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Key Changes in Regulatory Guidelines Effective April 1, 2025

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1. Priority Sector Lending (PSL) Guidelines by RBI

  • Objective: To enhance credit flow to priority sectors and foster inclusive growth.
  • Changes:
    • Increased Limits:
      • Education Loans: Raised limits to encourage access to education financing.
      • Renewable Energy Loans: Expanded support for financing renewable energy projects.
      • Affordable Housing Loans: Increased limits for loans under affordable housing schemes.
  • Impact: These changes are expected to boost lending to key sectors that contribute to economic growth and social welfare.

Risk Weights on Bank Loans to Non-Banking Financial Companies (NBFCs)

  • Change: The RBI has restored the risk weight on bank loans to NBFCs from 125% to 100%.
  • Effective Date: April 1, 2025.
  • Impact: This adjustment reduces the capital burden on banks lending to NBFCs, helping the sector deal with higher borrowing costs.

New Guidelines for UPI Transactions

  • Implemented by: National Payments Corporation of India (NPCI).
  • Changes:
    • Mobile Number Record Updates: Banks and Payment Service Providers (PSPs) must update mobile number records weekly to reduce transaction errors.
    • Opt-In Requirement: UPI users must explicitly opt-in for seeding their UPI numbers.
  • Purpose: These guidelines are aimed at enhancing security and reducing fraudulent transactions in the UPI ecosystem.

ATM Charges Increased

  • Change: The maximum fee that banks can charge for ATM cash withdrawals has been increased to ₹23.
  • Effective Date: May 1, 2025.
  • Previous Limit: ₹21.
  • Impact: The fee hike may lead to increased costs for customers withdrawing cash from ATMs.

Revised SRO Guidelines for Micro Finance Institutions (MFIs)

  • Implemented by: RBI-recognized Self-Regulatory Organization (SRO) for MFIs, MFIN.
  • New Guidelines:
    • Borrower Limit: A borrower will not be able to obtain loans from more than four lenders simultaneously.
  • Objective: This rule aims to reduce over-borrowing and mitigate the risk of excessive debt burdens on borrowers.

Prompt Corrective Action (PCA) Framework for Urban Cooperative Banks

  • Change: The existing Supervisory Action Framework (SAF) for weak Urban Cooperative Banks (UCBs) will be replaced by the PCA framework.
  • Effective Date: April 1, 2025.
  • Key Criteria for PCA:
    • Consecutive Losses: Banks incurring losses for two consecutive years.
    • Net NPAs: Net Non-Performing Assets (NPAs) above 6% but below 9%.
    • Capital Adequacy Ratio (CAR): CAR up to 250 basis points below the required level.
  • Impact: The PCA framework is designed to be principle-based, with fewer parameters, providing RBI with more flexibility to address financial stress in UCBs.

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