The Reserve Bank of India (RBI) has announced regulatory changes aimed at faster transmission of policy rate cuts to borrowers. Key reforms include allowing banks to reduce spread components on floating-rate loans before the existing three-year lock-in, potentially lowering EMIs and interest outgo. Borrowers will also have the option to switch to fixed-rate loans during interest resets, though it is no longer mandatory.
The RBI has also eased gold and silver lending rules, enabling banks—including tier-3 and -4 urban co-operative banks—to provide working capital loans to businesses using gold as raw material, not just jewellers. Additionally, repayment tenor for gold metal loans could extend from 180 to 270 days, with non-manufacturing jewellers now eligible for such loans for outsourced production.
Other measures include revisions to Basel III capital regulations, increasing the limit for perpetual debt instruments issued overseas, and proposals to align large exposure and intragroup transaction norms for foreign bank branches. To improve credit data accuracy, banks will report weekly to credit bureaus instead of fortnightly, with faster error rectification and inclusion of CKYC numbers in consumer reports. Draft proposals are open for public feedback until October 20.
These changes are designed to enhance credit flow, support borrowers, and modernize banking regulations, promoting more efficient financial transmission in India.
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