Government reforms boost credit discipline, governance, and digital finance in public and cooperative banks under key regulations
The government and regulatory authorities have implemented comprehensive reforms to enhance credit discipline, governance, and financial stability in public sector banks and cooperative banks. Key measures include the Insolvency and Bankruptcy Code, creation of a credit information repository, early recognition and resolution frameworks for stressed assets, and establishment of a national asset reconstruction company. Governance reforms involve merit-based leadership selection and performance-based management. Technology adoption has significantly expanded digital payments and financial inclusion. Legislative amendments in 2020 and 2025 have strengthened regulatory oversight and depositor protection. Specific initiatives to support MSMEs include credit guarantee schemes, emergency credit lines, and a new credit assessment model leveraging digital data. Digital payment transactions, particularly through UPI, have seen exponential growth in volume and value, reflecting increased adoption of technology-driven banking services. These reforms aim to promote responsible lending, improve asset quality, and enhance credit flow to MSMEs.