Lenders Law

The Hon'ble Supreme Court’s ruling in  EPC Constructions India Ltd. v. Matix Fertilizers and Chemicals Ltd.   (2025) clarifies that preference shares—however structured—remains part of a company's share capital, and cannot be regarded as "debt". Even if classified as “financial liability” under Ind AS 32, legal character under the Companies Act still governs enforceability. A cautionary tale for investors and creditors relying on redeemable or “put option” structures to secure repayment.  The Case in Brief In EPC Constructions (supra), the appellant had over ₹400 crores in receivables for project work. The appellant/ former operational creditor agreed to convert its dues into 8% Cumulative Redeemable Preference Shares (CRPS)—redeemable in three years. When the respondent/ debtor failed to redeem, the appellant (then in liquidation), through its liquidator, filed a Section 7 petition under the Insolvency and Bankruptcy Code (IBC), claiming default on redemption. Both ...

The Reserve Bank of India (RBI) has proposed the Master Direction – Internal Ombudsman for Regulated Entities, 2025 , to replace the 2023 framework . Issued under Section 35A of the Banking Regulation Act, 1949 and allied statutes, the new draft seeks to strengthen internal grievance redressal mechanisms and ensure speedy, meaningful resolution of customer complaints through a structured, independent review within each regulated entity (RE). This article compares the new draft with the 2023 Master Direction and highlights key changes. Topic Master Direction 2023 Draft Master Direction 2025 Appointment — IO eligibility IO: retired/serving GM-equivalent; min. 7 years relevant experience; not over 70; must not have been employed by the RE or related parties. Adds if serving, must relinquish prior post. Explicit permission ...

The Foreign Exchange Management (Establishment in India of a branch office or a liaison office or a project office or any other place of business) Regulations, 2016 have been the governing framework for foreign entities establishing Branch Offices (BOs), Liaison Offices (LOs), Project Offices (POs), or other business entities in India. Now, the Reserve Bank of India, on 3rd October, 2025, published  Draft Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025  proposing several clarifications, procedural updates, and operational guidelines to streamline and modernize the framework. The 2025 draft keeps the core eligibility and operational principles of FEMA 2016 but streamlines processes, strengthens reporting and compliance, formalizes closure and appeal mechanisms, and assigns explicit responsibilities to designated banks. It is designed to make foreign office establishment in India more transparent and accountable while retaining flexi...

Provision ECB 2018 Draft ECB 2025 Amendment 1. Eligible borrowers A person resident in India (other than an individual) incorporated, established or registered under a Central Act or State Act may raise ECB, subject to the condition that it is permitted to borrow in terms of the applicable laws. Clarifies- (1) An eligible borrower under a restructuring scheme or CIRP may raise ECB only if plan permits. (2) An eligible borrower under pending investigation/adjudication/appeal may raise ECB, must disclose to designated AD, which informs agencies. 2. Recognised lenders An eligible borrower may raise ECB from: - A person resident outside India; - A branch outside India or in IFSC of entity whose lending business is regulated by RBI. No major change; includes branches in IFSC and regulated lenders 3. Cur...

In a significant move towards regulatory simplification, the Reserve Bank of India (RBI) has consolidated the existing universe of regulatory instructions issued up to October 9, 2025 into 238 Draft Master Directions . This consolidation spans 11 types of regulated entities , including banks, NBFCs, payment system operators, and others. Importantly, the consolidation also incorporates Scale Based Regulations (SBR) for NBFCs , reflecting the RBI’s risk-based and size-oriented approach to supervision. As part of this initiative, approximately 9,000 circulars , including Master Circulars and Master Directions currently administered by the Department of Regulation, are proposed to be repealed . This is intended to reduce duplication, simplify compliance, and provide a more coherent regulatory framework for all stakeholders. Key Highlights 238 Draft Master Directions now consolidate prior instructions across 11 entity types. Scale Based Regulations (SBR) for NBFCs included to...

  Introduction: Why This Amendment Matters In the continuously evolving credit and regulatory landscape, timeliness and accuracy of credit data have become critical to risk assessment, early detection of stress, and better decision-making by lenders, regulators, and markets. The Reserve Bank of India’s draft “Credit Information Reporting (1st Amendment) Directions, 2025” seeks to strengthen the frequency and nature of data flows between regulated entities (banks, NBFCs, etc.) and Credit Information Companies (CICs). The key proposal: a transition to weekly submission of credit information to CICs. This shift is aimed at enhancing the granularity, freshness, and responsiveness of credit intelligence across the financial system. Key Proposal: Weekly Credit Information Submissions At the heart of the draft amendment is the proposal that lenders move from their current bi- monthly reporting of borrower credit data to weekly submissions . This change means that new loans, rep...

  Introduction: Why the RBI Proposed The Directions In recent years, concerns have intensified over governance lapses and concentration of exposures within related entities in the NBFC sector. Some NBFCs have been criticised for routinely granting favorable terms to promoter-related parties or renewing limits without adequate scrutiny—raising red flags about potential conflicts of interest, insider lending, and erosion of financial soundness. Moreover, as India’s financial architecture evolves, there is a drive to align NBFC regulatory norms with banking sector practices and draw lessons from corporate and securities regulations. The Reserve Bank of India (Non Banking Financial Company- Lending to Related Parties) Directions, 2025- Draft aims to bring similar discipline, transparency, and accountability to the non-banking lending space. By prescribing clear boundaries, independent oversight, and mandated reporting, the RBI seeks to preempt risks of moral hazard, reduce opac...