Read this week in our update, Read this week in our update, guidelines for establishing Digital Banking Units issued by RBI. RBI released guidelines on Compliance Function and Role of Chief Compliance Officer.
Highlights of the Week:
RBI issues guidelines on Compliance Function and Role of Chief Compliance Officer
RBI issues guidelines for establishment of digital banking units
RBI operationalizes Standing Deposit facility
NBFCs surrender certificate of registration to RBI
The Reserve Bank of India (RBI) has issued guidelines on the establishment of digital banking units (DBUs). This comes after the announcement made in Union Budget 2022-23 for setting up 75 DBUs in 75 districts. This initiative was taken to improve the availability of digital infrastructure for banking services. These guidelines are applicable to commercial banks excluding regional rural banks, payments banks and local area banks with immediate effect.[1]
RBI has operationalized the Standing Deposit Facility (SDF) from April 8, 2022. The SDF rate shall be 25 basis points (bps) below the policy repo rate, i.e., at 3.75 percent. Further, SDF shall replace the fixed-rate reverse repo (FRRR) as the floor of the Liquidity adjustment facility (LAF) corridor.[2]
RBI has extended risk weights on housing loans by one more year until March 31, 2023.[3]
RBI has enhanced the limit for inclusion of statutory liquidity ratio (SLR) eligible securities in the held to maturity (HTM) category from 22% of net demand and time liabilities (NDTL) to 23% of NDTL. Further, RBI has allowed banks to include securities acquired between April 1, 2022 and March 31, 2023 under the enhanced limit of 23% NTDL. Beginning with the quarter ending June 30, 2023, the increased HTM limit of 23 percent shall be gradually returned to 19.5 percent.[4]
RBI has announced that the balances held by banks registered with RBI under the Standing Deposit Facility (SDF) shall be an eligible Statutory Liquidity Ratio (SLR) asset and such balances shall form part of “Cash” for SLR maintenance.[5]
RBI has listed the additional measures relating to payment and settlement systems in the Statement on Developmental and Regulatory Policies, which are as follows:[6]
RBI has proposed to enable customer authorization through the use of the Unified Payments Interface (UPI) for the settlement of card-less cash withdrawals through ATMs. This shall help in ease of transaction and help prevent frauds;
RBI has proposed to decrease the net worth requirement of non-bank Bharat Bill Payment Operating Units (BBPOUs) from INR 100 crore to INR 25 crore to encourage the participation of a greater number of non-bank BBPOUs; and
RBI has proposed to issue directions to payment system operators similar to prescribed security controls for digital payment products and services offered by banks and credit card issuing non-banking finance companies.
RBI has cancelled the CoR issued to Karnawati Capital Market Limited (KCML) on March 8, 2022. Henceforth, KCML shall not transact the business of an NBFC.[7]
RBI has issued guidelines on compliance function and role of chief compliance officer (CCO) applicable to NBFCs in middle layer (NBFC-ML) and NBFCs in upper layer. (NBFC-UL).[8]
9. RBI penalizes banks
RBI has imposed monetary penalty on:
Name of the Bank | Penalty Imposed (in INR) | Reason |
IDBI Bank Limited[9]
| 90 lakh (Indian Rupees Ninety Lakhs Only) | Contravention of/non-compliance with directions issued by RBI on ‘Frauds - classification and reporting by commercial banks and select FIs’, ‘Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer’ and ‘Cyber Security Framework in Banks’. |
Axis Bank Limited[10]
| 93 lakh (Indian Rupees Ninety-three Lakh Only) | Contravention of/non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’, ‘Reserve Bank of India (Financial Services provided by Banks) Directions, 2016’, ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’, and ‘Levy of penal charges on non-maintenance of minimum balances in savings bank accounts’. |
RBI has accepted the surrender of the certificate of registration (CoR) of 22 non-banking financial companies (NBFCs). Hence, these companies shall not transact the business of a non-banking financial institution.
Sl. No. | Name of the Company | CoR Issued on | Cancellation Order Date |
1 | Anjali Technology Holdings Private Limited | December 18, 2000 | January 12, 2022 |
2 | Dr. B. R. Ambedkar Development Corporation Limited | September 25, 2007 | January 18, 2022 |
3 | India Debt Management Private Limited | May 25, 2006 | January 20, 2022 |
4 | Swiss Leasing and Finance Private Limited | March 12, 1998 | January 25, 2022 |
5 | Available Finance Limited | February 26, 1998 | January 28, 2022 |
6 | Dipul Sales and Marketing Private Limited | December 17, 2002 | January 28, 2022 |
7 | Redworth Equifin Private Limited | January 1, 2004 | January 31, 2022 |
8 | BNP Paribas India Finance Private Limited (Presently known as BNP Paribas India Consultancy Private Limited) | February 27, 1998 | February 9, 2022 |
9 | Carnex Sales Agencies Pvt Limited | January 29, 2018 | February 17, 2022 |
10 | Deepak Deposit and Advances Limited | February 8, 2012 | February 17, 2022 |
11 | Rashe Finstocks Private Limited | February 5, 2004 | February 17, 2022 |
12 | Raj Kamal Leasing and Investments Pvt Limited | February 20, 2002 | February 22, 2022 |
13 | Prudential Management and Services Pvt Limited | December 1, 2014 | February 25, 2022 |
14 | Sunvest Capital Private Limited | January 16, 2019 | February 25, 2022 |
15 | Allied Portfolios Private Limited | October 10, 2002 | February 28, 2022 |
16 | Acme Credit Pvt Ltd | January 25, 2001 | March 2, 2022 |
17 | NCC Infrastructure Holdings Limited | October 25, 2005 | March 4, 2022 |
18 | Hara Commercials Pvt. Limited | May 16, 2019 | March 10, 2022 |
19 | Mardia Sons Holdings Private Limited (Presently known as GVN Enterprises Private Limited) | March 4, 1998 | March 10, 2022 |
20 | Pluris Global Holding (India) Limited | November 2, 2015 | March 23, 2022 |
21 | Pedder's Investment Holdings Private Limited | October 22, 2003 | March 24, 2022 |
22 | Pedder Johnson Finance Limited (Presently known as Pedder Johnson Properties Private Limited) | February 13, 2002 | March 24, 2022 |
Further, the following housing finance company has surrendered the CoR granted by National Housing Bank (NHB) and shall neither transact the business of a housing finance institution nor of a non-banking financial institution:[11]
Sl. No. | Name of the Company | CoR Issued on | Cancellation Order Date |
1 | Essel Finance Home Loans Limited | October 23, 2016 | January 28, 2022 |
[1] Press Release: 2022-2023/30, Reserve Bank of India, April 7, 2022 [2] Press Release: 2022-2023/41, Reserve Bank of India, April 8, 2022 [3] RBI/2022-23/20DOR.CRE.REC.13/08.12.015/2022-23, Reserve Bank of India, April 8, 2022 [4] RBI/2022-23/21DOR.MRG.REC.14/21.04.141/2022-23, Reserve Bank of India, April 8, 2022 [5] RBI/2022-23/23DOR.RET.REC.15/12.01.001/2022-23, Reserve Bank of India, April 8, 2022 [6] Press Release: 2022-2023/39, Reserve Bank of India, April 8, 2022
[7] Press Release: 2022-2023/62, Reserve Bank of India, April 11, 2022 [8] RBI/2022-23/24Ref.No.DoS.CO.PPG./SEC.01/11.01.005/2022-23, Reserve Bank of India, April 11, 2022
[9] Press Release: 2022-2023/48, Reserve Bank of India, April 8, 2022
[10] Press Release: 2022-2023/47, Reserve Bank of India, April 8, 2022
[11] Press Release: 2022-2023/61, Reserve Bank of India, April 11, 2022
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