RBI Governor announces new measures for customer protection, security

RBI Governor Sanjay Malhotra unveils measures for customer protection, including a Rs 25,000 compensation for small frauds and new rules for loan recovery. The plan also aims to boost financial inclusion, credit flow, and strengthen UCBs and NBFCs.

Reserve Bank of India Governor Sanjay Malhotra on Friday announced a set of measures aimed at enhancing customer protection, advancing financial inclusion, enhance flow of credit, strengthening urban cooperative banks (UCBs), promoting ease of doing business for NBFCs, and deepening financial markets. For customer protection, the governor proposed issuing three draft guidelines: one on mis-selling; two on the recovery of loans and the engagement of recovery agents; and three on limiting customer liability for unauthorised electronic banking transactions. It has also been proposed to introduce a framework to compensate customers up to Rs 25,000 for losses incurred in small-value fraudulent transactions.

In the monetary policy statement, he announced that the RBI will also publish a discussion paper on potential measures to enhance the security of digital payments. "Such measures may include lagged credits and additional authentication for a specific class of users like senior citizens," the Governor said.

Advancing Financial Inclusion

In the financial inclusion space, the governor said the RBI has comprehensively reviewed the Lead Bank Scheme, the Kisan Credit Card Scheme, and the Business Correspondent Model. "We shall issue draft revised guidelines with respect to them. A unified reporting portal will also be launched by us for better management of LBS data," he said.

Enhancing Credit Flow

Further, he announced that the Rs 10 lakh limit for collateral-free loans to MSMEs is proposed to be increased to Rs 20 lakh. To further promote financing for the real estate sector, it is proposed to allow banks to lend to REITs, subject to certain prudential safeguards.

Strengthening Urban Cooperative Banks (UCBs)

To strengthen urban cooperative banks, he announced four measures. "The first two pertain to raising the financial limits on unsecured loans and loans to nominal members by UCBs. We also propose to remove the tenor and moratorium-related requirements on housing loans given by Tier III and Tier IV UCBs. To strengthen the managerial and technical capacity of the UCBs, we shall launch Mission-SAKSHAM (Sahakari Bank Kshamta Nirman). The mission intends to train over 1.4 lakh participants from UCBs."

Promoting Ease of Doing Business for NBFCs

On NBFCs, he said those having no public funds and customer interface, with asset size not exceeding Rs 1000 crore, are proposed to be exempted from the requirement of registration. Moreover, it is proposed to dispense with the requirement for certain NBFCs to obtain prior approval to open more than 1000 branches. (ANI)

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