Every regulation the RBI issues has a moment when it exists as a draft — placed on the website, open for public comment, waiting for stakeholder feedback before becoming final. That moment is where lawyers, compliance officers, and industry bodies have their only formal chance to shape the outcome. Once the final direction is issued, the only recourse is compliance or litigation.
As of early 2026, the RBI has at least eight active drafts in its pipeline — each traceable to an announcement in the February 2026 Statement on Developmental and Regulatory Policies (PR_62171). Here's what's coming, why it's coming, and what it means for each sector.
How does a draft become a final regulation?
The process is not the same for every type of change. As the KYC lifecycle article showed, obligatory implementations (statute changes, FATF standards) skip consultation entirely. But discretionary policy changes go through the full pipeline:
Step 1: The Governor announces the intention in the Statement on Developmental and Regulatory Policies, released alongside each bi-monthly Monetary Policy Statement.
Step 2: The relevant department drafts the directions.
Step 3: The draft is placed on the RBI website with a press release inviting public comments, typically for 30-45 days.
Step 4: The RBI considers feedback, may hold stakeholder meetings, and issues the final direction — often with modifications from the draft.
Why does the gap exist? Because genuine consultation takes time — and because the RBI wants to get the calibration right before making a direction binding. The gap between announcement and final direction can be months or years. Some drafts from 2023 are still pending finalisation.
What's in the February 2026 pipeline?
Mis-selling of financial products
Draft issued February 6, 2026 (PR_62207): comprehensive directions on advertising, marketing and sales of financial products and services by all regulated entities. This targets what happens at bank counters — insurance sold as deposits, mutual funds pushed without suitability assessment, credit cards activated without consent. The draft directions (PR_62207) were issued the same day:
"Draft comprehensive directions on advertising, marketing and sales of financial products and services by all regulated entities are being placed on the RBI website for stakeholder comments."
Why is the RBI acting now, after years of banks selling third-party products? Because the volume of complaints reached a point where the supervisory data demanded action. The recovery agents draft (PR_62215) stated:
"It has been decided to review and harmonise all the extant conduct related instructions on engagement of recovery agents." The February 2026 Statement (PR_62171) said: "Mis-selling financial products and services by any RE has significant consequences for both customers as well as the RE."
Connects to: NBFC fair practice norms, deposit regulation, digital payments customer protection.
Recovery agent conduct harmonisation
Draft issued February 6, 2026 (PR_62215): harmonising all extant conduct-related instructions on engagement of recovery agents across entity types. Currently, commercial banks, NBFCs, and co-operative banks have separate recovery norms — a regulatory inconsistency the November 2025 consolidation was supposed to fix.
Customer liability in digital transactions
Draft issued March 6, 2026 (PR_62340): reviewing the framework that determines when a customer bears the loss from an unauthorised digital transaction vs when the bank does. The current framework sets a zero-liability window for reporting fraud within 3 days and caps customer liability based on reporting delay. This draft may change those thresholds.
The draft directions (PR_62340) are more ambitious than a simple threshold adjustment. The press release specifies three distinct changes the draft proposes:
"The digital payment and banking landscape has evolved considerably since issuance of the existing instructions on limiting liability of customers in unauthorised electronic banking transactions in 2017. Upon a review, it has been decided to issue revised instructions on the subject to banks, which shall inter alia enhance the scope of existing instructions on limiting liability of customers in unauthorised electronic banking transactions to cover other categories of fraudulent electronic banking transactions, reduce the time taken by banks to process complaints related to fraudulent electronic banking transactions, and introduce a compensation mechanism for small value fraudulent electronic banking transactions."
Three changes, each significant. First, the scope expands beyond "unauthorised" transactions to cover "other categories of fraudulent electronic banking transactions" -- a wider net that could include social engineering fraud where the customer was tricked into authorising a transfer. Second, the complaint processing timeline gets compressed. Third, and most novel, a compensation mechanism for small value fraudulent transactions (PR_62340) is being introduced -- meaning the bank pays out even before fault is determined. The press release reveals that this compensation mechanism is experimental: "The compensation mechanism proposed to be introduced under these Amendment Directions will be in force for one year from the effective date of these Directions." After that year, the RBI will review "with an objective of enhancing the share of the banks and reducing / eliminating the share of RBI in the compensation paid to the victims."
The scope of the draft is entity-wide -- it covers commercial banks, small finance banks, payments banks, local area banks, regional rural banks, urban co-operative banks, and rural co-operative banks (PR_62340) through separate but parallel amendment directions for each entity type. The comment deadline was April 6, 2026.
Connects to: Digital payments, cyber security, payment system regulation.
NBFC registration framework amendments
Draft issued February 6, 2026 (PR_62200): amending the NBFC Registration and SBR Framework Directions 2025 (Reserve Bank of India (Non-Banking Financial Compa). Less than three months after the November 2025 consolidation, the RBI is already amending the consolidated directions — evidence that the consolidation was a starting point, not a final state.
The background section of PR_62200 explains the regulatory logic and the specific threshold:
"The Scale Based Regulatory Framework (SBR) for NBFCs introduced vide circular dated October 22, 2021 states that 'NBFCs not availing public funds and not having customer interface' bear a different risk profile and hence, deserve a differential regulatory treatment."
The proposed change is a registration exemption for a specific subset of NBFCs: those with no public funds, no customer interface, and asset size below Rs 1,000 crore. The draft directions (PR_62200) specify that these NBFCs "shall be exempted from registration requirement with the RBI, duly subject to the conditions as specified by the RBI." The proposed directions also include a procedure for deregistration of existing NBFCs that meet these criteria -- including those currently holding Type I NBFC certificates.
Why does the RBI want to deregulate these entities? Because regulating thousands of NBFCs that neither take public deposits nor deal with customers directly consumes supervisory resources without proportionate depositor protection benefit. The SBR framework already placed them in the Base Layer with relaxed requirements; this draft takes the logic to its conclusion by removing the registration requirement entirely.
Connects to: NBFC regulation, Scale Based Regulation.
Net owned fund requirements
Draft issued February 3, 2026 (PR_62041): clarifying NOF computation methodology. NOF is the entry barrier for NBFCs — currently Rs 10 crore minimum (being phased in through March 2027). How it's calculated determines who qualifies.
Lending to REITs and InvITs
Draft issued February 13, 2026: amending directions for bank lending to Real Estate Investment Trusts and Infrastructure Investment Trusts. These instruments sit at the intersection of capital markets, credit risk, and securitisation.
Revised Kisan Credit Card scheme
Draft issued February 6, 2026: revising the KCC scheme that is the foundation of agricultural priority sector lending. The KCC is how most Indian farmers access formal credit — any change to its terms affects the entire PSL framework.
What did the October 2025 Statement announce?
The previous Statement (PR_61377, October 2025) announced draft directions that have since been issued or are still pending. Tracing from Statement to draft to final shows the typical 3-6 month pipeline:
- Risk-based deposit insurance premium announced October 2025 — the framework that will make banks with higher risk profiles pay higher DICGC premiums
- Lending to related parties — draft issued post-announcement, targeting the exact governance gap that the PMC Bank fraud exploited
Why does the draft pipeline matter?
Three reasons.
For compliance planning: If a draft is issued, the final direction is coming — usually within 3-6 months. Compliance teams should start impact assessment now, not after the final direction is issued. The draft indicates the direction of travel even if specific provisions change.
For advocacy: The 30-45 day comment period is the only formal window to influence the outcome. Industry associations, individual banks, and law firms submit representations. The RBI considers these — and final directions routinely differ from drafts on specific points.
For understanding regulatory intent: The Statement on Developmental and Regulatory Policies is the clearest expression of what the RBI thinks needs fixing. When the Governor says "there is a felt need" for a particular regulation, it signals a problem the RBI has identified through supervision — and the upcoming direction is the solution.
The full lifecycle from trigger to enforcement shows that regulations announced in a Statement typically become circulars within 6-12 months. The February 2026 pipeline will produce final directions through mid-2026.
Last updated: April 2026