NEW DELHI: In a big move the banking sector regulator – the Reserve Bank of India (RBI) -- has increased the IPO financing limit from Rs 10 lakh to Rs. 25 lakh per person. The announcement was made by RBI governor Sanjay Malhotra in his monetary policy statement.
The governor also proposed to remove the regulatory ceiling on lending against listed debt securities and enhance limits for lending by banks against shares from Rs 20 lakh to Rs 1 crore.
These were part of five announcements made by the governor to enhance flow of credit. The governor also proposed to provide an enabling framework for Indian banks to finance acquisitions by Indian corporates.
It has also been proposed to withdraw the framework introduced in 2016 that disincentivised lending by banks to specified borrowers (with credit limit from banking system of Rs 10,000 crore and above).
While the Large Exposure Framework put in place for banks addresses credit concentration risk to a particular entity or group at an individual bank level, concentration risk at the banking system level, as and when considered necessary, will be managed through specific macroprudential tools.
To reduce the cost of infrastructure financing by NBFCs, it is proposed to reduce the risk weights applicable to lending by NBFCs to operational, high-quality infrastructure projects.
The regulator has also decided grant new licenses to Urban Co-operative Banks (UCBs). It must be noted that licensing for Urban Co-operative Banks (UCBs) had been paused since 2004.
“Considering the positive developments in the sector during the last two decades and in response to the growing demand from the stakeholders, we propose to publish a discussion paper on licensing of new UCBs,” said the governor in his speech.