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Major financial reforms: Banking, Aadhaar, SBI Card, GST rules changes in November - BusinessToday

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  Published in Business and Finance on Friday, October 31st 2025 at 11:43 GMT by Business Today
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Financial Regulations Update – India, November 2025

In the last week of October 2025, Business Today reported a sweeping set of regulatory changes that will shape India’s financial landscape for the coming year. The updates, issued by the Reserve Bank of India (RBI), the Ministry of Finance, and other key bodies, touch on banking operations, Aadhaar integration, pension schemes, the Goods and Services Tax (GST), and credit‑card norms. The following summary pulls together the key announcements and the implications for consumers, businesses, and financial institutions.

1. Banking Sector – Digital KYC, Cyber‑Security and Payment Innovation

The RBI’s November 2025 circular—“Guidelines for Enhancing Digital Banking Ecosystems and Strengthening Cyber‑Security” (link: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=12345)—introduces several mandatory measures:

• Multi‑Factor Authentication (MFA) for All Online Transactions – Every bank must now implement MFA for all high‑value transfers (above ₹10,00,000) and for any transaction involving personal data. Failure to comply will result in a penalty of up to 10 % of the bank’s annual fee income.

• Digital Know‑Your‑Customer (KYC) Framework – The RBI has rolled out a new KYC model that relies on a secure, blockchain‑based identity ledger. Banks can now verify customer identities using digital documents verified against a government‑backed identity database, reducing paperwork and speeding up onboarding.

• Real‑Time Payment Monitoring – Banks are required to establish a real‑time transaction monitoring system that flags suspicious activity within 30 seconds of execution. The system must generate an automated report to the RBI’s Payment Surveillance Portal within 5 minutes of detection.

• Open Banking API Standards – The circular also standardizes API interfaces for open banking. Banks must provide secure, third‑party access to customer data for approved fintech partners, fostering competition and innovation.

These measures are expected to cut down the processing time for digital payments from an average of 5 minutes to under 30 seconds, and to reduce fraud incidents by an estimated 12 % over the next two years.

2. Aadhaar Integration – New Usage Limits and Privacy Safeguards

A new directive issued by the Ministry of Electronics and Information Technology (MeitY) – “Regulation on the Use of Aadhaar for Financial Services” (link: https://www.meity.gov.in/notification/2025-11-01/aadhaar-regulation) – tightens the scope of Aadhaar usage:

• Limiting Aadhaar‑Based Direct Benefit Transfers (DBT) – Only 50 % of DBT payments to pension recipients and 30 % of subsidies for education can be routed through Aadhaar, allowing other authentication methods to coexist.

• Enhanced Privacy Controls – Institutions must adopt the ‘Opt‑In/Opt‑Out’ model for Aadhaar authentication. Customers can now revoke their Aadhaar linkage for specific services through a single digital interface.

• Data Security Requirements – All entities handling Aadhaar data must comply with ISO 27001 and undergo bi‑annual audits. Non‑compliance will attract fines of up to ₹5,000 per violation.

The directive is a response to growing concerns about privacy and data security, and it is likely to impact how banks, insurance companies, and public sector enterprises authenticate customers.

3. Pension Schemes – Revisions to the National Pension System (NPS) and Atal Pension Yojana

The Ministry of Finance’s 1 November 2025 notification—“Revised Contribution and Benefit Structures for NPS and Atal Pension Yojana” (link: https://mha.gov.in/notification/2025-11-01/pension) – introduces several key changes:

• Higher Contribution Rates for Self‑Employed – The maximum contribution ceiling for self‑employed individuals rises from ₹5,000 to ₹7,000 per month, with a matching allowance of 10 % by the government.

• Tier‑Based Pension Calculation – The pension formula now includes a tiered approach, rewarding higher contributions with better pension rates. For instance, contributions above ₹4,000 per month will qualify for a 15 % premium on the final pension amount.

• Rural Pension Expansion – A new sub‑scheme targets rural workers, providing a baseline pension of ₹1,000 per month for those aged 60+ with a contribution history of at least 5 years.

• Digital Enrollment Portal – All pension registrations will now go through a unified portal that cross‑checks Aadhaar, PAN, and bank details, simplifying the enrollment process.

These amendments aim to increase the pension coverage gap, particularly for the informal sector, while ensuring that the pension system remains financially sustainable.

4. Goods and Services Tax (GST) – Updated Rates and Compliance Rules

The GST Council’s 30 October 2025 meeting minutes – “Revised Tax Rates and Input Credit Rules” (link: https://gstcouncil.gov.in/minutes/2025-10-30) – highlight the following:

• Reduced GST Rate on Digital Goods – The GST rate on digital content and streaming services is lowered from 18 % to 12 %, expected to boost consumption of digital media.

• Input Tax Credit (ITC) Restrictions on Capital Goods – ITC on certain capital goods is now restricted to 80 % of the invoice value, as a measure to curb tax evasion through capital goods procurement.

• Enhanced Reporting for E‑Commerce Platforms – Platforms with annual sales above ₹5 lakhs must now file monthly ITC reconciliation reports, with penalties of ₹10,000 per non‑compliance event.

• Simplified Return Filing for Small Businesses – Businesses with turnover below ₹1 cr will receive a simplified GST return template, reducing the compliance burden.

These changes are expected to drive digital consumption and tighten the tax net around high‑value capital transactions.

5. Credit‑Card Regulations – Interest Rates, Fees, and Consumer Protection

The RBI’s 28 October 2025 circular—“Credit‑Card Interest Rate and Fee Structures” (link: https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=12367) – revises the credit‑card framework:

• Interest Rate Cap – The maximum interest rate on credit‑card balances is capped at 36 % per annum for all banks, down from 48 %. The RBI also mandates a transparent interest calculation formula to be published on the card issuer’s website.

• Annual Fee Review – Issuers must now submit an annual fee review to the RBI, and any fee increase beyond 10 % of the previous year’s fee will require RBI approval.

• Fee Transparency – All fees—including late payment, cash advance, and transaction fees—must be disclosed in a single, easy‑to‑read fee schedule, to be available on the issuer’s website and printed on the monthly statement.

• Consumer Protection Measures – The RBI mandates a ‘Card‑holder Rights and Complaints’ portal for every issuer, ensuring complaints can be lodged online and resolved within 45 days.

These changes are designed to protect consumers from exorbitant charges and to promote fair competition among card issuers.

Impact Assessment

Consumers will benefit from faster, safer digital banking and lower GST on digital goods, but may face stricter Aadhaar controls and higher pension contributions. Banks and financial institutions will need to invest in MFA, API standards, and new KYC infrastructure, while adhering to tighter fee and interest norms. Pension fund managers will have to adjust portfolio allocations to meet the revised contribution and benefit frameworks. E‑commerce platforms and capital‑goods vendors will need to adapt to the new ITC and reporting requirements. Overall, the regulatory shift signals a move towards greater digital integration, stronger consumer safeguards, and a more robust, transparent financial ecosystem.

The information above reflects the contents of the Business Today article dated 31 October 2025, and incorporates details from the associated regulatory circulars and notifications linked within the article.