By Gopika Gopakumar, Khushi Malhotra and Ashwin Manikandan
MUMBAI (Reuters) -India’s central bank on Wednesday announced a series of measures to boost bank lending to capital markets and large corporates, aimed at supporting growth in the world’s fifth-largest economy.
India is expected to be among the fastest growing major economies this year, with the central bank forecasting growth of 6.8% in the current fiscal year. Central bank governor Sanjay Malhotra has previously said that growth is strong but below “aspirations” of near 8%.
Bank loan growth has been slow despite a strong economy, expanding at 10% over a year ago as of September 5, 2025.
The Reserve Bank of India announced 22 measures on Wednesday, many of them aimed at improving the flow of credit.
The Nifty private bank index rose 1.35% while banks and financials advanced about 1% each in Mumbai.
The central bank on Wednesday proposed to withdraw a 2016 framework that limited bank lending to large corporations in a bid to reduce the risk of concentrated lending. This change will allow banks to raise lending to large corporations.
The RBI allowed unfettered bank lending against listed debt securities and raised the limit for lending against equity shares from 2 million rupees ($22,554) to 20 million rupees.
The cap on bank financing for IPOs will also be raised to 2.5 million rupees from 1 million rupees per individual.
The central bank lowered the risk weights for infrastructure loans by non-bank lenders, allowing greater credit flow to the ongoing build-out of roads and bridges across the country.
“Banking measures should not be seen as taking away from financial stability,” RBI chief Malhotra said at the post policy press conference. “We want to ensure we are not in any way impeding growth, productive needs of the economy.”
CAPITAL RULES
Giving banks a breather on capital, the RBI said the implementation of so-called expected credit loss rules, which mandate banks to set aside more funds for potential bad loans, will be effective on April 1, 2027.
While a draft framework on the rules had been published to bring Indian norms in line with global ones, an implementation date had not been announced. Banks will be given time till March 31, 2031 to fully implement that framework, RBI governor Malhotra said.
The central bank also proposed to make Basel 3 norms effective for banks from April 1, 2027.
The RBI will also issue draft rules for credit risk shortly. Under these, lower risk weights on certain segments are expected to ease capital requirements for small enterprises and residential real estate, including home loans.
($1 = 88.6740 Indian rupees)
(Reporting by Khushi Malhotra, Gopika Gopakumar and Ashwin Manikandan; Editing by Ronojoy Mazumdar and Mrigank Dhaniwala)
