23
Nov
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- The RBI has updated its priority sector lending guidelines, effective from April 1, 2025. Reuters
- The changes expand which sectors are covered, increase loan limits (for example for housing), and boost credit flow to “weaker sections.” Reuters
- For urban cooperative banks, the PSL target is raised to 60% of adjusted net bank credit. Reuters
- Lower Risk for Micro-Credit / NBFC Lending
- RBI has relaxed risk weights for bank credit to NBFCs and microfinance institutions. The Times of India
- This reduces the capital buffer banks need to keep, potentially enabling more lending by NBFCs and micro-lenders. The Times of India
- Gold & Silver Loans – New RBI Guidelines
- RBI released fresh rules for loans against gold and silver, covering banks, NBFCs, cooperative banks, and housing finance firms. EY
- Loan-to-Value (LTV) ratios are now tiered:
- These changes aim to make precious-metal-backed lending more borrower-friendly while imposing stricter risk discipline. EY
- (Also, there are draft/proposed changes mentioned for gold & silver credit checks — see below.)
- Interest Rate Flexibility & Credit Checks – New RBI Draft Proposals
- RBI has proposed allowing banks more flexibility to reduce the spread on floating-rate loans more frequently than before. India Today
- Earlier, banks could change the “spread over benchmark” only once in 3 years (except for credit risk), but that may change. India Today
- Also, the draft proposes easier access to loans against gold and silver for small businesses (e.g. jewellers) and better credit regulation. India Today
- The public consultation for some of these proposals was open until Oct 20, 2025. India Today
- Easier Project Financing for Infrastructure
- From October 1, 2025, new project finance norms apply: lower provisions required for delays in infrastructure projects. The Times of India
- The rules are now more “sector-specific” (roads, ports, power), rather than a one-size-fits-all. The Times of India
- This could lower borrowing costs for big infrastructure developers. The Times of India
- Corporate Lending Reforms – Loans Against Shares / M&A Funding
- RBI has raised the limit on loans against shares (i.e. pledged equity) from ₹20 lakh → ₹1 crore per individual. The Times of India+1
- Banks are now allowed to fund M&A (mergers & acquisitions), which was more restricted earlier. The Times of India+1
- Also, banks can lend in rupee to residents of India’s neighboring countries, as part of financial market-deepening efforts. The Indian Express
- The cap on lending against listed debt securities is proposed to be removed entirely. The Times of India
- Loan Growth Slowing
- According to RBI data, bank loan growth has slowed: credit growth was 11.8% YoY in November (specific year) compared to much higher earlier. Business Standard
- Particularly, unsecured loans (like personal loans) are decelerating. The Economic Times
- In April 2025, retail loan growth was 14.5% YoY, but unsecured loans fell significantly (unsecured down to 9%) from previous. The Economic Times
- Cheaper Loans
- Canara Bank cut its MCLR (Marginal Cost of Funds-based Lending Rate) by 5 bps (basis points) across all tenures from November 12, 2025. The Economic Times
- Tata Capital cut its personal loan interest rate to 11.50% p.a., making borrowing more affordable for salaried and other borrowers. Indiatimes
- Bank of Baroda reduced its home loan rate to 8.00% p.a. (from 8.4%), with extra concessions for women and younger borrowers. The Times of India
- FinTech Credit Expanding
- FinTech NBFCs sanctioned a record 10.9 crore personal loans in FY 2024-25, amounting to ₹1,06,548 crore. The Economic Times
- This shows a significant rise in formal credit access via digital lending platforms. The Economic Times
- Infrastructure Loan Risk Weight Proposal
- RBI has proposed new risk weights for NBFCs’ infrastructure loans based on project performance and repayment: good projects with repayments ≥ 10% may get 50% risk weight. Reuters
- For infrastructure loans where 5–10% has been repaid, 75% risk weight is proposed. Reuters
- This could free up capital for NBFCs and reduce their cost of financing infrastructure. Reuters
💡 Implications / What It Means
- For Borrowers:
- Potentially cheaper loans ahead (due to MCLR cuts and policy easing).
- More flexible options: e.g., gold/silver loans become more accessible.
- Better affordability for infrastructure borrowers.
- For Banks / NBFCs:
- More room to lend for infrastructure.
- Can take more risk on corporate credit (M&A, share-backed lending).
- Lower capital burden via adjusted risk weights.
- For the Economy:
- These changes are aimed at boosting credit flow to key sectors (infrastructure, renewable energy, microfinance).
- Could stimulate investment and economic growth, if implemented well.