Here's how RBI is trying to make banking easier for Indians with new rules

RBI MPC: The Reserve Bank of India unveiled plans to protect bank customers, curb digital fraud, ease loan rules for MSMEs, and simplify norms for banks, UCBs and NBFCs

The Reserve Bank of India (RBI) on Friday signalled a major push to make banking safer and more customer-friendly.

 

While the repo rate was left unchanged at 5.25 per cent, the central bank unveiled a series of steps aimed at improving customer protection, expanding credit access and easing rules for banks and non-bank lenders.

 

RBI MPC: Focus on customer protection

 

The RBI plans to issue three draft guidelines to strengthen customer protection. “For customer protection, we will issue three draft guidelines: one, relating to mis-selling; two, regarding recovery of loans and engagement of recovery agents; and three, on limiting liability of customers in un-authorised electronic banking transactions,” the RBI Governor said.

 

 

The central bank is also proposing a compensation framework for victims of small-value fraud. “It is also proposed to introduce a framework to compensate customers up to an amount of ₹25,000 for loss incurred in small-value fraudulent transactions,” Malhotra added.

 

To address rising concerns around digital fraud, the central bank will release a discussion paper on improving digital payment safety.

 

He added that the measures may include lagged credits and additional authentication, especially for vulnerable users such as senior citizens. 

 

More credit for MSMEs and real estate

 

In a move likely to benefit small businesses, the RBI proposed to double the limit for collateral-free loans of micro, small and medium enterprises (MSMEs).

 

The current limit of ₹10 lakh is proposed to be raised to ₹20 lakh.

 

To boost funding for the property market, banks will also be allowed to lend to Real Estate Investment Trusts (REITs), subject to prudential safeguards.

 

Easier rules for NBFCs

 

The RBI also announced steps to reduce compliance burden for certain non-banking financial companies (NBFCs).

 

“NBFCs having no public funds and customer interface, with asset size not exceeding ₹1,000 crore, are proposed to be exempted from the requirement of registration,” he said.

 

Some NBFCs will also no longer need prior approval to open more than 1,000 branches.

 

Malhotra said the overall health of the banking and NBFC sector remains robust. “The system-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of scheduled commercial banks continue to remain robust,” he said, adding that NBFCs too have adequate capital and improved asset quality.

 

Push for financial inclusion, rural banking

 

The RBI has also reviewed key financial inclusion schemes, including the lead bank scheme (LBS), Kisan Credit Card (KCC) Scheme and the Business Correspondent (BC) model. “We shall issue draft revised guidelines with respect to them,” Malhotra said.

 

To improve data management, the RBI will also launch a unified reporting portal for better monitoring of Lead Bank Scheme data.

 

RBI MPC February: Measures to strengthen urban cooperative banks

 

The RBI announced four steps to strengthen Urban Cooperative Banks (UCBs).

 

“...The first two pertain to raising the financial limits on unsecured loans and loans to nominal members by UCBs,” Malhotra said.

 

The central bank also plans to ease housing loan norms. “We also propose to remove the tenor and moratorium related requirements on housing loans given by Tier-III and Tier-IV UCBs,” he said.

 

To improve governance and skills, the RBI will also launch Mission-SAKSHAM, a capacity-building programme. “The mission intends to train over 140,000 participants from UCBs,” the RBI Governor said.

 

Lending rates down

 

The RBI highlighted that past rate cuts are already helping borrowers. “In response to the cumulative 125 bps cut in the policy repo rate, the weighted average lending rate of scheduled commercial banks declined by 105 bps for fresh rupee loans,” Malhotra said.

 

The RBI, citing latest available data, said that credit from all sources grew at 13.8 per cent year-on-year, compared with 11.6 per cent a year ago.