RBI News for March 2026
RBI proposes up to Rs. 25,000 payout for small-value digital fraud victims
The Reserve Bank of India has proposed compensating customers for losses arising from small-value digital frauds, with payouts capped at Rs. 25,000, as part of a revised consumer protection framework. The compensation would be 85 per cent of the loss amount or Rs. 25,000, whichever is lower, and will be available as a once-in-a-lifetime benefit.
Governor Sanjay Malhotra said the central bank has reviewed its 2017 framework on customer liability in unauthorised electronic banking transactions, given rapid technological adoption in digital payments. Draft revised instructions, including a structured compensation mechanism for small-value frauds, will be issued shortly for public consultation.
For first-time victims, RBI indicated that customers may receive compensation even in cases where one-time passwords were shared, recognising rising sophistication in fraud tactics. Alongside the fraud compensation framework, the central bank is also tightening norms to curb mis-selling of financial products and strengthen safeguards against cyber risks and aggressive recovery practices.
PFC and REC boards approve in-principle merger plan
The boards of Power Finance Corporation and REC Limited have approved in principle the merger of the two entities, retaining the combined entity’s status as a government company. The decision follows the Finance Minister’s announcement on restructuring public sector financial institutions.
REC said in an exchange filing that its board has cleared the proposal to proceed with restructuring in the form of a merger and to prepare a detailed scheme in accordance with applicable laws and regulatory requirements.
Officials said the merged entity will have a stronger balance sheet and enhanced capacity to meet the large funding requirements of the power sector. With most villages electrified, REC’s earlier mandate is considered less relevant, and consolidation is expected to streamline operations and improve efficiency. Currently, REC finances generation, transmission, distribution and renewable energy projects, and has diversified into sectors such as roads, metro and information technology infrastructure.
RBI launches Financial Literacy Week with focus on KYC awareness
The Reserve Bank of India has commenced Financial Literacy Week 2026 with the theme “KYC—Your first step to safe banking,” aimed at strengthening public awareness about safe financial practices. The campaign seeks to promote responsible use of financial services amid rising digital transactions.
The national launch was inaugurated in Mumbai by Governor Sanjay Malhotra, while the Bihar-level launch was held at the RBI’s Patna office, led by senior officials. As part of the outreach initiative, a Financial Literacy Express was flagged off to disseminate awareness messages across regions.
The campaign underscores the importance of Know Your Customer norms as a safeguard against identity theft, fraudulent update requests and misuse of accounts for money mule activities. RBI emphasised that KYC is not merely a regulatory compliance requirement but a practical protection tool for customers and the financial system in an increasingly digital environment.
RBI permits banks to finance listed and unlisted takeovers
The Reserve Bank of India has allowed banks to finance acquisitions of listed and unlisted companies, permitting exposure of up to 20 per cent of a bank’s eligible capital base. The move follows industry feedback on draft guidelines that had proposed a lower cap.
Under the final rules, banks may lend up to 75 per cent of the acquisition value. Acquisition financing can cover purchases through equity shares, compulsorily convertible debentures, or a combination of both. Previously, Indian banks were restricted from financing acquisitions, placing them at a disadvantage compared to global lenders and investment funds.
The revised framework opens a new avenue of credit growth for banks while subjecting such exposures to prudential limits. The central bank said the guidelines are part of its broader review of bank exposure to capital markets, aimed at balancing credit expansion with systemic risk management and capital adequacy safeguards.
RBI tightens recovery norms to curb harassment of borrowers
The Reserve Bank of India has proposed stricter recovery and repossession norms to prevent harassment and strengthen borrower protection. The draft amendments, part of the second revision to directions on responsible business conduct, will come into effect from July 1, 2026.
Under the draft framework, banks must first address and resolve borrower complaints before initiating recovery proceedings. Lenders are required to disclose the identity of recovery agents before making contact. Recovery agents are prohibited from using threatening or abusive language, sending inappropriate messages, harassing relatives or colleagues, or resorting to public shaming and invasion of privacy.
The central bank has also restricted contact hours between 08:00 and 19:00 and mandated that agents may approach only the borrower or guarantor. Calls and visits must be avoided during bereavements, festivals or other sensitive occasions, and banks must honour requests to avoid contact at specific times. The move aims to balance credit discipline with borrower dignity and fair practices.
NRI deposit inflows decline 26.6% in April–November 2025
Inflows into non-resident Indian deposit schemes fell 26.56 per cent to $9.2 billion during April–November 2025, compared with $12.55 billion in the corresponding period last year, according to data from the Reserve Bank of India.
Total outstanding NRI deposits stood at $168.23 billion at the end of November 2025. This compares with $162.69 billion in November 2024 and the same $168.23 billion recorded in October 2025, indicating relative stability in the stock of deposits despite lower inflows.
NRI deposit schemes comprise foreign currency non-resident deposits, non-resident external deposits and non-resident ordinary deposits. The moderation in inflows comes amid evolving global interest rate conditions and currency movements that influence returns on overseas deposits.
Analysts said deposit flows are sensitive to interest differentials between India and advanced economies, as well as exchange rate expectations. While inflows have softened during the current financial year, the overall deposit base remains elevated compared to a year earlier.
Cabinet approves Rs. 5,000 crore equity infusion in SIDBI
The Union Cabinet has approved an equity infusion of Rs. 5,000 crore into the Small Industries Development Bank of India to strengthen credit support for micro, small and medium enterprises.
The government will infuse Rs. 3,000 crore in FY26 at a book value of Rs. 568.7 as of March 31, 2025, followed by Rs. 1,000 crore each in FY27 and FY28 at prevailing book values. The capital support is expected to enhance SIDBI’s lending capacity and enable it to mobilise resources at competitive rates.
According to the official statement, the infusion is projected to benefit around 25.7 lakh new MSME borrowers by 2027-28 and potentially support the creation of 1.1 crore jobs. SIDBI said the additional capital will help expand its branch network and scale up digital products for working capital, invoice discounting, defence-related financing and machinery loans.
The move is aimed at improving credit flow to small businesses and supporting MSME-led economic growth amid evolving financing needs.
RBI announces OMOs, swaps and VRR to infuse liquidity
The Reserve Bank of India has announced a series of liquidity measures, including open market operations, dollar-rupee buy-sell swaps and long-term variable rate repo operations, to maintain orderly liquidity conditions.
The central bank will purchase Government of India securities worth Rs. 1 trillion through two tranches of Rs. 50,000 crore each. A 90-day variable rate repo auction of Rs. 25,000 crore will also be conducted. Additionally, a three-year dollar-rupee buy-sell swap of $10 billion has been scheduled.
The measures come as surplus liquidity in the banking system has moderated to around Rs. 10,000 crore, with loan demand typically strengthening in the final quarter of the financial year. Economists said further open market operations of up to Rs. 1 trillion could be undertaken to raise liquidity to about 0.9 per cent of net demand and time liabilities, within the central bank’s comfort range.
The RBI said it will continue to monitor liquidity and market conditions and take appropriate action to ensure stability in financial markets.
PSU banks seek inclusion of SDLs in RBI’s OMO purchase auctions
Public sector banks have urged the Reserve Bank of India to include state development loans in its open market operation purchase auctions amid widening yield spreads. According to sources, the request comes as ten-year SDL spreads over benchmark government securities have widened to around 80–92 basis points from 30–35 basis points last year, driven by heavy supply of state borrowings.
The RBI last conducted SDL-specific OMOs in 2020 during the Covid period, purchasing Rs. 30,000 crore across 75 securities. However, the impact was limited as purchases were spread across multiple securities. Experts say the central bank may remain cautious, as the earlier experience yielded moderate results. Market participants believe SDLs may be reconsidered if spreads widen beyond 100 basis points. The RBI governor has maintained that OMOs are primarily a liquidity management tool rather than a yield-management mechanism.
RBI to inject Rs. 2.15 lakh crore durable liquidity into banking system
The Reserve Bank of India has announced durable liquidity infusion of about Rs. 2.15 lakh crore between January 30 and February 12 to support banking system liquidity ahead of the financial year-end.
The measures include variable rate repo auctions, dollar-rupee buy-sell swaps and open market purchase of government securities. Notably, the central bank will conduct a 90-day variable rate repo auction for the first time, extending beyond the earlier maximum tenor of 56 days.
The liquidity infusion comes at a time when surplus liquidity has narrowed to marginal levels and credit demand typically strengthens in the final quarter. This marks the third round of liquidity support within a month. The RBI said the steps are aimed at ensuring orderly liquidity conditions and preventing undue tightening in financial markets as the fiscal year draws to a close.
RBI proposes higher unsecured loan limits for urban cooperative banks
The Reserve Bank of India has proposed raising individual loan limits for unsecured advances by urban cooperative banks to a range of Rs. 5 lakh to Rs. 10 lakh, depending on the size category of the bank.
Currently, limits range from Rs. 25,000 to Rs. 5 lakh based on deposit size and capital adequacy. Under the draft amendments, Tier I banks may lend up to Rs. 5 lakh, Tier II up to Rs. 7.5 lakh, while Tier III and Tier IV banks will continue with a Rs. 10 lakh ceiling.
The central bank has also proposed increasing the aggregate cap on unsecured advances to 20 per cent of total loans and advances from the current 10 per cent of total assets. The move aims to provide greater operational flexibility to cooperative banks while maintaining prudential safeguards. The proposed changes are part of broader reforms to strengthen credit delivery and improve competitiveness of the cooperative banking sector.
Digital banking must ensure clarity and transparency: RBI Deputy Governor
Digital banking journeys must be designed to ensure customers clearly understand their authorisations, terms and charges, Swaminathan J, Deputy Governor of the Reserve Bank of India, said at a banking event.
He stressed that consent mechanisms should be unambiguous, alerts timely and meaningful, and customers promptly informed in case of service failures. Transparency, he said, means customers should not face unpleasant surprises later and decisions should be recorded in a manner that can be clearly explained.
Swaminathan underscored that culture, ethics and customer centricity must guide institutions, not merely formal strategy. He cautioned that regulatory discipline should not be treated as a box-ticking exercise but as central to institutional credibility. Ethical conduct, he noted, prevents small compromises from turning into larger systemic risks and strengthens long-term trust in financial institutions.
RBI proposes ban on third-party sales incentives for bank staff
The Reserve Bank of India has proposed prohibiting bank employees from receiving incentives from third parties such as insurance companies and mutual fund houses to curb mis-selling of financial products.
In its draft amendment directions on advertising, marketing and sales practices, the regulator said banks must not bundle third-party products with their own offerings. If the sale of a bank product is made contingent upon purchase of a third-party product, customers must be given the freedom to source it from any provider.
Banks will also be required to refund the full amount and compensate customers where mis-selling is established. The draft norms further mandate that internal competitions or targets must not encourage aggressive product pushing. The RBI has also directed banks to avoid deploying “dark patterns” in digital interfaces that may mislead customers. The move strengthens consumer protection and aligns sales practices with responsible conduct standards.
RBI to issue discussion paper on digital payment safeguards
The Reserve Bank of India has proposed releasing a discussion paper to examine calibrated safeguards in digital payments amid rising fraud risks.
The measures under consideration include introducing lagged credits and additional authentication requirements for specific user segments, such as senior citizens. The objective is to enhance fraud mitigation while sustaining the growth of digital payments.
During the Monetary Policy Committee press conference, Governor Sanjay Malhotra said the central bank would explore sustainable methods to strengthen India’s real-time digital payments ecosystem, including the Unified Payments Interface. He noted that decisions regarding the merchant discount rate fall within the government’s domain.
The proposed safeguards aim to balance convenience with security, ensuring that digital payment systems remain resilient while protecting vulnerable users. The RBI said the initiative is aligned with its objective of promoting safe and secure digital financial infrastructure.
RBI assures continued supply of currency to meet demand
The Reserve Bank of India will continue to meet the country’s currency requirements, Governor Sanjay Malhotra said.
The total value of currency in circulation rose to Rs. 36.87 trillion at the end of March 2025 from Rs. 34.78 trillion a year earlier. In volume terms, banknotes increased to 155 billion pieces from 146 billion, reflecting growth of 6.0 per cent in value and 5.6 per cent in volume during 2024-25.
Among denominations, Rs. 500 notes accounted for the largest share by volume at 40.9 per cent, followed by Rs. 10 notes at 16.4 per cent. Lower denomination notes of Rs. 10, Rs. 20 and Rs. 50 together constituted 31.7 per cent of total notes in circulation by volume. The RBI is no longer printing Rs. 2 and Rs. 5 notes.
Malhotra said the central bank regularly reviews printing, management and circulation to ensure adequate supply across denominations.
RBI doubles collateral-free loan limit for micro enterprises
The Reserve Bank of India has doubled the collateral-free loan limit for micro and small enterprises from Rs. 10 lakh to Rs. 20 lakh to strengthen credit access.
Banks are mandated not to seek collateral security for loans up to Rs. 20 lakh extended to MSE units. Further, lenders may increase the limit to Rs. 25 lakh based on the borrower’s track record and financial position, as per internal policies.
Under the amended directions, banks can accept gold and silver as collateral if pledged voluntarily by borrowers within the enhanced limits. Collateral-free loans up to Rs. 20 lakh must also be provided to units financed under the Prime Minister Employment Generation Programme administered by the Khadi and Village Industries Commission.
The RBI said the move is aimed at improving formal credit access, supporting entrepreneurial activity and strengthening last-mile delivery to small businesses with limited collateral capacity.
RBI to offer Rs. 25,000 one-time compensation to digital fraud victims
The Reserve Bank of India has proposed a one-time compensation of up to Rs. 25,000 for customers affected by small-value digital frauds, to be funded from its Depositor Education and Awareness Fund.
Governor Sanjay Malhotra said the framework will compensate eligible customers only once, with the aim of providing relief while encouraging greater vigilance against online fraud. Banks reported 18,386 frauds amounting to Rs. 16,569 crore in the first half of FY25, with online frauds accounting for the highest number of cases.
The RBI said it will shortly issue draft guidelines for public consultation. The regulator will also harmonise conduct-related norms governing recovery agents, amid concerns over abusive practices by third-party agencies and digital lending platforms.
In addition, the central bank plans to issue comprehensive directions on advertising, marketing and sale of financial products to curb mis-selling and ensure suitability of third-party offerings sold through bank channels.
RBI introduces risk-based premium for deposit insurance from April
The Reserve Bank of India has introduced a risk-based premium framework for deposit insurance, replacing the uniform premium system in place since 1962. The new regime will take effect from April 1 and will be reviewed at least once every three years.
Currently, banks pay a flat premium of 12 paise per Rs. 100 of assessable deposits. Under the revised framework, banks will be categorised into four risk buckets—A to D—with Category A denoting the lowest risk. Premium rates will range from 8 paise to 12 paise per Rs. 100, allowing the strongest banks to receive a discount of up to 33.3 per cent.
The risk assessment will rely on audited financial data and supervisory ratings. Scheduled commercial banks will be evaluated under a Tier-I model incorporating supervisory inputs and financial indicators, while cooperative banks and regional rural banks will follow a Tier-II model with greater emphasis on financial ratios and governance metrics.
RBI proposes inclusion of agri-tech expenses under farm loans
The Reserve Bank of India has proposed expanding the scope of farm loans to include technology-linked expenses such as soil testing, real-time weather advisory services and certification for organic and good agricultural practices.
These expenses will be covered within the existing 20 per cent additional component allowed for repairs and maintenance of farm assets. The regulator has also proposed waiving collateral security and margin requirements for agricultural and allied activity loans up to Rs. 2 lakh per borrower.
Revised draft norms under the Kisan Credit Card framework aim to streamline operational aspects and align credit with evolving agricultural needs. Crop seasons have been standardised into short-duration crops of 12 months and long-duration crops of 18 months, with the Kisan Credit Card tenure extended to six years to ensure better alignment.
For marginal farmers, banks may provide flexible credit limits ranging from Rs. 10,000 to Rs. 50,000 based on landholding and cropping patterns.
