To improve the flow of credit, the Reserve Bank of India (RBI) on Wednesday raised the ceiling for taking loan against shares from the existing Rs 20 lakh to Rs 1 crore. It has also increased the IPO financing limit to Rs 25 lakh.

“It is proposed to remove the regulatory ceiling on lending against listed debt securities and enhance limits for lending by banks against shares from Rs 20 lakh to Rs 1 crore and for IPO financing from Rs 10 lakh to Rs 25 lakh per person,” RBI Governor Sanjay Malhotra announced at the end of a three-day-long meeting of its monetary policy committee.

This is part of a series of five measures announced by the RBI to improve the flow of credit in the economy following a 100 basis point rate cut so far in the calendar year 2025.

In a significant structural move, the RBI has also expanded the lending scope for Indian banks, allowing them to finance mergers and acquisitions by domestic companies. This is seen as a major boost for the banking sector, potentially shifting deal financing away from private credit and into the formal banking system.

While keeping the repo rate unchanged as expected, RBI revised its GDP growth estimate for the current fiscal year from 6.5% to 6.8%. It revised down its CPI inflation forecast from 3.1% to 2.6% for the current fiscal year.

“RBI stated space for monetary policy action opens up to support growth as CPI Inflation projection has consistently been higher than the actual inflation outcome. RBI projects next year CPI Inflation at 4.5 percent due to higher base, with fourth quarter CPI inflation at 3.9 in 2026-27. They are projecting GDP growth at 6.6 percent for next year. This growth seems to be below potential GDP growth given continuous undershooting of CPI inflation. This should open space to cut rates in the coming monetary policy meetings,” said Murthy Nagarajan, Head-Fixed Income, Tata Asset Management.The central bank has also proposed steps to boost the Indian rupee’s global use, including allowing local banks to lend in rupees to businesses in neighboring countries and setting official reference exchange rates for major trading partners’ currencies.

“We have been making steady process in this regard,” Malhotra said, referring to the rupee’s internationalization, and said that under the proposed changes, authorized Indian banks will be permitted to make rupee-denominated loans to non-residents from Bhutan, Nepal and Sri Lanka, for cross-border trade transactions.