RBI to Introduce LEI for Large-Value Transactions in RTGS/NEFT from April, 2021
Reserve Bank of India (RBI) announced the introduction of Legal Entity Identifier (LEI) for all payment transactions of Rs 50 crore and above undertaken by entities through Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT). The directions for the same have been issued by RBI under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007).
RBI announces Operationalization of Payments Infrastructure Development Fund (PIDF) Scheme
Reserve Bank of India (RBI) announced Operationalization of the Payments Infrastructure Development Fund (PIDF) Scheme with an initial corpus of INR 345 Crores for three years starting from January 1, 2021 & may be extended for two more years depending upon the progress. An Advisory Council (AC) under the chairmanship of RBI Deputy Governor BP Kanungo will be responsible for managing the functioning of PIDF.
RBI cancels Licence of Vasantdada Nagari Sahakari Bank, Osmanabad (Maharashtra)
Reserve Bank of India (RBI) cancelled the licence of Osmanabad (Maharashtra)-based Vasantdada Nagari Sahakari Bank Ltd.to carry on banking business with immediate effect under Section 22(1) read with Section 56 of Banking Regulation (BR) Act, 1949. The banking business includes acceptance of deposits and repayment of deposits as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949
Small Finance Banks’ Assets Grew 150% Annually between FY18-FY20 & NPA ratio Moderate:RBI
In accordance with an article ‘Small Finance Banks: Balancing Financial Inclusion and Viability’ published in Reserve Bank of India’s (RBI) monthly bulletin on January 21, 2021, the assets of Small Finance Banks (SFBs) between financial years (FY) 2017-18 and 2019-20 have grown 150% annually. Their share in total assets of the financial sector stood at 0.4% in March 2019. The article prepared by Richa Saraf and Pallavi Chavan from the RBI’s Department of Supervision provided an overview of SFB’s business between FY 2017-18 and 2019-20.
• The bad loan ratio or NPA ratio is low among the freshers of India’s financial system. Notably their NPA remained moderate inception, which states a healthy asset quality.
RBI proposes 4 Layered Bank-Like Norms for NBFCs
Reserve Bank of India (RBI) released a Discussion Paper on “Revised Regulatory Framework for NBFCs- A Scale-Based Approach” on the lines of the announcement made in the Statement on Developmental and Regulatory Policies on December 4, 2020. It envisages a four-layered regulatory and supervisory framework for NBFCs namely Base Layer (BL), Middle Layer (ML), Upper Layer (UL) and a possible Top Layer (TL).
RBI issues Framework for Strengthening Grievance Redress Mechanism in Banks
Reserve Bank of India (RBI) announced a comprehensive framework to strengthen the grievance redress mechanism in banks and also to provide greater insight into the volume and nature of complaints received by the banks. The grievance redressed process through Offices of Banking Ombudsman (OBOs) will continue to remain free for the banks and customers under BO Scheme, 2006 (BOS). This newly introduced framework is on the lines of ‘Statement on Developmental and Regulatory Policies’ issued as part of the Monetary Policy statement on December 4, 2020.
PNB Collaborates with IIT Kanpur & FIRST to Set up Fintech Innovation Centre at IIT Kanpur Campus
Punjab National Bank (PNB) headquartered at NewDelhi partnered with Indian Institute of Technology (IIT) Kanpur and Foundation for Innovation & Research in Science & Technology (FIRST) to jointly set up ‘Fintech Innovation Centre (FIC)’, the Punjab National Bank – IIT Kanpur Innovation Centre at the IIT Kanpur campus. Under this partnership, PNB and IIT Kanpur will set up a FIC to do research and
SBI, ICICI Bank, HDFC Bank remains in the 2020 list of D-SIBs
Reserve Bank of India (RBI) released the 2020 list of Domestic Systemically Important Banks (D-SIBs) under five buckets on the basis of data collected from banks as on March 31, 2020. As per the list SBI, ICICI, and HDFC continue to be D-SIBs or institutions which are ‘too big to fail (TBTF)’. ICICI Bank and HDFC Bank are in bucket one while SBI is in bucket three. The assets of the bank exceeding 2% of GDP (Gross Domestic Product) are considered part of D-SIBs.
Govt of India Increased Authorized Share Capital of Punjab & Sind Bank From Rs 3,000 Crore to Rs 10,000 Crore
Government of India has increased the authorised share capital of Punjab & Sind bank to Rs 10,000 crore from Rs 3,000 crore.The government in 2020 had approved to infuse Rs 5,500 crore capital into the bank by preferential allotment of shares. The fund was approved from Rs 20,000 crore cleared by the Parliament in September 2020 to infuse capital in Public Sector Banks (PSBs) as part of the 1st batch of Supplementary Demands for Grants for 2020-21.
India Post Payments Bank Collaborated with FSS to Promote Financial Inclusion
India Post Payments Bank (IPPB) headquartered at New Delhi, Delhi has collaborated with the leading payment processor and provider of integrated payment products, Financial Software and Systems (FSS) to promote Financial Inclusion in underserved and unbanked segments of India. To attain this purpose, IPPB will use FSS’ Aadhaar Enabled Payment System(AePS). The objective of this collaboration to provide doorstep delivery of banking service to customers in India.
RBI Appointed External Professional IT Firm to Audit HDFC Bank’s IT Infrastructure
Reserve Bank of India has appointed an external professional IT firm to carry out a special audit of the entire IT infrastructure of HDFC bank under Section 30 (1-B) of the Banking Regulation Act, 1949. The audit will be conducted at the cost of the bank under Section 30 (1-C) of the Banking Regulation Act, 1949. The name of the IT firm was not disclosed.
RBI Issued Risk-Based Internal Audit (RBIA) Guidelines for Select NBFCs & UCBs
Reserve Bank of India (RBI) issued guidelines on Risk-Based Internal Audit (RBIA) for selected Non-Banking Financial Companies (NBFCs) and Primary (Urban) Co-operative Banks (UCBs). The mentioned entities have to implement the RBIA framework by March 31, 2022. The guidelines also specified that these entities may also set up a committee of senior executives to formulate a suitable action plan.RBIA is an audit methodology that links with an organisation’s overall risk management framework.
RBI permits Residents to Make Remittances to IFSCs under LRS
RBI permitted resident individuals to make remittances under Liberalised Remittance Scheme (LRS) to International Financial Services Centres (IFSCs) set up in India under the Special Economic Zone Act, 2005. In this regard, Authorized Dealer Category Banks allow resident individuals to make these remittances subject to the following conditions:The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India. Any funds lying idle in the account for a period upto 15 days will be immediately repatriated to domestic INR account of the investor in India.
RBI issues Master Directions for Housing Finance Companies
On February 17, 2021, the Reserve Bank of India (RBI) has issued “Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021” in exercise of the powers conferred under sections 45L and 45MA of the Reserve Bank of India Act, 1934 and Sections 30, 30A, 32 and 33 of the National Housing Bank Act, 1987. These directions are come into force with immediate effect. These are applicable to every Housing Finance Company (HFC) registered under Section 29 A of the NHB Act, 1987
SEBI Releases New Norms of SEBI (Mutual Funds) (Amendment) Regulations, 2021
Securities and Exchange Board of India (SEBI) has released new norms of Securities and Exchange Board of India (Mutual Funds) ( Amendment) Regulations, 2021. This regulation came into force by amending, Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. SEBI has amended the regulation in exercise of its powers conferred by section 30 read with clause (c) of sub-section (2) of section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992).
Google Partners with EIF, Inter-American Development Bank & Kiva to Invest $75 million in COVID-19 Hit Small Businesses
Google has partnered with European Investment Fund (EIF), Inter-American Development Bank(IDB) and Kiva, an organisation that crowdfunds loans to unlock capital for the underserved around the world to invest $75 million(about Rs. 545 crore) to small and medium-sized companies outside U.S who are suffering from the impact of COVID-19.
The funds are part of $800 million (about Rs. 5,820 crores)commitment announced by Google in March 2020 to support small businesses in response to COVID-19 pandemic.
RBI removed LIC – Owned IDBI Bank from its PCA Framework after 4 Years
On March 10, 2021, The Reserve Bank of India (RBI) removed LIC – owned Industrial Development Bank of India (IDBI) from its enhanced regulatory supervision, the Prompt Corrective Action (PCA) framework, after almost 4 years, on improved financial performance and credit profile. RBI has decided to conduct a review on IDBI Bank by the Board for Financial Supervision(BFS) on February 18, 2021.
RBI issued Guidelines on Merger/Amalgamation for Urban Cooperative Banks
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n March 23, 2021, the Reserve Bank of India(RBI) issued RBI (Amalgamation of Urban Cooperative Banks) Directions, 2020, guidelines for merger/amalgamation to all Primary/Urban Co-operative Banks(UCBs) to place them in the public domain.It aims to provide an avenue for the non-disruptive weak UCB sector by consolidating them with the strong one in that sector.
SEBI cancels Sahara India Financial Corp’s registration as sub-broker
On March 3, 2021,According to a designated authority’s report, Securities and Exchange Board of India(SEBI) cancelled the certificate of registration of Sahara India Financial Corporation Ltd as a sub-broker citing its failure to fulfill the “fit and proper” criteria in terms of Intermediaries Regulations. Subrata Roy is a substantial shareholder in the company. In 2018, a designated authority was appointed by SEBI to enquire whether Sahara India Financial violated provisions of Intermediaries Regulations.
SEBI Amended the Valuation Norms on Perpetual Bonds
On March 22, 2021, the Securities and Exchange Board of India (SEBI) headquartered at Mumbai, Maharashtra amended the valuation rule of Perpetual Bonds (Additional Tier-1(AT-1) and Tier-2 Bonds), under the intervention of the Finance Ministry, to modify its recent framework on Perpetual Bonds. As per the amendments, the deemed residual maturity of Basel III additional tier-1(AT-1) bonds are to be 10 years until March 31, 2022, and would be increased to 20 and 30 years over the subsequent six-month period.
RBI Tightened the Security Norms for Payment companies
Following the rise in cyber-security breaches at Indian tech startups over the last few months, the Reserve Bank of India (RBI) has tightened its supervision norms over Payment companies that are storing customer data.As per RBI’s norms, from April 1, 2021, all licensed payment system operators (PSOs) have to submit detailed “compliance certificates” to the RBI twice a year.
RBI Restricted American Express, Diners Club from Enrolling New customers
Reserve Bank of India (RBI) has restricted American Express Banking Corp and Diners Club International Ltd, the payment system operators from on-boarding new domestic customers onto their card networks from May 1, 2021, due to the non-compliance with the directions on Storage of Payment System Data. American Express and Diners Club are authorized to operate card networks in India under the Payment and Settlement Systems Act, 2007 (PSS Act).