In his first major policy move, newly appointed Reserve Bank of India (RBI) Governor Sanjay Malhotra announced a 25-basis-point (bps) reduction in the repo rate on Friday. This decision brings much-needed relief to borrowers, particularly those with home and other loans. However, it remains to be seen how quickly banks will pass on this benefit to consumers.

Alongside the rate cut, the RBI has introduced key initiatives aimed at bolstering the banking sector, particularly in the digital payments space, to enhance security and combat cyber fraud.

One of the significant measures introduced is the implementation of an Additional Factor of Authentication (AFA) for domestic digital transactions. The RBI also plans to extend this authentication process to international digital payments made to offshore merchants, ensuring greater security in cross-border transactions.

Governor Malhotra emphasized that while digitalization has improved efficiency in financial services, it has also heightened exposure to cyber threats. He pointed out the increasing sophistication of digital frauds and stressed the need for collective action by all stakeholders. To counter these threats, he urged banks and non-banking financial companies (NBFCs) to strengthen their cybersecurity frameworks, improve fraud detection mechanisms, and conduct periodic testing of their incident response systems to maintain operational resilience.

Another key reform announced by the RBI is the introduction of exclusive internet domains for banking and financial institutions in India. The ‘bank.in’ domain will be designated for Indian banks, with registrations starting in April, followed by the ‘fin.in’ domain for financial institutions. This move is expected to mitigate the risk of banking fraud.

The 25-bps repo rate cut marks the first reduction by the RBI in nearly five years, signaling a shift in monetary policy under Malhotra’s leadership.