(November, 2025) The Banking Laws (Amendment) Act, 2025 This comprehensive reform amends five key legislations to modernize governance, raising the ‘substantial interest’ threshold to ₹2 crore and reforming cooperative bank director tenures. It also empowers Public Sector Banks to transfer unclaimed assets to the Investor Education and Protection Fund (IEPF) and enhances statutory audit independence.
(November, 2025) RBI Conducts Variable Rate Reverse Repo (VRRR) Auction As part of its Liquidity Adjustment Facility (LAF), the RBI conducted a ₹1 lakh crore 7-day VRRR auction to absorb surplus liquidity from the banking system. This tool allows banks to lend funds to the RBI at market-determined rates, influencing short-term money market rates like the call money rate.
(November, 2025) Ban on Pre-Payment Charges for Floating Rate Loans The RBI has barred lenders from levying pre-payment penalties on floating-rate loans for individuals and Micro and Small Enterprises (MSEs) effective January 2026. This regulatory shift aims to enhance loan portability, promote competition among lenders, and ensure fair lending practices.
(October, 2025) Constitution of Payments Regulatory Board (PRB) The RBI replaced the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) with a six-member PRB to regulate all domestic and cross-border payment systems. Chaired by the RBI Governor, the new board includes government nominees to ensure oversight and modernization of payment infrastructures.
(October, 2025) Review of Flexible Inflation Targeting (FIT) Framework With the current 4% CPI target expiring in March 2026, the RBI released a discussion paper seeking stakeholder views on retaining the headline inflation target. Most respondents supported continuing the existing 4% target with a +/- 2% tolerance band to anchor inflation expectations and maintain credibility.
(October, 2025) Banking Regulation Amendments and Basel III Norms The RBI increased the eligible limit for Perpetual Debt Instruments (PDI) issued abroad, allowing banks to raise Tier-1 capital up to 1.5% of risk-weighted assets to boost capital adequacy. Additionally, banks were permitted to reduce the spread on floating-rate loans before the lock-in period ends to ensure faster policy rate transmission.
(October, 2025) Self-Regulatory Organisation (SRO) Status for NBFCs The RBI granted SRO status to the Finance Industry Development Council (FIDC) to enforce industry standards and dispute resolution within the NBFC sector. This recognition is intended to enhance industry discipline, peer monitoring, and build market confidence in Asset and Loan Financing NBFCs.
(September, 2025) Financial Inclusion Index (FI Index) Improvement The RBI’s FI Index improved to 67 in March 2025 from 64.2 the previous year, driven by improvements in usage and quality parameters. This comprehensive index captures data across banking, investments, insurance, and postal services to measure the extent of financial inclusion ranging from 0 to 100.
(August, 2025) Nomination to Monetary Policy Committee (MPC) The RBI nominated Executive Director Indranil Bhattacharyya as an ex-officio member of the MPC, which is responsible for fixing the benchmark repo rate. The MPC is a statutory body under the RBI Act, 1934, designed to maintain price stability while keeping growth objectives in mind.
(July, 2025) Reduction in Priority Sector Lending (PSL) Targets for SFBs The RBI reduced the overall PSL target for Small Finance Banks (SFBs) from 75% to 60% to enhance their operational flexibility and profitability. While the additional PSL component dropped to 20%, SFBs must still allocate 40% of their Adjusted Net Bank Credit to specific PSL sub-sectors.
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Monetary Policy and Banking System Current Affairs ▼
(November, 2025) The Banking Laws (Amendment) Act, 2025 This comprehensive reform amends five key legislations to modernize governance, raising the ‘substantial interest’ threshold to ₹2 crore and reforming cooperative bank director tenures. It also empowers Public Sector Banks to transfer unclaimed assets to the Investor Education and Protection Fund (IEPF) and enhances statutory audit independence.
(November, 2025) RBI Conducts Variable Rate Reverse Repo (VRRR) Auction As part of its Liquidity Adjustment Facility (LAF), the RBI conducted a ₹1 lakh crore 7-day VRRR auction to absorb surplus liquidity from the banking system. This tool allows banks to lend funds to the RBI at market-determined rates, influencing short-term money market rates like the call money rate.
(November, 2025) Ban on Pre-Payment Charges for Floating Rate Loans The RBI has barred lenders from levying pre-payment penalties on floating-rate loans for individuals and Micro and Small Enterprises (MSEs) effective January 2026. This regulatory shift aims to enhance loan portability, promote competition among lenders, and ensure fair lending practices.
(October, 2025) Constitution of Payments Regulatory Board (PRB) The RBI replaced the Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) with a six-member PRB to regulate all domestic and cross-border payment systems. Chaired by the RBI Governor, the new board includes government nominees to ensure oversight and modernization of payment infrastructures.
(October, 2025) Review of Flexible Inflation Targeting (FIT) Framework With the current 4% CPI target expiring in March 2026, the RBI released a discussion paper seeking stakeholder views on retaining the headline inflation target. Most respondents supported continuing the existing 4% target with a +/- 2% tolerance band to anchor inflation expectations and maintain credibility.
(October, 2025) Banking Regulation Amendments and Basel III Norms The RBI increased the eligible limit for Perpetual Debt Instruments (PDI) issued abroad, allowing banks to raise Tier-1 capital up to 1.5% of risk-weighted assets to boost capital adequacy. Additionally, banks were permitted to reduce the spread on floating-rate loans before the lock-in period ends to ensure faster policy rate transmission.
(October, 2025) Self-Regulatory Organisation (SRO) Status for NBFCs The RBI granted SRO status to the Finance Industry Development Council (FIDC) to enforce industry standards and dispute resolution within the NBFC sector. This recognition is intended to enhance industry discipline, peer monitoring, and build market confidence in Asset and Loan Financing NBFCs.
(September, 2025) Financial Inclusion Index (FI Index) Improvement The RBI’s FI Index improved to 67 in March 2025 from 64.2 the previous year, driven by improvements in usage and quality parameters. This comprehensive index captures data across banking, investments, insurance, and postal services to measure the extent of financial inclusion ranging from 0 to 100.
(August, 2025) Nomination to Monetary Policy Committee (MPC) The RBI nominated Executive Director Indranil Bhattacharyya as an ex-officio member of the MPC, which is responsible for fixing the benchmark repo rate. The MPC is a statutory body under the RBI Act, 1934, designed to maintain price stability while keeping growth objectives in mind.
(July, 2025) Reduction in Priority Sector Lending (PSL) Targets for SFBs The RBI reduced the overall PSL target for Small Finance Banks (SFBs) from 75% to 60% to enhance their operational flexibility and profitability. While the additional PSL component dropped to 20%, SFBs must still allocate 40% of their Adjusted Net Bank Credit to specific PSL sub-sectors.
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