What happened
The Reserve Bank of India (RBI) on 19 October 2026 removed the part of its rulebooks that set limits on non-option derivative contracts, for both commercial banks and small finance banks. Both changes apply from the day they were issued.
Two separate orders carry the change. One is the Commercial Banks (Miscellaneous) Second Amendment Directions, 2026, and the other is the Small Finance Banks (Miscellaneous) Amendment Directions, 2026. Each strikes out Section C of Chapter IV of the relevant 2025 Directions, which is paragraph 37.
RBI said it took the step after a review, using its powers under section 35A of the Banking Regulation Act, 1949, and judged the move necessary and expedient in the public interest. Chief General Manager Sunil T S Nair signed the orders.
What it means for you
A non-option derivative is a contract, such as a forward or a swap, whose value depends on an underlying rate or price and which, unlike an option, does not give the holder a right they can choose not to use. The deleted section covered limits on such contracts for these banks.
The orders do not say what, if anything, replaces the section, and they give no reasons beyond the review. The notifications mention no change to deposits, loans or charges for ordinary customers.
Background
The Directions being amended were issued in 2025 as consolidated rulebooks for commercial banks and small finance banks. The commercial banks order is numbered as a Second Amendment, which indicates an earlier amendment to that rulebook. To follow how banks report their performance, see our explainer on bank results terms such as NII, NIM, NPA and CASA.
