<h1>Regulator directs banks to expand credit to MSMEs and agriculture, strengthen risk controls, digitalisation and faster scheme delivery</h1> A government financial regulator convened a review with public sector banks to assess H1 FY 2025-26 performance, directing sustained credit expansion to MSMEs, agriculture and identified 'champion' sectors while reinforcing risk management, underwriting, cybersecurity, operational continuity and grievance redressal. Banks were instructed to improve low-cost deposit mobilisation, adopt responsible AI and data analytics, accelerate digital inclusion and implement government lending schemes with reduced turnaround times. Asset quality gains and use of an asset reconstruction vehicle were noted; banks were advised to prepare for transition to an Expected Credit Loss provisioning framework and to leverage digital platforms for recovery and resolution.