Reserve Bank News

RBI urges banks to cut retail service charges, targets low-income impact

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The Reserve Bank of India (RBI) is pressing banks to reduce service charges on consumer products such as debit cards, minimum balance violations, and late payments, according to sources. While the RBI has not issued formal guidelines, officials have conveyed the message during private meetings, aiming to reduce the financial burden on low-income individuals.

Retail banking has become a major growth driver for Indian lenders, especially after setbacks in corporate lending. The central bank is concerned that some charges may be disproportionately affecting the underprivileged and is keen on fostering fairer practices in line with financial inclusion goals.

There are currently no regulatory caps on such charges. Retail processing fees typically range from 0.5% to 2.5%, and some banks cap home loan charges at Rs. 25,000, according to BankBazaar data. While the RBI has not specified fee ranges, it has left the matter to banks' discretion.

This development comes amid broader regulatory scrutiny into retail loan growth, digital lending practices, and consumer protection frameworks. The move may significantly impact banks' fee-based income streams, currently a major contributor to their profitability.

RBI proposes simplified norms for foreign companies opening offices in India

The Reserve Bank of India (RBI) has issued a draft proposal to ease rules for foreign companies wishing to open or shut branches and liaison offices in India. The draft Foreign Exchange Management (Establishment in India of a branch or office) Regulations, 2025 seeks to move from a prescriptive to a principle-based framework, offering greater operational flexibility.