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In a major push to reinforce regulatory oversight, expand funding mechanisms, and stimulate innovation in India’s financial system, the Reserve Bank of India (RBI) has announced six key policy measures spanning banking regulation, financial technology, and payment infrastructure. These initiatives, introduced by RBI Governor Sanjay Malhotra during the latest Monetary Policy announcement, reflect a strategic shift toward enhanced compliance frameworks, regulatory technology solutions, and risk management mechanisms.
Strengthening Infrastructure Finance and Loan Recovery
Among the most notable initiatives is the RBI’s intent to revise guidelines on Partial Credit Enhancement (PCE), a move designed to boost capital access for infrastructure development. By expanding funding avenues, this regulatory update aims to improve credit risk mitigation and enable broader participation in large-scale public and private sector projects.
Complementing this, the central bank plans to introduce a market-based mechanism for the securitisation of stressed assets, augmenting the traditional Asset Reconstruction Company (ARC) model under the SARFAESI Act, 2002. This strategy is expected to deepen India’s distressed debt market while enhancing transparency and accountability in asset recovery.
Expanding Co-Lending and Harmonising Regulations
In a significant development for the credit ecosystem, co-lending arrangements—previously limited to priority sector lending—will now be permitted across all loan categories and regulated entities, including banks and Non-Banking Financial Companies (NBFCs). This broadening of co-lending regulations supports greater financial inclusion, improved risk distribution, and more dynamic lending models in both retail and corporate sectors.
To ensure regulatory consistency across financial institutions, the RBI will issue comprehensive prudential and conduct guidelines for gold loans, addressing divergent risk-bearing capacities and improving internal controls. Additionally, harmonisation of non-fund-based credit facilities—such as bank guarantees and letters of credit—will be introduced, standardizing compliance obligations across the financial industry.
Draft guidelines for these proposals have been opened to public consultation, with final frameworks to be released after stakeholder feedback, in line with global best practices in regulatory change management.
Enhancing UPI and Encouraging RegTech Innovation
On the payments front, the National Payments Corporation of India (NPCI) will now be empowered to set transaction limits for person-to-merchant UPI payments, in coordination with banks and key stakeholders. This move is anticipated to unlock higher-value digital transactions, supporting a more seamless and secure retail payment ecosystem.
To catalyze regulatory innovation, the RBI also announced that its Regulatory Sandbox framework will become theme-neutral and ‘on-tap’, enabling continuous submission of fintech solutions without the restriction of predefined thematic cohorts. This evolution is expected to accelerate RegTech innovation, promote compliance automation, and enhance the testing of emerging technologies in a controlled environment.
A Forward-Looking Regulatory Agenda
“These announcements reflect the RBI’s commitment to evolving India’s regulatory and financial ecosystem in line with international standards,” said Governor Sanjay Malhotra. “Empowering institutions, fostering transparency, and facilitating innovation are at the core of these reforms.”
As India continues to lead the digital finance revolution, these new measures underscore the role of Governance, Risk, and Compliance (GRC) systems in managing regulatory obligations, improving risk mitigation, and enhancing operational resilience for banks, fintechs, and payment service providers alike.
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