• AK & Partners

AKP Banking & Finance Digest- April 18, 2022

Updated: Sep 22

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


1. RBI issues guidelines for establishment of digital banking units

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]


2. RBI operationalizes Standing Deposit facility

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]


3. RBI extends rationalization of risk weight

RBI has extended risk weights on housing loans by one more year until March 31, 2023.[3]


4. RBI extends SLR holdings in HTM category

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]


5. Maintenance of Statutory Liquidity Ratio by banks

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]


6. RBI releases Statement on Developmental and Regulatory Policies

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.

7. RBI cancels CoR of one NBFC

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]


8. RBI issues guidelines on Compliance Function and Role of Chief Compliance Officer

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’.


10. NBFCs surrender certificate of registration to RBI

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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