RBI announces six key measures to strengthen India's banking, fintech, payments ecosystems

ANI April 9, 2025 161 views

The Reserve Bank of India has unveiled six transformative measures to strengthen India's financial landscape. These initiatives range from expanding asset securitization mechanisms to empowering digital payment platforms like UPI. By making the Regulatory Sandbox more accessible, RBI is signaling strong support for fintech innovation and technological experimentation. The reforms demonstrate a strategic approach to modernizing India's banking and payments ecosystems while providing more flexibility for financial institutions.

"Making the Regulatory Sandbox theme-neutral and 'on-tap'" - Sanjay Malhotra, RBI Governor
Mumbai, April 9: In a move to strengthen India's financial ecosystem, Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday announced six additional measures focused on banking regulation, fintech, and payment systems.

Key Points

1

RBI introduces market-based mechanism for stressed asset securitization

2

Expanding co-lending arrangements across regulated financial entities

3

NPCI to set UPI transaction limits

4

Regulatory Sandbox becomes more flexible for fintech innovation

These initiatives were revealed by the RBI governor while announcing the Monetary Policy initiatives. The RBI plans to introduce a new market-based mechanism to enable the securitisation of stressed assets.

This will complement the existing Asset Reconstruction Company (ARC) route under the SARFAESI Act, 2002, and aim to deepen the secondary market for distressed loans.

Currently, co-lending arrangements are restricted to only priority sector loans by banks and Non-Banking Financial Companies (NBFCs), but they will now be extended to all regulated entities for all loans, priority sector or otherwise.

The RBI will issue comprehensive prudential and conduct regulations for gold loans to ensure consistency across regulated entities and account for their varying risk-bearing capacities.

The central bank also plans to harmonise the regulations governing non-fund-based credit facilities, such as bank guarantees and letters of credit, across financial institutions.

Additionally, the RBI intends to revise guidelines on partial credit enhancement (PCE), a step aimed at expanding funding avenues for infrastructure projects.

Draft guidelines for the above four proposals are released for public consultation, with final frameworks to be issued following stakeholder feedback.

The fifth announcement is that the National Payments Corporation of India (NPCI) will be empowered to set transaction limits for Unified Payments Interface (UPI) person-to-merchant transactions in consultation with banks and relevant stakeholders. This could pave the way for higher-value digital payments in the retail ecosystem.

In a move to foster continuous innovation, the RBI will make its Regulatory Sandbox framework theme-neutral and 'on-tap'.

This means fintechs and other entities can apply at any time without waiting for themed cohorts, encouraging more agile experimentation and faster adoption of emerging technologies.

RBI Governor stated, "The other two announcements relate to enabling NPCI to decide, in consultation with the banks and other stakeholders, the transaction limits in UPI for person to merchant transactions; and making the Regulatory Sandbox theme-neutral and 'on-tap'. Necessary directions for the implementation of these two measures shall be issued separately."

Reader Comments

P
Priya K.
Finally some forward-thinking measures from RBI! The theme-neutral sandbox is especially exciting for fintech startups. Can't wait to see what innovations emerge from this. 🚀
R
Rahul M.
Good steps overall but I'm concerned about higher UPI limits for merchants. Hope they implement strong fraud prevention measures along with this.
S
Sanjay T.
As someone working in NBFC sector, the co-lending expansion is a game changer! This will really help in reaching more customers with better loan products.
A
Ananya P.
The gold loan regulations are much needed. Too many variations in how different lenders handle this. Standardization will protect consumers better.
V
Vikram S.
While I appreciate most measures, I wish RBI had addressed digital lending regulations more clearly. The current framework still leaves room for predatory lending apps to operate.
N
Neha R.
The infrastructure funding changes are smart! Partial credit enhancements could really boost public-private partnerships. Hope this translates to better roads and utilities soon.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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Tags:
RBI Sanjay Malhotra Banking Reforms Fintech Digital Payments UPI Financial Innovation
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