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AKP Banking & Finance Digest- April 10, 2023

Updated: Apr 14, 2023

Weekly Round-up | Updates


1. INDIA



1.1.1. Master Circular on Credit Facilities to Minority Communities - Reserve Bank of India (RBI) has periodically issued guidelines/instructions/directives to banks with regard to providing credit facilities to Minority Communities. The said master circular consolidates the circulars issued by RBI on the subject to date.[1]


1.1.2. Master Circular - Credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs) - Reserve Bank of India has, from time to time, issued a number of guidelines/instructions to banks on credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs). The said master circular consolidates the circulars issued by RBI on the subject to date.[2]


1.1.3. Master Circular - Guarantees, Co-Acceptances & Letters of Credit UCBs - Please refer to our master circular DoR.STR.REC.9/09.27.000/2022-23 dated April 1, 2022, on the captioned subject. This master circular consolidates the circulars issued by RBI on the subject to date.[3]


1.1.4. Master Circular on SHG-Bank Linkage Programme - Reserve Bank of India has, from time to time, issued a number of guidelines/instructions to banks on SHG-Bank Linkage Programme. In order to enable banks to have instructions in one place, the master circular incorporating the existing guidelines/ instructions on the subject has been updated and enclosed.[4]


1.1.5. Master Circular - Guarantees and Co-acceptances - Please refer to the master circular DOR.STR.REC.8/13.07.010/2022-23 dated April 1, 2022, consolidating the instructions/guidelines issued to banks till March 31, 2022, relating to Guarantees and Co-acceptances.[5]


1.1.6. Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Please refer to the master circular DOR.STR.REC.4/21.04.048/2022-23 dated April 1, 2022, consolidating instructions/guidelines issued to banks till March 31, 2022, on matters relating to prudential norms on income recognition, asset classification and provisioning pertaining to advances.[6]


1.1.7. Master Direction – Reserve Bank of India (Classification, Valuation and Operation of Investment Portfolio of Primary (Urban) Co-operative Banks) Directions, 2023 - Reserve Bank of India has, from time to time, issued several guidelines/instructions/directives to the banks on Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Primary (Urban) Co-operative Banks (UCBs). To enable UCBs to have current instructions in one place, a Master Direction incorporating all the existing guidelines/instructions/directives on the subject has been prepared for the reference of the banks.[7]


1.1.8. Master Circular on Conduct of Government Business by Agency Banks - Payment of Agency Commission - Please refer to our master circular RBI/2022-23/08, CO.DGBA.GBD.No.S-1/31.12.010/2022-23 dated April 1, 2022, on the above subject. We have now revised and updated the master circular which consolidates important instructions on the subject issued by the Reserve Bank of India till March 31, 2023.[8]


1.1.9. Master Circular – Housing Finance - Please refer to the master circular DOR.CRE.REC.No.06/08.12.001/2022-23 dated April 01, 2022, consolidating the instructions/guidelines issued to banks till March 31, 2022. relating to Housing Finance. This master circular consolidates instructions on the above matter issued up to March 31, 2023.[9]


1.1.10. Master Circular - Bank Finance to Non-Banking Financial Companies (NBFCs) - Please refer to our master circular DOR.CRE.REC.No.07/21.04.172/2022-23 dated April 01, 2022, on the captioned subject. This master circular consolidates instructions on the above matter issued up to March 31, 2023.[10]


1.1.11. Master Circular - Disbursement of Government Pension by Agency Banks - Please refer to our master circular RBI/2022-23/09 dated April 01, 2022, on the above subject. We have revised and updated the master circular which consolidates important instructions on the subject issued by the Reserve Bank of India till March 31, 2023.[11]


1.1.12. Master Circular - Asset Reconstruction Companies - In order to have all current instructions/ guidelines on the subject in one place, the Reserve Bank of India issues updated circulars/ guidelines. The instructions contained in the Asset Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003 (vide Notification No. DNBS.2/CGM(CSM)-2003, dated April 23, 2003) together with Guidance Notes updated as on March 31, 2023, are enumerated in this.[12]


1.1.13. Master Circular – Lead Bank Scheme - Reserve Bank of India has issued a number of guidelines/ instructions on the Lead Bank Scheme from time to time. This master circular consolidates the relevant guidelines/ instructions issued by the Reserve Bank of India on the Lead Bank Scheme up to March 31, 2023.[13]


1.1.14. Master Direction – Facility for Exchange of Notes and Coins - In exercise of the powers conferred under Section 35A of the Banking Regulation Act, 1949, read with sections 28, 38, 39, 58(1) and 58(2)(q) of the Reserve Bank of India Act, 1934, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby, issues the Directions hereinafter specified.[14]


1.1.15. Master Direction on Counterfeit Notes, 2023 - Detection, Reporting and Monitoring - RBI has, from time to time, issued several guidelines/ instructions/ directives to the banks on counterfeit notes. A master direction incorporating and updating the extant guidelines /instructions/ directives on the subject has been prepared to enable banks to have all current instructions on the counterfeit note in one place for reference.[15]


1.1.16. Master Direction on Penal Provisions in Reporting of Transactions/Balances at Currency Chests - In terms of the Preamble to and Section 45 of the RBI Act, 1934 and Section 35 A of the Banking Regulation Act, 1949, Reserve Bank of India issues guidelines/instructions for realising the objectives of Clean Note Policy as part of currency management. With a view to sustaining these efforts and ensuring timely and accurate reporting of currency chest transactions, instructions on the subject have been issued from time to time.[16]


1.1.17. Master Direction on Framework of Incentives for Currency Distribution & Exchange Scheme for bank branches including currency chests based on performance in rendering customer service to the members of the public - In terms of the Preamble to and Section 45 of the RBI Act, 1934 and Section 35 A of the Banking Regulation Act, 1949; Reserve Bank of India issues guidelines/instructions for realising the objectives of Clean Note Policy as part of currency management. With a view to furthering these objectives, the Bank has formulated a framework of incentives titled Currency Distribution and Exchange Scheme (CDES) to encourage all the bank branches to provide better customer services to the members of the public.[17]


The attention of Full Fledged Money Changers (FFMCs) and non-bank Authorised Dealers (AD) Category-II is invited to A.P. (DIR Series) Circular No. 25 dated March 6, 2006, containing instructions for AD - Category II licence/reporting, the Master Direction on Money Changing Activities dated January 01, 2016 (updated from time to time) containing guidelines on issuance and renewal of FFMC licence and on money changing activities as well as the Master Direction on Money Transfer Service Scheme (MTSS) dated February 22, 2017 (updated from time to time) containing guidelines for Indian Agents under MTSS.

A software application called ‘APConnect’ has been developed for the processing of applications for licencing of FFMC, non-bank AD Cat-II, authorisation as MTSS Agent, renewal of existing licence/authorisation, for seeking approval as per the extant instructions and for submission of various statements/returns by FFMCs and non-bank AD Cat II. The application can be accessed at ‘https://apconnect.rbi.org.in/entity’.[18]


RBI has appointed Shri Neeraj Nigam as Executive Director (ED) with effect from April 03, 2023. Prior to being promoted to ED, Shri Neeraj Nigam was heading the Bhopal Regional Office of the Bank as Regional Director. Shri Nigam has, over a span of more than three decades, served in Regulation and Supervision, Human Resource Management, Premises, Currency Management, Bank Accounts and other areas in the Reserve Bank, in its Central Office as well as Regional Offices.[19]


RBI has imposed, by an order dated March 29, 2023, a monetary penalty of ₹4.00 lakh (Rupees Four Lakh only) on Shree Chhani Nagarik Sahakari Bank Limited, Vadodara (Gujarat) (the bank) for contravention of directions issued by RBI on ‘Board of Directors of Urban Co-operative Banks - Professionalisation and their role - Do's and Don'ts’, ‘Prudential Norms Income Recognition, Asset Classification, Provisioning and Other Related Matters’, ‘Loans and advances to directors etc.- directors as surety/guarantors- Clarification’, ‘Frauds in UCBs: Changes in Monitoring and Reporting mechanism’ and ‘Master Direction - Know Your Customer (KYC) Direction, 2016’.[20]


RBI has, by an order dated March 29, 2023, imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on the Jamnagar People’s Co-operative Bank Ltd., Jamnagar (Gujarat) (the bank) for contravention of directions issued by RBI on ‘Income Recognition, Asset Classification and Provisioning Norms for Loans and Advances’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’.[21]


The rate of interest on the Government of India Floating Rate Bond 2028 (GOI FRB 2028) applicable for the half year April 04, 2023, to October 03, 2023, shall be 7.88 per cent per annum. It may be recalled that FRB 2028 carries a coupon, which has a base rate equivalent to the average of the Weighted Average Yield (WAY) of the last three auctions (from the rate fixing day i.e., April 04, 2023) of 182 Day T-Bills, plus a fixed spread (0.64 per cent).[22]


RBI has today released the data on External Commercial Borrowings (ECB), Foreign Currency Convertible Bonds (FCCB) and Rupee Denominated Bonds (RDB) both, through Automatic Route and Approval Route, for the month of February 2023.[23]


RBI’s Governor issued a statement for the year 2023. RBI’s Governor issued a statement for the year 2023 shedding light on the improving supply conditions, resilient economic conditions and optimistic financial markets with central banks steering their economies towards a soft landing. The Governor mentioned the US Federal Reserve landscape including what we are witnessing with respect to the geopolitical landscape in the present world. The key points of discussion in the statement were the following:

- Decisions and Deliberations of the Monetary Policy Committee (MPC)

- Assessment of Growth and Inflation

- Financial Stability

- Liquidity and Financial Market Conditions

- External Sectors Influencing the Indian Economy

- Additional Measures that India shall adopt

- Developing an Onshore Non-deliverable Derivative Market

- Enhancing Efficiency of Regulatory Processes

- Development of a Centralised Web Portal for the Public to Search Unclaimed Deposits

-Grievance Redress Mechanism relating to Credit Information Reporting by Credit Institutions and Credit information provided by Credit Information Companies

-Operation of Pre-Sanctioned Credit Lines at Banks through the UPI[24]


RBI issued a statement which sets out various developmental and regulatory policy measures relating to (i) Financial Markets; (ii) Regulation and Supervision; and (iii) Payment and Settlement Systems.[25]


RBI has, by an order dated April 06, 2023, imposed a monetary penalty of ₹10.50 lakh (Rupees Ten lakh fifty thousand only) on Muthoot Money Limited, Ernakulam, Kerala (the company) for non-compliance with certain provisions of the ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016’.[26]


RBI has, by an order dated April 06, 2023, imposed a monetary penalty of ₹55 lakh (Rupees Fifty Five lakh only) on Indian Bank (the bank) for non-compliance with certain provisions of the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’.[27]


RBI has, by an order dated April 5, 2023, imposed a monetary penalty of ₹6.77 crores (Rupees Six crore seventy seven lakh only) on Mahindra & Mahindra Financial Services Limited, Mumbai (the company) for non-compliance with the "Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016” issued by RBI.[28]


RBI, vide directive DEL.DOS.EXG_SSM No. S515/12-10-013/2022-23 dated July 07, 2022., had placed Ramgarhia Co-operative Bank Ltd, New Delhi – under Directions from the close of business on July 08, 2022, for a period of six months up to January 08, 2023, the validity of which was extended up to April 08, 2023, vide directive DOR.MON.D-54/12.28.115/2022-23 dated January 06, 2023.[29]


RBI, vide directive CO.DOS.DSD.No.S2322/12-07-005/2022-23 dated July 07, 2022., had placed Sangli Sahakari Bank Limited, Mumbai, Maharashtra under Directions from the close of business on July 08, 2022, for a period of six months.[30]


RBI, vide directive CO.DOS.DSD.No.S2323/12-07-005/2022-23 dated July 07, 2022., had placed Sahebrao Deshmukh Co-operative Bank Limited, Mumbai, Maharashtra under Directions from the close of business on July 08, 2022, for a period of six months.[31]


RBI issued directions to Shushruti Souharda Sahakara Bank Niyamita, Bengaluru under Section 35A read with Section 56 of the Banking Regulation Act, 1949 vide Directive CO.DOS.DSD.No.S98/10-01-23/2022-23 dated April 07, 2022, which were extended from time to time, last being up to April 07, 2023, vide Directive DOR.MON/D-55/10.01.023/2022-23 dated January 06, 2023.[32]


2. Bangladesh


In accordance with Bangladesh Payment and Settlement Systems Regulations 2014 issued under Section 7(a) € of the Bangladesh Bank Order, 1972, issued by Bangladesh Bank to “Digital Payments Ltd”, PSD/ADC&L Licensed as a Payment Service Provider (PSP) under the brand name “Pathao Pay” within the country subject to the conditions stated in the Letter No 2023-907.[33]


3. Sri Lanka


Further to the T-bill auction held on 04 April 2023, Rs. 18,367 million was raised at phase II, from the Treasury bills bearing the International Securities Identification Numbers (ISINs) LKA09123G071 and LKA18223J064 at the Weighted Average Yield Rates of 24.12% and 24.10% respectively, determined at the auction. The date of settlement is April 10th, 2023.[34]

[1] Notification: RBI/2023-24/02, April 01, 2023, Reserve Bank of India [2] Notification: RBI/2023-24/01, April 01, 2023, Reserve Bank of India [3] Notification: RBI/2023-24/05, April 01, 2023, Reserve Bank of India [4] Notification: RBI/2023-24/03, April 01, 2023, Reserve Bank of India [5] Notification: RBI/2023-24/04, April 01, 2023, Reserve Bank of India [6] Notification: RBI/2023-24/06, April 01, 2023, Reserve Bank of India [7] Notification: RBI/2023-24/96, April 01, 2023, Reserve Bank of India [8] Notification: RBI/2023-24/07, April 01, 2023, Reserve Bank of India [9] Notification: RBI/2023-24/08, April 03, 2023, Reserve Bank of India [10] Notification: RBI/2023-24/09, April 03, 2023, Reserve Bank of India [11] Notification: RBI/2023-24/10, April 03, 2023, Reserve Bank of India [12] Notification: RBI/2023-24/12, April 03, 2023, Reserve Bank of India [13] Notification: RBI/2023-24/11, April 03, 2023, Reserve Bank of India [14] Notification: RBI/2023-24/97, April 03, 2023, Reserve Bank of India [15] Notification: RBI/2023-24/98, April 03, 2023, Reserve Bank of India [16] Notification: RBI/2023-24/101, April 03, 2023, Reserve Bank of India [17] Notification: RBI/2023-24/99, April 03, 2023, Reserve Bank of India [18] Notification: RBI/2023-24/13, April 06, 2023, Reserve Bank of India [19] Press Release: 2023-2024/2, April 03, 2023, Reserve Bank of India [20] Press Release: 2023-2024/4, April 03, 2023, Reserve Bank of India [21] Press Release: 2023-2024/5, April 03, 2023, Reserve Bank of India [22] Press Release: 2023-2024/6, April 03, 2023, Reserve Bank of India [23] Press Release: 2023-2024/8, April 03, 2023, Reserve Bank of India [24] Press Release: 2023-2024/21, April 06, 2023, Reserve Bank of India [25] Press Release: 2023-2024/23, April 06, 2023, Reserve Bank of India [26] Press Release: 2023-2024/29, April 06, 2023, Reserve Bank of India [27] Press Release: 2023-2024/30, April 06, 2023, Reserve Bank of India [28] Press Release: 2023-2024/31, April 06, 2023, Reserve Bank of India [29] Press Release: 2023-2024/32, April 06, 2023, Reserve Bank of India [30] Press Release: 2023-2024/35, April 06, 2023, Reserve Bank of India [31] Press Release: 2023-2024/36, April 06, 2023, Reserve Bank of India [32] Press Release: 2023-2024/38, April 08, 2023, Reserve Bank of India [33] PSD Circular No. 02; April 02, 2023, Bangladesh Bank [34] Public Debt Department, April 06, 2023, Central Bank of Sri Lanka


Disclaimer The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.


* Image credits: RBI


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