RBI Issues Second Amendment to Commercial Banks Miscellaneous Directions 2026: Non-Option Derivative Contract Limits Deleted
Overview of the Amendment
The Reserve Bank of India has introduced a significant regulatory change through Circular RBI/2026-27/294 dated October 19, 2026, formally titled the Reserve Bank of India (Commercial Banks – Miscellaneous) Second Amendment Directions, 2026. The circular, bearing reference number DOR.MRG.REC.No.248/00-00-020/2026-27 and signed by Sunil T S Nair, Chief General Manager, carries a single but consequential operative change — the deletion of the provision governing limits applicable to non-option derivative contracts as contained in the Reserve Bank of India (Commercial Banks – Miscellaneous) Directions, 2025.
The amendment takes effect immediately from the date of its issuance, i.e., October 19, 2026, with no transitional period prescribed.
Statutory Authority and Basis for the Amendment
The RBI has issued these directions in exercise of the powers vested in it under Section 35A of the Banking Regulation Act, 1949, read alongside all other enabling provisions and applicable laws that authorize the Reserve Bank to issue binding instructions to commercial banks. The circular expressly records that the RBI is satisfied that issuing these instructions is necessary and expedient in the public interest, which forms the requisite statutory predicate for invoking such powers.
Note: The satisfaction of the RBI regarding public interest necessity is a formal statutory requirement under
Section 35Aof the Banking Regulation Act, 1949 and is recorded in the circular itself.
The Operative Change: Deletion of Section C, Chapter IV
The central and sole substantive action under this amendment is as follows:
"Section C on 'Limits for Non-Option Derivative Contracts' of Chapter IV of the Reserve Bank of India (Commercial Banks – Miscellaneous) Directions, 2025 (paragraph 37 of the Directions) stands deleted."
In practical terms, this means that paragraph 37 of the Reserve Bank of India (Commercial Banks – Miscellaneous) Directions, 2025 — which constituted Section C of Chapter IV under the heading "Limits for Non-Option Derivative Contracts" — no longer forms part of the regulatory framework governing commercial banks in India.
The amendment does not:
- Introduce any replacement provision in lieu of the deleted section
- Prescribe revised numerical limits for non-option derivative contracts
- Provide any transitional or grandfathering arrangement
- Expand or modify any other section of Chapter IV or the broader Directions