The Reserve Bank of India (RBI), in its Statement on Developmental and Regulatory Policies issued on December 6, 2024, announced several measures across various sectors:

I. Liquidity and Financial Markets

1. Reduction in Cash Reserve Ratio (CRR):

1. • CRR for all banks will be reduced by 50 basis points (bps), in two phases (25 bps each), to 4% of net demand and time liabilities (NDTL) starting December 14, 2024, and December 28, 2024. This release of liquidity amounts to ₹1.16 lakh crore for the banking system.

2. Interest Rates on FCNR(B) Deposits:

1. • To attract more capital inflows, the ceiling on interest rates for FCNR(B) deposits will be raised. For deposits with a maturity of 1–3 years, the rate can go up to ARR + 400 bps, and for 3–5 years, it can go up to ARR + 500 bps, effective December 6, 2024.

3. Linking FX-Retail Platform with Bharat Connect:

1. • The FX-Retail platform will be linked to Bharat Connect, facilitating easier foreign exchange transactions through bank apps, starting with a pilot for buying US dollars against the Rupee.

4. Secured Overnight Rupee Rate (SORR):

1. • A new benchmark, SORR, based on secured money markets (including repo transactions), will be developed to replace the existing MIBOR (Mumbai Interbank Outright Rate).

II. Regulation

1. ‘Connect 2 Regulate’ Initiative:

1. • To enhance consultation with stakeholders, the RBI will launch ‘Connect 2 Regulate’, allowing stakeholders to contribute their ideas on regulatory issues via the RBI website.

III. Communication

1. Podcast Facility:

1. • The RBI will introduce podcasts to enhance communication with the public, providing information on decisions, their rationale, and awareness messages.

IV. Financial Inclusion

1. Collateral-free Agriculture Loan Limit Increase:

1. • The limit for collateral-free agricultural loans will be raised from ₹1.6 lakh to ₹2 lakh, benefiting small and marginal farmers.

V. Payment Systems

1. Pre-sanctioned Credit Lines through UPI for SFBs:

1. • Small Finance Banks (SFBs) will now be allowed to offer pre-sanctioned credit lines through UPI, expanding access to credit for low-income customers.

VI. Fintech

1. Framework for Responsible AI in the Financial Sector (FREE-AI):

1. • A committee will be formed to develop a Framework for Responsible and Ethical Enablement of AI (FREE AI) adoption in the financial sector, addressing risks like algorithmic bias and data privacy.

2. AI-based Solution to Detect Mule Accounts (MuleHunter.AI^TM):

• The RBI will pilot an AI/ML-based model, MuleHunter.AI^TM, to detect mule bank accounts used in fraud. This initiative, currently being tested with two public sector banks, aims to combat financial fraud.

These steps are designed to enhance liquidity, improve financial systems, support financial inclusion, and integrate new technologies to reduce fraud and improve transparency in India’s financial sector.