Inquisitive Mind

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on April 09, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Reduced by 0.25% 6.00% Standing deposit facility (SDF) rate 5.75% Marginal standing facility (MSF) rate 6.25% Bank rate 6.25% Monetary policy stance Monetary policy stance was changed from ‘neutral’ to ‘accommodative’. Monetary policy stance – Accommodative – entails easy monetary policy that is geared towards stimulating the economy through softer interest rates. Tightening – refers to contractionary monetary policy whereby interest rates are hiked to restrain spending and curb economic activity, all with the objective of reining in inflation.  Neutral – is typically associated with a state of economy which neither calls for stimulating economic activity nor calls for controlling inflation by curtailing demand and provides flexibility to move in either direction on the basis of ...

Reserve Bank of India (RBI) has issued the revised guidelines on Priority Sector Lending (PSL) which has come into effect from April 01, 2025.  To whom does Priority Sector Lending (PSL) guidelines apply? Priority Sector Lending (PSL) guidelines apply to – Commercial Bank [including Regional Rural Bank (RRB), Small Finance Bank (SFB), Local Area Bank (LAB)] Primary (Urban) Co-operative Bank (UCB) other than Salary Earners’ Bank  What are the categories under PSL? The categories under priority sector are as follows – Agriculture Micro, Small and Medium Enterprises Export Credit Education Housing Social Infrastructure Renewable Energy Others What are the PSL targets for banks? The targets and sub-targets set under PSL, to be computed on the basis of the Adjusted Net Bank Credit (ANBC) / Credit Equivalent of Off-Balance Sheet Exposures (CEOBE) as applicable as on the corresponding date of the preceding year are as below – Categories Total Priority Sector A...

Reserve Bank of India (RBI) has invited applications for recognition of Self-Regulatory Organisation for the Account Aggregator ecosystem (SRO-AA). Who are Account Aggregators (AAs)? Account Aggregators (AAs) undertake the business of account aggregation, i.e., retrieve / collect specified financial information from Financial Information Providers (FIPs) and aggregate, consolidate and present such information to the customers or Financial Information Users (FI-Us). What is the need of Self-Regulatory Organisations for Account Aggregator ecosystem (SRO-AA)? The FIPs and FI-Us fall under the purview of different Financial Sector Regulators (FSRs), i.e., Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority of India (PFRDA). Further, Department of Revenue is deemed to be the regulator for Goods and Services Tax Network for the purpose of onboarding the ...

Reserve Bank of India (RBI) has released directions on forward contracts in government securities. What is Bond Forward? Bond forward means a rupee interest rate derivative contract in which one counterparty (buyer) agrees to buy a specific government security from another counterparty (seller) on a specified future date and at a price determined at the time of the contract. Which transactions shall be covered under the directions? The directions shall apply to forward contracts in government securities (referred to as bond forwards) undertaken in the Over-the-Counter (OTC) market in India. Who are market participants? The following persons shall be eligible to undertake bond forward transactions – A resident A non-resident who is eligible to invest in Government Securities Who are market-makers? Market-maker means an entity which provides prices to users and other market-makers. The following entities shall be eligible to undertake transactions in bond forwards as market-makers – Sche...

Reserve Bank of India (RBI) has issued draft circular on levy of foreclosure charges / pre-payment penalties on loans. What issues were observed by RBI during supervisory reviews? Divergent practices were observed amongst Regulated Entities (REs) with regard to levy of foreclosure charges / pre-payment penalties in case of loans sanctioned to Micro and Small Enterprises (MSEs) which lead to customer grievances and disputes.  Certain REs were found to include restrictive clauses in loan contracts / agreements to deter borrowers from switching over to another lender, either for availing lower rates of interest or better terms of service. What are the draft revised guidelines on levy of foreclosure charges / pre-payment penalties on loans? The following REs shall not levy foreclosure charges / pre-payment penalties on floating rate loans – REs Loan to Purpose of loan All REs Individuals, with or without co-obligants Other than busin...

Reserve Bank of India (RBI) has launched RBIDATA Mobile App. What is RBIDATA Mobile App? RBIDATA Mobile App offers macroeconomic and financial statistics relating to the Indian economy in a user-friendly and visually engaging format. This app offers quick access to the Database on the Indian Economy (DBIE – https://data.rbi.org.in ) portal and aims to serve the researchers, students, and the general public.  The key features of the app include – Access to over 11,000 different series of economic data to give a comprehensive view of the Indian economy. Users can view time series data in graphs / charts and download data for analysis. The app includes details such as data source, unit of measurement, frequency, recent updates. Additional notes are also provided to help users understand the graphs / charts better. The ‘Popular Reports’ section features a series of frequently viewed reports. ‘Search’ option allows users to access data directly from home screen, without the need to navi...

Reserve Bank of India (RBI) has observed digital payments awareness week from March 10 to 16, 2025. Digital Payments Awareness Week (DPAW) Digital Payments Awareness Week (DPAW) is an initiative to highlight the impact and importance of digital payments and to create awareness about safe usage of digital payment products.  Digital Payments Awareness Week (DPAW) 2025 Reserve Bank of India (RBI) has observed DPAW 2025 from March 10 to 16, 2025.  Under the mission ‘Har Payment Digital’, the theme for the current year is ‘India Pays Digitally’. This theme reflects India’s transformative journey toward a digitally empowered citizenry, with the ubiquity and convenience of digital payments. ‘Har Payment Digital’ mission RBI had launched the mission ‘Har Payment Digital’ on the occasion of the DPAW 2023. This is part of RBI’s endeavour to make every person in India a user of digital payments. Previous Digital Payments Awareness Weeks (DPAWs) Year Theme 202...

Reserve Bank of India (RBI) has observed financial literacy week from February 24 to 28, 2025. Financial Literacy and Financial Education Organization for Economic Co-operation & Development (OECD) defines ‘financial literacy’ as a combination of financial awareness, knowledge, skills, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial well-being.  OECD defines ‘financial education’ as the process by which financial consumers / investors improve their understanding of financial products, concepts and risks and through information, instruction and / or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help and to take other effective actions to improve their financial well-being. Financial Literacy Week (FLW) Reserve Bank of India (RBI) has been observing Financial Literacy Week (FLW) every year since 2016 to p...

Reserve Bank of India (RBI) has issued directions on access criteria for NDS-OM. What is NDS-OM? Negotiated Dealing System-Order Matching (NDS-OM) is the Electronic Trading Platform (ETP) authorised by RBI for transactions in Government securities. It is an anonymous screen-based order matching module, where the participants can trade anonymously by placing their orders on the system or accepting the orders already placed by other participants.  It is operated by Clearing Corporation of India Limited (CCIL) on behalf of RBI.  Who can access NDS-OM? Any person / entity eligible to invest in Government securities shall be eligible to access NDS-OM either through direct access or through indirect access or through Stock Broker Connect. Direct Access – means access to NDS-OM wherein an entity that is party to a transaction directly executes / reports the transaction on / to the platform and such transactions are settled in its own Subsidiary General Ledger (SGL) account . Indirect...