RBI has released its Statement on Developmental and Regulatory Policies. This Statement sets out various developmental and regulatory policy measures relating to (i) Regulations; (ii) Payments System; (iii) Financial Inclusion; (iv) Financial Markets; and (v) Capacity Building. Some of the important decisions taken by RBI are as follows:
Mis-selling by Banks
The RBI has decided to tighten its grip on Mis-selling of financial products and services by banks. The RBI said that it has significant consequences for both customers as well as the bank.
RBI said that there is a need to ensure that third party products and services that are being sold at the bank counters are suitable to customer needs and are commensurate with the risk appetite of individual clients.
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It has therefore been decided to issue comprehensive instructions to banks on advertising, marketing and sales of financial products and services. The draft instructions in this regard shall be issued shortly for public consultation.
Bank Lending to Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) were established in India with a view to free up banks’ funds in completed and operational real estate and infrastructure projects by refinancing such exposures with pooled funds of institutional as well as retail investors.
Commercial banks were not permitted to lend to these entities. While bank lending to InvITs was allowed subsequently, lending to REITs was not permitted hitherto. Now it is proposed to permit commercial banks to extend finance to REITs, subject to appropriate prudential safeguards.
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Draft directions in this regard will be issued shortly for public consultation.
Exemption from registration to eligible NBFCs
Considering the lower systemic-risk profile of NBFCs, it is proposed that such Type-I NBFCs with asset size not exceeding ₹1,000 crore, may be exempted from registration requirement with the Reserve Bank subject to certain specified conditions. Accordingly, draft Amendment Directions will be issued shortly for feedback from stakeholders.
NBFC – Investment and Credit Companies (ICCs) engaged in the business of lending against gold collateral with over 1,000 branches are required to obtain prior RBI approval for opening new branches. It is proposed to dispense with the requirement of prior approval for opening branches by such NBFCs. The draft instructions in this regard shall be issued shortly seeking stakeholders’ comments.
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Revision in Lead Bank Scheme (LBS)
The objectives of LBS and the framework to achieve them are proposed to be delineated clearly. The revised guidelines are expected to enhance the effectiveness of the Scheme. The draft Circular will be issued shortly for public consultation. In addition, the Reserve Bank will be launching a unified portal for reporting of Bank-wise LBS data which is currently fragmented across various portals. This is expected to significantly enhance the data quality and provide better insights towards achieving the objectives of LBS.
Revision in the Guidelines of Kisan Credit Card (KCC)
The Reserve Bank has comprehensively reviewed the KCC Scheme with a view to expand coverage, streamline operational aspects and address emerging requirements. It is now proposed to issue a revised set of instructions to banks on the Scheme, consolidating those on agriculture and allied activities. The proposed guidelines include, among others, standardisation of crop season, extension of KCC tenure to six years, alignment of drawing limit with Scale of Finance (SoF) for each crop season and inclusion of expenses on technological interventions. The draft guidelines will be issued shortly.
Enhancement in Collateral free loan limit from ₹10 lakh to ₹20 lakh
It has been decided to enhance the limit of collateral free loans to MSEs from ₹10 lakh to ₹20 lakh. The above provisions shall be applicable to all loans to MSE borrowers sanctioned or renewed on or after April 01, 2026. Instructions in this regard will be issued shortly.
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