Current Affairs - Banking

The Reserve Bank of India has reduced the qualifying asset threshold for NBFC-MFIs from 75% to 60%. This change allows NBFC-MFIs to diversify their loan portfolio, freeing up 15% of asset space. The move is expected to provide operational flexibility, balance sheet stability, and better cross-cycle earnings, ultimately enhancing service delivery to poor households and enabling MFIs to customize financial products for low-income and underserved segments.

The Reserve Bank of India has increased the Loan-to-Value (LTV) ratio for gold loans up to ₹2.5 lakh from 75% to 85%, effective April 1, 2026. This change is part of a broader strategy to enhance credit access for small-ticket borrowers while maintaining robust risk management practices. The decision comes amid a surge in gold loan demand and rising non-performing assets (NPAs) in this segment. By allowing a higher LTV, borrowers can access more funds against the same amount of gold, offering critical financial relief, especially to those in the lower income brackets. However, stricter lender protocols will be enforced to ensure systemic stability.

Canara Bank has become the first major public sector bank in India to eliminate the minimum balance requirement across all types of savings bank accounts, including regular, salary, and NRI accounts. This reform means customers will no longer face penalties for failing to maintain an Average Monthly Balance (AMB), a practice that previously discouraged low-income and rural populations from accessing formal banking services. The move is aimed at boosting financial inclusion and simplifying banking access for a broader demographic, including students, salaried workers, and rural communities. It reflects Canara Bank's commitment to customer convenience and inclusive financial practices.

The State Bank of India (SBI), through its latest economic research report, projected that India’s household net financial savings could reach ₹22 lakh crore in FY2024–25, amounting to 6.5% of the Gross National Disposable Income (GNDI). This projection marks a significant rise from previous years and reflects growing economic confidence and household financial stability post-pandemic. The SBI report not only highlights this surge in savings but also analyzes broader financial trends including the Reserve Bank of India's record ₹2.69 lakh crore surplus transfer, an 8.19% increase in its balance sheet, and a notable shift in fraud patterns in the financial sector.

Indian Overseas Bank (IOB) has collaborated with Amul and Richplus by signing a tripartite Memorandum of Understanding (MoU) aimed at promoting organic farming in India. As part of this initiative, IOB introduced a co-branded Organic Farming Card specifically for its account holders involved in organic farming. Additionally, IOB launched a dedicated credit scheme called “Harit Kranti” to support this cause, while Richplus provides technical expertise, demonstrating a combined effort to boost sustainable agricultural practices.