Blitz Bureau
NEW DELHI: In a significant move to boost corporate growth and strategic investment, Reserve Bank of India (RBI) Governor Sanjay Malhotra announced a series of measures on October 1 designed to unlock credit, simplify regulations, and enhance the competitive edge of Indian businesses.
Industry leaders and economists have lauded the measures as “incremental but impactful,” signalling a shift towards structural support over purely monetary action, especially at a time when industry is reeling under the impact of 50 per cent US tariffs on Indian exports.
One of the key upcoming reforms is a dedicated framework allowing banks to fund corporate mergers and acquisitions (M&A) more efficiently. This step is widely seen as aligning with India’s ambition to build “global champions” by giving Indian companies a competitive edge in strategic buyouts.
The central bank’s announcements focus squarely on supporting corporate growth and deepening capital markets:
* Increased loan limits: RBI has significantly raised limits on loans against listed shares from ₹20 lakh to ₹1 crore, and on IPO financing from ₹10 lakh to ₹25 lakh, steps analysts say will deepen the capital market ecosystem and improve investor liquidity.
* Removal of restriction on large borrowers: A major 2016 restriction that discouraged banks from lending to very large borrowers (exceeding ₹10,000 crore) has been withdrawn.
The earlier restrictions were aimed at mitigating risks of banks, addressing high NPAs and nudging corporates with high funds requirement to explore other sources of tapping money. But the focus of the Government is now once again on providing an enabling environment for industry to grow.
Bankers have hailed this as a pragmatic move. “The earlier rule often prevented consortium lending to large, credit-worthy corporates,” said a senior executive at HDFC Bank. “Removing it will enable better credit allocation.”
* Infrastructure funding boost: To encourage long-term investment, RBI has lowered risk weights on NBFC loans to operational, high-quality infrastructure projects, effectively reducing borrowing costs.
Easing compliance and business operations
In parallel, RBI has introduced crucial regulatory easing to cut compliance fatigue:
* Current account flexibility: A key highlight is the proposal to give banks greater flexibility in opening and operating current accounts and cash credit / overdraft (CC / OD) accounts for borrowers, a reform expected to remove overlapping restrictions and improve working capital efficiency for corporates.
“This is a big relief for corporates juggling multiple banking relationships,” said Rajnish Kumar, former SBI Chairman. “Easing current account norms will reduce friction and improve working capital efficiency.”
* Liquidity relief for exporters: The time for exporters to bring back funds from their foreign currency accounts in IFSC units has been extended from one month to three months, and the merchanting trade payment window has been widened from four to six months.
These relaxations will ease liquidity pressures on exporters facing delays in overseas payments,” said Ajay Sahai, DG & CEO, Federation of Indian Export Organisations. “At a time when global trade is volatile, such flexibility is essential.”
* Regulatory clean-up: RBI has also announced a major consolidation of its regulatory framework, merging nearly 9,000 circulars and directions into 11 subject-wise documents to streamline the rulebook and boost business confidence. “This clean-up is a long-overdue reform,” said Chandrajit Banerjee, Director General, CII. “Businesses will gain clarity and confidence from a more streamlined rulebook.”
* Financial inclusion: In a nod to inclusive growth, RBI will explore issuing new licences for urban co-operative banks (UCBs), a sector set for further reforms. “This shows renewed confidence in the co-operative model,” noted Ramesh Sobti, former CEO of IndusInd Bank. “With proper governance, UCBs can play a vital role in financial inclusion.”
Repo rate unchanged
Meanwhile, in a widely anticipated move, RBI has decided to keep the repo rate unchanged at 5.5 per cent, maintaining its cautious stance.
The decision signals the central bank’s continued focus on price stability while supporting growth through structural reforms rather than rate cuts. By holding the repo rate steady, RBI is signalling that inflation control remains its top priority.
Economists have characterised the policy as a “calibrated shift” from monetary to structural levers. “RBI clearly believes growth can be supported more effectively through liquidity and policy reforms rather than rate cuts,” said Sonal Varma, Chief Economist, Nomura India, calling it a prudent stance given global uncertainties.
With inflation expected to hover within RBI’s 4-6 per cent comfort band, and GDP growth projected near 7 per cent, the central bank’s latest policy blends caution with reformist zeal.
Industry leaders, including FICCI President Harsha Vardhan Agarwal and PHDCCI President Hemant Jain, expressed confidence that the non-rate measures — such as easier compliance, credit flexibility, and regulatory clarity — will be powerful in stimulating investment and growth momentum.