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RBI cautions Public

 

Reserve Bank of India has cautioned the public not to fall prey to fictitious offers of buying/ selling of Old Banknotes and Coins.

In a press release issued today RBI has said, "It has come to the notice of Reserve Bank of India that certain elements are fraudulently using the name/ logo of Reserve Bank of India, and seeking charges/ commission/ tax from the public, in transactions related to buying and selling of old banknotes and coins through various online/ offline platforms."

"It is clarified that the Reserve Bank of India does not deal in such matters and never seeks charges/ commissions of any sort. Reserve Bank of India has also not authorised any institution/ firm/ person etc. to collect charges/ commission on its behalf in such transactions."

"Reserve Bank of India advises members of the public to remain cautious and not to fall prey to elements using the name of Reserve Bank of India to extract money through such fictitious/ fraudulent offers."

#RBI
04-August-2021
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RBI imposes restrictions on Mastercard

 

The Reserve Bank of India (RBI) today imposed restrictions on Mastercard Asia / Pacific Pte. Ltd. (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from 22nd July 2021.

Notwithstanding the lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data.

This order will not impact existing customers of Mastercard. Mastercard shall advise all card issuing banks and non-banks to conform to these directions. The supervisory action has been taken in the exercise of powers vested in RBI under Section 17 of the Payment and Settlement Systems Act, 2007 (PSS Act).

In terms of RBI circular on Storage of Payment System Data dated April 6, 2018, all System Providers were directed to ensure that within a period of six months the entire data (full end-to-end transaction details / information collected / carried / processed as part of the message / payment instruction) relating to payment systems operated by them is stored in a system only in India. They were also required to report compliance to RBI and submit a Board-approved System Audit Report conducted by a CERT-In empanelled auditor within the timelines specified therein.

#RBI
14-July-2021
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Mandatory Leave for Bank Employees Posted in Sensitive Positions or Areas of Operation

 

The Reserve Bank of India has asked banks to put in place a 'mandatory leave' policy wherein the employees posted in sensitive positions or areas of operation shall be compulsorily sent on leave for a few days (not less than 10 working days) in a single spell every year, without giving any prior intimation to these employees, thereby maintaining an element of surprise.

It has also asked the banks to ensure that the employees, while on 'mandatory leave', do not have access to any physical or virtual resources related to their work responsibilities, with the exception of internal/ corporate email which is usually available to all employees for general purposes.

Banks shall, as per a Board-approved policy, prepare a list of sensitive positions to be covered under 'mandatory leave' requirements and the list shall be reviewed periodically. Implementation of this policy shall be reviewed under the supervisory process.

The revised instructions shall be applicable to all the banks and they shall comply with these instructions within six months from the date of issue of this circular.

#RBI
10-July-2021
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Reserve Bank of India imposes monetary penalty on 14 Banks


The Reserve Bank of India (RBI) has imposed monetary penalty on fourteen banks for non-compliance with certain provisions of directions issued by RBI on 'Lending to Non-Banking Financial Companies (NBFCs)', 'Bank Finance to Non-Banking Financial Companies (NBFCs)', 'Loans and Advances – Statutory and Other Restrictions', 'Creation of a Central Repository of Large Common Exposures – Across Banks'.

The penalties have been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and 51 (1), of the Banking Regulation Act, 1949, as applicable. This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

Background

A scrutiny in the accounts of the companies of a Group was carried out by RBI and it was observed that the banks had failed to comply with provisions of one or more of the aforesaid directions issued by RBI and/or contravened provisions of the Banking Regulation Act, 1949. In furtherance to the same, Notices were issued to the banks advising them to show cause as to why penalty should not be imposed for non-compliance with the directions/contraventions of provisions of Banking Regulation Act, 1949. The replies received from the banks, oral submissions made in the personal hearings, wherever sought by the banks, and examination of additional submissions, where made, were duly considered, and to the extent the charges of non-compliance with RBI directions/contraventions of provisions of Banking Regulation Act, 1949 were sustained, RBI concluded that it warranted imposition of monetary penalty on aforementioned fourteen banks.

The list of the fourteen banks is as given above.

#RBI
08-July-2021
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RBI gives out India's External Debt details as at end of March 2021

 

RBI has given out major developments relating to India's external debt as of end-March 2021.

Highlights:-

  1. At end-March 2021, India's external debt was placed at USD 570.0 billion, recording an increase of USD 11.5 billion over its level at end-March 2020.
  2. The external debt to GDP ratio increased to 21.1 per cent at the end-March 2021 from 20.6 per cent at end-March 2020.
  3. Valuation loss due to the depreciation of the US dollar vis-à-vis Indian rupee and major currencies such as euro, SDR2 and pound sterling was placed at USD 6.8 billion. Excluding the valuation effect, the increase in external debt would have been USD 4.7 billion instead of USD 11.5 billion at end-March 2021 over end-March 2020.
  4. Commercial borrowings remained the largest component of external debt, with a share of 37.4 per cent, followed by non-resident deposits (24.9 per cent) and short-term trade credit (17.1 per cent).
  5. At end-March 2021, long-term debt (with original maturity of above one year) was placed at USD 468.9 billion, recording an increase of USD 17.3 billion over its level at end-March 2020.
  6. The share of short-term debt (with original maturity of up to one year) in total external debt declined to 17.7 per cent at end-March 2021 from 19.1 per cent at end-March 2020; the ratio of short-term debt (original maturity) to foreign exchange reserves declined to 17.5 per cent at end-March 2021 (22.4 per cent at end-March 2020).
  7. Short-term debt on residual maturity basis (i.e., debt obligations that include long-term debt by original maturity falling due over the next twelve months and short-term debt by original maturity) constituted 44.6 per cent of total external debt at end-March 2021 (42.4 per cent at end-March 2020) and stood at 44.1 per cent of foreign exchange reserves (49.6 per cent at end-March 2020).
  8. US dollar denominated debt remained the largest component of India's external debt, with a share of 52.1 per cent at end-March 2021, followed by the Indian rupee (33.3 per cent), yen (5.8 per cent), SDR (4.4 per cent) and the euro (3.5 per cent).
  9. The borrower-wise classification reflects that the outstanding debt of both government and non-government sectors increased at end-March 2021.
  10. The share of outstanding debt of non-financial corporations in total external debt was the highest at 40.4 per cent, followed by deposit-taking corporations (except the central bank) (28.2 per cent), general government (18.8 per cent) and other financial corporations (8.1 per cent).
  11. The instrument-wise classification reflects that the loans were the largest component of external debt, with a share of 34.8 per cent, followed by currency and deposits (25.2 per cent), trade credit and advances (17.6 per cent) and debt securities (17.0 per cent).
  12. Debt service (principal repayments plus interest payments) increased to 8.2 per cent of current receipts at end-March 2021 as compared with 6.5 per cent at end-March 2020, reflecting higher repayments and lower current receipts.

#RBI
01-July-2021
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Chief Risk Officer to be appointed in Primary Urban Cooperative Banks

 

With the aim of putting in place, an appropriate risk management mechanism commensurate with the business profile and strategic objectives, the Reserve Bank of India has decided that all UCBs having an asset size of Rs 5,000 crore or above, shall appoint a Chief Risk Officer (CRO).

The RBI has also decided that the board must clearly define the CRO's role and responsibilities and ensure that he/she functions independently.

The UCBs shall strictly adhere to the following instructions in this regard:

  1. The CRO shall be a senior official in the bank's hierarchy and shall have adequate professional qualification / experience in the area of risk management.

  2. The CRO shall be appointed for a fixed tenure with the approval of the Board. The CRO can be transferred / removed from the post before completion of the tenure only with the approval of the Board and such premature transfer / removal shall be reported to the concerned Regional Office of Department of Supervision, Reserve Bank of India.

  3. The Board shall put in place adequate policies to safeguard the independence of the CRO. The CRO shall have direct reporting lines to MD/CEO or Board or Risk Management Committee of Board (RMC). In case the CRO reports to the MD/CEO, the Board or the RMC shall meet the CRO, without the presence of the MD and CEO, at least on a quarterly basis.

  4. The CRO shall not have any reporting relationship with the business verticals and shall not be given any business targets. Further, there shall not be any 'dual hatting' i.e. the CRO shall not be given any other responsibility such as CEO, COO, CFO, Chief of the Internal Audit, etc.

  5. In UCBs that follow committee approach in the credit sanction process for high-value proposals, if the CRO is one of the decision-makers in the credit sanction process, he shall have voting power and all members who are part of the credit sanction process, shall individually and severally be liable for all the aspects, including risk perspective related to the credit proposal. If the CRO is not a part of the credit sanction process, his role will be limited to that of an adviser.

  6. In UCBs which do not follow the committee approach for sanction of high-value credits, the CRO can only be an adviser in the sanction process and shall not have any sanctioning power.

  7. All credit products shall be vetted by the CRO from the angle of inherent and control risks.

The CRO shall support the Board in establishing an integrated risk management system, capable of identifying, measuring and monitoring all types of risks on an ongoing basis. This will include developing the organisational risk appetite and a framework that will translate the Board’s strategy into clearly laid down monitorable risk limits at the aggregate and at granular levels. The CRO shall also be involved in actual monitoring and mitigation of risks.

It is emphasized that the primary responsibility of risk management lies with the Board. In order to focus the required level of attention on various aspects of risk management, UCBs meeting the eligibility criteria specified in para 1 above are advised to set up a Risk Management Committee (of the Board) by March 31, 2022. The Board shall decide the membership, scope of work and frequency of meeting of the Risk Management Committee.

UCBs meeting the prescribed criteria as on March 31, 2021 shall appoint / designate a CRO by March 31, 2022. UCBs which may fulfill the criteria at the end of the current or subsequent financial years shall appoint / designate a CRO within a period of six months from the end of the financial year concerned.

A copy of this circular should be placed before the Board of Directors of the bank at its next meeting.

#RBI
26-June-2021
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RBI imposes monetary penalties on three banks

 

The Reserve Bank of India has imposed monetary penalties on three banks for contravention of certain directions issued by the RBI.

The penalties have been imposed on The Ajara Urban Co-operative Bank Ltd. in Kolhapur, Excellent Co-operative Bank Ltd. in Mumbai and Janseva Sahakari Bank Limited in Pune.

The details are as below:-

The Ajara Urban Co-operative Bank Ltd:-

The RBI has imposed a monetary penalty of Rs 2 lakh (Rupees Two lakh only) on The Ajara Urban Co-operative Bank Ltd., Ajara, Kolhapur (the bank) for contravention of a direction issued by the RBI on 'Maintenance of Deposit Accounts'. This penalty has been imposed in the exercise of powers vested in the RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949. The inspection report of the bank based on its financial position as on March 31, 2019, revealed that the annual review of inoperative accounts had not been done by the bank. 

Excellent Co-operative Bank Ltd:-

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 4 lakh (Rupees Four lakh only) on Excellent Co-operative Bank Ltd., Mumbai (the bank) for contravention of the directions issued by RBI on 'Maintenance of Deposit Accounts' and 'Know Your Customer (KYC)'. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949. The inspection report of the bank based on its financial position as on March 31, 2019, revealed that the bank had (i) no system of periodic updation of KYC information of customers in the bank and (ii) not conducted annual review of inoperative accounts.

Janseva Sahakari Bank Limited:-

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2 lakh (Rupees Two lakh only) on Janseva Sahakari Bank Limited, Pune (the bank) for contravention of the direction issued by RBI on Know Your Customer (KYC). This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949. The inspection report of the bank based on its financial position as on March 31, 2019, revealed that the bank had not introduced system of periodic review of risk categorization of accounts.

#RBI
24-June-2021
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RBI allows mobile prepaid recharges through Bharat Bill Payment System

 

The Reserve Bank of India has decided to permit 'mobile prepaid recharges' as a biller category in Bharat Bill Payment System (BBPS) on a voluntary basis.

This decision will be implemented on or before August 31, 2021.

Bharat Bill Payment System is an integrated bill payment system in India offering interoperable and accessible bill payment service to customers through a network of Agent Institutions, enabling multiple payment modes, and providing instant confirmation of payment.

#RBI
14-June-2021
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Banks allowed to raise charges for ATM withdrawals

 

The Reserve Bank of India had constituted a Committee in June 2019 under the Chairmanship of the Chief Executive, Indian Banks' Association to review the entire gamut of Automated Teller Machine (ATM) charges and fees with a particular focus on interchange structure for ATM transactions.

The recommendations of the Committee have been comprehensively examined and the following decisions have been taken:-

  1. Allow increase in interchange fee per transaction from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres. This shall be effective from August 1, 2021.

  2. Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, the ceiling/cap on customer charges is Rs 20 per transaction. To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022.

  3. Applicable taxes, if any, shall be additionally payable.

  4. These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions).

#RBI
11-June-2021
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RBI clarifies stand on virtual currencies

 

The Reserve Bank of India (RBI) has issued a notification clarifying its stand on virtual currencies.

It is as follows:-

It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 04, 2020 in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.

Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.

#RBI
02-June-2021