The Reserve Bank of India announced a slew of measures to strengthen the risk management framework for India’s financial system.
“The Indian banking system continues to be resilient, backed by improved asset quality, stable credit growth, and robust earnings growth,” Governor Shaktikanta Das said, while pointing out “very high growth” in personal loans.
Banks and non-banking financial companies should strengthen their risk management strategies and develop stronger underwriting standards to tackle stress in these loans, Das said while presenting the monetary policy statement on Friday. “…strengthen their internal surveillance mechanisms, address the build-up of risks, if any, and institute suitable safeguards in their own interest,” he said.
The measures that the RBI announced are as follows:
Pertaining to project finance, a comprehensive regulatory framework for projects under implementation is proposed to be issued.
The Large Exposure Framework guidelines have been extended to NBFCs in the middle layer and base layer. Such entities have been permitted to offset their exposure with eligible credit risk transfer instruments.
To incentivise the urban co-operative banks, the RBI increased the monetary ceiling of gold loans under the bullet repayment scheme to Rs 4 lakh from Rs 2 lakh currently. This will be applicable to UCBs that have met the overall priority sector lending targets as of March 31.
An omnibus framework for self-regulated organisations for various regulated entities of the central bank has been proposed to strengthen compliance and policymaking. The omnibus SRO framework shall prescribe the broad objectives, functions, eligibility criteria, and governance standards that will be common for all SROs.
The Payment Infrastructure Development Fund, which incentivises the deployment of payment acceptance infrastructure such as physical point of sale and quick response codes, has been extended to December 2025. Further, beneficiaries of the Prime Minister Vishwakarma Scheme are also included under the PIDF Scheme.
The RBI has proposed the introduction of card-on-file token creation facilities at the issuer bank level to enhance convenience for cardholders.
