New Delhi [India]Nai Delhi [भारत], February 28 (ANI): According to a report by CLSA Research, after a period of strict rules in 2023 and 2024, the Reserve Bank of India (RBI) has now changed its stand, which has benefited the banking sector significantly. The report highlights several measures taken by the central bank, including liquidity infusion, repo rate cuts and some regulatory criteria. Changes began with large -scale liquidity infusions to overcome the lack of liquidity in the banking sector. This was followed by the much awaited repo rate, which provided relief to both lenders and borrowers.

In addition, the RBI adjourned some proposed regulatory strict measures indefinitely, including liquidity coverage ratio (LCR) norms and provisions on project financing.

Recently, RBI has reduced the risk of microfinance loans as well as bank loans to non-banking financial companies (NBFCs). The report states that the risk-load determines the capital that banks have to keep separate for different categories of loans. Low risk-load free of capital for banks, which helps them to give more debt and improve profitability. According to CLSA, microfinance is the largest beneficiary bonding bank for debt risk reduction.

Risk-load for microfinance loans has been reduced from 125 to 100 percent in most cases and 75 percent in some eligible cases. Similarly, the risk-load on bank loans to be given to NBFC has been cut by 25 per cent points, returning to the level before November 2023.

The report also said that since the charge of RBI Governor Sanjay Malhotra in December, several steps have been taken to resolve the challenges in the banking sector. These include deduction of 25 basis points in the repo rate, which has brought it to 6.25 percent, which has helped reduce the cost of borrowing. Injection of liquidity from time to time through means such as forex (FX) swap, open market operation and variable rate auction. Postponing the proposed LCR and standard asset provision guidelines indefinitely, which will reduce regulatory pressure on banks. Encourage microfinance loans and risk-load on bank loans to NBFCs. These measures indicate a clear change in the RBI approach, which is moving towards a more supportive stance than a strict phase for the banking sector. Dysfonial regulation and increased liquidity expect an increase in debt availability and improve overall financial stability