RBI Governor Sanjay Malhotra announced a series of proposals aimed at strengthening India’s financial sector. Measures include easing housing loan rules for Tier II & III Urban Cooperative Banks (UCBs), allowing banks to lend to select REITs with safeguards, and increasing collateral-free loan limits for MSMEs. Bond yields rose in response.
The Reserve Bank of India (RBI) unveiled significant reforms to enhance credit flow and financial stability. Governor Sanjay Malhotra proposed removing tenor and moratorium-related requirements on housing loans for Tier II and III Urban Cooperative Banks (UCBs), a move expected to improve access to affordable housing finance.
In a major step for the real estate sector, the RBI plans to allow banks to lend to certain Real Estate Investment Trusts (REITs), subject to prudential safeguards. This is expected to deepen capital markets and support infrastructure growth.
Additionally, the RBI will raise the limit of collateral-free loans to MSMEs, providing greater financial flexibility to small businesses. On the markets front, India’s 10-year benchmark government bond yield rose 5 basis points to 6.6989%, reflecting investor reaction to policy announcements.
Key Highlights
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Housing loans: Relaxation of tenor/moratorium rules for Tier II & III UCBs.
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Real estate: Banks may lend to REITs with safeguards.
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MSMEs: Collateral-free loan limit to be increased.
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Bond market: 10-year G-sec yield rises to 6.6989%.
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Objective: Strengthen credit flow, support growth, and enhance financial stability.
Sources: ANI, Business Standard, Mint, Economic Times