The Reserve Bank of India has announced six new regulatory proposals for banks and fintechs.

While four are for banks, two are for fintech companies. 

The proposals for banks are:

Securitisation of stressed assets framework:

The RBI has proposed a new framework to allow securitisation of stressed assets through a market-based mechanism, in addition to the existing asset reconstruction company (ARC) route under the SARFAESI Act. 

This is expected to improve risk distribution and offer lenders an exit route. 

Extending scope of co-lending guidelines:

The RBI plans to broaden the scope of co-ending to all regulated entities (REs) and loan categories. The aim is to address evolving credit partnerships across the sector.

The current co-lending rules apply only to collaborations between banks and NBFCs for priority sector lending. 

Uniform regulations for gold-backed loans:

RBI will issue standardised guidelines for loans backed by gold jewellery and ornaments across all REs. This is set to harmonise conduct and prudential norms and respond to observed risks in the segment.

Revised guidelines for non-fund based facilities:

The RBI has proposed comprehensive norms to consolidate rules for non-fund based facilities, including guarantees, letters of credit and co-acceptances, across REs. 

"Instructions related to partial credit enhancement (PCE) by regulated entities are also proposed to be revised. This is expected to broaden the funding sources for infrastructure financing," said RBI Governor Sanjay Malhotra.

Draft guidelines for these four proposals are released for public consultation. The final frameworks to be issued following stakeholder feedback.

The other two key measures are for fintechs. They are:

UPI transaction limits to be made flexible:

The RBI has proposed that the National Payments Corporation of India (NPCI) will be empowered to decide transaction limits for Unified Payments Interface (UPI) person-to-merchant transactions in consultation with banks and relevant stakeholders, a move that could pave the way for higher-value digital payments in the retail ecosystem. Banks will continue to hold the discretion to set their internal limits within the NPCI cap.

Currently, UPI transactions are capped at Rs 1 lakh for most use cases. 

The Rs 1 lakh limit on peer-to-peer (P2P) transfers, however, will remain unchanged.

 On Tap’ and ‘Theme Neutral’ regulatory sandbox:

The RBI will make its Regulatory Sandbox framework theme-neutral and ‘on-tap’. Fintechs and other entities can apply at any time without waiting for themed cohorts, encouraging more agile experimentation and faster adoption of emerging technologies.

Earlier, sandboxes were cohort-based with specific themes and timelines.