In News: RBI Issues New Directions and Draft Banking Guidelines
The Reserve Bank of India has issued seven new regulatory directions effective from 1 October 2025, along with four draft guidelines for public consultation. These reforms cover floating rate loans, lending against gold and silver, capital regulations, and credit reporting systems, aiming to enhance borrower flexibility, financial stability, and transparency in banking operations.
The recent measures by RBI reflect a calibrated attempt to balance financial stability with consumer protection and credit expansion. The revision in floating rate loan norms is particularly significant. Earlier, banks could revise spreads (except credit risk premium) only once in three years. Now, banks are allowed to reduce spreads earlier, enabling borrowers to benefit from favorable market conditions. Additionally, providing an optional switch to fixed interest rates introduces flexibility and reduces uncertainty in EMI-based loans.
Another major reform relates to lending against gold and silver collateral. The expansion of eligibility beyond jewellers to include industrial users of gold broadens credit access and supports sectors like manufacturing and exports. Inclusion of Tier 3 and Tier 4 Urban Co-operative Banks aligns them with scheduled commercial banks, enhancing financial inclusion at the grassroots level.
On the prudential side, RBI has updated Basel III capital regulations, particularly regarding Additional Tier-1 (AT1) instruments, ensuring continued alignment with global banking standards. This strengthens bank capital adequacy and resilience against financial shocks.
The draft guidelines indicate RBI’s forward-looking regulatory approach. The proposal to extend Gold Metal Loan (GML) repayment period from 180 to 270 days improves liquidity management for jewellers. Similarly, changes in the Large Exposures Framework (LEF) and Intragroup Transactions and Exposures (ITE) aim to refine risk assessment and exposure norms, especially for foreign bank branches.
A notable reform is in credit information reporting, where data submission frequency may shift from fortnightly to weekly, along with mandatory inclusion of CKYC numbers. This will significantly enhance credit discipline, reduce information asymmetry, and improve credit risk assessment.
Overall, these reforms indicate a shift toward greater flexibility, digitization, and risk-sensitive regulation in India’s banking system.
Updated - 30 September 2025 ; 9:47 AM | News Source: DD NEWS