MUMBAI: While the RBI-led MPC has underwhelmed headline-seekers with its unanimous vote for status-quo on the benchmark rates, the Reserve Bank has overwhelmed them with a flurry of measures—as many as 22 regulatory changes to count—aimed at improving customer convenience, credit flow to the economy and individuals, and the overall ease of doing business for all along with reducing the compliance cost for regulated entities.
Unveiling the 22 additional measures, Governor Sanjay Malhotra said these measures are aimed at strengthening the resilience and competitiveness of the banking sector, improving the flow of credit, promoting ease of doing business, simplifying foreign exchange management, enhancing consumer satisfaction, and internationalisation of the bleeding rupee.
Topping the list is the revamping of the lending norms for capital market participation by changing in the lending norms and limits for banks to ensure easier flow of funds to capital markets through the banking route. Think of these steps as a three-pronged push to unlock more credit, fuel corporate deal-making, and give banks a bigger role in equity and debt financing.
Upping lending caps for IPO funding: Within this, is allowing banks to lend more to individuals against the securities they already own. Accordingly, the RBI has removed the cap on loans against listed debt and raised exposure limits for loans against shares, from Rs 20 lakh to Rs 1 crore per person. Also, IPO financing limits are being raised from Rs 10 lakh to Rs 25 lakh per borrower.
By raising the loan against shares cap to Rs 1 crore and lifting ceilings on lending against debt securities, RBI has given banks a fairer playing field.
IPO financing: this has also been raised, but limits for NBFCs are still significantly higher. That said, this market has shrunk compared to earlier years—the shorter listing cycle has reduced the number of days loans are needed, making the business less lucrative.
Funding M&As: Another key measure is green-lighting banks to fund acquisitions, which will go a long way in boosting mergers and acquisitions.
For the first time, banks are now allowed to lend for corporate acquisitions, implying that they can now fund buyouts and consolidation deals-0something lenders have been lobbying for.
Risk-based deposit insurance: Another measure is introduction of risk-based deposit insurance premium and flat rates to act as ceiling
Rolling back curbs on large borrowers: The RBI plans to withdraw the old framework that penalized banks for lending to very large corporates, with system-wide exposure above Rs 10,000 crore. RBI said the systemic risks will now be managed through macroprudential tools, while banks continue to face individual exposure caps under the large exposure framework.
This is being done by rolling back the 2016 restrictions, and it signals RBI’s willingness to let banks lend more freely to large groups. The large exposure framework already constrains banks with group-level limits and higher risk weights at certain thresholds. The finer details of this change are still awaited, but banks may find some room to grow large-ticket lending again.
The move will boost credit growth as corporate lending has been the weakest part of overall bank credit growth. Allowing acquisition financing helps banks capture a bigger share of consolidation-led growth, especially in core sectors where fresh capacity creation is muted.
Leveling the field with NBFCs: Historically, banks were capped at modest limits on loans against shares (Rs 20 lakh) and faced stricter loan-to-value rules. NBFCs, on the other hand, could set higher limits at their discretion.
To boost resilience and competitiveness of the banking sector, the following measures are unveiled.
The expected credit loss (ECL) framework of provisioning with prudential floors is proposed to be made applicable to all banks (excluding small finance banks, payment banks, regional rural banks and all-India financial institutions with effect from April 1, 2027.
The RBI has also proposed to make the revised Basel III capital adequacy norms effective for banks (excluding SFBs, PBs and RRBs) from April 1, 2027. In furtherance of this, a draft of the standardised approach for credit risk shall be issued shortly.
A circular on forms of business and prudential regulation for investments by banks has been finalised after public consultations and will be issued shortly.
There is also a proposal to publish a discussion paper on licensing of new UCBs.
The following measures are aimed at promoting ease of doing business:
The RBI has proposed to rationalize key provisions relating to eligible borrowers, recognised lenders, limits on borrowing, cost of borrowing, end-use and reporting etc. in ECB regulations, issued under Fema. It also proposed to rationalise Fema regulations regarding non-residents establishing their business presence in the country.
The RBI will issue draft of consolidated circulars and directions, segregated subject wise, across 11 types of regulated entities.
The central bank also proposed to provide greater flexibility to banks for opening and maintaining transaction accounts of borrowers.
To strengthen the export sector, the RBI plans to extend the time period for repatriation from foreign currency accounts of Indian exporters in IFSC, from one month to three months.
The central bank proposed to increase the period for forex outlay for merchanting trade transactions, from four months to six months. It aims to simplify the process of reconciliation of outstanding entries related to exports and imports in the respective reporting portals.
The following measures aim to enhance consumer satisfaction:
The RBI has proposed to expand bouquet of services offered to basic savings bank deposit account-holders without levy of minimum balance charges.
It has also proposed to strengthen the internal ombudsman mechanism to make grievance redressal by regulated entities more effective.
The RBI will also be revising RBI Ombudsman scheme for improved grievance redressal and rural cooperative banks are being included under the ambit of the scheme. The move is aimed at strengthening the internal ombudsman mechanism to make grievance redressal by regulated entities more effective.
The following measures aim to internationalize the rupee:
The central bank has proposed to permit authorized dealer banks to lend in the rupee to non-residents from Bhutan, Nepal and Sri Lanka for cross border trade transactions. There is also a proposal to establish transparent reference rates for currencies of the countrys’ major trading partners to facilitate rupee-based transactions.
The RBI has also proposed to permit wider use of SRVA (special rupee vostro accounts) balance by making them eligible for investment in corporate bonds and commercial papers. This opens up new avenues for NRIs and overseas institutions to transact and invest in India using the rupee.
The RBI has also decided to review the outward remittance rules under the liberalised remittance scheme (LRS) which had touching 30 billion dollars in FY25. The review will focus on rationalising the rules and promoting greater use of the rupee in international transfers. For NRIs, this could bring clarity on remittance limits, eligible investments, and currency options, potentially reshaping the way money is sent abroad.
Expanding digital payment access for NRIs: with banks increasingly enabling NRIs to use domestic digital payment systems through UPI transactions. Already UPI has been made available in several countries using international mobile numbers linked to NRE and NRO accounts, allowing seamless rupee payments without requiring an Indian SIM.
The RBI has also introduced new rules for cross-border card transactions, giving banks flexibility to apply risk-based authentication. These measures make it easier and safer for NRIs to manage transactions across borders.
The latest set of measures reflects RBI’s intent to bring NRIs closer to the country’s financial ecosystem while boosting the international role of the rupee. By easing rules for business entry, expanding investment caps, reviewing remittance norms, and opening up digital payments, the central bank is offering NRIs wider opportunities and greater convenience. These steps are expected to strengthen their participation in India’s growth and financial markets.