EMIs will be reduced quickly, gold loans will be easily available... RBI has changed the rules..

The Reserve Bank of India (RBI) has made several changes to regulations that will benefit both customers and banks. Seven changes have been made in total. It is believed that these will accelerate the passage of interest rate benefits to customers, make obtaining gold loans easier, and loosen regulations for large loans. Three of these changes will come into effect from October 1st, while the remaining four are currently only proposals. Public feedback has been sought on these changes.

Under the new regulations, banks can reduce the spread on floating-rate loans. They will be able to do this even before the current three-year lock-in period. This move will significantly benefit borrowers. When the RBI reduces interest rates, customers will benefit quickly. This could lead to lower EMIs or lower interest payments. Furthermore, banks can now offer customers an additional option: When interest rates change, customers can convert their floating-rate loans to fixed-rate loans. However, this option will no longer be mandatory for banks.

Gold Loans
In addition, the RBI has eased the rules for lending against gold and silver. Banks and small urban cooperative banks (Tier-3 and Tier-4) will now be able to offer loans. This loan will be available to anyone who uses gold as raw material. Previously, only jewelers were eligible for this loan. Now, any business that uses gold as a raw material can avail itself of it.

The central bank has also amended Basel III capital regulations. Banks will now be able to raise more capital for PDIs (Perpetual Debt Instruments) issued abroad. These PDIs can be denominated in foreign currency or rupees. This change will benefit banks, allowing them to more easily increase their Tier-1 capital from abroad. The proposals currently open for public opinion include several other points.

How to Get More Credit
The RBI has suggested increasing the repayment period for Gold Metal Loans (GMLs). This period is proposed to be increased from 180 days to 270 days. Jewelers who do not manufacture jewelry themselves will also be able to avail themselves of GML. They will be able to avail themselves of this loan for their outsourced work. The regulator has also proposed changes to the rules for branches of foreign banks in India. This includes harmonizing the Large Exposure Framework (LEF) and Intragroup Transactions and Exposures (ITE) rules. Now, loans given to the head office will be considered only under LEF. The benefits of reducing credit risk will now be available on more types of loans.

The RBI has also proposed improving credit data. Credit lending institutions will now be required to report information to credit bureaus every week, up from every 15 days. The proposal also calls for prompt correction of errors and inclusion of CKYC numbers in customer reports. People can provide their feedback on all these proposals until October 20th.

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