The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday unveiled a set of initiatives aimed at bolstering the resilience and competitiveness of the banking sector while improving services for consumers.
These reforms were announced alongside the decision to maintain the policy repo rate at 5.50 per cent, reflecting the RBI’s cautious approach amidst a dynamic macroeconomic and global environment.
Digital Makeover for Basic Savings Accounts
Basic Savings Bank Deposit (BSBD) account holders will now benefit from digital and mobile banking services without the burden of minimum balance requirements. The accounts also provide debit cards without annual maintenance charges for the first year and limited free withdrawals each month, offering greater convenience and financial inclusion.
Expanding Credit Flow
To enhance credit availability, the RBI introduced five key measures:
- Indian banks will be allowed to finance acquisitions by domestic corporates, broadening the scope for capital market lending.
- Lending against listed shares has been increased from Rs 20 lakh to Rs 1 crore per individual, with IPO financing limits raised from Rs 10 lakh to Rs 25 lakh.
- The 2016 framework that discouraged lending to certain large borrowers will be withdrawn, while concentration risks at the banking system level will be managed via macroprudential tools.
- Risk weights for NBFC lending to operational, high-quality infrastructure projects will be reduced to lower financing costs.
- After nearly two decades, the RBI plans to issue a discussion paper on licensing new Urban Co-operative Banks (UCBs) in response to sectoral demand.
Strengthening Consumer Protection
The Internal Ombudsman mechanism will be reinforced to ensure more effective grievance redressal. Additionally, the RBI Ombudsman Scheme is being updated to include rural cooperative banks, expanding protection for customers across the banking sector.
These measures are expected to enhance credit flow, encourage competitive banking practices, and improve consumer satisfaction.
Global and Domestic Economic Context
Since the August policy meeting, a strong monsoon and robust domestic demand have supported economic growth, with Q1 FY2025-26 showing higher-than-expected expansion.
Headline inflation has moderated, supported by GST rationalisation, which is expected to stimulate consumption while containing price pressures, the central bank observed.
Globally, the US and China have shown resilient growth, although policy uncertainties, financial market volatility, and currency fluctuations persist. The US dollar has strengthened and treasury yields have hardened, while equities remain buoyant in advanced and emerging markets.
Policy Decision: Repo Rate and Neutral Stance
After a comprehensive review of domestic and global conditions, the MPC unanimously decided to keep the repo rate at 5.50 per cent. The Standing Deposit Facility (SDF) remains at 5.25 per cent, while the Marginal Standing Facility (MSF) rate and Bank Rate are unchanged at 5.75 per cent. The neutral stance has been retained, signalling a careful balance between supporting growth and maintaining price stability.
By combining banking sector reforms with a stable policy stance, the RBI aims to create a resilient financial system capable of sustaining long-term economic growth and financial inclusion.
