RBI is investigating measures to extend bank credit to productive sectors: Guv Malhotra

RBI GOUVERNEUR SANJAY MALHOTRA on FIBAC 2025, in Mumbai, on 25 August | Photocredit: PTI

The Reserve Bank of India (RBI) is investigating measures to extend the bank credit to productive sectors and to reduce the costs of mediation, even because it is planning to implement Basel III guidelines for the market, credit and operational risk from 1 April 2027, according to Gouverneur Sanjay Malhotra.

With regard to this, credit risk and ECL (expected credit loss) -related design guidelines will soon be issued. The forms of Business Circular will also be completed soon, Malhotra said at the Ficci-IBA conference.

The development comes at a time when the credit growth of the non-food bank is delayed. According to RBI’s data on the sectoral deployment of bank credit, the credit growth of non-Food Bank Credit in June 2025 to 10.2 percent on annual basis (JOJ), compared to 13.8 percent JOJ during the corresponding period last year.

The delay in credit growth is over all four credit segments – agriculture and allied activities, industry, services and personal loans.

ECL facilities will be a solution of their own historical data from banks about probability of standard (PD) and loss given (LGD), according to the ICRA rating agency.

Quality of capital

The Basel III guidelines mainly try to increase the quality and level of capital to ensure that banks are better able to absorb losses on both a Going -peice and a Gone group basis.

They also increase the risk coverage of the capital framework, introduce the lever ratio to serve as a backstop for the risk -based capital measure, increase the standards for the supervisory assessment process and public disclosures.

Dring to investments

In his inaugural speech, the governor noted that RBI is looking forward to working with regulated entities to improve the efficiency and effectiveness of financial mediation to ensure that the appropriate benefits reach the people of the country.

Likewise, he encouraged the industry on the demand to courageously investing and defending the entrepreneurial spirit that defines India.

“At a time, when the balance of banks and companies are at their best, they have to come together and control the animal spirits to create an investment cycle,” said Malhotra.

The Governor noted that RBI is trying to rationalize the macro policy that should be approved by the boards of regulated entities and the procedural and routine issues at management, so that the board gets Quality Time to deliberate about strategic and important matters.

Referring to proposed instructions, Malhotra said that the RBI rewinds the internal Ombudsman framework at the level of RES (regulated entities – such as banks and NBFCs) to further strengthen it and ensure that complaints are effectively resolved within the institution itself.

The Central Bank also revise the RB-IIOs (Integrated Ombudsman Scheme) to improve its effectiveness, transparency and customer focus as an alternative complaint repair mechanism.

Improve efficiency

Furthermore, RBI plans to improve the consistency and adequacy of reimbursements granted under the Ombudsman framework. The Central Bank is also planning to expand the set of services that may be liable for non-Timely provision for the payment of the fine.

Emphasizes that consumer trust is of vital importance, not only for the regulated entity, but also for the stability and resilience of the banking system, the governor called for the need to build and retain trust, because it is essential that a robust, effective and affordable mechanism for complaints has been introduced.

“They have to periodically assess the types of complaints, perform a root cause analysis and implement systemic corrective measures in product design, processes and employee guidance. It is also suggested that customer satisfaction-related KPIs (important performance indicators) are included in performance assessment and variabled wages,” he said.

Published on August 25, 2025