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AKP Banking & Finance Digest - August 29, 2022

Updated: Sep 22

Weekly Round-Up | Updates


1.1. RBI lifts business restrictions imposed on American Express Banking Corp.

The RBI has lifted the business restrictions imposed on American Express Banking Corp (“Amex”) with immediate effect taking into account satisfactory compliance with the RBI circular on Storage of Payment System Data. The RBI had restricted Amex from onboarding new domestic customers onto its card network from May 01, 2021, due to non-compliance with the RBI circular on Storage of Payment System Data. Amex shall now be able to onboard domestic customers onto their card network. [1]


1.2. RBI releases quarterly statistics on deposits and credit of SCBs in June 2022

The Reserve Bank of India has released quarterly statistics on deposits and credit of scheduled commercial banks (SCBs) for June 2022. The data is available on RBI’s Database on Indian Economy (DBIE) portal. The database highlighted that credit growth on a year-on-year basis (y-o-y) has accelerated to 14.2 per cent in June 2022 from 6.0% a year ago and 10.8 % a quarter ago. It highlighted that all the population groups, bank groups and regions of the country recorded double-digit credit growth. The database also showed that the aggregate deposit growth on a y-o-y basis has remained between 9.5% to 10.2% during the last five quarters. [2]


1.3. The Central Board of Directors of RBI holds its 597th meeting

The Central Board of Directors of the RBI had its 597th meeting on August 26, 2022, under the Chairmanship of Shri Shaktikanta Das, Governor of RBI at its regional office in Jaipur. In its meeting, the Board reviewed the current economic situation, global and domestic challenges and the impact of the current global geopolitical crisis. In addition, the Board discussed the functioning of local boards and other different areas of operations of the RBI. [3]


1.4. RBI revises the list of LWE-affected districts

The Reserve Bank of India (RBI) has released a notification stating that the Government of India has reduced the list of Left-Wing Extremism (LWE) affected districts to 70 from 90 as specified on the circular ‘Rationalization of Branch Authorisation Policy-Revision of Guidelines’ dated May 18, 2017. The revised list of LWE-affected districts is annexed with the notification. [4]


1.5. RBI releases Foreign Exchange Management (Overseas Investment) Directions, 2022 and Foreign Exchange Management (Overseas Investment) Regulations, 2022

The RBI has released the Foreign Exchange Management (Overseas Investment) Directions, 2022 (“Directions”) and Foreign Exchange Management (Overseas Investment) Regulations, 2022 in supersession of Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Amendment) Regulations, 2004 and Foreign Exchange Management (Acquisition and Transfer of Immovable Property Outside India) Regulations, 2015. The Directions are applicable on authorized dealer category I banks. The key factors introduced by the directions are as follows [5]:

  1. enhanced clarity with respect to various definitions;

  2. introduction of the concept of “strategic sector” such as energy and natural resources sectors such as oil, gas, coal, mineral ores, submarine cable system and start-ups.

  3. dispensed with the requirement of approval for:

  4. deferred payment of consideration;

  5. investment/disinvestment by a person resident in India under investigation by any investigative agency/regulatory body;

  6. issuance of corporate guarantees to or on behalf of second or subsequent level step-down subsidiary (“SDS”); and

  7. write-off on account of disinvestment.

  8. introduced “Late Submission Fee (“LSF”)” for reporting delays.


1.6. RBI issued directions to Co-operative Banks.

RBI issued directions to the following Co-operative Banks-


S.No.

Name of the Co-operative Bank

Sanctions Imposed

1.

​The RBI has extended the applicability of earlier directions till September 22, 2022.

2.

​The RBI has extended the applicability of earlier directions from August 25, 2022, to November 24, 2022, subject to review.

3.

The RBI has extended the applicability of earlier directions from August 25, 2022, to November 24, 2022, subject to review.

4.

The bank shall not grant/renew any loans, make any investment, incur any liability including borrowing of funds and acceptance of fresh deposits, disburse or agree to disburse any payment, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except with the prior approval of the RBI.

1.7. RBI penalizes M/s Swagatam Marketing Private Limited, Kolkata

RBI has imposed monetary penalty on-


Name of the Entity

Penalty Imposed

Reason

INR 1,00,000 (Indian Rupees one lakh only)

Contravention of/ non-compliance with the directions issued by RBI to Non-Banking Financial Company (Non-Systemically Important, Non-Deposit taking) regarding Change in Management.

[1] Press Release: 2022-2023/755, Reserve Bank of India, August 24, 2022.


[2] Press Release: 2022-2023/760, Reserve Bank of India, August 25, 2022.


[3] Press Release: 2022-2023/770, Reserve Bank of India, August 26, 2022.


[4] RBI/2022-23/109 DOR.AUT.REC.62/22.01.001/2022-23, Reserve Bank of India, August 22, 2022.


[5] RBI/2022-2023/110 A.P. (DIR Series) Circular No.12, Reserve Bank of India, August 22, 2022.


[6] Press Release: 2022-2023/773, Reserve Bank of India, August 26, 2022


[7] Press Release: 2022-2023/756, Reserve Bank of India, August 24, 2022.


[8] Press Release: 2022-2023/748, Reserve Bank of India, August 23, 2022.


[9] Press Release: 2022-2023/751, Reserve Bank of India, August 24, 2022.


[10] Press Release: 2022-2023/744, Reserve Bank of India, August 22, 2022.




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.


For further queries or details you may contact:

Mr Anuroop Omkar,

Partner, AK & Partners

anuroop@akandpartners.in


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