In an upbeat move, the Reserve Bank of India (RBI) increased India’s FY26 GDP growth forecast to 6.8% from 6.5%. The RBI also unveiled comprehensive reforms spanning credit access, banking regulations, and rupee globalisation, eyeing new areas of growth. These reforms add a new chapter to India’s banking outreach to prospective customers and sectors.
Banking sector reforms
RBI, in its effort to match the global regulatory framework brings any regulatory changes in effect from April 1, 2027. As per new rules, all scheduled commercial banks (apart from small finance, payments, and regional rural banks) and all-India financial institutions will be subject to the Expected Credit Loss (ECL) framework. The measure will bring Indian banking standards closer to international best practices.
Additionally, the sector’s resilience will be strengthened by the implementation of revised Basel III capital adequacy standards. The implementation of a risk-based deposit insurance premium, which replaces the existing flat-rate system and more accurately represents the risk profiles of individual banks, is a significant reform.
Improvements to credit flow
The RBI announced a number of actions to increase business financing. A new framework has made it possible for Indian banks to finance acquisitions by Indian corporations. There is no longer any cap on lending against listed debt securities. While IPO financing limits more than doubled from ₹10 lakh to ₹25 lakh, individual borrowing limits against shares increased fivefold, from ₹20 lakh to ₹1 crore. This is in line with the increased market capitalisation of listed stocks and expansion of the capital markets.
Now businesses and investors will find it much easier to obtain capital as a result of these changes. The RBI made NBFC lending to operational, high-quality infrastructure projects more appealing by lowering risk weights for infrastructure development. Additionally, a discussion paper on granting licenses to new urban cooperative banks will be released.
Rupee internationalisation strategy
Three important steps were announced to further India’s currency globalization goals. Since 90% of India’s $25 billion South Asian exports go to Bhutan, Nepal, and Sri Lanka, authorized dealer banks are now able to offer rupee loans to non-residents of these countries for cross-border trade.
To reduce reliance on currency crossing, the RBI will set clear reference rates for important trading partners’ currencies, such as the UAE Dirham and Indonesian Rupiah. Both the rupee and partner currencies would gain from this, according to Deputy Governor T Rabi Sankar.
The options for rupee-based trade settlement have expanded since Special Rupee Vostro Account balances can now be invested in corporate bonds and commercial papers in addition to government securities.
Business and consumer benefits
Banks are given more latitude in handling borrower transaction accounts for convenience. In IFSCs, merchanting trade forex outlay periods have been extended from four to six months, and exporters can now hold foreign currency for three months instead of one. FEMA has streamlined its rules for non-resident business establishments and external commercial borrowings.
What the central bank has come up with are radical reforms and will help bank to have sustained growth and new regulatory framework. Looking at the way the Indian banking sector reformed itself and made working and finances robust, these measures will add to and consolidate the sector.
Significantly improved consumer protection
Basic Savings Bank Deposit accounts will provide more digital banking features without minimum balance fees. By joining the RBI Ombudsman Scheme and strengthening the Internal Ombudsman mechanism, underprivileged groups will be able to file grievances.
Monetary stability and growth facilitation are balanced in the RBI’s comprehensive policy package. Better economic forecasts give breathing room, and changes in banking, credit, and international finance set up India for long-term growth. The next MPC meeting is set for December 3-5, 2025, and the minutes will be released on October 15.
