1 October Reform Wave: How Banking, NPS, Railways & Digital Payments Will Reshape Markets

Starting 1 October 2025, a set of wide-ranging rule changes will take effect across India’s financial and public systems. These include new norms for cheque clearing, digital payments through Unified Payments Interface (UPI), pension allocations under the National Pension System (NPS), and even how train tickets are booked on Indian Railway Catering and Tourism Corporation (IRCTC). For individuals, this means adjustments in how money is managed, fees are charged, and savings are invested. For the markets, it signals shifts in revenue flows, cost structures, and growth outlooks for banks, fintech companies, pension funds, and railway services.

Key Changes From 1 October 2025

Here are the key reforms that you should be aware of:

• Banking Reform

Effective 4 October 2025, the Reserve Bank of India (RBI) initiated a phased rollout of a continuous cheque clearing system, replacing the legacy batch-based model. Under the new framework, cheques are scanned and processed in real-time during banking hours, reducing settlement time from 2 working days to under 3 hours for most transactions.

This reform is being implemented in two phases:

• Phase 1 (4 October 2025–2 January 2026) covers high-volume urban branches
  
• Phase 2 (from 3 January 2026) will extend to all remaining branches nationwide
  

The RBI estimates that this system will improve liquidity and reduce float costs for both businesses and individuals. However, the transition to continuous cheque clearing necessitates significant investment in technology and infrastructure by banks. While this move promises faster settlement times, banks may encounter initial cost pressures. Additionally, the revised service charges for lockers, debit cards, and ATM withdrawals could impact customer retention and satisfaction.

The RBI has also mandated that all scheduled commercial banks transition to the ‘.bank.in’ domain by 31 October 2025. This move aims to improve cybersecurity and reduce online fraud. The Institute for Development and Research in Banking Technology (IDRBT) is overseeing this transition, with over 80% of the banking business already secured under the new domain.

• NPS Reform

Starting 1 October 2025, the Pension Fund Regulatory and Development Authority (PFRDA) has enabled non-government subscribers to invest across multiple NPS schemes using a single PAN. This includes the option to allocate up to 100% of contributions to equity schemes, a significant shift from the earlier 75% cap.

The reform allows diversification across Tier I and Tier II accounts, with real-time switching permitted between schemes.

As of August 2025, NPS assets under management stood at ₹15 lakh crore, with equity schemes accounting for ₹2.46 lakh crore. This reform is likely to attract a younger demographic seeking higher returns. Consequently, there may be a shift in asset flows from traditional fixed-income instruments to equity-oriented pension products, which could influence market liquidity and investor behaviour.

Also, for central government employees, the deadline to switch from NPS to the Unified Pension Scheme (UPS) has been extended to 30 November 2025, providing additional time for those considering the transition.

• Railways Reform

From 1 October 2025, Indian Railways has implemented Aadhaar-based authentication for booking general tickets online via IRCTC. Only verified users can access the first 15 minutes of ticket availability when booking opens, aimed at curbing misuse by automated bots and agents. This reform applies to over 2.3 crore daily passengers, with IRCTC handling 13 lakh online bookings per day as of August 2025.

The Aadhaar linkage has already reduced duplicate bookings significantly in pilot zones. Additionally, the system now flags suspicious booking patterns in real time, enabling enforcement action against violators under Section 143 of the Railways Act.

• Digital Payments Reform

The National Payments Corporation of India (NPCI) has officially discontinued the UPI ‘collect request’ (pull transaction) feature for peer-to-peer (P2P) payments from 1 October 2025. This decision follows a 17-month review of fraud patterns, during which over ₹ 100 crore in unauthorised transactions were reported via pull requests in FY 2024–25.

The reform mandates push-only transactions for Peer-to-Peer (P2P) transfers, eliminating the risk of phishing-based payment requests. As of September 2025, UPI processed approximately 11.2 billion transactions per month, with P2P accounting for around 62% of the volume. While this reform will improve security, it may lead to a temporary decline in transaction volumes for platforms that previously relied on this feature. To adapt, these platforms will need to innovate and offer alternative services to maintain user engagement.

Additionally, in the interim, the RBI has increased the transaction limit for UPI-based payments to ₹5 lakh per transaction, effective from 1 October 2025.

Conclusion

The 1 October reform wave is set to shape the way stock market investors and traders operate. With faster cheque clearing, businesses will gain quicker access to funds, improving liquidity and supporting banking as well as corporate earnings, even though banks could face some short-term cost pressure. At the same time, the NPS’s move to allow 100% equity allocation is expected to bring more long-term capital into the stock market, deepening liquidity and strengthening valuations, especially in blue-chip and growth-oriented companies.

For traders, this shift may translate into increased market activity and sharper price swings as money flows from fixed-income investments into equities. On the payments front, the UPI changes aim to strengthen transaction security, which should enhance trust in fintech firms. In this environment, investors would do well to closely monitor banking, fintech, and pension fund stocks, while traders can look to benefit from the increased liquidity driving market movements.

Sources

DNA India
The Times of India
CNBC TV18
National Pension System Trust
Mathrubhumi
Indian Express
The Economic Times