The RBI, through amendments to the Credit Risk Management Directions effective April 1, 2026, has introduced stricter norms for NBFC lending to directors, senior officers, and their relatives. Such related-party transactions can no longer be treated as routine business and must now be governed by a formal framework with explicit board approval and arm’s-length certification. Mandatory recusal of interested persons, quarterly internal audits, defined materiality thresholds, and enhanced disclosure requirements aim to prevent preferential lending and concentration of risk. Existing non-compliant loans may run off to maturity but cannot be renewed or enhanced unless aligned with the new standards.