By Mr. Abhay Ray 
Introduction
The Reserve Bank of India (RBI) on Wednesday introduced six new regulatory proposals for banks and fintechs, alongside a 25 basis points (bps) cut in the repo rate, reducing it to 6%. The announcements were made by RBI Governor Sanjay Malhotra after the conclusion of the Monetary Policy Committee’s three-day meeting.
Gold loan guidelines
The RBI will issue comprehensive regulations for lending against gold jewellery. Currently, prudential and conduct norms for gold-backed loans differ across regulated entities (REs), such as banks and NBFCs.
“To ensure consistency across entities and to address emerging concerns, the RBI will release a draft framework covering prudential norms and conduct standards,” Governor Malhotra said.
With an aim to accelerate innovation, the RBI plans to make its Regulatory Sandbox (RS) framework both ‘on tap’ and theme-neutral. Since its launch in 2019, the RS has run four thematic cohorts. The current fifth cohort announced in October 2023 is already theme-neutral and will accept applications until May 2025.
“Going forward, applications will be accepted on a rolling basis, allowing innovators to test eligible products without waiting for cohort-specific announcements,” Malhotra explained.
Key measures announced by the RBI
- Framework for securitisation of stressed assets
In a move to deepen the debt market, the RBI will soon issue a draft framework for securitising stressed assets through a market-driven mechanism. This will operate alongside the existing Asset Reconstruction Company (ARC) route under the SARFAESI Act, 2002.
The framework aims to create an alternate securitisation channel, expanding investor participation and enhancing price discovery in the stressed asset segment.
- Expanded co-lending guidelines:
Existing co-lending rules apply only to collaborations between banks and NBFCs for priority sector lending. RBI plans to broaden this to cover all regulated entities (REs) and all loan categories. The draft framework aims to address evolving credit partnerships across the sector.
“This initiative reflects the growing relevance of collaborative lending models in meeting diverse credit needs in a sustainable and inclusive manner,” Governor Malhotra noted.
- Uniform regulations for gold-backed loans:
RBI will introduce standardised guidelines for loans backed by gold jewellery and ornaments across all REs. The move is aimed at harmonising conduct and prudential norms and responding to observed risks in the segment.
- Revised guidelines for non-fund based facilities:
New norms will consolidate rules for non-fund based facilities like guarantees, letters of credit, and co-acceptances. The review includes updates on partial credit enhancement to boost infrastructure financing.
- NPCI gets green light to revise UPI transaction limits
The RBI has granted the National Payments Corporation of India (NPCI) the authority to review and revise transaction limits on the Unified Payments Interface (UPI) for person-to-merchant (P2M) payments. Currently, UPI transactions are capped at ₹1 lakh for both person-to-person (P2P) and P2M payments, with higher limits up to ₹5 lakhfor select merchant use cases.
RBI Governor Sanjay Malhotra stated that NPCI, in collaboration with banks and ecosystem stakeholders, will now be empowered to increase these limits based on evolving user demands. “Appropriate safeguards will be put in place to mitigate any associated risks,” he added.
- On Tap’ and ‘Theme Neutral’ regulatory sandbox:
RBI plans to shift the Regulatory Sandbox to an open-ended, theme-neutral format. Earlier, sandboxes were cohort-based with specific themes and timelines. Under the new system, eligible fintech innovations will be allowed to apply and test their products at any time. Further details will be shared separately.
RBI Policy Review: Repo Rate Eased, New Rules Set for UPI, Gold Loans
In a move aimed at boosting economic momentum and reinforcing regulatory oversight, the Reserve Bank of India (RBI) announced a 25 basis points cut in the repo rate on Wednesday, bringing it down to 6%. The decision follows the three-day meeting of the Monetary Policy Committee (MPC) and comes amid signs of easing inflation and a need to support domestic demand.
Alongside the rate cut, RBI Governor Sanjay Malhotra unveiled six major regulatory proposals targeted at banks and fintech companies. These measures focus on enhancing digital payment infrastructure, tightening norms for gold-backed loans, and improving the transparency and resilience of financial service providers. From increasing UPI transaction limits to proposing a cloud facility and fintech repository, the central bank’s approach reflects a balance between promoting innovation and safeguarding financial stability.
Conclusion
The RBI’s latest policy announcements mark a significant step toward strengthening the regulatory
framework while encouraging responsible innovation in India’s rapidly evolving financial landscape. By addressing key areas such as digital payments, gold loan practices, and fintechoversight, the central bank aims to create a more secure, transparent, and inclusive financial ecosystem.
These reforms not only enhance consumer protection but also support financial institutions in managing risks more effectively. With initiatives like the fintech repository and cloud infrastructure, the RBI is laying the groundwork for a future-ready regulatory environment that keeps pace with technological advancements. As India continues its push towards becoming a digitally driven economy, these measures reinforce the RBI’s commitment to stability, innovation, and equitable growth across the financial sector.
GetMyIndia.com RaysVeda.com GetMyStartup.com LawCanal.com ABHAYRAY.COM ZinCob.com