FX.co ★ RBI Eases Path for Bank Loans, Capital Market Entry

The Reserve Bank of India (RBI) introduced a series of initiatives on Wednesday aimed at enhancing bank lending and expanding the role of banks in the capital markets. The central bank granted domestic banks the ability to finance acquisitions by Indian corporations, a sector traditionally led by foreign lenders. Additionally, the RBI increased the cap on loans secured against equity shares from INR 2 million to INR 20 million. Individual financing for IPOs will also be increased to INR 2.5 million. The policymakers unveiled plans to retract a 2016 framework that restricted loans to large corporations, reduce risk weights for infrastructure loans, and delay the implementation date for expected credit loss rules until April 1, 2027, with full compliance required by March 31, 2031. Furthermore, Basel III regulations will commence from April 2027, and draft guidelines to relax capital requirements for small businesses and home loans are expected to be released shortly.