Mumbai’s central bank, the Reserve Bank of India (RBI), rolled out exciting updates Wednesday to help companies and everyday people get easier access to bank loans. These changes aim to spark more business deals, boost stock market participation, and fuel big infrastructure projects.
RBI Governor Sanjay Malhotra shared the news after the Monetary Policy Committee meeting. He explained that banks can now offer loans to Indian companies buying out others, creating a smoother path for corporate acquisitions. This step follows a request from the State Bank of India, showing how feedback from major lenders shapes policy.
In another big move, the RBI scrapped limits on loans backed by listed debt securities, giving banks more flexibility to lend against these safe assets.
For individuals, the rules got a major upgrade. Banks can now lend up to Rs 1 crore against shares per person, up from the old Rs 20 lakh cap. And for funding initial public offerings (IPOs), the limit jumps to Rs 25 lakh from Rs 10 lakh. These tweaks, starting October 1, 2024, will especially benefit high net worth individuals eyeing bigger stakes in hot IPOs.
The RBI also made it cheaper for non-banking financial companies (NBFCs) to finance top-notch infrastructure projects by lowering risk weights on those loans. This should speed up funding for roads, power plants, and other key developments.
Plus, the central bank ditched a 2016 rule that held back loans to big borrowers with over Rs 10,000 crore in bank exposure. Experts say this will unlock more credit overall, helping businesses expand without roadblocks.
Looking ahead, Malhotra noted that key reforms like the expected credit loss (ECL) framework and Basel 3 capital rules won’t kick in until 2027, so banks have time to prepare.
Analysts praise these RBI decisions for pushing banks to lend more freely. They support corporate takeovers, ramp up IPO involvement, and free up cash for infrastructure and growth—good news for India’s buzzing economy.
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