Please click here to download the document as a PDF.
September 2026 brought significant regulatory developments across India’s banking and finance and insolvency space. The Reserve Bank of India (“RBI”) has amended the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, reducing the period for realisation and repatriation of export proceeds and empowering authorised dealers to handle certain trade transactions undertaken before October 1, 2026, that previously required RBI approval.
The Ministry of Finance (“MoF”) has issued the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026, permitting e-commerce entities to engage in inventory-based models exclusively for the export of goods manufactured or produced in India.
The Securities and Exchange Board of India (“SEBI”) has revised the norms relating to position limits for clients and penalties for violations in the commodity derivatives segment, including linking monetary penalties to the quantum of violation and revising the definition of ‘Broad Commodity’ and client-level position limits.
The Insolvency and Bankruptcy Board of India (“IBBI”) issued a circular on recent judicial pronouncements regarding cessation of interim moratorium for personal guarantors to corporate debtors under the Insolvency and Bankruptcy Code, 2016 (“IBC”). These judgments clarify that the interim moratorium under Sections 96 and 124 of the IBC ceased to operate from May 26, 2026, including for pending applications.
Separately, IBBI has issued a circular on due diligence by Insolvency Professionals (“IPs”) to prevent misuse of the IBC framework. IPs are directed to remain vigilant to indicators of misuse and file appropriate applications before the Adjudicating Authority (“AA”) where warranted.
IBBI has also introduced the IBBI (Liquidation Process) (Fifth Amendment) Regulations, 2026, streamlining the process for modifying entries in the list of stakeholders during liquidation.
This edition of the JSA Finance Newsletter takes a closer look at these developments and their practical implications for stakeholders.
RBI update
Foreign Exchange Management (Export and Import of Goods and Services) (Amendment) Regulations, 2026
RBI, vide notification dated September 22, 2026, has amended the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 to revise certain timelines and transitional provisions relating to export and import transactions. The period for realisation and repatriation of export proceeds has been reduced from 15 (fifteen) months to 9 (nine) months, with the extended realisation period under the first proviso reduced from 18 (eighteen) months to 12 (twelve) months. Authorised dealers are now empowered to handle certain trade transactions undertaken before October 1, 2026, that previously required approval of RBI.
Key takeaway: RBI has reduced the export realisation period from 15 (fifteen) to 9 (nine) months and the extended period from 18 (eighteen) to 12 (twelve) months. It has empowered authorised dealers to handle certain pre-October 1, 2026, trade transactions that earlier required RBI approval.
MoF update
Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026
MoF, vide notification dated September 2, 2026, has issued the Foreign Exchange Management (Non-debt Instruments) (Fourth Amendment) Rules, 2026 to further amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”). This amendment is further to Press Note 3 of 2026 issued by the Department for Promotion of Industry and Internal Trade permitting foreign-invested entities to adopt an inventory-based business to customer (“B2C”) model exclusively for exporting goods manufactured or produced in India. A new provision is inserted in Schedule I of the NDI Rules permitting an e-commerce entity to engage in an inventory-based model of e-commerce exclusively for the export of goods or products manufactured or produced in India. Such exports must be in accordance with the Foreign Trade Policy 2023 read with the Handbook of Procedures (“HBP”) and the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015. Accordingly, the restrictions on B2C transactions and the inventory-based model of e-commerce stipulated under serial number 15.2.1 to 15.2.4 of Schedule I will not apply to the export of goods or products through e-commerce as permitted under the new provision.
Key takeaway: MoF has amended the NDI Rules to permit e-commerce entities to engage in inventory-based models exclusively for the export of goods manufactured or produced in India. The amendment clarifies that the existing restrictions on B2C and inventory-based e-commerce models do not apply to exporting goods manufactured or produced in India.
SEBI update
Review of position limits for clients and penalty provisions for commodity derivatives
SEBI, vide circular dated September 9, 2026, has revised the norms relating to position limits and penalties for violations in the commodity derivatives segment, with the objective of facilitating ease of doing business. Some of the key changes are as follows:
- monetary penalties on the concerned member for client-level open interest violations are now linked to the quantum/value of the violation and are to be charged for every day the violation continues. All penalties are to be credited to the investor protection fund of the exchange;
- the definition of a ‘Broad Commodity’ is revised for agricultural commodities based on an average deliverable supply of at least 10,00,000 (ten lakh) metric tonnes or INR 5,000 crore (Indian Rupees five thousand crore) over the preceding 5 (five) years; and
- the client-level position limits have been revised to 2% of deliverable supply for broad commodities, 1% for narrow commodities and 0.5% for sensitive commodities, with specified transitional treatment for commodities moving from the narrow to broad category.
Key takeaway: SEBI has linked commodity derivatives penalties to the value of the violation (charged daily), revised the ‘Broad Commodity’ definition for agricultural commodities and set client-level position limits at 2%, 1% and 0.5% of deliverable supply for broad, narrow and sensitive commodities, respectively.
IBBI updates
Cessation of interim moratorium in respect of personal guarantors to corporate debtors – Judgments of the Hon’ble High Courts
IBBI, vide circular dated September 21, 2026, has drawn attention to the judgments of the Hon’ble Bombay High Court and Delhi High Court on the cessation of interim moratorium in respect of personal guarantors to corporate debtors following the Insolvency and Bankruptcy Code (Amendment) Act, 2026 (“Amendment Act”). Pursuant to the Amendment Act, Sections 96(4) and 124(4) were inserted in the IBC providing that the interim moratorium will not apply in respect of a personal guarantor to a corporate debtor, with effect from May 26, 2026.
The key judicial observations are as follows:
- the Hon’ble Bombay High Court, in Tata Capital Financial Services Limited vs. Neel Motors LLP and Ors.[1], has held that the phrase ‘where an application is filed’ would bring within its sweep anything that is filed and is pending with the AA as of that date. The Court observed that the reading of the words ‘is filed’ as including those that have been filed and are pending, will not give retrospective effect. Instead, it will have prospective effect from the date on which the provision takes effect; and
- the Hon’ble Delhi High Court, in IDBI Trusteeship Services Ltd. vs. Manish Jain and Ors.[2], confirmed that the provisions of Section 96(4) of the IBC by way of the amendment are ‘retroactive’, even though the Amendment Act did not expressly state so. The Court observed that the import, purport and impact of such retroactive legislation would amount to ‘quasi retroactivity’ and would be applicable to pending applications.
Accordingly, the interim moratorium under Section 96 (and, correspondingly, Section 124) of the IBC, in respect of a personal guarantor to a corporate debtor, has ceased to operate with effect from May 26, 2026. This applies to applications pending before the AA as on that date.
Key takeaway: IBBI has clarified, based on judgments of the Hon’ble Bombay High Court and Delhi High Court, that the interim moratorium under Sections 96 and 124 of the IBC does not apply to personal guarantors to corporate debtors with effect from May 26, 2026. This includes applications pending before the AA as on that date. The amendment has been held to be retroactive in nature and applicable to pending applications.
Due diligence by IPs regarding misuse of IBC framework
IBBI, vide circular dated September 9, 2026, has issued guidance on due diligence to be undertaken by IPs to prevent misuse of the IBC framework. The circular notes that IBBI has received information from law enforcement and regulatory agencies that, in certain cases, the framework under the IBC is being misused for purposes other than insolvency resolution or liquidation of the corporate debtor. Such instances include, inter alia, mitigating tax liabilities, closure/merger of companies without regulatory scrutiny, mitigating investigations, prosecution and penalties under various statutes, and monetising and ring-fencing assets.
IPs are directed to remain vigilant to the following indicators of potential misuse:
- Corporate Insolvency Resolution Process (“CIRP”) initiated by, or debt assigned shortly before initiation to, a single creditor (other than a scheduled bank or a public financial institution as defined in Section 2(72) of the Companies Act, 2013), who then dominates the Committee of Creditors (“CoC”);
- a cluster of corporate debtors with common promoters, addresses, directors, or inter-lending, taken into CIRP within a proximate timeframe with overlapping CoC composition;
- minimal competitive participation in the resolution process, or a common resolution applicant recurring across connected corporate debtors;
- realisation to creditors grossly disproportionate to admitted claims, unsupported by a proper valuation exercise;
- linkage of the corporate debtor or its group to an order or ongoing proceeding of another regulator, enforcement or investigating agency concerning fraud; and
- substantial loans, advances or investments to or from related/group entities despite absence of operations, written off or shown as doubtful/NIL without adequate basis.
On noticing one or more such indicators, or other circumstances of a similar nature, the IP should undertake such further enquiry as may be warranted. Where the IP forms a view, on reasonable grounds, that the process may be serving a fraudulent or malicious purpose other than the resolution of insolvency or liquidation of the corporate debtor, the IP will make an application before the AA. The application should set out the relevant facts and materials and seek such directions as the AA may consider appropriate under the IBC.
Key takeaway: IBBI has issued guidance requiring IPs to remain vigilant to indicators of potential misuse of the IBC framework. These include CIRP initiation by single creditors dominating the CoC, clusters of connected corporate debtors, minimal competitive participation, disproportionate realisations, linkage to fraud proceedings, and substantial related-party transactions. Where warranted, IPs must file applications before the AA setting out the relevant facts and seeking appropriate directions.
IBBI (Liquidation Process) (Fifth Amendment) Regulations, 2026
IBBI, vide notification dated September 22, 2026, has amended the IBBI (Liquidation Process) Regulations, 2016 to provide greater flexibility to the liquidator in updating the list of stakeholders. The liquidator may modify an entry in the list of stakeholders where additional information warrants such modification and must intimate the AA of such modification within 30 (thirty) days of the modification.
Key takeaway: IBBI has streamlined the process for modifying entries in the list of stakeholders during liquidation. Liquidators may now modify entries when additional information warrants such modification and must intimate the AA within 30 (thirty) days. It enhances transparency and ensures timely updates to stakeholder information.
This Newsletter has been prepared by:
|
Anish Mashruwala |
Srinjoy Bhattacherjee |
Swarna Hardikar |
Arpita Mittal |
For more details, please contact km@jsalaw.com.
[1] Commercial Arbitration Petition No. 620 of 2021 (decided on July 24, 2026)
[2] CS(COMM) 800/2025 & I.A. 7470/2026, O.A. 59/2026 (decided on August 19, 2026)
