Tag: RBI

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RBI plans simpler rules for large NBFCs

The Reserve Bank of India (RBI) has proposed a simpler way to identify and regulate large non-banking financial companies (NBFCs), in a move aimed at improving clarity and strengthening oversight.

In a draft framework released for public feedback, the RBI has suggested that NBFCs with assets of ₹1 lakh crore or more should automatically be placed in the “upper layer.” These are the biggest and most systemically important firms, and they are subject to tighter regulations.

Right now, NBFCs are classified using a mix of factors such as size, risk level and their connections with other financial institutions. This system can be complex and difficult to follow. By introducing a clear asset-based threshold, the RBI hopes to make the process more straightforward and transparent.

Another important change proposed is treating government-owned NBFCs the same as private ones. Until now, many state-run NBFCs were placed in lower regulatory categories. The RBI’s new approach removes this distinction, ensuring that any company—public or private—that meets the size requirement will face the same level of scrutiny.

This shift could bring more large NBFCs under stricter supervision. Companies classified in the upper layer are expected to follow tighter governance norms, improve risk management practices, and may also face requirements such as listing on stock exchanges.

The proposal could impact several large financial entities and corporate groups, potentially increasing compliance responsibilities for them. However, regulators believe this is necessary to maintain stability in the financial system, especially as NBFCs play a growing role in lending and financial services.

Also Read: India urged to cut West Asia energy dependence

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Beyond

RBI keeps Repo rate at 5.25%

The Reserve Bank of India has decided to keep its key policy rate, the repo rate, unchanged at 5.25%, signalling a cautious approach as it navigates a complex global and domestic environment.

The decision was announced after the latest meeting of the Monetary Policy Committee (MPC), which voted to maintain the current rate while continuing with a “neutral” stance. This means the central bank is keeping its options open, depending on how inflation and growth trends evolve in the coming months.

Alongside the rate decision, the RBI projected India’s economic growth at 6.9% for the financial year 2026–27. While the outlook remains positive, it reflects a slightly moderated pace amid global uncertainties. Inflation is expected to average 4.6%, staying within the RBI’s comfort range but still requiring close monitoring.

The central bank highlighted that risks from global developments remain a concern. Ongoing geopolitical tensions, particularly in West Asia, and fluctuations in crude oil prices could impact both inflation and economic activity. Any sharp rise in oil prices may increase input costs and put pressure on household budgets.

Despite these risks, the RBI expressed confidence in the strength of the domestic economy. It pointed to steady consumption, improving investment activity, and stable financial conditions as key supporting factors.

For borrowers, the unchanged repo rate means lending rates on home, auto and other loans are likely to remain stable for now. This provides some relief to households and businesses that have been adjusting to higher interest rates over the past few years.

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Corporate

Emirates NBD gets RBI nod to acquire RBL Bank

Emirates NBD Bank has secured approval from the Reserve Bank of India (RBI) to acquire a controlling stake in Mumbai‑based RBL Bank, signaling a landmark foreign investment in India’s banking sector. Under RBI’s approval, Emirates NBD can hold up to 74 % of RBL Bank’s paid-up capital, though voting rights remain capped at 26 % in line with Indian banking regulations.

The acquisition, first announced in October 2025, involves a $3 billion strategic investment through a preferential share issuance. Emirates NBD has already received regulatory clearance in its home country, and India’s competition authority had approved the deal earlier this year. Once completed, the transaction would become one of the largest cross-border banking acquisitions in India.

With RBI’s nod, RBL Bank will now move forward with a mandatory open offer to public shareholders, which requires approval from the Securities and Exchange Board of India (Sebi). The open offer would allow Emirates NBD to acquire an additional 26 % of RBL Bank’s voting share capital, in line with takeover regulations, further consolidating its stake.

After completion, RBL Bank will be reclassified as a foreign bank subsidiary, with Emirates NBD as its parent. The RBI has granted temporary regulatory relaxations during the transition, including exemptions from certain governance norms and rules for board meetings and branch integration.

The approval is valid for one year and remains subject to additional statutory clearances, including compliance with the Foreign Exchange Management Act (FEMA), Sebi rules, and government approvals for foreign direct investment beyond 49 %.

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Rupee jumps to 93.53 after RBI action

The Indian rupee saw a sharp rebound on April 2, rising 1.3% to 93.53 against the US dollar, after the Reserve Bank of India (RBI) introduced new measures to tighten control over the forex market.

The central bank’s latest steps focus on reducing speculative trading that had been putting pressure on the rupee. By restricting non-deliverable forward (NDF) trades and preventing companies from rebooking cancelled derivative contracts, the RBI effectively limited opportunities for traders to bet against the currency.

This triggered a rapid unwinding of existing dollar positions. As traders rushed to exit these bets, dollar supply increased while demand for the rupee improved, leading to the sharp appreciation.

The move comes after a period of weakness for the rupee, driven by rising oil prices, global uncertainty, and continued outflows by foreign investors. These factors had pushed the currency to record lows in recent sessions.

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RBI makes digital payments safer from April 1

The Reserve Bank of India (RBI) is set to introduce new rules for digital payments from April 1, 2026, making online transactions more secure for users across the country.

Under the updated guidelines, all digital payments, whether through UPI, debit cards, credit cards, or internet banking, will now require two-factor authentication (2FA). Simply entering a one-time password (OTP) will no longer be enough to complete a transaction. Users will need to verify payments using an additional step, such as a PIN, password, or biometric method like a fingerprint or face scan.

The idea behind this change is simple: add an extra layer of protection. With online fraud cases rising alongside the rapid growth of digital payments, the RBI wants to ensure that transactions are safer and harder for fraudsters to misuse.

The new system is designed to be both secure and user-friendly. For smaller or routine payments made from trusted devices, the process may remain quick and smooth. However, for larger or unusual transactions, users might be asked to complete extra verification steps. This risk-based approach aims to balance convenience with safety.

The changes will also affect recurring payments such as subscriptions and automatic bill payments. Users may be required to re-confirm these transactions from time to time to ensure they are still authorised.

Banks and digital payment platforms have already been instructed to upgrade their systems to meet the new requirements. Many are expected to introduce more advanced features like device-based authentication and biometric verification to make the process seamless.

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Centre to borrow ₹8.2 lakh cr in 1st half of FY27

The Government of India will borrow ₹8.2 lakh crore from the market during the first half of the 2026‑27 fiscal year (April–September) to meet its fiscal needs. This accounts for roughly half of the total annual borrowing target of ₹16 lakh crore announced in the Budget.

The funds will be raised through government bonds of varying maturities, issued via 26 weekly auctions conducted with the Reserve Bank of India (RBI). Spreading borrowings across weekly auctions is intended to maintain stability in the debt market and reduce pressure on interest rates.

About 25 percent of the borrowing will come from long-term bonds, with maturities ranging up to 30–50 years. This approach is designed to secure long-term funding at stable rates and manage debt repayment schedules effectively.

In addition to traditional bonds, the government plans to raise ₹15,000 crore through Sovereign Green Bonds. These bonds will finance environmentally sustainable projects and support India’s climate action and green infrastructure initiatives.

The borrowing plan is part of the government’s broader fiscal framework for FY27, aimed at balancing the fiscal deficit while funding essential public services, infrastructure, and other budget priorities. Borrowings are necessary even after accounting for revenues, small savings contributions, and other financing sources.

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Corporate

RBI clears Bain entry into Manappuram

The Reserve Bank of India (RBI) has approved a major investment by Bain Capital in Manappuram Finance, allowing the global firm to acquire joint control of the company and its subsidiaries.

Manappuram Finance said the RBI has given the green signal for an indirect change in control of its key units, including Asirvad Micro Finance and Manappuram Home Finance. This approval is a crucial step for completing the deal.

The transaction is valued at around ₹4,385 crore, making it one of the significant investments in India’s non-banking financial sector in recent times. As part of the deal, Bain Capital will become a co-promoter of Manappuram Finance along with the existing promoters.

Initially, Bain Capital is expected to acquire an 18% stake in the company. It will also launch an open offer to public shareholders. If fully subscribed, this could increase its total stake to about 41.7%.

The RBI’s approval is mandatory for such ownership changes in financial institutions. It also allows Bain Capital to have representation on the company’s board and take part in management decisions.

Manappuram Finance believes the investment will strengthen its capital base and support future expansion. The company plans to use the funds to grow its lending business across segments such as gold loans, microfinance, and housing finance.

Market reaction to the announcement was cautious. Shares of Manappuram Finance saw a slight decline after the news, reflecting investor concerns about changes in ownership and control.

The deal is expected to be completed by the end of March 2026, subject to the completion of the open offer and other regulatory requirements.

Also Read: HDFC Bank chairman Atanu Chakraborty resigns

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Leaders

HDFC Bank chairman Atanu Chakraborty resigns

India’s largest private sector lender, HDFC Bank, faced a sudden leadership shock as part‑time chairman Atanu Chakraborty resigned with immediate effect, citing “differences over values and ethics” with certain internal practices. Chakraborty, a retired IAS officer who became chairman in 2021 and was re‑appointed in 2024, did not elaborate on the specifics of his concerns, only noting that “certain happenings and practices” over the past two years conflicted with his personal values.

Following the resignation, the Reserve Bank of India (RBI) approved the appointment of veteran banker Keki Mistry as interim chairman for a three‑month term. Mistry, a long‑time executive within the HDFC Group, reassured investors and employees about operational stability and continuity, emphasizing that the leadership transition is smooth and governance remains strong.

The news triggered a sharp market reaction. HDFC Bank shares plunged around 8% in early trading, reflecting investor concern over governance uncertainty and strategic direction. The decline marked one of the steepest intraday drops in recent months, though prices later moderated slightly. The resignation came at a sensitive time as the bank continues to navigate the integration and operational pressures following its merger with HDFC Ltd, creating one of India’s largest financial conglomerates.

In response to the turmoil, the RBI clarified that its supervisory review had found no material governance or financial irregularities at the bank, affirming that it remains well-capitalized, liquid, and operationally sound.

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RBI targets bank mis-selling

The Reserve Bank of India (RBI) has proposed new draft rules to stop banks from mis-selling financial products to customers. The central bank wants to end incentive structures that push employees and agents to aggressively sell insurance, mutual funds and other third-party products.

Under the proposed guidelines, banks will not be allowed to design reward systems, sales competitions or performance targets that encourage staff to prioritise sales over customer needs. The RBI has made it clear that employees and direct sales agents must not receive direct or indirect incentives from third-party companies for promoting their products.

The move comes after concerns that customers are often pressured into buying products that may not suit their financial goals, income level or risk capacity. In some cases, products are bundled with loans or other banking services without giving customers a clear choice.

The draft rules define mis-selling as selling products that are unsuitable, failing to disclose important details, or using misleading tactics to influence customer decisions. If mis-selling is proven, banks will be required to fully refund customers and compensate them for any financial loss.

The RBI has also targeted unfair digital practices. The draft prohibits the use of “dark patterns”, design features in apps or websites that mislead or pressure customers into making purchases. Banks will need to review their systems and remove such tactics.

Another important proposal is that banks can contact customers for marketing only with explicit consent and during specified hours. This is aimed at reducing harassment through repeated calls and messages.

The central bank has invited public comments on the draft guidelines until early March 2026. If finalised, the new rules are expected to come into effect from July 1, 2026.

Also Read: RBI clears 9.95% stake IDFC first, then Federal Bank

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Corporate

RBI clears 9.95% stake IDFC first, then Federal Bank

The Reserve Bank of India (RBI) has approved ICICI Prudential Asset Management Company (AMC) and ICICI Bank group entities to acquire up to 9.95% stake in IDFC First Bank and Federal Bank.

Both banks informed stock exchanges that they received the RBI’s approval on February 11, 2026. The approval allows ICICI Prudential AMC, along with related entities of the ICICI Bank group, to buy up to 9.95% of the paid-up share capital or voting rights in each bank.

The permission is subject to strict regulatory conditions. The stake purchase must comply with the Banking Regulation Act, 1949, RBI’s guidelines on shareholding in banks, SEBI regulations, and rules under the Foreign Exchange Management Act (FEMA), wherever applicable.

Importantly, the RBI has given a one-year deadline to complete the acquisition. If the stake is not acquired within this period, the approval may lapse.

A 9.95% stake is considered a significant minority holding in the banking sector. While it does not give control over the bank, it allows the investor to have meaningful financial exposure and influence as a large shareholder.

Following the announcement, market participants closely tracked the development, as institutional investments by large financial groups are often seen as a sign of confidence in a bank’s growth prospects.

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