Mumbai, Oct. 27 -- The Reserve Bank of India (RBI) has issued a set of Draft Directions, in line with its Statement on Developmental and Regulatory Policies released earlier this month. A key directive is "Capital Market Exposure Directions, 2025" to overhaul rules on banks' exposure to capital markets. Capital market exposures (CME) by regulated entities (REs) carry higher risk and are therefore subject to sectoral exposure limits, purpose-specific lending caps, and loan-to-value (LTV) ratios. CME includes both direct exposures (investments) and indirect exposures (credit). These Directions shall come into force from April 1, 2026, or an earlier date when adopted by a bank in entirety.

Aggregate CME of a bank shall be subject to the fol...