the CRB for FY 2025-26 as against ₹44,861.70 crore in the previous year, and maintain the CRB at 6.5 per cent of the size of the RBI Balance Sheet. The Central Board approved the transfer of surplus of ₹2,86,588.46 crore to the Central Government for the accounting year 2025-26. Deputy Governors Shri Swaminathan J, Dr. Poonam Gupta, Shri Shirish Chandra Murmu, Shri Rohit Jain and other Directors of the Central Board - Shri Nagaraju Maddirala, then Secretary, Department of Financial Services; Shri Satish Kashinath Marathe, Smt. Revathy Iyer, Prof. Sachin Chaturvedi, Shri Anand Gopal Mahindra, Shri Venu Srinivasan and Shri Pankaj Ramanbhai Patel - attended the meeting. II. Regulation Prudential Norms on Specified Non-financial Assets (SNFA) Directions The Reserve Bank issued the draft 'Prudential Norms on Specified Non-financial Assets Directions' on May 5, 2026, to provide clarity on the prudential treatment of Specified Non-financial Assets (SNFAs) acquired by Regulated Entities (REs) in exceptional cases where exposures become non-performing and legal or contractual remedies are invoked. The draft Directions stipulate that only non-performing exposures, where other recovery options are unviable, are eligible for extinguishment via acquisition of SNFAs, which may be taken in lieu of full or partial claim extinguishment; in cases of partial extinguishment, the residual exposure shall be treated as restructured and subject to applicable prudential requirements. SNFAs are to be recorded and carried at the lower of the Net Book Value (NBV) of the extinguished exposure or the distress sale value of the asset, and at each subsequent reporting date, at the lower of the last available distress sale value or the revised NBV (net of notional provisions had the exposure continued). To ensure timely disposal, a maximum holding period of seven years is prescribed, and to mitigate moral hazard, REs are prohibited from selling SNFAs back to the borrower or related parties, with a requirement to disclose the stock of SNFAs in their balance sheet. To read more, please click here. RBI Issues Amendment Directions on 'Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks' The Reserve Bank had, on April 08, 2026, issued three draft Amendment Directions on 'Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks' seeking feedback from stakeholders. Currently, Commercial Banks (excluding Local Area Banks and Regional Rural Banks) may reckon the profits in current financial year for CRAR calculation on a quarterly basis provided the incremental provisions made for non-performing assets (NPAs) at the end of the any of the four quarters of the previous financial year have not deviated more than 25 per cent from the average of the four quarters. The Draft Directions were aimed to remove the qualifying condition of incremental provisions for NPAs. Feedback received on the drafts have been examined and considered while finalizing the Amendment Directions. A statement on the feedback received on the drafts is provided in the Annex. Accordingly, Reserve Bank of India has released on May 8, 2026 the following three Amendment Directions on 'Review of guidelines on inclusion of quarterly profits to Common Equity Tier 1 (CET1) capital for computation of Capital to Risk weighted Assets Ratio (CRAR) for Banks': (i) Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026, (ii) Reserve Bank of India (Small Finance Banks – Prudential Norms on Capital Adequacy) Fourth Amendment Directions, 2026, and (iii) Reserve Bank of India (Payments Banks – Prudential Norms on Capital Adequacy) Second Amendment Directions, 2026. To read more, please click here. Review of Requirement of Counter-Cyclical Capital Buffer The Reserve Bank advised on May 18, 2026, that as per the framework on Countercyclical Capital Buffer (CCyB) laid out in the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025, CCyB would be activated as and when circumstances warranted, with decisions normally pre-announced, envisaging the credit-to-GDP gap as the main indicator used in conjunction with other supplementary indicators. Based on a review and empirical analysis of CCyB indicators, it has been decided that it is not necessary to activate CCyB at this point in time. RBI issues Amendment Directions on 'Investment Fluctuation Reserve' The Reserve Bank of India had issued the draft Amendment Directions proposing review of the norms on Investment Fluctuation Reserve (IFR) for various bank categories, seeking feedback from stakeholders. The draft Amendment Directions proposed (i) to dispense with the IFR requirement for bank categories maintaining capital charge for market risk and following the revised norms on classification, valuation, and operation of investment portfolio; (ii) that the remaining Regulated Entity categories shall comply with the IFR requirement as on balance sheet dates instead of on a continuous basis; and (iii) to harmonise certain IFR-related instructions across various categories of Regulated Entities, thereby eliminating existing inconsistencies and enhancing regulatory clarity. The feedback received on the above draft Amendment Directions was examined and the consequent modifications have been suitably incorporated in the Final Amendment Directions. A statement on the feedback received on the draft Amendment Directions is provided in the Annex. Thereafter, on May 18, 2026, the Reserve Bank of India has issued Amendment Directions. To read more, please click here. RBI invites comments on the draft "Reserve Bank of India (Capital Adequacy) Amendment Directions, 2026" The Reserve Bank released draft Amendment Directions on Pillar 3 disclosure requirements, namely the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Seventh Amendment Directions, 2026 and the Reserve Bank of India (Small Finance Banks - Prudential Norms on Capital Adequacy) Fifth Amendment Directions, 2026, on May 19, 2026, to ensure greater consistency with the Basel Pillar 3 disclosure requirements. Comments in this regard were invited till June 2, 2026. To read more, please click here. III. Reserve Bank of India and European Central Bank sign Memorandum of Understanding on mutual cooperation Shri Sanjay Malhotra, Governor of the Reserve Bank of India (RBI) and Ms Christine Lagarde, President of the European Central Bank (ECB), today signed a Memorandum of Understanding (MoU) on cooperation in the field of central banking. The signing took place on the margins of the Bank for International Settlements (BIS) meetings in Basel. The MoU, which updates the previous MoU of 2015, provides a framework for a regular exchange of information, policy dialogue and technical cooperation between the two institutions in areas of mutual interest in the field of central banking. |
RBI Issues Revised Draft Amendment Directions on 'Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents'
The Reserve Bank issued revised draft Amendment Directions on 'Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents' on May 20, 2026, incorporating stakeholder feedback on the initial draft released in February 2026, including provisions on technology-based recovery mechanisms, and invited further comments from regulated entities and the public till May 31, 2026. To read more, please click here. RBI issues final Amendment Directions on Cooling-off Period for Directors of Co-operative Banks The Reserve Bank had, on January 8, 2026, issued Draft Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026 and Draft Reserve Bank of India (Rural Co-operative Banks - Governance) Amendment Directions, 2026, seeking feedback from stakeholders. The draft Amendment Directions proposed to introduce a cooling-off period for directors of UCBs and RCBs after they complete a continuous tenure of ten years on the Board of a UCB / RCB, to ensure that the statutory provision contained in section 10A(2A)(i) read with section 56 of the Banking Regulation Act, 1949 is implemented in letter and spirit. A statement on the feedback received for the draft Amendment Directions is provided in the Annex. Accordingly, the Reserve Bank on May 25, 2026, has issued the following Amendment Directions: i. Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026. ii. Reserve Bank of India (Rural Co-operative Banks - Governance) Amendment Directions, 2026. IV. Fintech Quantum Secure and Adaptive Financial Ecosystem (Q-SAFE) – Setting up of an Expert Committee The Reserve Bank setup an Expert Committee for a The Reserve Bank setup an Expert Committee for a Quantum Secure and Adaptive Financial Ecosystem (Q-SAFE) on May 25, 2026, to examine the benefits, risks, and challenges of quantum technology in the financial sector, particularly its potential to undermine existing cryptographic standards, with a mandate to evaluate the sector's cryptographic inventory, assess crypto-agility, undertake cross-country regulatory analysis, gauge industry preparedness for quantum-safe cryptography, and recommend a roadmap to quantum-secure the Indian financial system, submitting its report within six months from the date of its first meeting, supported secretarially by the FinTech Department, RBI, and comprising members from IIT Madras, DST, SBI, NPCI, MeitY, DSCI, ex-IBM, and RBI. To read more, please click here. V. Publications RBI publishes Payment System Report, December 2025 The Reserve Bank published the half-yearly Payment System Report, December 2025 on May 18, 2026. This report, in addition to analysing the trends in payment transactions carried out using various payment systems in India during the last five calendar years up to the second half of the calendar year 2025, covers major recent regulatory developments in the domestic payments ecosystem. The role of Central Counterparties (CCPs), in strengthening India's financial stability by mitigating counterparty credit risk, is examined. The report also discusses issues in cross-border payments, the efforts made by the Reserve Bank of India, as part of the G20 Roadmap, for improving efficiency therein and technical innovations in general, which are re-shaping global payments ecosystem. The half-yearly Payment Systems Report for December 2025 presents a comprehensive and forward-looking overview of the evolving landscape of payment systems in India. Over the years, India's digital payments ecosystem has witnessed remarkable growth - fueled by widespread accessibility, surging user adoption, and continuous strengthening of acceptance infrastructure across urban and rural geographies. Innovations in fintech, regulatory support, and public-private collaboration have accelerated the transition toward a less cash economy, positioning India as a global leader in digital financial inclusion. The Payment Systems Reports are designed to serve as a reference for policymakers, industry stakeholders, and researchers, providing a comprehensive analysis of payment system statistics, regulatory developments, and emerging technological advancements shaping India's payment ecosystem. Aligned with the strategic framework of Payments Vision 2028, the Reserve Bank of India remains steadfast in its commitment to advancing an efficient, resilient, and inclusive payment infrastructure that propels economic growth and accelerates the nation's digital transformation journey. The Report presents a comprehensive analysis of various payment systems operated by the RBI, the National Payments Corporation of India (NPCI), banks and other Payment System Operators (PSOs). It examines the growth of both large-value and retail payment systems from the first half (H1) of 2021 to the second half (H2) of 2025. The Report is organised as follows. Chapter 2 outlines the structure of India's payment systems and presents key payment system statistics. Chapter 3 covers significant regulatory developments and major innovations and policy changes in the payments ecosystem during the HY ended December 2025. Chapter 4 examines the role of Central Counterparties (CCPs), regulated under the Principles for Financial Market Infrastructures (PFMIs), in strengthening India's financial stability. These CCPs mitigate counterparty credit risk through novation, multilateral netting, and robust default management frameworks. Chapter 5 outlines the frictions observed in cross-border payments, the efforts made by the Reserve Bank of India, as part of the G20 Roadmap, for improving efficiency therein and technical innovations in general, which are re-shaping global payments ecosystem. RBI Bulletin – May 2026 The Reserve Bank released the May 2026 issue of its monthly Bulletin on May 22, 2026. The Bulletin includes five speeches, one article and current statistics. The article is on the State of the Economy. State of the Economy The global economy continued to be shadowed by uncertainties in West Asia. Domestic economic activity exhibited resilience in April, with industrial and services sectors maintaining strength across several segments. In agriculture, summer sowing progressed well, supported by above normal pre-monsoon rainfall and comfortable reservoir levels. CPI inflation rose to 3.5 per cent in April, driven mainly by food inflation, while core inflation remained steady. In March, net foreign direct investment remained positive for the second consecutive month. Foreign portfolio investors continued to remain net sellers in April and May, though the pace of outflows moderated. To read more, please click here. Annual Report for the Year 2025-26 The Reserve Bank of India released its Annual Report for 2025-26, a statutory report of its Central Board of Directors on May 29, 2026. The Report covers the working and functions of the Reserve Bank of India for the period April 2025 - March 2026. VI. Data Release Important data released by the Reserve Bank during the month of May 2026 are as follows:
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