Reserve Bank of India (RBI) on Friday unveiled a broad set of regulatory and developmental measures aimed at easing compliance for low-risk financial entities, improving credit flow and updating key financial inclusion and market frameworks to reflect a rapidly evolving financial system.
In its statement on developmental and regulatory policies, the central bank announced plans to exempt certain non-banking financial companies (NBFCs) from registration requirements, review lending norms for urban cooperative banks (UCBs) and revise guidelines governing flagship schemes such as the lead bank scheme and the kisan credit card (KCC) programme.
Registration Relief for Low-risk NBFCs
In a significant compliance-easing move, RBI proposed exempting eligible NBFCs that do not accept public funds and have no customer interface from the requirement of registration with the central bank.
These entities, classified as type-I NBFCs under the scale-based regulatory framework, typically, pose minimal systemic risk. The exemption will apply to such NBFCs with asset sizes not exceeding ₹1,000 crore, subject to specified conditions.
RBI says the move follows a review of the regulatory burden on these entities and aims to reduce unnecessary compliance costs without compromising financial stability. Draft amendment directions will be issued shortly for stakeholder feedback, it added.
Lending Norms for UCBs under Review
The central bank also announced a review of lending norms applicable to UCBs, signalling further regulatory flexibility for a sector that plays a crucial role in local credit delivery.
The proposed changes include rationalising norms for unsecured loans, imposing limits on lending to nominal members, and reviewing tenor and moratorium requirements for housing loans. RBI says the revised framework will adopt a tiered and simplified approach, while maintaining prudential discipline.
The review considers the growth in UCBs' loan books over recent years and aims to support their expansion while strengthening governance standards. RBI will soon issue draft directions for public consultation.
Banks To Be Allowed To Lend to REITs
In a notable shift in policy, RBI says it plans to permit commercial banks to extend finance to real estate investment trusts (REITs), subject to appropriate prudential safeguards.
While banks were earlier allowed to lend to infrastructure investment trusts (InvITs), lending to REITs had remained prohibited since inception. The central bank says the decision reflects a strong regulatory and governance framework for listed REITs.
RBI says it will also harmonise existing guidelines on bank lending to InvITs to ensure parity with the safeguards proposed for REIT financing and will shortly issue draft directions in this regard.
Financial Inclusion Frameworks Set for Overhaul
RBI says it has undertaken a comprehensive review of several financial inclusion frameworks, beginning with the lead bank scheme (LBS). Revised guidelines will be issued to streamline operational aspects, clearly define objectives and improve the effectiveness of the scheme, it says.
To support this, the central bank will launch a unified reporting portal for bank-wise LBS data, replacing the current fragmented reporting system. The move is expected to improve data quality and enable better monitoring of inclusion outcomes.
The kisan credit card-KCC scheme has also been reviewed with a view to expanding coverage and addressing emerging requirements in agriculture and allied activities. Proposed changes include standardising crop seasons, extending KCC tenure to six years, aligning drawing limits with the scale of finance, and including technology-related expenses. Draft guidelines will be issued for consultation, RBI says.
In addition, RBI is reviewing norms governing the use of business correspondents (BCs) by banks, following recommendations of a committee comprising officials from RBI, NABARD, the department of financial services and the Indian Banks’ Association (IBA).
Credit Access Boosted for Small Enterprises
To strengthen last-mile credit delivery, RBI announced an increase in the limit for collateral-free loans to micro and small enterprises from ₹10 lakh to ₹20 lakh. The enhanced limit will apply to loans sanctioned or renewed on or after 1 April 2026.
The move is expected to improve access to formal credit for small businesses with limited assets, particularly in the informal and semi-formal segments of the economy, RBI says.
Push To Deepen Financial Markets
On the markets front, RBI says it will issue a regulatory framework for the introduction of derivatives on corporate bond indices and total return swaps on corporate bonds, in line with the Union Budget announcement.
The central bank also announced a review of the voluntary retention route (VRR) for foreign portfolio investors (FPIs) in debt markets. Under the revised approach, investments made through the VRR will be counted under the general route limits, alongside additional operational flexibilities to improve ease of doing business.
"The VRR has been witnessing active investment by FPIs, and over 80% of the current investment limit of ₹2.5 lakh crore has been utilised. With a view to ensuring predictability about the availability of investment limits under the VRR and to further increase ease of doing business, it has been decided that investments under the VRR shall now be reckoned under the limit for FPI investments under the general route and certain additional operational flexibilities will be provided to FPIs investing under the VRR," RBI says.
Separately, the central bank is planning to issue revised guidelines for authorised dealers and standalone primary dealers, giving them greater flexibility in foreign exchange transactions and risk management practices.
Capacity Building for Cooperative Banks
RBI also announced the launch of mission SAKSHAM (sahakari bank kshamta nirman), a sector-wide capacity-building initiative for urban cooperative banks. The programme aims to train around 140,000 personnel across functions through a mix of physical and digital platforms, with content delivered in regional languages where feasible.
