Reserve Bank of India (Small Finance Banks - Resource Raising Norms) Directions, 2025 · RBI/DoR/2025-26/183
RBI master-direction RBI/DoR/2025-26/183 · 28 Nov 2025
RBI master-direction RBI/DoR/2025-26/183 · 28 Nov 2025
Summary
Check the official recordThe Reserve Bank of India establishes norms for Small Finance Banks to issue long-term bonds for financing infrastructure sub-sectors and affordable housing. Banks may issue unsecured, redeemable bonds with a minimum maturity of seven years. These bonds must be denominated in Indian Rupees and lack embedded call or put options. Issuing banks receive exemptions from Cash Reserve Ratio and Statutory Liquidity Ratio requirements, subject to specific ceilings based on eligible credit. The bonds also qualify for exemptions in Adjusted Net Bank Credit calculations for Priority Sector Lending. Banks must report bond issuance details to the Department of Supervision immediately after completion. These directions replace previous resource raising instructions for Small Finance Banks.
What you must do
Key dates
Who is affected
Thresholds
Exceptions
If you do not comply
RBI/DoR/2025-26/183
DoR.CRE.REC.102/08.12.014/2025-26
November 28, 2025
Reserve Bank of India (Small Finance Banks - Resource Raising Norms) Directions, 2025
Table of Contents
Chapter I - Preliminary
A. Short Title and Commencement
B. Applicability
Chapter II - Issue of Long-Term Bonds for Financing Infrastructure Sub-Sectors
Chapter III - Repeal and Other Provisions
A. Repeal and Saving
B. Application of other laws not barred
C. Interpretations
In exercise of the powers conferred under Sections 35A of the Banking Regulation Act, 1949, the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest and in the interest of financial sector policy so to do, hereby, issues the Directions hereinafter specified.
These Directions shall be called the Reserve Bank of India (Small Finance Banks - Resource Raising Norms) Directions, 2025.
These Directions shall become effective on the day these are placed on the official website of the Reserve Bank.
(1) lending to long term projects in all infrastructure sub-sectors; and
(2) individual housing loans under affordable housing sub-sector;
as included and defined in the Harmonized Master List (HML) of Infrastructure Sub-sectors issued vide Gazette Notifications of the Department of Economic Affairs, Ministry of Finance, Government of India, from time to time.
(1) Regulatory Incentives:
Incentives with a view to minimising regulatory pre-emptions on statutory reserve requirements and priority sector lending obligations shall be available on issuance and deployment of proceeds from such bonds as per paragraph 6 of this Chapter.
(2) Type of bond:
The instrument shall be fully paid, redeemable and unsecured. They shall rank pari-passu with other uninsured, unsecured creditors.
(3) Currency of issue:
The bonds shall be denominated in Indian Rupees.
(4) Maturity period:
The bonds shall have a minimum maturity period of seven years.
(5) Quantum of Issue:
There shall be no restriction on the quantum of such bonds issued by a bank. However, the regulatory incentives shall be restricted to the bonds that are used to incrementally finance long term projects in infrastructure sub-sectors. Any incremental infrastructure and affordable housing loans acquired from other banks or financial institutions shall require prior approval from the Reserve Bank to be reckoned for regulatory incentives.
(6) Options:
The bonds shall be issued in plain vanilla form, without any embedded call or put option.
(7) Rate of interest:
The bonds may be issued with either a fixed or floating rate of interest. In the case of floating rate bonds, the rate of interest shall be referenced to a market determined benchmark.
(8) Method of issue:
The bonds may be issued through a public issue or private placement, in full compliance with the applicable guidelines and norms prescribed by the Securities and Exchange Board of India (SEBI), including those relating to mandatory credit rating and listing.
(9) Eligibility for deposit insurance:
The bonds shall not be eligible for deposit insurance.
(10) Regulatory/Statutory compliance:
A bank issuing long-term bonds shall be required to comply with all relevant statutory and regulatory requirements.
(1) Credit eligible for regulatory incentives:
‘Eligible Credit (EC)’ shall refer to the outstanding ‘standard’ project loans to all Infrastructure sub-sectors as also outstanding ‘standard’ housing loans under ‘affordable housing’ sub-sector on the date of reporting to RBI (reporting Fridays for reserve requirements and March 31 of a year for computing priority sector obligation), where such loans have original maturities of more than seven years and are net of Bills rediscounted with RBI and other approved financial institutions.
(2) Compliance with reserve requirements:
The bonds will be exempted from computation of net demand and time liabilities (NDTL) and would therefore not be subjected to CRR/SLR requirements. However, this exemption will be subject to a ceiling of the “Eligible Credit” mentioned in paragraph 6(1) above. Therefore, Demand and Time Liabilities (DTL) for the bank which has issued long term bonds as indicated herein will be computed as given below:
| DTL for the purpose of maintaining CRR and SLR calculated in terms of Reserve Bank of India (Small Finance Banks – Cash Reserve Ratio and Statutory Liquidity Ratio) Directions, 2025 as updated from time to time. | I |
|---|---|
| Amount of long-term credit eligible for regulatory incentives as per paragraph 6(1) above. | EC |
| Outstanding long-term bonds issued to finance infrastructure loans and affordable housing loans, as indicated herein | LB |
| DTL for the bank which has issued long term bonds as indicated herein | I – Min (EC and LB) |
(3) Relaxation in priority sector lending norms:
Eligible bonds will also get exemption in computation of Adjusted Net Bank Credit (ANBC) for the purpose of Priority Sector Lending (PSL), as per the computation outlined in Master Directions - Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025.
(1) A bank’s investment in such bonds will not be treated as ‘assets with the banking system in India’ for the purpose of calculation of NDTL.
(2) Such investments are not to be held under HTM category.
(3) An investing bank’s investment in a specific issue of such bonds will be capped at two per cent of the investing bank’s Tier 1 Capital or five per cent of the issue size, whichever is lower.
(4) An investing bank’s aggregate holding in such bonds will be capped at 10 per cent of its total Non-SLR investments.
(5) Not more than 20 per cent of the primary issue size of such bond issuance can be allotted to a bank.
(6) A Bank cannot hold its own bonds.
Further, RBI’s relevant extant prudential norms will be applicable on such issuances and investments.
(1) Foreign Exchange Management Act (FEMA) Compliance requirement:
A bank shall comply with the FEMA requirements, wherever applicable.
(2) Reporting requirements:
A bank issuing long term bonds shall submit a report to the Department of Supervision (DOS), RBI providing details of the bonds issued, such as the amount raised, maturity of the instrument, rate of interest, together with a copy of the offer document, immediately after the completion of the issue.
With the issue of these Directions, the existing Directions, instructions and guidelines relating to Resource Raising as applicable to Small Finance Banks stand repealed, as communicated vide circular DOR.RRC.REC.302/33-01-010/2025-26 dated November 28, 2025. The Directions, instructions and guidelines repealed prior to the issuance of these Directions shall continue to remain repealed.
Notwithstanding such repeal, any action taken or purported to have been taken, or initiated under the repealed Directions, instructions, or guidelines shall continue to be governed by the provisions thereof. All approvals or acknowledgments granted under these repealed lists shall be deemed as governed by these Directions. Further, the repeal of these directions, instructions, or guidelines shall not in any way prejudicially affect: