{"id":66155,"date":"2025-10-03T10:45:09","date_gmt":"2025-10-03T05:15:09","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=66155"},"modified":"2025-10-03T11:05:05","modified_gmt":"2025-10-03T05:35:05","slug":"rbi-relaxes-rules-to-boost-market-liquidity-and-retail-investor-access","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/rbi-relaxes-rules-to-boost-market-liquidity-and-retail-investor-access\/","title":{"rendered":"RBI Relaxes Rules to Boost Market Liquidity and Retail Investor Access"},"content":{"rendered":"<h2><b>RBI Market Liquidity Measures Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>RBI has unveiled key measures to ease access to capital<\/b><span style=\"font-weight: 400;\">, including removing the ceiling on loans against listed debt securities, raising the loan limit against shares from <\/span><b>\u20b920 lakh to \u20b91 crore<\/b><span style=\"font-weight: 400;\">, and increasing <\/span><b>IPO financing for retail investors from \u20b910 lakh to \u20b925 lakh<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The steps aim to <\/span><b>revitalize India\u2019s financial markets<\/b><span style=\"font-weight: 400;\">, enhance retail and institutional participation, and improve liquidity amid a busy IPO season.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">While boosting lending opportunities for banks, the RBI assured that <\/span><b>systemic risks will be managed through macroprudential safeguards<\/b><span style=\"font-weight: 400;\">, balancing growth with financial stability.<\/span><\/li>\n<\/ul>\n<h2><b>RBI\u2019s Moves Timed to Counter Market Pressures<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI\u2019s latest relaxations come as Indian equity markets face global and domestic headwinds.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Trade tensions with the US, H1-B visa curbs, and geopolitical flashpoints in West Asia and Europe have hurt investor sentiment.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Adding to the strain, <\/span><b>foreign portfolio investors have withdrawn $21 billion from equities in the past year<\/b><span style=\"font-weight: 400;\">, weakening the rupee and leaving domestic investors to sustain volumes.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By easing rules on lending against shares, debt securities, and IPO financing, the RBI aims to <\/span><b>address liquidity shortfalls, bolster domestic participation, and restore confidence in capital markets<\/b><span style=\"font-weight: 400;\">, while also helping banks reclaim business from structured credit players.<\/span><\/li>\n<\/ul>\n<h2><b>RBI\u2019s IPO Financing Boost to Broaden Retail Access<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI\u2019s decision to raise the <\/span><b>IPO financing limit for retail investors<\/b><span style=\"font-weight: 400;\"> from \u20b910 lakh to \u20b925 lakh comes as several big-ticket offerings, including Tata Capital and LG, near launch.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Strong listing gains and corporate earnings have already fuelled robust investor appetite.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>By easing capital constraints<\/b><span style=\"font-weight: 400;\">, the move will broaden retail participation, inject more liquidity into the primary market, and deepen India\u2019s capital markets.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Analysts note the timing is critical, <\/span><span style=\"font-weight: 400;\">ensuring savings flow into equities when demand is peaking, thereby sustaining growth momentum and supporting industry funding<\/span><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2><b>RBI Eases Rules on Lending Against Shares and Securities<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI has proposed major relaxations in lending norms, including <\/span><b>removing the ceiling on loans against listed debt securities<\/b><span style=\"font-weight: 400;\"> and raising the loan limit against shares to <\/span><b>\u20b91 crore per borrower<\/b><span style=\"font-weight: 400;\">, up from \u20b920 lakh.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Banks can also now lend more against <\/span><b>REITs and InvITs<\/b><span style=\"font-weight: 400;\">, widening collateral options and boosting liquidity.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The move is expected to <\/span><b>increase trading volumes, broaden investor participation, and strengthen credit growth<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors, especially high-net-worth individuals, gain quicker and cheaper access to funds without selling securities, while banks benefit from a more diverse collateral base.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, analysts caution that prudent risk management will be essential to avoid over-leverage in volatile markets.<\/span><\/li>\n<\/ul>\n<h2><b>RBI Lifts Curbs on Lending to Large Borrowers<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI has proposed <\/span><b>withdrawing its 2016 framework<\/b><span style=\"font-weight: 400;\"> that discouraged banks from lending to corporates with exposures of <\/span><b>\u20b910,000 crore or more<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Initially introduced to push big firms toward capital markets, the framework is now seen as redundant, since the <\/span><b>Large Exposure Framework already caps single-bank lending to large groups<\/b><span style=\"font-weight: 400;\">, managing concentration risks.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The shift will give <\/span><b>corporates easier access to bank credit<\/b><span style=\"font-weight: 400;\"> for major projects, mergers, and expansions, while allowing banks more flexibility in financing without undermining financial stability.<\/span><\/li>\n<\/ul>\n<h2><b>RBI Eases NBFC Funding for Infrastructure Projects<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI has proposed <\/span><b>reducing risk weights on NBFC loans to operational, high-quality infrastructure projects<\/b><span style=\"font-weight: 400;\">, lowering capital requirements and enabling more competitive lending rates.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This move is expected to <\/span><b>ease financing costs for developers<\/b><span style=\"font-weight: 400;\"> in critical sectors such as roads, power, transport, and renewables, boosting India\u2019s infrastructure growth.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">By improving liquidity and encouraging NBFCs to expand exposure to stable, cash-generating projects, the step supports long-term economic development.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, analysts caution that the relaxation could raise leverage risks in concentrated NBFC infrastructure portfolios, making <\/span><b>prudent capital management essential<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h2><b>RBI Relaxes Rules on ECBs and IFSC Accounts<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The RBI has announced major relaxations in <\/span><b>External Commercial Borrowing (ECB) norms<\/b><span style=\"font-weight: 400;\">, including expanding eligible borrowers and lenders, easing maturity and cost restrictions, and simplifying reporting.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">These changes are expected to lower overseas borrowing costs and improve compliance ease, making foreign debt more attractive for Indian firms while maintaining safeguards against risk.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In parallel, the RBI has extended the repatriation period for foreign currency accounts in IFSCs (like GIFT City) from one to three months, giving exporters more flexibility in managing forex inflows.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This brings onshore rules in line with offshore arrangements, strengthens liquidity in IFSC banking units, and supports India\u2019s ambition of building a globally competitive financial hub.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/rbi-unlocks-capital-market-liquidity-markets-flat-10283773\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.moneycontrol.com\/news\/business\/markets\/mc-explains-rbi-s-capital-market-lending-revamp-what-s-changing-and-why-it-matters-13592573.html\/amp\" target=\"_blank\" rel=\"nofollow noopener\">MC<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>RBI eases lending norms, raises IPO funding limits, and boosts NBFC infra lending to deepen market liquidity and support India\u2019s economic growth.<\/p>\n","protected":false},"author":18,"featured_media":66186,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[60,3023,22,59],"class_list":{"0":"post-66155","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-mains-articles","9":"tag-rbi-market-liquidity-measures","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/66155","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=66155"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/66155\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/66186"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=66155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=66155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=66155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}