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AKP Banking & Finance Digest- April 3, 2023

Weekly Round-up | Updates


1. INDIA


Reserve Bank of India (RBI) through its notification dated March 27th announced that Abu Dhabi Commercial Bank ("ADCB") would cease to be a banking company under the Banking Regulation Act, of 1949. As a result, the ADCB would be unable to conduct banking operations in India. Along with removing ADCB from the Reserve Bank of India Act, 1934, RBI also removed the bank from the Second Schedule. The Second Schedule in the RBI Act lists the banks that are eligible to operate in India and outlines their regulatory requirements. Now that the ADCB is no longer listed in the Second Schedule, it will be unable to conduct banking operations in India.


Earlier, RBI issued a circular titled "Revised Regulatory Framework for Urban Co-operative Banks (UCBs) - Net Worth and Capital Adequacy" on December 1, 2022. As per the December 1st circular, Tier 1 UCBs operating in a single district must have a minimum net worth of Rs. 2 crores, while all other UCBs (of all tiers) must have a minimum net worth of Rs. 5 crores. The same became effective on April 1, 2023. RBI has now decided that the instructions will take effect on March 31, 2023.


Reserve Bank of India (RBI) has imposed, by an order dated March 22, 2023, a monetary penalty of ₹2 lakh (Rupees Two Lakh only) on Aligarh Zila Sahkari Bank Ltd., Aligarh, Uttar Pradesh (the bank) for contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. This penalty has been imposed in the 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.


Reserve Bank of India (RBI) has, by an order dated March 16, 2023, imposed a monetary penalty of ₹3 lakh (Rupees Three Lakh only) on the Delhi Nagrik Sehkari Bank Limited, New Delhi (the bank) for contravention of Section 35A and Section 36(1)(a) read with Section 56 of the Banking Regulation Act, 1949. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to specific directions issued by RBI.


Reserve Bank of India (RBI) has, by an order dated March 23, 2023, imposed a monetary penalty of ₹2 lakh (Rupees Two lakh only) on Shri Ganesh Sahakari Bank Ltd., Navi Sangvi, Pune (the bank) for contravention of directions issued by RBI on Know Your Customer (KYC) and Maintenance of Deposit Accounts. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 (the Act), taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.


Reserve Bank of India (RBl) has imposed, by an order dated March 24, 2023, a monetary penalty of ₹2 lakh (Rupees Two lakh only) on Vyapari Sahakari Bank Maryadit, Solapur (Maharashtra) (the bank) for contravention of/ non-adherence with the directions issued by RBI to Urban Co-operative Banks on Exposure Norms & Statutory/ Other Restrictions - UCBs and Board of Directors-UCBs. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.


Reserve Bank of India (RBI) has, by an order dated March 24, 2023, imposed a monetary penalty of ₹2.10 lakh (Rupees two lakh ten thousand only) on Mehsana District Central Co-operative Bank Ltd., Mehsana (Gujarat) (the bank) for contravention of/non-compliance with certain provisions of directions issued by RBI contained in the Reserve Bank of India – [Know Your Customer (KYC)] Direction, 2016, and RBI directions on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’. This penalty has been imposed in the exercise of powers conferred on RBI under Section 47A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949 and Section 25 (1) (iii) read with Section 23 (4) of the Credit Information Companies (Regulation) Act, 2005.


Reserve Bank of India (RBI) has imposed, by an order dated March 24, 2023, a monetary penalty of ₹1.10 lakh (Rupees One lakh Ten thousand only) on Kolkata Police Co-operative Bank Ltd., Kolkata, West Bengal (the bank) for contravention of/ non-adherence with certain provisions of the ‘Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016’. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.


Reserve Bank of India released its web publication entitled ‘Quarterly Basic Statistical Returns (BSR)-1: Outstanding Credit of Scheduled Commercial Banks (SCBs), December 2022’ on its Database on Indian Economy (DBIE) portal. It captures various characteristics of bank credit such as occupation/activity and organisational sector of the borrower, type of account and interest rates. Data reported by 90 SCBs (excluding Regional Rural Banks) are presented for bank groups, population groups and states.


It has been decided, in consultation with the Government of India, that the limit for Ways and Means Advances (WMA) for the first half of the financial year 2023-24 (April 2023 to September 2023) will be ₹1,50,000 crore. Reserve Bank of India may trigger fresh floatation of market loans when the Government of India utilises 75 per cent of the WMA limit. Reserve Bank of India retains the flexibility to revise the limit at any time, in consultation with the Government of India, taking into consideration the prevailing circumstances.


2. Bangladesh


Referring to Section 1.3.1 and Addendum of the Operating Guidelines for Two-Step Loan (TSL) component of Foreign Direct Investment Promotion Project (FDIPP) read with FEID Circular No. 01 dated 30 August 2017. Section 1.3.1 of the Operating Guidelines has specified the composition, functions and meeting intervals of the TSC Steering Committee (TSC). Please refer to the link for a detailed list of amendments.[1]


Regarding SME SPD Circular No-04 dated 19 July 2022, SME SPD Circular Letter No-07 dated 08 November 2022, SME SPD Circular Letter No-01 dated 18 January 2023 and SME SPD Circular Letter No-02 dated 31 January 2023 of this department. In the post- Kovitta period, the demand for loans/ investment is being observed in the business sector as well as other sectors in the economic activities of the country. In this context, according to SME SPD Circular Letter No-07/2022, the existing division rate of loan/ investment in production, service and business sectors will be relaxed. This relaxation is valid till June 30th, 2024.[2]


It is hereby informed that the name of 'International Finance Investment and Commerce Bank Limited' has been changed to 'IFIC Bank PLC' (in English 'IFIC Bank PLC') in the list of Scheduled Banks with effect from March 28th, 2023, Tuesday 14 Chaitra 1429. A copy of notification no. BRPD(LS-1)/ 745(13)/ 2023-2559 issued by Bangladesh Bank on March 28th, 2023 in this regard is attached herewith for information and necessary action.[3]


3. Sri Lanka


Further to the T-bill auction held on March 29th, 2023, Rs. 5,796 million was raised in phase II, from the Treasury bills bearing the International Securities Identification Numbers (ISINs) LKA09123F305, LKA18223I298 and LKA36424C293 at the Weighted Average Yield Rates of 25.99%, 25.79% and 24.31% respectively, determined at the auction. The date of settlement is 31 March 2023.[4]

[1] FEID Circular Letter No. 03, 27th March 2023, Bangladesh Bank [2] SMESPD Circular Letter No. 05, 28th March 2023, Bangladesh Bank [3] BRPD Circular Letter No. 10, March 29, 2023, Bangladesh Bank [4] Public Debt Department, March 31, 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


For further queries or details, you may contact:

Mr Anuroop Omkar,

Partner, AK & Partners



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