Overview of RBI's Recent Measures

The Reserve Bank of India (RBI) has announced several measures to enhance customer protection, digital payment safety, and curb the mis-selling of financial products, in line with its latest monetary policy decision. The repo rate was maintained at 5.25% as decided during the Monetary Policy Committee (MPC) meeting.

Strengthening Customer Protection

• Guidelines: RBI will issue draft guidelines on: 
  • Mis-selling of financial products
  • Recovery of loans and recovery agents
  • Limiting customer liability in unauthorized electronic transactions
• Compensation Framework: Proposes compensating customers up to ₹25,000 for small-value fraudulent transactions.
• Digital Payment Safety: Discussion paper on enhancing safety, which may include lagged credits and additional authentication for specific user groups.

Promoting Financial Inclusion

The RBI has reviewed several schemes and proposed measures to enhance financial inclusion:

• Lead Bank Scheme: Comprehensive review and draft revised guidelines.
• Unified Reporting Portal: To improve LBS data management.
• Collaboration-Free Loans for MSMEs: Limit raised from ₹10 lakh to ₹20 lakh.
• Bank Lending to REITs: Allowed with prudential safeguards.

Strengthening Urban Cooperative Banks

• Financial Limits: Increased limits on unsecured loans and loans to nominal members.
• Housing Loans: Proposal to remove tenor and moratorium-related requirements for Tier III and IV UCBs.
• Mission-SAKSHAM: Training initiative for over 140,000 UCB participants.

Ease of Doing Business for NBFCs

• Exemptions: NBFCs with no public funds, under ₹1,000 crore asset size, may be exempt from registration.
• Branch Approvals: Certain NBFCs may not require prior approval for opening more than 1,000 branches.

Financial Markets Reforms

• VRR Investment Limit: Removal of the ₹2.5 trillion limit under Voluntary Retention Route, subject to General Route ceilings.
• Regulatory Framework: Proposed for derivatives on corporate bond indices and total return swaps.
• Authorised Dealer Guidelines: Revised for greater flexibility in forex transactions.
• External Commercial Borrowings: Draft regulations finalized, pending notification.

Financial Literacy Week

Scheduled from February 9, with the theme ‘KYC – Your First Step to Safe Banking’. Banks are urged to participate actively.