Reserve Bank of India Governor Sanjay Malhotra on Friday announced a series of measures aimed at strengthening customer protection, advancing financial inclusion, improving credit flow, reinforcing urban cooperative banks (UCBs), easing compliance for non-banking financial companies (NBFCs), and deepening financial markets.
To enhance customer protection, the Reserve Bank of India proposed issuing three draft guidelines. These will focus on curbing mis-selling, regulating loan recovery practices including the engagement of recovery agents, and limiting customer liability in cases of unauthorised electronic banking transactions.
The RBI has also proposed a framework to compensate customers for losses arising from small-value fraudulent transactions, with compensation capped at Rs 25,000.
In the monetary policy statement, the Governor said the central bank will publish a discussion paper outlining potential measures to further strengthen the security of digital payments. These may include features such as lagged credits and additional authentication mechanisms for specific categories of users, including senior citizens.
On financial inclusion, Malhotra said the RBI has undertaken a comprehensive review of the Lead Bank Scheme (LBS), the Kisan Credit Card scheme, and the Business Correspondent model. Draft revised guidelines for these initiatives will be issued, and a unified reporting portal will be launched to improve the management of LBS-related data.
To enhance credit flow to small businesses, the Governor announced that the limit for collateral-free loans to micro, small and medium enterprises (MSMEs) is proposed to be increased from Rs 10 lakh to Rs 20 lakh.
To promote financing in the real estate sector, banks will be allowed to lend to Real Estate Investment Trusts (REITs), subject to specified prudential safeguards.
Announcing measures to strengthen urban cooperative banks, Malhotra said the RBI will raise financial limits on unsecured loans and loans to nominal members. The central bank also plans to remove tenor- and moratorium-related requirements for housing loans extended by Tier III and Tier IV UCBs. In addition, the RBI will launch Mission SAKSHAM (Sahakari Bank Kshamta Nirman) to enhance the managerial and technical capacity of UCBs. The mission aims to train more than 1.4 lakh participants.
On NBFCs, the Governor said entities that do not handle public funds or have a customer interface, and with asset sizes not exceeding Rs 1,000 crore, are proposed to be exempted from mandatory registration. Further, certain NBFCs will no longer require prior approval to open more than 1,000 branches.
