India’s Reserve Bank (RBI) introduced key reforms in 2025 to enhance capital market accessibility. These measures aim to increase credit availability for investors and companies. The changes come amid global economic uncertainties and domestic market pressures. They focus on easing lending norms, expanding IPO financing, and improving infrastructure funding.
Relaxation of Lending Against Securities
The RBI removed the ceiling on loans against listed debt securities. Banks can now lend more freely against these instruments. The individual loan limit against shares rose from Rs 20 lakh to Rs 1 crore. This fivefold increase enables investors to access larger funds without selling shares. Lending limits against Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) were also raised. These steps aim to deepen market liquidity and broaden investor participation.
Enhanced IPO Financing for Retail Investors
The IPO financing limit for retail investors increased from Rs 10 lakh to Rs 25 lakh. This move targets the growing IPO market, encouraging more retail investors to participate. With high-profile IPOs expected, the RBI hopes to channel savings into equities. It also aims to boost liquidity in the primary market. Analysts view this as a critical push to sustain market momentum and economic growth.
Withdrawal of 2016 Lending Curbs on Large Borrowers
The RBI scrapped the 2016 framework restricting bank loans to large borrowers with credit exposure over Rs 10,000 crore. The existing Large Exposure Framework now manages concentration risks. This change offers banks more flexibility to fund large projects, mergers, and expansions. It helps corporates access bank credit more easily while maintaining financial stability through macroprudential tools.
NBFC Funding Support for Infrastructure Projects
Risk weights on loans by Non-Banking Financial Companies (NBFCs) to high-quality infrastructure projects were reduced. Lower risk weights reduce capital requirements, allowing NBFCs to lend more competitively. This reform aims to ease financing costs for sectors like roads, power, and renewable energy. It encourages NBFCs to increase exposure to stable infrastructure projects, supporting India’s long-term growth.
Simplification of External Commercial Borrowings (ECB)
The RBI streamlined ECB regulations by expanding eligible borrowers and lenders. Borrowing limits, maturity norms, and cost restrictions were relaxed. Reporting requirements were simplified. These changes make overseas borrowing cheaper and easier for Indian companies. They aim to balance risk management with improved access to foreign capital.
Extended Repatriation Period for IFSC Accounts
The repatriation period for foreign currency accounts in International Financial Services Centres (IFSCs) was extended from one to three months. This benefits exporters by offering greater flexibility in managing foreign currency inflows. It aligns onshore IFSC accounts with offshore arrangements. The reform strengthens India’s offshore financial infrastructure and forex liquidity.
Questions for UPSC:
- Taking example of India’s RBI reforms, discuss how monetary policy can influence capital market development and investor confidence.
- Examine the role of Non-Banking Financial Companies (NBFCs) in infrastructure financing and analyse the risks and benefits associated with their increased participation.
- With suitable examples, discuss the impact of external commercial borrowings (ECBs) on India’s economic growth and debt sustainability.
- Critically discuss the significance of International Financial Services Centres (IFSCs) in enhancing India’s position in global finance and trade.
