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Why Every Bank Branch Has an MSME Lending Target
In 2018, the RBI's Expert Committee on MSMEs — chaired by former SEBI chairman U.K. Sinha — toured the country and heard the same complaint from small business owners everywhere: banks counted medium enterprises toward their MSME targets, claimed compliance, and left the smallest businesses unfunded
What Foreign Investors Can and Cannot Buy in Indian Markets
In September 2013, a single global fund manager sat in Mumbai trying to register three separate entities with SEBI — one as an FII, one as a sub-account, and one as a qualified foreign investor. Each had different forms, different caps, and different reporting requirements, all for the purpose of bu
Why Your Export Payment Must Arrive in 9 Months: India's Trade Forex Controls
In May 2020, with global supply chains frozen and Indian exporters unable to collect on invoices already shipped, the Reserve Bank of India did something it almost never does — it relaxed the export realisation deadline. The standard nine-month window was stretched to fifteen months, because COVID-1
How India Built the World's Largest Real-Time Payment System
In March 2004, the Reserve Bank of India switched on RTGS — Real Time Gross Settlement — for the first time. A high-value transfer between two banks settled in seconds rather than days. Twenty years later, India's Unified Payments Interface processed over 14 billion transactions in a single month, m
What Happens to a Wilful Defaulter? The Framework Banks Use to Name, Shame, and Restrict
In 2018, Vijay Mallya fled India with over Rs 9,000 crore in unpaid loans. Nirav Modi engineered a Rs 13,000-crore fraud at Punjab National Bank. Mehul Choksi vanished to Antigua. These cases triggered a national reckoning: why could borrowers who deliberately refused to repay — or actively looted b
From MCLR to EBLR: Why Your Home Loan Rate Finally Moves With the Repo
For the better part of two decades, the Reserve Bank of India faced an exasperating problem: it would cut the repo rate, announce the decision at a press conference, and then watch as commercial banks simply refused to pass the reduction on to borrowers. Between 2015 and 2019, the RBI cut the repo r
Who Controls Your Lending App? How the RBI Cracked Down on Digital Lending
In 2020, a borrower in Hyderabad took a Rs 10,000 loan from an app on his phone. Within weeks, the app had accessed his entire contact list, sent threatening messages to his family members, and demanded repayment of Rs 45,000 — interest, processing fees, and penalties that were never disclosed upfro
How the RBI Tiered 10,000 NBFCs by Risk: The Scale Based Regulation Story
In September 2018, IL&FS — Infrastructure Leasing & Financial Services — defaulted on its commercial paper obligations. Within weeks, the contagion spread through the mutual fund industry, froze the commercial paper market, and triggered a liquidity crisis that took down DHFL and nearly brought seve
Why Banks Must Lend to Farmers — And What Happens When They Don't
In 1991, India liberalised its economy but kept one regulatory lever firmly in place: mandatory agricultural lending targets. The reason was straightforward. Agriculture employed roughly half the workforce, yet banks — left to their own credit allocation — would lend almost entirely to safer urban b
The $10 Million Question: How India Liberalised Forex Hedging
For twenty years, an Indian company that cancelled a forward contract on a $10 million receivable was barred from rebooking it. The shipment could be delayed, the counterparty could renegotiate, the commercial reality could shift entirely — none of it mattered. Once cancelled, the hedge was gone. Th
When Your Company Borrows From Abroad: How the ECB Framework Controls Foreign Debt
In the summer of 1991, India's foreign exchange reserves dropped below two weeks of import cover, and the country came within days of defaulting on its external obligations. The crisis was triggered partly by short-term external commercial borrowings that could not be rolled over — foreign banks ref
How India Opened Its Doors to Foreign Capital — Sector by Sector
In December 2014, the Indian government did something no one in the railways ministry thought politically possible: it opened railway infrastructure — a sector that had been explicitly prohibited from foreign investment since independence — to 100% FDI under the automatic route, in a single notifica
Why Can an NRI Buy a Flat but Not a Farm? The Property and Deposit Rules That Catch Every Diaspora Indian
In September 2013, when the rupee was in freefall — touching 68 to the dollar — the RBI opened a special swap window for FCNR(B) dollar deposits (RBI8388), offering banks concessional rates to attract NRI dollars. The move worked: over $34 billion flowed in within weeks. But the episode exposed a de
Banks Under RBI Directions: What Section 35A Means for Your Deposits
As of early 2026, over 200 co-operative banks across India are operating under Section 35A directions from the Reserve Bank — their lending frozen, their deposit acceptance restricted, their management decisions subject to RBI approval. Some have been under these restrictions for years. Others were
What the RBI Is Changing Right Now: The Active Draft Pipeline
Every regulation the RBI issues has a moment when it exists as a draft — placed on the website, open for public comment, waiting for stakeholder feedback before becoming final. That moment is where lawyers, compliance officers, and industry bodies have their only formal chance to shape the outcome.
Who Owns This Company? How Indian Banks Must Trace Beneficial Ownership
When a company opens a bank account, the bank doesn't just identify the company — it must identify the human beings who ultimately own or control it. This requirement, buried in Chapter VI of the KYC Master Direction, was first introduced at a 25% ownership threshold in 2013, lowered to 10% in 2016,
Can a Gold Loan Be Priority Sector? The Classification Puzzle That Trips Up Every Bank
A farmer walks into a bank, pledges gold jewellery, and takes a Rs 2 lakh loan. The bank's branch manager marks it as agriculture credit under priority sector lending. The bank's compliance team flags it during the quarterly review. The RBI's inspection team questions it during the ISE. And the PSL
When the RBI Investigates Your Bank: The Complete Enforcement Chain
On March 11, 2026, the RBI issued a direction to Kanaka Pattana Sahakara Bank Niyamita, Davangere under Section 35A of the Banking Regulation Act. The bank was ordered, with immediate effect, to stop granting or renewing any loans, stop making investments, stop accepting fresh deposits, stop disburs
Is Your Money Safe in an NBFC? What the Law Actually Says
Every few months, news breaks about a non-banking financial company defaulting on deposits — or worse, an unregistered entity that was never authorised to accept deposits in the first place. The questions that follow are always the same: Is my deposit insured? Can I get my money back? Who regulates
Why Did It Take India 14 Years to Write One KYC Rule Book?
In 2002, the RBI issued its first KYC circular. In 2016, it finally consolidated everything into a single Master Direction. In 2025, it broke that single document back into ten separate ones. Each transition was a response to a failure in the previous structure — and each failure raises questions th
Can I Open a Bank Account With Just Aadhaar? The Complete KYC Answer
The most common question on the RBI's KYC FAQ: what documents do I need to open a bank account? Why has the answer changed four times in six years — from mandatory Aadhaar to voluntary Aadhaar to OTP-based eKYC with limits to video KYC from your phone. Each change was a regulatory decision that resh
What Happens to Your Deposit If Your Bank Fails?
The RBI's FAQ on deposit insurance gets more traffic than almost any other page on its website. The questions are basic — Is my bank insured? How much is covered? What if I have accounts at multiple branches? — and the answers matter to every depositor in India.
What the RBI Is Doing Next: The February 2026 Policy Statement
On February 6, 2026, Governor Sanjay Malhotra released the Statement on Developmental and Regulatory Policies (RBIPR62171) alongside the monetary policy decision. Why does this statement matter more than the rate cut? Because the rate cut affects one variable — the repo rate. The developmental state
When the RBI Penalises: What Enforcement Actions Reveal About Compliance Failures
On March 23, 2026, the RBI fined Central Bank of India Rs 63.60 lakh for two violations: failing to upload KYC records to the Central KYC Records Registry within the prescribed timeline, and opening duplicate Basic Savings Bank Deposit Accounts for customers who already had one. On March 18, HSBC go