Latest Banking Policy Updates: What You Need to Know

Introduction

Banking policies often change, so it's important to stay updated. For the latest updates, check the Reserve Bank of India (RBI) announcements and review your bank's policies. This article summarizes the most recent banking policy changes as of April 8, 2025, to help you understand how they might affect your financial decisions.

Monetary Policy and Interest Rates

The Reserve Bank of India has made several significant changes to monetary policy in recent months:

• Repo Rate Cut: The RBI's Monetary Policy Committee (MPC), led by new Governor Sanjay Malhotra, cut the repo rate by 25 basis points to 6.25% during their meeting on February 7, 2025. This was the first rate cut in approximately five years.
• Neutral Stance: The RBI's neutral stance indicates that it can change policy rates as the economy evolves, suggesting the potential for further rate adjustments in the future.
• CRR Reduction: Last December, the Cash Reserve Ratio (CRR) dropped by 50 basis points to 4%. This change aimed to boost liquidity in banks and support credit growth.
• Upcoming MPC Meeting: The next MPC meeting is scheduled to begin on Monday, April 7, 2025. Economists expect a 25 basis point rate cut in this meeting due to lower inflation and a focus on growth.

Banking Regulations and Governance

Several important regulatory changes have been implemented or proposed:

• Banking Laws (Amendment) Bill, 2024: This bill, passed by the Lok Sabha, aims to improve governance standards in the Indian banking system. Key proposed amendments include:
• Redefinition of "fortnight" for cash reserves: It will now mean either the 1st to 15th or the 16th to the last day of each month. This applies to all scheduled and non-scheduled banks.
• Increase in "substantial interest" threshold: It has gone up from ₹5 lakh (or 10% of paid-up capital, whichever is less) to ₹2 crore. There may be more changes through future notifications. This impacts the definition of directors with significant influence in banks.
• Investor Education and Protection Fund (IEPF): If dividends, shares, or bond interest go unclaimed for seven years, they will be sent to IEPF.
• Auditor Remuneration: Banks can now set the pay for their auditors. This replaces the old system that required talks with the RBI and the central government.
• Increase in Nominee Limit: The number of nominees allowed per bank account is proposed to be increased from one to four.
• Cooperative Bank Directors' Tenure Extension: Directors can now serve from eight to ten years.

Digital Banking and Payments

The digital banking landscape continues to evolve with these updates:

• UPI Enhancements:
• The per-transaction limit for UPI123Pay (for feature phone users) has been increased to ₹10,000 to broaden its use cases.
• A new payment system for Internet banking has been announced. It aims to help online merchants. This system will improve interoperability and allow for faster settlements.
• The overall limit for UPI Lite has been increased to ₹5,000, with a per-transaction limit of ₹1,000.
• There's a push to add a feature in RTGS and NEFT. This would verify the receiver's name before payment, like in UPI and IMPS.
• Card Network Interoperability: The RBI told card issuers not to make deals that limit their use of other card networks. This helps cardholders have more choices.
• Central KYC (CKYC) Registry: A new CKYC registry will launch in 2025. It aims to unify customer verification across financial institutions. This change will simplify processes.

Financial Inclusion

Efforts to expand financial access continue with these initiatives:

• Grameen Credit Score: The government is starting a "Grameen Credit Score" system. This will help rural borrowers, including Self-Help Groups, get better access to formal credit.
• BSBD Account: This program offers a basic bank account for people without banking access. There's no minimum balance needed. You also get a free RuPay debit card with accident insurance and access to other banking services.

Other Important Developments

Additional policy changes that may impact the banking sector:

• Streamlining Mergers: The approval process for mergers will be made simpler. This change will help cut down delays and improve how businesses restructure.
• Regulatory Reforms Committee: A new committee will review old regulations. This will help make it easier to do business.
• Jan Vishwas Bill 2.0: This bill seeks to decriminalize more than 100 rules in different laws. It focuses on financial regulations to make them easier for businesses.
• EPFO Updates: EPFO members may soon get updates. One possibility is direct ATM withdrawals. Also, EPS pensioners can now receive their pension in any bank branch in India.

Recommendations for You

To stay informed about banking policy changes, we recommend:

• Stay Informed: Regularly visit the Reserve Bank of India's website at rbi.org.in. It has the latest circulars, notifications, and press releases you need.
• Ask Your Bank: Connect with your bank to see how these changes impact your accounts and services.
• Read Financial News: Keep up with reliable financial news sources. They provide updates and insights on policy changes.

Conclusion

Banking policies are constantly evolving to address economic challenges and opportunities. By staying informed about these changes, you can make better financial decisions and take advantage of new benefits. At Cheema Capital, we're committed to helping you navigate these changes with expert guidance and tailored financial solutions.