Even though the Reserve Bank of India has decided to keep the repo rate unchanged at 5.25% in its February monetary policy review, the central bank has given a big ‘booster dose’ of reforms in the financial system. Keeping the policy rates stable on Friday, Governor Sanjay Malhotra opened the treasury for consumer protection and small businessmen. While RBI has proposed compensation of up to Rs 25,000 for customers who are victims of digital fraud, it has also taken a major initiative to accelerate growth by simplifying rules for the real estate and NBFC sectors.
RBI’s focus on customer protection
It has announced a number of measures to enhance digital payment security and curb mis-selling of financial products while strengthening customer protection. RBI Governor Sanjay Malhotra said that guidelines will be presented soon and work is being done in many ways to stop this. We plan to give a very small amount as immediate relief to customers who lose their money due to fraud. This amount will be given to the customer only once. The governor said it has also proposed a framework to compensate customers up to Rs 25,000 for losses incurred in small value fraudulent transactions.
It is planned to issue three draft guidelines relating to prevention of mis-selling of financial products, relating to loans, debt recovery and appointment of recovery agents and limiting liability of customers in unauthorized electronic banking transactions. The governor said to address growing concerns over digital fraud, the central bank will issue a discussion paper on improving digital payment security. He said these measures could include delayed credit and additional authentication, especially for vulnerable users like senior citizens.
More loans for MSME and real estate
To benefit MSMEs, RBI has proposed to double the limit of unsecured loans for micro, small and medium enterprises (MSMEs). There is a proposal to increase the present limit of Rs 10 lakh to Rs 20 lakh. To boost funding for the property market, banks will also be allowed to lend to Real Estate Investment Trusts (REITs), subject to prudential safeguards.
Easy rules for non-financial companies
RBI also announced steps to reduce the compliance burden for some non-banking financial companies (NBFCs). The Governor said NBCs which do not have public funds and customer exposure, and whose asset size does not exceed Rs 1,000 crore, are proposed to be exempted from the requirement of registration. Malhotra said the overall position of the NBC sector remains strong. System-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of scheduled commercial banks also remain strong.
Rural banks will be promoted
RBI has reviewed major financial inclusion schemes, including the Lead Bank Scheme (LBS), Kisan Credit Card Scheme (KCC) and Business Correspondent (BC) model. RBI will issue revised draft guidelines in this regard.
