RBI announces host of measures to improve flow of Bank credit

The Reserve Bank of India has introduced several measures to enhance credit accessibility, including establishing a framework for banks to finance corporate acquisitions in India and increasing loan limits for share-backed lending.

Additional changes include expanded lending limits against units of REITs and InvITs, while eliminating regulatory ceilings entirely for loans against listed debt securities. The central bank will implement a more principle-based framework for lending to capital market intermediaries.

These regulatory adjustments aim to streamline existing guidelines and broaden opportunities for regulated financial entities to participate in capital market lending.

These measures come amid declining bank credit flows to the commercial sector during FY2025, while non-bank credit sources have offset this trend. Bank credit expanded at 12.1% in 2024-25, slower than the previous year’s 16.3% growth but still exceeding the average 10.3% growth rate over the preceding decade.

Non-food bank credit decreased to approximately ₹18 lakh crore in FY2025, marking a reduction of ₹3.4 lakh crore from FY2024 levels. However, non-bank sources compensated this shortfall by increasing their lending activity.

Governor Malhotra noted that the commercial sector’s financial resources expanded from ₹33.9 lakh crore to ₹34.8 lakh crore between FY2024 and FY2025, with this trend continuing into the current fiscal year.

Key reforms will include: 1) a new framework for bank financing of corporate acquisitions; 2) removal of lending restrictions against listed debt securities; and 3) increased share-backed lending limits from ₹20 lakh to ₹1 crore per borrower, while IPO financing ceilings will increase from ₹10 lakh to ₹25 lakh per individual.

Additionally, the 2016 framework restricting banks from lending to large borrowers with aggregate credit limits exceeding ₹10,000 crore will be discontinued. The Governor stated that the existing Large Exposure Framework effectively addresses single entity credit concentration risks at individual banks, while systemic concerns would be addressed through macroprudential measures when necessary.

To lower infrastructure financing costs through NBFCs, the RBI plans to reduce risk weights for loans to operational high-quality infrastructure projects.

More Like This

Published on October 1, 2025