Introduction
The Reserve Bank of India (‘RBI’) released a forward-looking policy statement[i] introducing a range of developmental and regulatory measures spanning Regulations, Payment Systems, and Fintech innovation frameworks. These proposals are largely in draft form and open for public consultation, reflecting the RBI’s approach towards evolving financial practices in a dynamic economy.
Key Highlights of the Statement
I. Regulations
Draft Framework for Securitisation of Stressed Assets: The RBI has proposed a draft framework for a market-based mechanism for securitisation of stressed assets, supplementing the existing Asset Reconstruction Companies (ARCs) under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). The move is aimed at enhancing risk diversification and facilitating exit routes for lenders dealing with distressed exposures.
Expanded Framework for Co-Lending Arrangements: The current co-lending model, which is limited to banks and Non-Banking Financial Companies (NBFCs) for priority sector lending, is being widened to include all regulated entities (‘REs’). This is expected to strengthen access to credit across segments through collaborative lending models by introducing a uniform, generic framework.
Unified Guidelines for Lending Against Gold Jewellery: To harmonize the inconsistencies across RE categories, the RBI will introduce unified prudential and conduct norms for gold-backed loans. The aim is twofold: harmonise regulations and mitigate risks, while still supporting both consumption and income-generating uses of such loans.
Review and Harmonisation of Non-Fund Based Facilities (‘NFB’): Instruments like Guarantees, Letters of Credit, Co-Acceptances, etc., will be brought under a consolidated framework across all REs. The new guidelines also propose a review of rules governing partial credit enhancements to diversify infrastructure funding sources.
II. Payment Systems
Rationalisation of Unified Payments Interface ('UPI') Transaction Limits: Currently, UPI transactions are capped at Rs. 1 lakh for most uses, with higher limits for specific merchant categories, ranging from Rs. 2 lakh to Rs. 5 lakh. RBI now proposes that the National Payment Corporation of India (NPCI), in consultation with the bank and other stakeholders, be empowered to revise these limits based on emerging requirements. However, person-to-person (P2P) transactions will remain capped at Rs. 1 lakh, and banks will retain the autonomy to set stricter internal thresholds.
III. Fintech
‘Theme-Neutral’ and ‘On-Tap’ Regulatory Sandbox: RBI proposes to convert its Regulatory Sandbox framework into a ‘Theme Neutral’ and ‘On Tap’ model. This evolution from fixed-time thematic cohorts aims to promote continuous innovation and accommodate Fintech developments dynamically. Eligible products and services will be able to apply for testing under the sandbox at any time, without waiting for specific cohort announcements.
Compliance and Next Steps
Most of the above measures are currently in draft form and have been issued for public consultation. The RBI will finalise the guidelines based on stakeholder feedback and will announce the implementation timelines separately.
Conclusion
The April 2025 policy statement reflects the RBI’s effort toward progressive liberalisation coupled with robust regulatory oversight. The move to broaden co-lending and securitisation avenues signals a clear intent to embrace market mechanisms for financial deepening, while the proposed harmonisation measures aim to ensure regulatory consistency across the financial system. However, the success of these frameworks will depend significantly on stakeholder feedback, timely implementation, and strong risk safeguards, particularly in areas such as gold lending and infrastructure credit enhancement.
Overall, the initiatives underscore the RBI’s proactive stance in fostering a responsive, inclusive, and innovation-driven financial ecosystem.
End Note
[i] Press Release No. 2025-26/63 dated 09.04.2025.
Authored by Priyavansh Kaushik, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
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