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RBI Proposes New Customer Protection Rules, Boosts MSME Loan Limits

The Reserve Bank of India has proposed issuing three key draft guidelines focused on protecting customers from mis-selling, regulating loan recovery agents, and limiting liability in unauthorized digital transactions. It announced a framework to compensate customers for small-value fraudulent transactions and plans to double the collateral-free loan limit for MSMEs to ₹20 lakh. The central bank also unveiled Mission SAKSHAM to train over 1.4 lakh participants from Urban Cooperative Banks and proposed easing registration and branching norms for certain NBFCs. These measures are part of a broader set of announcements aimed at enhancing customer protection, financial inclusion, and credit flow.

Key Points: RBI Draft Guidelines for Customer Protection & Financial Inclusion

  • Draft rules against mis-selling & loan recovery
  • Fraud compensation up to ₹25k
  • MSME loan limit doubled to ₹20 lakh
  • Mission to train 1.4 lakh UCB staff
  • Eased norms for certain NBFCs
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RBI to issue draft guidelines for protecting customers from mis-selling, among others

RBI Governor announces new draft rules against mis-selling, enhanced fraud compensation, and increased collateral-free loan limits for MSMEs.

RBI to issue draft guidelines for protecting customers from mis-selling, among others
"We shall issue draft revised guidelines... A unified reporting portal will also be launched by us for better management of LBS data. - Sanjay Malhotra"

Mumbai, February 6

Reserve Bank of India Governor Sanjay Malhotra on Friday proposed to issue three draft guidelines for customer protection: one, relating to mis-selling; two, regarding recovery of loans and engagement of recovery agents; and three, on limiting liability of customers in unauthorised electronic banking transactions.

Reading the monetary policy statement, the RBI Governor announced a set of measures which are 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.

It has also been proposed to introduce a framework to compensate customers up to an amount of Rs 25000/- for loss incurred in small-value fraudulent transactions.

He announced that RBI will also publish a discussion paper on possible measures to enhance the safety of digital payments.

"Such measures may include lagged credits and additional authentication for specific class of users like senior citizens," the Governor said.

He announced that the limit of Rs 10 lakh for collateral-free loans to MSMEs is proposed to be increased to Rs 20 lakh.

In the financial inclusion space, the governor said RBI has comprehensively reviewed the Lead Bank Scheme, 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.

To further promote financing to real estate sector, it is proposed to allow banks to lend to REITs with certain prudential safeguards.

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."

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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Reader Comments

R
Rohit P
Increasing the collateral-free loan limit for MSMEs to ₹20 lakh is a game-changer for small businesses like mine. Access to credit has been our biggest hurdle. Hoping the guidelines for recovery agents are strict—no more harassment calls!
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Sarah B
The focus on digital payment safety, especially for senior citizens, is crucial. My dad got scammed via a UPI link last year. Lagged credits and extra authentication could prevent that. RBI needs to ensure banks implement these properly, not just on paper.
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Arjun K
Good to see the review of the Kisan Credit Card and Lead Bank Scheme. In our village, the scheme's benefits often don't reach the actual farmers due to paperwork and corruption. A unified portal for data might bring some transparency. Let's see.
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Nikhil C
While the intent is good, I'm skeptical. More guidelines often mean more compliance burden for banks, which they pass on to customers as hidden charges. Exempting small NBFCs from registration could be risky if not monitored. Hope RBI gets the balance right.
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Meera T
Mission SAKSHAM for UCBs is a welcome move. Many cooperative banks lack trained staff, leading to poor service. Training 1.4 lakh people is ambitious! Also, relaxing housing loan rules for Tier III/IV UCBs could help people in smaller towns own homes. 🏠

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