RBI Eases Lending Rules to Boost Credit for Corporates, IPOs, and Infrastructure

The Reserve Bank of India (RBI) on Wednesday unveiled a major set of reforms aimed at making bank credit more accessible for companies and individuals. The central bank announced that it would allow banks to finance acquisitions by Indian corporates and ease restrictions on lending against shares and debt securities.

Key Measures Announced

• Banks can now provide loans for corporate acquisitions, following requests from institutions like the State Bank of India.

• The regulatory ceiling on lending against listed debt securities has been removed.

• Lending limits against shares have increased from Rs 20 lakh to Rs 1 crore per individual.

• IPO financing limits have been raised from Rs 10 lakh to Rs 25 lakh per person, effective October 1, 2024, allowing high-net-worth individuals (HNIs) to apply for larger amounts in public offerings.

Supporting Infrastructure and Large Borrowers

The RBI will also reduce risk weights on loans by NBFCs to high-quality infrastructure projects, making lending for infrastructure cheaper. In addition, a 2016 rule restricting lending to large borrowers with bank exposure above Rs 10,000 crore has been withdrawn, expected to boost overall credit availability.

Regulatory Timelines

Governor Sanjay Malhotra stated that the Expected Credit Loss (ECL) framework and Basel III capital framework will come into effect from 2027, giving banks sufficient time to adjust.

Experts say the RBI’s measures aim to encourage more lending by banks, support corporate acquisitions, boost IPO participation, and facilitate funds for infrastructure and business growth.