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The Securities and Exchange Board of India (“SEBI”), the Reserve Bank of India (“RBI”) and the Insolvency and Bankruptcy Board of India (“IBBI”) have introduced significant regulatory updates in the banking and finance and insolvency space in July 2025.
RBI issued the RBI (Pre-payment Charges on Loans) Directions, 2025 (“Pre-payment Directions”) to govern floating rate loans to micro and small enterprises. It has also issued the regulatory guidelines to govern investments by Regulated Entities (“REs”) in Alternative Investment Funds (“AIF”). IBBI amended the corporate insolvency resolution process regulations to strengthen disclosure requirements and limit the assignment of certain avoidance transactions. SEBI has mandated accessibility compliance for all digital platforms of REs under the Rights of Persons with Disabilities Act, 2016 (“RPwD Act”).
SEBI update
Mandatory compliance by REs relating to the RPwD Act
SEBI issued a circular on July 31, 2025, mandating all REs to ensure digital accessibility for persons with disabilities in accordance with the RPwD Act and the Rights of Persons with Disabilities Rules, 2017 (“RPwD Rules”). These entities are required to make their digital platforms accessible to persons with disabilities by adhering specifically to certain sections of the RPwD Act such as: (a) Section 40 (Accessibility) which mandates accessibility across public infrastructure, including digital platforms, which SEBI extends to securities market interfaces; (b) Section 42 which requires Information and Communication Technology (“ICT”) services such as websites and apps to be accessible; and (c) Section 46 which sets a statutory timeline for implementing accessibility. Further, Rule 15(1)(c) of the RPwD Rules prescribes the standards issued by Bureau of Indian Standards (IS 17802) for ICT accessibility.
REs must provide updates on the status of implementation of accessibility provisions on all digital platforms, specifically in accordance to the prescribed milestones. Further, the compliance reporting for this circular must be done on annual basis within 30 (thirty) days from the end of each financial year in the prescribed manner.
IBBI update
Amendment to insolvency resolution process regulations for corporate persons
IBBI, vide notification dated July 4, 2025, has notified the IBBI (Insolvency Resolution Process for Corporate Persons) (Fifth Amendment) Regulations, 2025, The amendment focus on enhanced disclosure and transparency in resolution processes.
Some of the key provisions are as follows:
- in addition to the information memorandum the resolution professional now must submit all the subsequent updates to each member of the committee after the insolvency commencement date;
- the information memorandum must also contain the details of the corporate debtor in relation to all identified avoidance transactions (such as preferential, undervalued, extortionate, or fraudulent transactions) and related filings; and
- the assignment of avoidance transactions or fraudulent/wrongful trading in resolution plans is prohibited if: (a) they were not disclosed in the information memorandum; and (b) not communicated to prospective resolution applicants before the final submission deadline. However, this restriction does not apply to resolution plans already submitted to the adjudicating authority before the commencement of these regulations.
JSA updates
RBI notifies framework governing investments by REs in AIFs
RBI, vide notification dated July 29, 2025, has passed the AIF Directions. Regulated entities such as commercial banks (including small finance banks, local area banks and regional rural banks), primary (urban) co-operative banks/state co-operative banks/ central co-operative banks all-India financial institutions; and non-banking financial companies (including housing finance companies) will be required to comply with the AIF Directions.
The AIF Directions prescribe the regulatory guidelines governing investments by the aforesaid regulated entities in AIFs and provide for limits on investment in such AIFs and relevant provisioning requirements to be complied by the regulated entities. The AIF Directions come into force from January 1, 2026, or at an earlier date decided by the respective regulated entities pursuant to its internal policies.
For a detailed analysis, please refer to the JSA Prism of August 12, 2025.
National Company Law Appellate Tribunal affirms that assets attached by the Enforcement Directorate are excluded from insolvency proceedings
In an important decision on the interplay between the Insolvency and Bankruptcy Code, 2016 (“IBC”) and the Prevention of Money Laundering Act, 2002 (“PMLA”), the National Company Law Appellate Tribunal, Principal Bench, New Delhi, in Mr. Anil Kohli, Resolution Professional for Dunar Foods Limited vs. Directorate of Enforcement and Anr.[1], has held that the assets attached by the Enforcement Directorate which are ‘proceeds of crime’ cannot be claimed as part of the resolution estate under the IBC. Further, it was clarified that the overriding effect of Section 238[2] of the IBC does not extend to negate valid actions taken under the PMLA, which operates in a distinct legislative domain.
For a detailed analysis, please refer to the JSA Prism of July 22, 2025.
SEBI approves new framework for co-investment opportunities through Category I and Category II AIFs
SEBI, in its board meeting held on June 18, 2025, has approved the introduction of a new co-investment framework under the SEBI (AIF) Regulations, 2012. This permits Category I and Category II AIFs to offer co-investment opportunities through a Co-Investment Scheme, in addition to the existing Portfolio Management Services route. The amendment is aimed at streamlining the co-investment process, easing regulatory burdens, and enhancing operational efficiency.
For a detailed analysis, please refer to the JSA Prism of July 18, 2025.
RBI’s 2025 Directions on pre-payment charges: enhancing borrower protection and transparency
On July 2, 2025, RBI has notified the Directions for prohibiting prepayment penalties on floating rate loans availed by individuals for non-business purposes. It also extends relief to micro and small enterprises and individuals borrowing for business needs under certain conditions. The Directions will be applicable to loans sanctioned or renewed on or after January 1, 2026.
RBI also mandates clear disclosure of prepayment charges in loan agreements and key fact statement. This move aims to improve transparency, encourage borrower mobility , and prevent unfair lending practices.
For a detailed analysis, please refer to the JSA Prism of July 3, 2025.
This Newsletter has been prepared by:
|
Anish Mashruwala |
Karan Mitroo |
Purvi Dabbiru |
Harsh Dugar |
Riddhi Sri |
For more details, please contact [email protected]
[1] Company Appeal (AT) (Ins.) No. 389 of 2018 (decided on July 3, 2025)
[2] The overriding provision under the IBC: “The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.
