Decoding RBI’s Developmental & Regulatory Roadmap–April 2025 Edition

The Reserve Bank of India (RBI) issued its Statement on Developmental and Regulatory Policies on April 9, 2025, outlining a set of proposed reforms aimed at strengthening the regulatory framework and fostering innovation in the financial sector. The statement covers key updates in three broad areas — Regulations, Payment Systems, and Fintech. Highlights include a draft framework for securitisation of stressed assets, expansion of co-lending arrangements, harmonised guidelines for lending against gold jewellery, and revised norms for non-fund based credit facilities. On the digital payments front, RBI has proposed enhancements to UPI transaction limits, while also announcing a more flexible, theme-neutral Regulatory Sandbox to encourage continuous fintech innovation.

Let’s understand the details!

Date : Apr 09, 2025

Statement on Developmental and Regulatory Policies

This Statement sets out various developmental and regulatory policy measures relating to (i) Regulations; (ii) Payment Systems; and (iii) Fintech.

I. Regulations

1. Securitisation of Stressed Assets Framework

A prudentially structured securitisation transaction can be an enabler for resolution of stressed assets as it is expected to improve risk distribution and provide an exit route from such exposures for lenders. With this objective, RBI had released a discussion paper on Securitisation of Stressed Assets Framework in January 2023, to seek comments from market participants on various aspects of the framework. After factoring in the suggestions received from the stakeholders on the discussion paper, the draft framework for securitisation of stressed assets is being issued for public comments. The framework intends to enable securitisation of stressed assets through a market-based mechanism, in addition to the existing ARC route under SARFAESI Act, 2002.

2. Framework on Co-lending arrangements (CLA)

The extant guidelines on co-lending are applicable only to arrangements between banks and NBFCs for priority sector loans. In light of the evolution of such lending practices, and the potential of such lending arrangements in catering to the credit needs of a wider segment in a sustainable manner, it has been decided to expand the scope for co-lending and issue a generic regulatory framework for all forms of co-lending arrangements among REs. The draft guidelines are being issued for public comments.

3. Review of Guidelines for Lending against Gold Jewellery

Loans against the collateral of gold jewellery and ornaments are extended by regulated entities (REs) for both consumption and income-generation purposes. Prudential and conduct related regulations for such loans have been issued from time to time and they vary for different categories of REs. With a view to harmonizing such regulations across REs while keeping in view their risk-taking capabilities, and also to address a few concerns that have been observed, it has been decided to issue comprehensive regulations, on prudential norms and conduct related aspects, for such loans. The draft guidelines in this regard are being issued for public comments.

4. Review of Non-Fund Based Facilities

Non-fund based (NFB) facilities like Guarantees, Letters of Credit, Co-Acceptances etc. play a significant role in facilitating effective credit intermediation, besides enabling seamless business transactions, including trade transactions. It has now been decided to harmonize and consolidate guidelines covering these facilities across all REs. The revised guidelines include a review of instructions on issuance of partial credit enhancement by REs, with a view to, inter alia, broadening funding sources for infrastructure financing. Draft guidelines in this regard are being issued for public comments.

II. Payment Systems

5. Enhancing transaction limits in UPI

At present, the transaction amount for UPI, covering both Person to Person (P2P) and Person to Merchant payments (P2M), is capped at ₹1 lakh except for specific use cases of P2M payments which have higher limits, some at ₹2 lakh and others at ₹5 lakh.

To enable the ecosystem to respond efficiently to new use cases, it is proposed that NPCI, in consultation with banks and other stakeholders of the UPI ecosystem, may announce and revise such limits based on evolving user needs. Appropriate safeguards will be put in place to mitigate risks associated with higher limits. Banks shall continue to have the discretion to decide their own internal limits within the limits announced by NPCI.

P2P transactions on UPI shall continue to be capped at ₹1 lakh, as hitherto. NPCI will be advised accordingly.

III. Fintech

6. ‘On Tap’ application facility under theme neutral Regulatory Sandbox

The Reserve Bank has been operating the Regulatory Sandbox (RS) framework since 2019, and four specific thematic cohorts have been announced and completed till date. An ‘On Tap’ application facility for themes of closed cohorts was announced in October 2021. A fifth ‘Theme Neutral’ cohort with a specified time window for receiving applications was also announced in October 2023, which will close in May 2025. Under this cohort, any innovative product or solution within the regulatory ambit of RBI could be tested if found eligible. Based on the experience gained and feedback received from stakeholders, it is now proposed to make the Regulatory Sandbox ‘Theme Neutral’ and ‘On Tap’.

This initiative is expected to foster continuous innovation and keep pace with the rapidly evolving FinTech / regulatory landscape. Additional details in this regard will be communicated separately.

(Puneet Pancholy)  
Chief General Manager

Press Release: 2025-2026/63

Key Highlights of the RBI Statement

I. Regulations

1. Draft Framework for Securitisation of Stressed Assets
   
   • Aims to enable a market-based mechanism for securitising stressed assets, in addition to the existing ARC route under SARFAESI Act.
   • Draft framework released for public comments following stakeholder feedback on the 2023 discussion paper.
2. Expansion of Co-Lending Arrangements (CLA)
   
   • Proposes a generic regulatory framework applicable to all co-lending arrangements among Regulated Entities (REs), beyond just banks and NBFCs.
   • Designed to improve credit access across broader borrower segments.
3. Harmonised Guidelines for Lending Against Gold Jewellery
   
   • Intends to issue uniform prudential and conduct-related regulations for loans backed by gold jewellery.
   • Seeks to address concerns and align standards across different categories of REs.
4. Review of Non-Fund Based (NFB) Credit Facilities
   
   • Proposes harmonised and consolidated guidelines for facilities such as Guarantees, Letters of Credit, and Co-Acceptances.
   • Includes a review of partial credit enhancement norms to support infrastructure financing.

II. Payment Systems

5. Revised Transaction Limits for UPI
   
   • NPCI may revise UPI transaction limits (especially for Person-to-Merchant or P2M payments) based on evolving user needs, in consultation with banks and stakeholders.
   • P2P transaction limit remains capped at ₹1 lakh.
   • Banks will retain discretion to set internal limits within NPCI-announced caps.

III. Fintech

6. ‘On Tap’ and Theme-Neutral Regulatory Sandbox
   
   • Regulatory Sandbox to become ‘On Tap’ and ‘Theme Neutral’ going forward.
   • Aims to allow continuous application and testing of innovative products within the RBI’s regulatory ambit.
   • Designed to foster agile, real-time innovation in the rapidly evolving fintech space.

Conclusion

The RBI’s proposed regulatory and developmental measures mark a significant step toward modernising India’s financial architecture. By inviting public feedback on key frameworks, the central bank is taking a consultative and adaptive approach that balances innovation with risk management. Whether it's through better credit distribution mechanisms, more inclusive co-lending practices, enhanced payment capabilities, or a more agile fintech testing environment, these updates aim to align regulatory priorities with the dynamic needs of the economy. As the financial sector evolves, these reforms are poised to create a more resilient, responsive, and future-ready ecosystem.

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