RBI's new norms for borrowers and banks from October 1

While strengthening its financial supervision, the Reserve Bank of India (RBI) has started to relax lending standards. Wider access to credit secured by gold, more affordable and flexible loans for borrowers, and simpler capital-raising channels for banks are all promised by its most recent regulations. While four of these modifications have been made available as drafts for feedback, three will go into effect on October 1.

A look at the new rules taking effect from October 1, 2025.

1- All personal, retail, and MSME floating loans will be linked to an external benchmark.
2- Banks will now be able to reduce the spread in three years. This could reduce EMIs.
3- From August 18, 2023, it was mandatory to offer a fixed rate option on EMI loans on every scheduled reset date.
4- From October 1, 2025, the fixed rate option will now be at the bank's discretion.
5- This includes home loans, car loans, and other personal loans.

Gold and silver lending has also been broadened. Previously, only jewellers had the facility to avail of working capital loans, but as per the new rules, all borrowers using gold, silver/raw materials in industry and production can also avail themselves of loans. Moreover, Tier 3 and Tier 4 Urban Co-operative Banks are also allowed to offer this facility.

There is a relaxation of capital rules. Restrictions on the use of overseas rupee and foreign currency bonds as Additional Tier 1 capital have been loosened by the RBI. This change should improve banks' Basel III buffers by making it simpler for them to access international markets.

Draft guidelines open for public feedback

1. Now it is mandatory for all banks and financial institutions to send borrowers' credit information to CICS (Customer Information Control System) every week.
2. It is essential to send data quickly and correct errors immediately, so that banks will receive reliable information.
3. CKYC number reporting is mandatory; it will have to be filled in a separate field. Data tracking will be easier that way.
4. Credit data is available to all banks and lenders, so loan defaults are not limited to just one bank.

This is a draft by RBI; comments are invited till October 20, 2025. By doing this, the central bank aims to make credit reporting fast, accurate, and reliable so that banks make better decisions and ensure fair evaluation of borrowers.