Insolvency and Bankruptcy Code (IBC) completes 10 years

 India's Insolvency and Bankruptcy Code (IBC) completes 10 years today. A decade ago, recovering money from a distressed borrower in India meant navigating a maze of fragmented laws — SICA, SARFAESI, DRT, winding-up petitions — often taking 6 to 8 years, with creditors recovering as little as 15–20 paise on the rupee.

The IBC was enacted in 2016 to fix exactly that. It promised a creditor-driven, time-bound, transparent mechanism for resolving financial distress. Ten years in, the results are significant — though the journey has been as much about culture change as it has been about law.

📊 THE NUMBERS AT A GLANCE (as of March 2026)

✦ 8,987 cases admitted to the NCLT process

✦ 7,102 cases reached closure

✦ 1,419 resolution plans successfully approved

✦ ₹4 lakh crore+ realised for creditors

✦ Recovery at 95% of fair value and 167% of liquidation value

✦ 52.4% of all bank recoveries now flow through IBC (₹0.54L Cr of ₹1.04L Cr total)

✦ Recovery rate improved from 28.3% (FY24) to 36.6% (FY25)

✦ Resolution timelines cut from 6–8 years → ~2 years

🏦 IMPACT ON THE BANKING SYSTEM

Perhaps the most visible impact of IBC has been on the health of India's banking sector.

Gross NPAs in the banking system stood at a staggering 11.8% in 2017. As of September 2025, that number has fallen to 2.1% — a transformation that few would have predicted a decade ago.

Critically, the RBI's own Report on Trend and Progress of Banking 2024–25 identifies IBC as the most effective credit recovery mechanism available to scheduled commercial banks — ahead of SARFAESI, DRTs, and Lok Adalats.

Without the deterrent effect of IBC — which led to over 30,000 cases being settled at the pre-admission stage involving nearly ₹14 lakh crore — the NPA ratio would have been significantly worse.

That pre-admission settlement figure is the one that often gets overlooked. It tells us that IBC is reshaping debtor behaviour long before a company formally enters insolvency proceedings.

🔄 BEYOND RECOVERY: WHAT HAPPENED TO RESOLVED COMPANIES?

Recovery numbers matter. But what happened to the businesses after resolution?

An IIM Ahmedabad study (2025) tracked resolved firms over five years post-resolution and found:

→ Average sales grew by ~89%

→ Asset turnover ratios improved by ~131%

→ Capital expenditure rose by ~106%

→ Aggregate market cap of resolved listed entities jumped from ₹2.8 lakh crore to ₹9 lakh crore

These are not zombie companies limping along — many are genuinely revived enterprises contributing to the broader economy.

Notably, ~42% of companies that went through IBC resolution were either defunct or had previously failed under BIFR. The Code gave these entities — and their workforces — a second chance.

🧠 THE BEHAVIOURAL SHIFT — THE REAL REVOLUTION.

Laws are only as powerful as the behaviour they change.

An IIM Bangalore study found measurable improvement in credit discipline post-IBC. The proportion of loan accounts moving from "Overdue" to "Normal" has been steadily increasing since 2018. More strikingly, the average number of days an account remained overdue fell from 248–344 days to just 30–87 days.

This is the intangible dividend of IBC — borrowers who once delayed repayments strategically are now settling dues earlier, because the cost of default has become real and predictable.

S&P Global Ratings upgraded India's insolvency framework from Group C to Group B — a recognition that the ecosystem around resolution has matured considerably.

⚖️ WHAT STILL NEEDS WORK

Honest assessment demands acknowledging the gaps:

→ Timelines remain a challenge — average resolution still exceeds the 270-day statutory limit in complex cases

→ The haircut problem — financial creditors absorbing large haircuts raises questions about pricing of credit risk

→ Liquidation outcomes are often poor — 3,003 cases ended in liquidation, with asset realisation well below book value

→ Capacity constraints at NCLT — infrastructure and bench strength continue to bottleneck the process

→ Cross-border insolvency framework is still evolving — critical for multinational groups

The IBC jurisprudence has matured significantly, but the operational infrastructure needs to keep pace.

🔭 LOOKING AHEAD

India's aspiration of Viksit Bharat 2047 rests significantly on the quality of its financial architecture. An efficient insolvency system is not just a legal reform — it is infrastructure for entrepreneurship.

When entrepreneurs know that failure is survivable, they take better risks. When lenders know recovery is possible, they price credit more accurately. When investors see accountability enforced, confidence deepens.

The IBC's first decade was about establishing the framework. The next decade needs to be about deepening it — faster resolution, better liquidation outcomes, stronger cross-border mechanisms, and a more capacitated adjudicatory system.

For those of us in law, finance, restructuring, and policy — this is an exciting space to be working in.

RBI imposes monetary penalty on The Lunawada People’s Co-operative Bank Ltd., Dist. Mahisagar, Gujarat

 The Reserve Bank of India (RBl) has, by an order dated May 22, 2026, imposed a monetary penalty of ₹2 lakh (Rupees Two Lakh only) on The Lunawada People’s Co-operative Bank Ltd., Dist. Mahisagar, Gujarat (the bank), for non-compliance with certain directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms / concerns in which they are interested’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by the RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank had sanctioned loans wherein relatives of its directors stood as guarantors.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

BHAVYA: India's ₹33,660 Crore Push for World-Class Industrial Parks | Notified 10 April 2026 | DPIIT, Government of India | 6-year scheme (FY27–32)

 

BHAVYA: India's ₹33,660 Crore Push for World-Class Industrial Parks

Policy Brief | May 2026 | DPIIT, Government of India

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India has launched Bharat Audyogik Vikas Yojna (BHAVYA) — a landmark Central Sector Scheme to create 100 world-class, plug-and-play industrial parks across the country. With a total outlay of ₹33,660 crore, the scheme is designed to make India a globally competitive manufacturing destination by building investment-ready infrastructure close to cities, multi-modal logistics networks, and global supply chains.

Metric	Detail
Total Outlay	₹33,660 crore
Industrial Parks	100 (50 in Phase 1)
Scheme Duration	6 years — FY 2026-27 to 2031-32
Notified On	10 April 2026
Nodal Ministry	DPIIT, Ministry of Commerce & Industry

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1. Objective

BHAVYA aims to develop investment-ready, world-class industrial infrastructure that allows investors to commence manufacturing without delays. Each industrial park under the scheme will offer plug-and-play facilities — meaning an allottee can begin operations from day one.

Core Vision: Transform India into a globally competitive manufacturing hub by creating industrial ecosystems with proximity to cities, connectivity to multi-modal logistics, and deep integration into domestic and global value chains — while boosting employment and value addition in the country.

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2. Who Can Apply?

Applications may be submitted by the following sponsoring agencies:

• State / UT Governments — after due consideration and recommendation of the State Level Committee (SLC) chaired by the Chief Secretary.
• Central Public Sector Enterprises (CPSEs) — with Board approval and in compliance with applicable Government of India instructions.
• Private Developers — in joint venture with the State Nodal Agency and NICDIT, subject to eligibility conditions including minimum net worth of 15% of project cost and at least 50 acres of prior development experience in industrial/logistics/real estate projects.

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3. Eligibility Criteria

Land Area

• Non-hilly states: Minimum 100 acres of contiguous land.
• Hilly/NE states, UTs, and states with population under 1 crore (Himachal Pradesh, Uttarakhand, all NE states, Goa, Andaman & Nicobar, Lakshadweep, Chandigarh, Dadra & Nagar Haveli, Daman & Diu, Delhi, J&K, Ladakh, Puducherry): Minimum 25 acres.
• Non-contiguous adjoining parcels (maximum 2) of at least 100 acres each within a 2 km radius may be considered.
• Up to 20 of the 100 parks may have a development area between 500–1000 acres.

Land Ownership

• 90% encumbrance-free land must be in possession at the time of application.
• Land ownership must be transferred to the SPV within 3 months of project approval (extendable by 3 months for genuine reasons; else approval is annulled).
• Land transferred to the SPV is treated as equity contribution in all cases.

Other Mandatory Conditions

• Planning and development powers must be formally delegated to the SPV by the State/UT Government — a prerequisite for any fund release.
• Proposals using land pooling, aggregation, or town planning schemes receive additional evaluation weightage.
• Both greenfield and brownfield parks are eligible. Brownfield parks are considered on a case-to-case basis.

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4. Application Windows — Phase 1

Round	Window	Projects
Round 1	01 June 2026 – 31 July 2026	Up to 20 projects
Round 2	01 August 2026 – 30 September 2026	Remaining from 50

Applicants not selected in Round 1 may reapply with improvements in Round 2. The application portal URL will be notified at https://www.dpiit.gov.in

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5. Funding Structure

Financial assistance is provided by the Central Government through NICDIT in the form of equity contribution, linked to the value of land transferred to the SPV. NICDIT's equity shall not exceed 50% of paid-up equity capital of the SPV.

Funding Quantum

• State/CPSE-led parks: Up to ₹1 crore per acre
• Private developer-led parks: ₹50 lakh per acre or 50% of infrastructure cost, whichever is lower
• External infrastructure: Up to 25% of total approved project funding. The Scheme covers a maximum of 25% of such external infra cost; the balance 75% is borne by the State/UT Government.

Fund Release — 3 Tranches Over 3 Years (Ratio 40:40:20)

Tranche I — 40%

• NLSC approval
• Transfer of 90% encumbrance-free land to SPV
• Delegation of planning/development powers to SPV
• Allocation of power & water by State/UT Government
• Environmental clearance obtained — 10% released after this
• Commencement of work

Tranche II — 40%

• Utilisation of 75% of Tranche I
• Proportionate physical progress
• Land allotment to at least 2 manufacturing units (investment commitment: ₹50 crore in non-hilly states; ₹10 crore in others)

Tranche III — 20%

• Utilisation of 90% of Tranches I & II
• Proportionate physical progress
• Completion of external infrastructure components
• Commencement of construction of at least 2 independent manufacturing facilities
• Certification for final completion

What Is NOT Funded

Land acquisition cost, commissioning fees, royalties, preliminary/pre-operative expenses, interest capitalised, transportation vehicles, and working capital.

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6. How Proposals Are Evaluated

Selection is competitive. Applications meeting mandatory criteria are scored out of 100. Top-scoring proposals above the benchmark threshold are shortlisted for DPR appraisal by PMA before NLSC approval.

Criterion	Marks
Proximity to nearest Urban Local Body (ULB)	10
Mode of land acquisition (extra for land pooling)	5
Proximity to NH / SH / seaport / cargo airport / ICD / MMLP	10
Connectivity from the park to above logistics node	5
Power & water supply confirmation	10
DPR quality & industrial competitiveness	25
Vacancy in nearest competing industrial parks (within 100 km)	5
Demand assessment study	5
Single-window clearance digitisation at SPV level	10
Industrial power tariff competitiveness & RE facilitation	10
Land allotment time (last calendar year)	5
Project proposed in states with per capita income below national average	Up to 10
Total	100

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7. Implementation — The SPV Model

Each approved industrial park is implemented through a Special Purpose Vehicle (SPV) incorporated under the Companies Act, 2013, jointly formed by NICDIT and the State Nodal Agency (or CPSE).

Key features of the SPV model:

• NICDIT's equity stake is capped at 50% of paid-up capital.
• Land transferred to the SPV is valued by an independent committee of registered valuers (circle rate or Fair Market Value, whichever is higher).
• Core infrastructure is developed through EPC mode. Private developers may use alternate modes with SPV approval.
• Development must be completed within 24 months (extendable for 500–1,000 acre parks based on justified requirements).
• An O&M Corpus Fund of up to 5% of gross allotment premium is maintained in a dedicated escrow account for the first 5 years post-completion — for ETPs, STPs, roads, streetlights, security, housekeeping, and short-life asset replacement.
• Private developer anchor investors may self-allot up to 25% of developed land; the remaining 75% is allotted transparently to other industrial units.
• In private developer-led projects, transfer/sale of equity is permitted only after 5 years from the date of completion and operationalisation.

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8. What Infrastructure Can Be Funded?

Core Infrastructure

Internal road network, underground utilities (water, sewerage, gas, power), storm water drainage, streetlights, area landscaping, CETP, WTP, STP, solid waste management, ICT & security infrastructure, administrative block, and fire safety systems.

Value-Added Infrastructure

Built-to-suit (BTS) facilities, storage & warehousing, sector-specific support infrastructure (R&D centres, testing labs, training centres — preferably on PPP basis), and renewable energy infrastructure.

Social Infrastructure (preferably on PPP basis)

SAFE worker housing, Common Facility Centres, on-site day care & health services, and Skill Development Centres.

External Infrastructure

Last-mile link roads (to NH/SH/rail heads/logistics hubs), power transmission lines from nearest substation, water supply pipelines from nearest reservoir, and gas supply access.

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9. Governance & Oversight

National Level Steering Committee (NLSC) — Headed by Secretary, DPIIT. Approves projects, monitors progress, oversees fund release, and can recommend modifications to scheme guidelines.

State Level Committee (SLC) — Chaired by the Chief Secretary. Recommends projects, facilitates external infrastructure, reviews milestone achievement, and ensures state policy integration.

NICDC (Project Management Agency / PMA) — Provides secretarial, technical, and managerial support; prepares appraisal reports for every proposal; and submits quarterly progress reviews to NLSC.

Transparency mechanisms include GIS-based project tracking, periodic third-party evaluations, and public disclosure by the SPV.

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10. Convergence with Other Government Schemes

The SPV and State/UT Government are encouraged to leverage other Central and State schemes for components not funded or only partially funded under BHAVYA — including external infrastructure, logistics, skill development, renewable energy, water management, and testing/lab facilities. Double-financing of the same component under two schemes is strictly prohibited.

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Conclusion: Why BHAVYA Matters

BHAVYA is not just another infrastructure scheme — it is a structural shift in how India creates manufacturing capacity. By combining competitive selection, milestone-linked funding, private sector participation, and convergence with other government schemes, it ensures that every rupee spent creates a genuinely investible, operational industrial park.

For state governments, it is an opportunity to attract manufacturing investment, create jobs, and develop world-class industrial estates. For PSUs and private developers, it offers a structured, well-funded framework to build and operate industrial parks at scale. For investors and manufacturers, it promises plug-and-play infrastructure with single-window clearances and reliable utilities.

The application window opens 1 June 2026. The time to act is now.

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Source: Office Memorandum No. 32026/2/2024-MIIUS, DPIIT, Government of India, dated 23 May 2026. Guidelines for implementation of Bharat Audyogik Vikas Yojna (BHAVYA).

#BHAVYA #MakeInIndia #DPIIT #IndustrialInfrastructure #Manufacturing #InvestIndia #NICDIT #IndustrialParks

IBBI's Twin Amendments: A Simpler Insolvency Path for MSMEs Regulatory Insight | 19 May 2026 | 4 min read

 On 19th May 2026, the Insolvency and Bankruptcy Board of India issued two companion notifications that quietly but meaningfully ease the burden on small businesses navigating insolvency.

India's insolvency framework has long grappled with a fundamental tension: the Insolvency and Bankruptcy Code (IBC) was designed for large corporate debtors, but a significant share of cases involve Micro, Small and Medium Enterprises (MSMEs) with limited assets and thinner margins. Two new amendments, notified simultaneously by IBBI Chairperson Ravi Mital, take a targeted step toward resolving that tension.

"For MSMEs classified under section 7 of the MSME Development Act, 2006, one registered valuer per asset class shall suffice — unless the relevant committee decides, for reasons to be recorded in writing, to appoint two."

This single proviso, inserted in parallel into two separate regulations, captures the spirit of both amendments. Here is what changed, and why it matters.

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The Two Amendments at a Glance

Both notifications were issued on the same date under the authority of sections 196 and 240 of the Insolvency and Bankruptcy Code, 2016, and came into force immediately upon publication in the Official Gazette.

Amendment 1 — CIRP Insolvency Resolution Process for Corporate Persons (Second Amendment) Regulations, 2026 F. No. IBBI/2026-27/GN/REG141

Inserts a new proviso in Regulation 27. The Resolution Professional handling an MSME's CIRP now appoints one set of registered valuers per asset class, not two — unless the Committee of Creditors (CoC) directs otherwise in writing.

Amendment 2 — Liquidation Liquidation Process (Third Amendment) Regulations, 2026 F. No. IBBI/2026-27/GN/REG142

Inserts a parallel proviso in Regulation 35. The Liquidator managing an MSME's liquidation appoints one registered valuer per asset class, unless the Consultation Committee decides to require two.

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Why This Change Matters

Under the existing framework, two sets of registered valuers were mandated to independently value each asset class of the corporate debtor — a check meant to ensure accuracy and prevent manipulation. For large companies with significant assets, the cost and time involved in appointing two separate valuers is justified. For an MSME with limited assets, however, the same requirement often imposed a disproportionate financial and procedural burden on an already strained estate.

The amendments address this directly by making a single valuer the default for MSMEs, while preserving the committee's discretion to require two where warranted.

✅ Reduces valuation costs in CIRP and liquidation for MSME debtors ✅ Speeds up the resolution and liquidation timeline ✅ Eases the burden on Resolution Professionals and Liquidators ✅ Retains oversight — committees can still require two valuers with recorded reasons

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Reading the Signal

The fact that both amendments were notified on the same date, covering both the resolution and the liquidation process, is deliberate. IBBI is signalling a coherent, cross-stage policy stance: MSMEs should face a proportionate insolvency regime — one that maintains safeguards but removes unnecessary friction at every stage of the process.

This is consistent with the broader legislative direction in recent years, which has sought to make the IBC more accessible and less costly for smaller enterprises, including through the pre-packaged insolvency framework introduced in 2021.

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Key Takeaway for Practitioners

For insolvency professionals, resolution professionals, liquidators, and legal practitioners advising MSME clients, these amendments require an immediate update to standard operating procedures. The default valuation approach for MSME debtors has changed — and any deviation from the single-valuer norm now requires formal committee approval with written reasons on record.

IBBI Tightens Valuer Rules in Pre-Packaged Insolvency — What Resolution Professionals Need to Know

 The Insolvency and Bankruptcy Board of India (IBBI) has notified the Pre-Packaged Insolvency Resolution Process (Second Amendment) Regulations, 2026 vide notification dated 19th May 2026. The amendment comes into force on the date of publication in the Official Gazette and makes targeted but significant changes to how registered valuers are appointed and how valuations are determined in PPIRP proceedings.

Key regulation amended: Regulation 38 (Appointment of Registered Valuers) has been substituted in entirety. Regulation 39 (Valuation process) has also been amended to tighten language around coordinating valuers.

What changed in Regulation 38?

The revised Regulation 38 now mandates that the Resolution Professional (RP) appoint a set of registered valuers within three days of their own appointment to determine both the fair value and the liquidation value of the corporate debtor. The Committee of Creditors (CoC) retains the discretion to decide, in writing, to appoint two sets of valuers instead of one.

More significantly, the amendment introduces an expanded and explicit list of persons who cannot be appointed as registered valuers:

• A related party of the corporate debtor
• An auditor of the corporate debtor at any time during the five years preceding the pre-packaged insolvency commencement date
• A partner or director of the insolvency professional entity of which the RP is a partner or director
• A relative of the RP, or of any partner or director of the IP entity

This mirrors the conflict-of-interest framework that was already in place under CIRP, bringing greater parity and integrity to the PPIRP process as well.

What changed in Regulation 39?

The amendments to Regulation 39 refine the language around the valuation process itself:

• "Coordinating valuers" replaced with "the coordinating valuer" — signalling a single designated coordinator
• Fair value is now the estimate submitted by the coordinating valuer; where two sets are appointed, it is the average of the two coordinating valuers' estimates
• Liquidation value equals the aggregate of estimates per asset class; where two sets are appointed, it is the average of the two sets' estimates in each class

Why does this matter for RPs?

For Resolution Professionals, these changes have immediate operational implications. The three-day clock for valuer appointment starts ticking from the moment the RP is appointed — there is no room for delay. Due diligence on valuer eligibility must be conducted upfront, particularly given the expanded disqualification criteria now covering not just direct relationships but also those within the IP entity's network.

The tighter language on coordinating valuers also reduces ambiguity in how final valuation figures are arrived at, which should lead to cleaner, more defensible valuation reports in PPIRP proceedings.

Takeaway

This amendment is a step toward greater transparency and independence in the PPIRP process. As an RP, building a pre-screened panel of eligible registered valuers — with conflict-of-interest checks built in — is no longer optional best practice. It is essential from day one.

SEBI Revises Monthly Cumulative Report (MCR) Format for Mutual Funds.

 SEBI has issued a fresh circular dated May 19, 2026, directing all Mutual Funds, Asset Management Companies (AMCs), Trustee Companies, and AMFI to adopt a revised Monthly Cumulative Report (MCR) format — effective June 2026 onwards.

While this may appear to be a routine administrative update, the changes carry meaningful implications for compliance, operations, and data reporting teams across the mutual fund industry.

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Why Has SEBI Revised the MCR Format?

The revision flows directly from SEBI's earlier circular dated February 26, 2026 on the Categorisation and Rationalisation of Mutual Fund Schemes, which introduced new scheme categories into the Indian mutual fund landscape. These new categories — now consolidated as Clause 3.7 of the SEBI Master Circular for Mutual Funds (March 20, 2026) — weren't reflected in the existing MCR format under Clause 6.20.

To bridge this gap and ensure accurate, comprehensive monthly reporting, SEBI has updated the MCR format to accommodate these additions.

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What's New in the Revised MCR Format?

The revised MCR (Annexure A) retains the overall structure of the existing report but introduces several notable additions and refinements:

New Scheme Categories Added

Life Cycle Funds are now formally included as a separate category with six maturity buckets:

• 5 Years
• 10 Years
• 15 Years
• 20 Years
• 25 Years
• 30 Years

This is a significant addition, reflecting SEBI's push to encourage goal-based, long-horizon investing products in India.

Refined Debt Sub-categories now include the Ultra Short to Short Term Fund as a distinct category, sitting between Ultra Short Term and Short Term funds — providing more granular reporting.

A Brand New MCR-SIF Format

Perhaps the most structurally significant change is the introduction of a separate MCR format for Specialised Investment Funds (SIF) — enclosed as Annexure B.

The MCR-SIF covers three broad investment strategy categories:

A. Equity Oriented Investment Strategies

• Equity Long-Short Fund
• Equity Ex-Top 100 Long-Short Fund
• Sector Rotation Long-Short Fund

B. Debt Oriented Investment Strategies

• Debt Long-Short Fund
• Sectoral Debt Long-Short Fund

C. Hybrid Investment Strategies

• Active Asset Allocator Long-Short Fund
• Hybrid Long-Short Fund

The SIF format captures the same data points as the standard MCR — number of schemes, folios, fund mobilisation, redemptions, net inflows/outflows, AUM, AAUM, segregated portfolios, and SIP data — but mapped specifically to these alternative strategy categories.

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What Remains Unchanged?

SEBI has been explicit: all other conditions specified under Clause 6.20 of the Master Circular remain unchanged. The data fields, reporting notes, and submission obligations continue as before. The revision is purely a structural expansion to accommodate new product categories — not an overhaul of the reporting framework.

Key reporting notes that continue to apply:

• Number of schemes includes series/serial plans
• Segregated portfolios are not counted as separate schemes
• Folios of segregated portfolios are excluded from folio counts
• AUM of segregated portfolios is included in overall AUM figures
• AAUM is the average of daily AUM for the month
• Inter-scheme investments are excluded from all data

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Timeline & Action Points

Milestone	Date
Circular issued	May 19, 2026
New MCR format effective	June 2026 (reporting for June month)
Reference Master Circular	March 20, 2026 (Clause 6.20 & 3.7)

For AMC Operations & Compliance Teams:

• Review Annexure A and Annexure B of the circular carefully
• Update your internal MIS and reporting systems to accommodate the new scheme categories
• Coordinate with your technology and data teams to map Life Cycle Fund and SIF data to the new format before the June reporting cycle
• Confirm with AMFI if any additional operational guidance is issued on the SIF reporting format

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The Bigger Picture

This circular is a small but telling indicator of the direction SEBI is steering the mutual fund industry. The inclusion of Life Cycle Funds and Specialised Investment Funds in the MCR signals that these are no longer niche experiments — they are now mainstream enough to warrant standardised monthly reporting at the industry level.

For investors, this means greater transparency into how money is flowing across these newer product categories. For fund houses, it's a reminder that regulatory reporting must keep pace with product innovation.

The industry has until the June 2026 reporting cycle to get its systems in order. That's not a long runway — so compliance teams would do well to act now.

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This blog is for informational purposes only. Please refer to the official SEBI circular (HO/24/11/24(62)2026-IMD-RAC4/I/11872/2026 dated May 19, 2026) and the SEBI Master Circular for Mutual Funds for complete and authoritative details.

SEBI's Master Circular on Surveillance: What Every Market Participant Needs to Know Published: May 2026

 The Securities and Exchange Board of India (SEBI) has released an updated Master Circular on Surveillance of Securities Market (last updated May 15, 2026), consolidating over two decades of surveillance-related guidelines into a single, comprehensive framework. Whether you are a listed company, a stock broker, a depository, or a compliance officer — this circular has something important for you.

Here's a clear, structured breakdown of what's changed and what it means in practice.

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1. Trading Rules for Special Situations

Certain categories of securities are now required to trade exclusively in the Trade for Trade (TFT) segment for the first 10 trading days after listing or reinstatement. This applies to:

• Securities emerging from mergers, demergers, amalgamations, or corporate debt restructuring
• Securities admitted to trading via direct listing, MOU, or permitted category
• Scrips whose trading suspension has been revoked after more than one year

The TFT mechanism ensures price transparency and reduces the risk of manipulation during the sensitive early days of trading. Stock exchanges are also required to ensure companies meet disclosure requirements before trading commences.

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2. Cracking Down on Unauthenticated News

SEBI has long been concerned about market rumours spreading through digital channels — and this circular reinforces that stance firmly. Market intermediaries are now directed to:

• Establish robust internal codes of conduct governing employee communication
• Ensure no unverified news or rumours are circulated via social media, WhatsApp, blogs, email, or VoIP platforms
• Maintain logs of all such communication as records
• Route all market-related news through the Compliance Officer before forwarding

Failure to comply means not just the employee but the Compliance Officer can also be held personally liable. This is a significant escalation in accountability.

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3. Financial Penalties for Surveillance Lapses at MIIs

One of the most consequential additions in this circular is the structured Financial Disincentives for Surveillance Related Lapses (FDSRL) framework for Market Infrastructure Institutions — stock exchanges, clearing corporations, and depositories.

A Surveillance Related Lapse (SRL) includes:

• Non-implementation or delayed action on surveillance meeting decisions
• Failure to discharge surveillance activities within agreed timelines
• Inadequate or non-reporting of surveillance activity

Penalty Structure (per Financial Year):

Instances of SRL	MII Revenue > ₹1000 Cr	MII Revenue ₹300–1000 Cr	MII Revenue < ₹300 Cr
1st instance	₹25 Lakhs	₹5 Lakhs	₹1 Lakh
2nd instance	₹50 Lakhs	₹10 Lakhs	₹2 Lakhs
3rd instance onwards	₹1 Crore	₹20 Lakhs	₹4 Lakhs

Penalties are credited to the Investor Protection and Education Fund (IPEF) within 15 working days. Minor procedural delays or self-corrected errors are excluded from this framework.

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4. Insider Trading Disclosures — Going Digital

SEBI has strengthened disclosure requirements under the Prohibition of Insider Trading (PIT) Regulations, 2015 in two key ways:

Automated, System-Driven Disclosures

Continual disclosures under Regulation 7(2) are now automated for promoters, designated persons, and directors — covering trades in equity shares, equity derivatives, and listed debt securities. Companies that have implemented the system-driven disclosure mechanism are no longer required to file manually.

Code of Conduct Confirmations

Companies must immediately confirm to stock exchanges that their:

• Code of Fair Disclosure for Unpublished Price Sensitive Information (UPSI) is published on their website
• Code of Conduct has been formulated and communicated

They must also ensure that all market intermediaries handling UPSI have their own code of conduct in place.

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5. Trading Window Closure — Now Fully Automated

Perhaps the most operationally significant update is the PAN-ISIN Freeze Framework for Trading Window Closure periods.

Stock exchanges and depositories will now automatically restrict trading by Designated Persons (DPs) and their immediate relatives during trading window closure periods — eliminating the risk of inadvertent non-compliance.

What Gets Restricted?

• On-market transactions in equity shares and equity derivatives
• Off-market transfers
• Creation of pledge and other encumbrances

How It Works:

1. The listed company confirms DP details and trading window dates to the Designated Depository (DD) at least 2 trading days in advance
2. The DD shares this with stock exchanges and the other depository 1 trading day before closure
3. From the start date, PAN of DPs and their immediate relatives is frozen at ISIN level
4. Any additions or exemptions take effect within 2 trading days of intimation

For newly listed companies, this freeze framework kicks in from the first day of the second quarter after listing.

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What This Means for You

If you are...	Key action
A listed company	Update DP details with your Designated Depository; confirm codes of conduct to exchanges
A stock broker / intermediary	Review your internal communication controls; train employees on rumour-spreading risks
A compliance officer	Ensure timely disclosures; you are now personally accountable for communication lapses
A stock exchange / depository	Implement PAN-ISIN freeze systems; be aware of FDSRL penalty thresholds

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The Big Picture

This Master Circular is not just a consolidation exercise. It reflects SEBI's broader push toward automation, accountability, and zero tolerance for market manipulation. The move to system-driven disclosures and automated trading window freezes reduces human error while the FDSRL framework ensures MIIs take their surveillance responsibilities seriously.

With 22 earlier circulars now rescinded and replaced by this unified document, market participants have a single authoritative reference point — a welcome step toward regulatory clarity.

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This blog is intended for informational purposes only and does not constitute legal or compliance advice. Always refer to the official SEBI circular for complete details.

SEBI Clarifies What InvITs Can Do When Borrowings Cross the 49% Mark May 15, 2026 SEBI/HO/DDHS/DDHS-PoD-2/I/11700/2026

 SEBI has issued a circular, effective May 15, 2026, clarifying the permissible use of fresh borrowings for Infrastructure Investment Trusts (InvITs) whose net borrowings exceed forty-nine percent of the value of their assets. This follows the amendment to Regulation 20(3)(b)(ii) of the SEBI (Infrastructure Investment Trusts) Regulations, 2014, notified on April 17, 2026.

InvITs are typically subject to a borrowing ceiling, but the regulations have always recognised that certain high-capital situations may require flexibility beyond this threshold. Until now, the specifics of what qualifies as a permissible use above 49% were not explicitly enumerated. This circular removes that ambiguity.

Three permitted uses above the 49% threshold

The first is capital expenditure made to enhance asset performance or for capacity augmentation. This is particularly significant for infrastructure assets where periodic enhancement is integral to long-term viability and revenue generation.

The second is major maintenance expense in respect of road projects. Major maintenance here means expenditure on road upkeep that is not routine in nature and is specifically mandated under the concession agreement. A road project, for this purpose, refers to a project in the 'Roads and bridges' infrastructure sub-sector as defined under the Ministry of Finance notification dated September 19, 2025, including any subsequent amendments.

The third is refinancing of existing debt, applicable to the InvIT, its SPV, or Holdco — subject to two strict conditions. First, the original debt being refinanced must itself have been used for a purpose already permitted under Regulation 20(3)(b)(ii). Second, only the principal portion of the debt may be refinanced — accumulated interest, charges, or fees of any kind are explicitly excluded.

Why this circular matters

Infrastructure assets are capital-intensive by nature. Road concessions, power transmission lines, and other InvIT-held projects routinely require significant periodic expenditure well beyond day-to-day operations. The 49% borrowing cap, while a prudent guardrail, can create friction for InvITs managing large, long-lived assets with lumpy capital requirements.

By codifying these three categories, SEBI has given trustees, investment managers, and lenders a clear framework to structure financing above the threshold — without the uncertainty of case-by-case interpretation. The refinancing carve-out in particular is a practical acknowledgement that debt management is an ongoing function, not a one-time event.

Key takeaway for practitioners

For InvIT trustees and investment managers, this circular is both a compliance guide and a structuring tool. Borrowings above 49% must now be mapped to one of the three permitted categories. For road InvITs in particular, the major maintenance and refinancing provisions offer meaningful headroom — provided the original debt lineage and concession obligations are well documented.

IBBI Strengthens Governance of Insolvency Professional Agencies: What the 2026 Amendment Means: May 13, 2026 F. No. IBBI/2026-27/GN/REG/14

 The Insolvency and Bankruptcy Board of India (IBBI) has notified an important amendment to the Model Bye-Laws and Governing Board of Insolvency Professional Agencies (IPA) Regulations, 2016. Published in the Gazette of India on May 13, 2026, these changes signal a decisive move toward tighter regulatory oversight and cleaner governance within India's insolvency ecosystem.

Four key changes at a glance.

Nominee Director on the Governing Board

IBBI can now nominate one individual as a director on the Governing Board of any IPA. This nominee director carries the same status, rights, duties, powers, and responsibilities as any other director — giving IBBI a direct seat at the table.

Stronger independence criteria

Directors who are members of any statutory regulator that has sponsored or promoted an IPA, or who hold shareholding or control over an IPA, are now ineligible. A director of one IPA cannot simultaneously serve as an independent director of another IPA.

Performance-linked reappointment

The second term of Governing Board members will now be granted only after a satisfactory performance review of the first term by the Governing Board itself, along with prior approval from IBBI. This prevents automatic renewals and introduces accountability.

Transparent MD appointment process

For appointment or renewal of a Managing Director, an IPA must now forward at least two names to IBBI no less than one month before the existing MD's tenure expires. This ensures IBBI has adequate time to review and approve, reducing last-minute appointments.

Why this matters

These amendments collectively reduce the risk of regulatory capture, strengthen the independence of IPA governance, and bring greater transparency to key leadership appointments. For insolvency professionals, resolution applicants, and creditors, a more robustly governed IPA framework translates to higher confidence in the quality and consistency of professional oversight.

When the Law Exists But the Culture Doesn't: The TCS POSH Failure That Should Wake Us All Up

 

The Report That Shook Corporate India

A government fact-finding probe. A Fortune 500 company. A workplace described as "deeply disturbing and toxic."

This is not a storyline from a workplace drama series. This is the finding of India's National Commission for Women (NCW), submitted to the Maharashtra Chief Minister after a probe into Tata Consultancy Services' (TCS) Nashik unit.

The NCW's report found pervasive sexual harassment, systemic bullying, and — most damning of all — zero compliance with the POSH Act, 2013, a law that has been in force for over a decade.

How does this happen in 2025? At one of India's most recognised companies? Let's unpack it.

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What the Probe Actually Found

The inquiry committee — comprising a retired Bombay High Court judge, a former DGP, and legal experts — visited the Nashik facility in April, interacting with victims, internal committee members, and police officials before compiling their report.

Here is what they documented:

• Multiple instances of sexual harassment, attempted molestation, and sustained mental abuse of employees
• The accused — Danish, Tausif, and Raza Memon — controlled the entire office and were shielded by HR official Ashwini Chainani
• Employees who attempted to raise their voices faced transfers and terminations
• The accused used their positions to denigrate Hindu mythology, beliefs, and traditions, impressing upon women that Islam was a superior religion — a textbook grooming and coercion tactic
• CCTVs were installed but non-functional — raising serious questions about intent
• TCS did not respond to media queries before publication

The NCW's conclusion was unambiguous: "No employee had the courage to raise their voice, and those who did so faced fear of professional repercussions including transfer and terminations."

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The POSH Act, 2013 — What It Says and Who It Covers

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 — commonly called the POSH Act — was a landmark piece of legislation born out of the Supreme Court's Vishaka Guidelines (1997). It gives statutory teeth to the right of every woman to work in a safe, dignified environment.

Here is what the law mandates, in plain terms:

Who does it apply to?

Every organisation with 10 or more employees — private companies, public sector undertakings, NGOs, educational institutions, hospitals, startups, factories, and even households employing domestic workers.

What must organisations do?

Requirement	Detail
Internal Complaints Committee (ICC)	Mandatory at every office/branch with 10+ employees
ICC Composition	Minimum 4 members; presiding officer must be a senior woman employee; at least 1 external member from an NGO or legal background
Complaint Window	Victim must file within 3 months of the incident (extendable in exceptional cases)
Inquiry Timeline	Must be completed within 90 days of receiving the complaint
Annual Report	Must be submitted to the District Officer every year
Awareness	Employer must conduct regular workshops and awareness programmes

Who does it protect?

All women at the workplace — permanent employees, contractual staff, temporary workers, trainees, interns, and even visitors or clients who face harassment on the premises.

What are the penalties for non-compliance?

• Fine up to ₹50,000 for first-time non-compliance
• Repeat offences can lead to cancellation of the organisation's business licence or registration
• Officers found guilty of non-compliance can face personal liability

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The Gap Between Law and Culture

The TCS Nashik case exposes a painful truth that HR professionals, legal teams, and leadership have quietly known for years:

A law on a notice board protects no one.

The POSH Act requires organisations to set up an ICC. Most large companies did — on paper. They drafted policies. They held one annual training session. They filed their annual report. Box ticked.

But they never asked the harder questions:

• Does anyone in this organisation actually know how to file a complaint?
• Is the ICC genuinely independent — or is it staffed by loyalists of senior management?
• Do employees believe they will be protected if they report? Or do they believe they will be punished?
• Is psychological safety a real feature of this workplace — or just a slide in the onboarding deck?

In the TCS case, the answer to every one of those questions was clearly: No.

HR did not protect the victims. HR protected the accused.

The CCTVs that should have been evidence — were non-functional.

The ICC that should have been a safe channel — was either absent or compromised.

And the result? Women went to work every day in an environment of fear, harassment, and coercion, with no safe exit.

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The Roles We All Play

This is not just a TCS problem. It is a systemic problem — and it implicates all of us in the ecosystem.

For HR professionals:

Your role is not to protect the company's reputation. Your role is to protect its people. When HR becomes a shield for the powerful rather than a voice for the vulnerable, it does not just fail individuals — it makes the entire organisation complicit.

For senior leadership:

Culture is set at the top. If you tolerate silence, you are endorsing it. If you reward loyalty over integrity, you will always get loyalty over integrity. The tone of psychological safety — or the absence of it — flows directly from how leaders respond when someone is brave enough to speak.

For managers:

You are often the first person someone approaches. How you respond in that moment — whether with empathy or defensiveness, action or deflection — determines whether that person ever speaks again.

For employees:

You are not alone, even when it feels that way. The POSH Act exists because people fought for it. Knowing your rights is the first step to exercising them.

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What Does Real POSH Compliance Look Like?

Beyond the legal minimums, organisations serious about safe workplaces should ask:

1. Is our ICC truly independent? The presiding officer and external member must be empowered to act without fear of management pressure.

2. Do employees know it exists — and trust it? Annual awareness training is not enough. Regular, candid conversations about what harassment looks like, how to report, and what protections exist are essential.

3. Are complaints handled confidentially and promptly? Leaks destroy trust instantly. A 90-day inquiry timeline that actually holds is non-negotiable.

4. Is retaliation treated as seriously as harassment itself? The TCS case shows that retaliation — transfers, terminations — was the primary weapon of suppression. Organisations must treat retaliatory action as a severe independent violation.

5. Are leaders held accountable? If a team leader, manager, or HR official is found to have suppressed complaints or protected the accused, they must face consequences — not promotions.

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Closing Thought

Twelve years after the POSH Act became law, a government committee had to travel to a corporate office, interview victims in person, and write a report to the Chief Minister of a state — just to get someone to acknowledge that women were being harassed and silenced there.

That is not a legal failure. The law was always clear.

That is a culture failure. A leadership failure. A human failure.

The question every organisation should be sitting with today is not "Are we compliant?"

It is: "Would someone in our team feel safe enough to speak up? Really?"

If you are not certain the answer is yes — that is where the work begins.

India Overhauls FDI Approval Process: A Complete Guide to DPIIT's New SOP (May 2026)

 

Introduction

On 4 May 2026, the Department for Promotion of Industry & Internal Trade (DPIIT), under India's Ministry of Commerce & Industry, issued a landmark update to the Standard Operating Procedure (SOP) for processing Foreign Direct Investment (FDI) proposals — File No. 1/8/2016-FC.I.

This is not a minor tweak. The revised SOP fundamentally restructures how FDI proposals are filed, processed, approved, and monitored in India. For foreign investors, legal counsel, compliance teams, and corporate strategists, this document is now a core transaction reference.

The SOP operationalises Government-route filings under:

• The Consolidated FDI Policy dated 15.10.2020 (as amended)
• The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (as amended)

1. The Big Shift: Fully Paperless, End-to-End Digital

The most immediate change is the complete elimination of physical document filing. The new SOP mandates that all FDI proposals requiring Government approval be filed exclusively online via the Foreign Investment Facilitation (FIF) / National Single Window System (NSWS) Portal.

What this means in practice:

• All application documents must be digitally signed by an authorised representative
• No physical copies of any documents are required at any stage
• All queries, clarifications, approvals, and rejections are communicated only through the Portal
• This applies to Administrative Ministries/Departments as well — they continue examining proposals on the Portal

This move dramatically reduces processing delays caused by courier timelines, document mismatches, and manual routing — a long-standing pain point for foreign investors.

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2. How the Process Works: Step by Step

Step 1 — Filing the Application

The applicant (investor or investee) prepares and submits the FDI application on the Portal along with all required documents (see Document Checklist section below). A Security Clearance Form must also be filed separately where applicable.

Step 2 — DPIIT Routes the Proposal (Day 1–2)

Within 2 working days, DPIIT:

• Identifies the concerned Administrative Ministry/Department (Competent Authority)
• Assigns the proposal to them via the Portal
• Simultaneously circulates the proposal to RBI (for FEMA perspective), MHA (for security clearance cases), and MEA (for all proposals, particularly LBC-related ones)

Step 3 — Initial Scrutiny (Within 2 weeks / cumulative)

The Competent Authority scrutinises the application and documents. If additional information is needed, all queries must be raised through the Portal — ideally in a single communication to avoid back-and-forth delays.

Step 4 — Stakeholder Comments (By Week 8 cumulative)

RBI, MHA, MEA, and any other consulted Ministry/Department must provide comments within 6 weeks of receiving the proposal. If no comments are received within the timeline, silence is treated as "no objection".

Step 5 — Final Decision (By Week 12 cumulative)

The Competent Authority takes a final decision and conveys it to the applicant with copies to all consulted Ministries, Regulatory Agencies, and DPIIT — all via the Portal.

Step 6 — CCEA for Large Proposals

Proposals involving foreign equity inflow above the threshold stated in Para 4.1.5 of the FDI Policy are placed before the Cabinet Committee on Economic Affairs (CCEA) by the Competent Authority, within the prescribed timeline.

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3. The 12-Week Timeline at a Glance

Stage	Action	Time Allowed	Cumulative
(i)	DPIIT disseminates proposal to all stakeholders	2 days	—
(ii)	Initial scrutiny + additional info requests	12 days	2 weeks
(iii)	DPIIT clarification on FDI Policy issues	2 weeks	4 weeks
(iv)	MHA / MEA / RBI / other stakeholder comments	6 weeks	8 weeks
(v)	Final approval by Competent Authority	4 weeks	12 weeks

Note: Time taken by applicants to respond to queries or remove deficiencies is excluded from the above timeline. Proposals proposed for rejection or with additional conditions get an extra 2 weeks for DPIIT consideration.

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4. Land Border Country (LBC) Investments — Major New Framework

One of the most significant additions in the 2026 SOP is the formalisation of the Land Border Country (LBC) investment framework, updated vide Press Note 2 of 2026 dated 15.03.2026, read with the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2026 dated 01.05.2026.

Who are LBCs?

Countries sharing a land border with India — primarily China, Pakistan, Bangladesh, Nepal, Bhutan, Myanmar, and Afghanistan. Given India's strategic concerns, investments from these countries have been under the Government approval route since 2020. The 2026 SOP significantly tightens and formalises these norms.

Two Categories of LBC Investments

Category A — Reporting-Only (Para 3.1.1(d)): Investments where cumulative LBC ownership at the investor level is below the applicable threshold and satisfies the criteria under Section 2(fa) of the Prevention of Money Laundering Act, 2002. These do not require prior Government approval but must be reported to DPIIT via the Portal before inward remittance (or before execution of relevant transactions where no remittance is involved).

Category B — Prior Government Approval (Para 3.1.1(a) & (b)): All other LBC investments above the threshold require Government approval through the standard SOP process.

Fast-Track for Strategic Sectors (60-Day Window)

For LBC investments where the foreign investor holds up to 49% of capital/voting rights in an Indian investee entity engaged in Schedule II sectors, AND where majority shareholding and control remains with resident Indian citizens/entities, the Government approval must be conveyed within 60 days of filing.

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5. Security Clearance — Who Needs It?

MHA security clearance is required for proposals in:

1. Sensitive Sectors: Broadcasting, Telecommunications, Space, Private Security Agencies, Defence, Civil Aviation, and Mining & mineral separation of titanium-bearing minerals and ores (including value addition and integrated activities)
2. LBC-Linked Proposals: All applications falling under Press Note 2 of 2026 dated 15.03.2026, read with the FEM (NDI) (Amendment) Rules, 2026

The Security Clearance Form requires extensive disclosures including:

• Details of investee and investor directors (with passport numbers, parentage, addresses)
• Shareholders holding more than 10% in both investee and investor entities
• Ultimate beneficial ownership chain
• Self-declaration on presence/operations in China and Pakistan
• Criminal case history (India and abroad) against the investee and its directors

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6. Document Checklist for FDI Applications

All documents must be digitally signed and uploaded on the Portal. Key documents include:

Applicant & Transaction Documents

• Letter of authorisation on applicant's letterhead
• Detailed summary of the FDI proposal (background, business model, beneficial ownership, transaction particulars, projected investments)
• Pre and post-transaction shareholding pattern
• Diagrammatic representation of fund flow and group structure
• Duly notarised Affidavit on ₹100 stamp paper (as per Annexure VI format)
• Undertaking confirming absence on sanction/caution/debarment lists

Investee Company Documents

• Certificate of Incorporation (CoI), MoA, AoA
• Board Resolution for the proposed investment
• Audited Financial Statements (last FY)
• (For yet-to-be-incorporated entities: draft documents acceptable; final docs to be submitted within 60 days of approval)

Investor Documents (to be authenticated as per Foreign Exchange (Authentication of Documents) Rules, 2000)

• CoI, MoA, AoA (or equivalents under the investor's home jurisdiction)
• Board Resolution
• Audited Financial Statements

Beneficial Ownership Disclosures (LBC-specific)

• Details of all upstream shareholders, directors, investment committee members, general/limited partners, and KMPs from any LBC — up to the ultimate beneficial owner
• Control rights: board appointment rights, veto rights, voting rights

Other Documents

• Signed investment/JV/shareholder/share transfer agreements
• Valuation certificate (as required under FEMA pricing guidelines)
• Past approvals, rejections, or withdrawal records
• Downstream investment reporting documents (Form-DI from FIRMS Portal)
• Declaration for proposals not requiring LBC prior approval (if applicable)

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7. Approval Letter — Key Conditions

The Competent Authority issues the approval in a standardised format (Annexure III). Every approval letter contains the following standard conditions:

• Compliance with the FDI Policy and FEM (NDI) Rules
• Sectoral laws, regulations, and guidelines
• Tax implications to be examined independently by tax authorities (approval does not confer tax immunity)
• Onus of compliance with sectoral caps lies on the Investee
• No prior approval needed for equity amount increases (within approved percentage and below INR 5,000 crores) — only a notification within 30 days required
• Pricing of capital instruments as per RBI/SEBI guidelines
• Downstream investments to comply with Para 3.8.4 of the FDI Policy and Rule 23 of FEM (NDI) Rules
• Acknowledgement of approval letter must be sent to the Administrative Ministry within 7 days of receipt

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8. Closure, Rejection, Withdrawal & Surrender

Closure (Not the Same as Rejection)

An application may be closed due to:

• Non-submission of required documents despite reminders
• Failure to address queries

Process: Competent Authority issues two reminders (7 days each). If no response, the Secretary of the concerned Ministry may close the application. Closure does not bar re-application with complete documents.

Rejection

Any proposal proposed for rejection must have DPIIT concurrence (with approval of Secretary concerned) before the rejection letter is issued. This is a critical safeguard for investors.

Withdrawal by Applicant

Applicant may withdraw a pending proposal by submitting a duly authorised withdrawal letter to the Competent Authority (copy to DPIIT), clearly stating reasons. Once acknowledged on the Portal, the proposal is treated as withdrawn.

Surrender of Approval

An approved proposal may be surrendered by submitting a signed declaration through the authorised representative, explaining reasons. The Ministry issues an acknowledgement specifying the date from which the approval stands withdrawn.

Corrigendum

Typographical or grammatical errors in the Approval Letter may be rectified via a corrigendum issued by the Ministry, with approval of the Secretary concerned.

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9. Priority Sectors — Schedule II (Fast-Track for LBC Investments)

The following sectors are eligible for the expedited 60-day approval for qualifying LBC investments:

Category	Sectors/Activities
Capital Goods Manufacturing	Heavy electrical industries (power plant components, alloy steel pipes, 800kV bushings, transformer insulation), metal-forming machinery
Electronic Components	PCBA, display modules, camera modules, power/sensor modules, passive components, electromechanical components, Li-ion batteries, PCBs, chargers, cables, wearables, hearables, printers, scanners
Polysilicon & Wafers	Manufacturing of polysilicon, ingots, and wafers
Advanced Battery Components	Primary/secondary cells, BESS, cathode active materials (LFP, NMC, NCA), anode materials (graphite, silicon), electrolytes, separators, copper foil, aluminium foil, conductive additives, binders, sodium-ion and zinc-based battery components
Rare Earth Permanent Magnets	Rare earth metal/alloy/magnet facilities; PMSGs for wind turbines
Rare Earth Processing	Rare earth processing facilities

These sectors are directly tied to India's Make in India, PLI Schemes, and clean energy transition goals — and signal where India is actively seeking strategic foreign capital even from border-country investors, subject to ownership and control conditions.

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10. Monitoring & Compliance

• Each Ministry/Department must maintain a dedicated FDI Cell headed by a nodal officer of Joint Secretary rank or above
• Secretary, DPIIT convenes regular review meetings every 4–6 weeks with concerned Ministries on pending proposals
• Any violation of FDI regulations is subject to penal provisions under FEMA, enforced by the Directorate of Enforcement (Ministry of Finance) and Reserve Bank of India
• Compounding of contraventions is governed by the Foreign Exchange (Compounding Proceedings) Rules, 2000 and RBI's Master Directions on Compounding

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Key Takeaways for Practitioners

For Foreign Investors:

• The 12-week timeline is now codified and enforceable — plan transaction timelines accordingly
• Silence from consulted Ministries = no objection; this reduces uncertainty significantly
• LBC investors must conduct thorough beneficial ownership mapping before filing

For Legal & Compliance Teams:

• The SOP is now a core transaction document — review it alongside the FDI Policy and FEM (NDI) Rules for every Government-route deal
• Rejection now requires DPIIT concurrence — stronger protection against arbitrary denials
• Security clearance requirements have expanded under Press Note 2 of 2026

For Corporate Strategists:

• Schedule II sectors signal India's strategic manufacturing priorities — alignment with these sectors can unlock faster approvals even for LBC-linked structures
• The 60-day LBC fast-track (for ≤49% stake with Indian majority control) opens structured co-investment opportunities in deep-tech manufacturing

Official Reference

Document: Standard Operating Procedure (SOP) for Processing Foreign Direct Investment (FDI) Proposals Issued by: Department for Promotion of Industry & Internal Trade (DPIIT), Ministry of Commerce & Industry, Government of India File No.: 1/8/2016-FC.I Dated: 04 May 2026 Portal for Filing: https://www.nsws.gov.in Full SOP Document: https://www.dpiit.gov.in/static/uploads/2026/05/d7693ed0552aef6c3fa8bcdcf6a44cf3.pdf

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This blog post is prepared for informational purposes only and does not constitute legal advice. Readers are advised to consult qualified legal counsel for specific transaction advice.