RBI proposes risk-based deposit insurance premiums; plans lending reforms for banks

The Reserve Bank of India (RBI) on Wednesday (October 1) proposed reforms in deposit insurance, aiming to incentivise sound risk management by banks. Announcing the measures, RBI Governor Sanjay Malhotra said the central bank plans to introduce risk-based deposit insurance premiums, which would help lower costs for banks with higher credit ratings.

In addition to insurance reforms, the RBI also outlined changes in lending regulations. The central bank plans to expand acquisition finance to broaden lending opportunities for banks.

Regulatory modifications include the removal of the ceiling on lending against listed debt securities, an increase in limits for lending against shares from ₹20 lakh to ₹1 crore per person, and a rise in IPO financing limits from ₹10 lakh to ₹25 lakh per person.

Governor Malhotra said these steps are intended to ensure

effective risk management, promote responsible lending, and provide greater flexibility for banks while protecting depositors.

The announcement came alongside the central bank’s decision to keep the repo rate unchanged at 5.5% for the second consecutive monetary policy review.

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