Page 9 - Banking Finance November 2025

RBI CORNER

RBI urges banks to cut re-

tail service charges, targets
low-income impact
The Reserve Bank of India (RBI) is
pressing banks to reduce service
charges on consumer products such as
debit cards, minimum balance viola-
tions, and late payments, according to Ò»©­
sources. While the RBI has not issued
formal guidelines, officials have con-
veyed the message during private
meetings, aiming to reduce the finan-
cial burden on low-income individuals.
Retail banking has become a major RBI standardises claim settlement rules for deceased
growth driver for Indian lenders, espe-
cially after setbacks in corporate lend- customers
ing. The central bank is concerned that The Reserve Bank of India (RBI) has issued revised norms to streamline the
some charges may be disproportion- process for claim settlement in cases of deceased customers' bank accounts,
ately affecting the underprivileged and lockers, and safe custody articles. Under the new guidelines, banks must
is keen on fostering fairer practices in settle valid claims within 15 days of receiving the required documents, fail-
line with financial inclusion goals. ing which compensation will be payable.

There are currently no regulatory caps Named the "RBI (Settlement of Claims in respect of Deceased Customers of
on such charges. Retail processing fees Banks) Directions, 2025," the rules aim to eliminate inconsistent practices
typically range from 0.5% to 2.5%, and across banks and improve customer service. The instructions are to be imple-
some banks cap home loan charges at mented by March 31, 2026, and apply to all deposit accounts, lockers, and
Rs. 25,000, according to BankBazaar articles in safe custody.
data. While the RBI has not specified
For accounts with nomination or survivorship clauses, settlement to the nomi-
fee ranges, it has left the matter to
nee or surviving account holder will be considered a valid discharge of liabil-
banks' discretion.
ity. If there is no nomination, and no legal contest, banks must process claims
This development comes amid broader on submission of a claim form, death certificate, identification, indemnity
regulatory scrutiny into retail loan bond, and, where applicable, a letter of disclaimer.
growth, digital lending practices, and
consumer protection frameworks. The This move marks a significant step toward simplifying banking interactions
move may significantly impact banks' for bereaved families and reducing delays in claim disbursal.
fee-based income streams, currently a
major contributor to their profitability.
shut branches and liaison offices in In- rectly to the RBI. Once approved and
dia. The draft Foreign Exchange Man- the bank account is opened, the bank
RBI proposes simplified agement (Establishment in India of a will report the establishment to the

norms for foreign compa- branch or office) Regulations, 2025 central bank, which will then issue a
seeks to move from a prescriptive to a Unique Identification Number (UIN).
nies opening offices in In- principle-based framework, offering The draft also suggests relaxing eligi-
dia greater operational flexibility. bility norms for foreign firms establish-

The Reserve Bank of India (RBI) has Under the new proposal, Entities Resi- ing a business presence in India. These
issued a draft proposal to ease rules for dent Outside India (EROI) would apply changes aim to make India more at-
foreign companies wishing to open or to an authorised bank instead of di- tractive for international businesses,

8 | 2025 | NOVEMBER | BANKING FINANCE