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AKP Banking & Finance Digest- December 12, 2022

Updated: Dec 13, 2022

1. INDIA


1.1. RBI signs currency swap agreement with Maldives Monetary Authority

Under the SAARC Currency Swap Framework, the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) have inked a currency swap agreement. This will serve as a backup source of funding for short-term foreign exchange liquidity requirements for swap support. Through this agreement, the MMA will be entitled to withdraw from the RBI up to USD 200 million in numerous tranches.[1]


1.2. Reserve Bank of India issued a statement on December 07, 2022, on Development and Regulatory Policies

RBI issued a statement that UPI will include a single-block-and-multiple-debits functionality, which will considerably improve the simplicity of making payments in e-commerce and securities investments.

All types of payments and collections, both recurring and non-recurring in nature, will be added to the BBPS's scope. As a result, a larger group of people and businesses will have access to the platform, and they will be able to take advantage of the transparent and consistent payments experience, quicker access to funds, and increased efficiency.[2]


1.3. RBI Extends Market Trading Hours

RBI issued a notification in which it stated to extend trading hours for various markets regulated by it. The new timings are from 9:00 am to 5:00 pm which shall come into effect from 12th December.

The call/notice/term money market, the market for commercial paper and certificates of deposit, the repo in the corporate bonds market, and the rupee interest rate derivatives market would all close at 5 p.m. as a result of the revised hours.[3]


Market

Extant Timings

Timings with effect from December 12, 2022

Call/notice/term money

​9:00 AM to 3:30 PM

9:00 AM to 5:00 PM

Market repo in government securities

9:00 AM to 2:30 PM

9:00 AM to 2:30 PM

​Tri-party repo in government securities

9:00 AM to 3:00 PM

​9:00 AM to 3:00 PM

Commercial paper and Certificates of Deposit

9:00 AM to 3:30 PM

9:00 AM to 5:00 PM

Repo in Corporate Bonds

9:00 AM to 3:30 PM

9:00 AM to 5:00 PM

Government Securities (Central Government Securities, State Development Loans and Treasury Bills)

​9:00 AM to 3:30 PM

​9:00 AM to 3:30 PM

Foreign Currency (FCY)/Indian Rupee (INR) Trades including Forex Derivatives*

9:00 AM to 3:30 PM

9:00 AM to 3:30 PM

Rupee Interest Rate Derivatives*

9:00 AM to 3:30 PM

9:00 AM to 5:00 PM

* Other than those traded on recognised stock exchanges.


1.4. Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC) December 5-7, 2022

MPC on December 7, 2022, decided to with immediate effect, raise the policy repo rate to 6.25 per cent under the liquidity adjustment facility (LAF) by 35 basis points. As a result, the Bank Rate and the marginal standing facility (MSF) rate have both been adjusted to 6.50 per cent. and the standing deposit facility (SDF) rate at 6.00 per cent.

The MPC also made the decision to keep its attention on the removal of accommodation in order to guarantee that inflation will continue to be within the target going forward while promoting growth. These choices are in line with the goal of supporting growth while achieving the medium-term target for consumer price index (CPI) inflation of 4% within a +/- 2% range. [4]


1.5. Directions for Sumerpur Mercantile Urban Co-operative Bank Ltd., Sumerpur, Pali under Section 35 A read with section 56 of the Banking Regulation Act, 1949 (as applicable to Co-operative Societies)

RBI issued directions for Sumerpur Mercantile Urban Co-operative Bank Ltd., Sumerpur, Pali under Section 35 A read with section 56 of the Banking Regulation Act, 1949 whereby as of December 6, 2022, at the close of business, the bank shall not, without the prior written consent of RBI, grant or renew any loans and advances, make any investments, incur any liabilities, including borrowing money and accepting new deposits, disburse or agree to disburse any payments whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement, sell, transfer, or otherwise dispose of any of its property.[5]


1.6. Revised Master Direction- Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021

RBI updated the Master Direction on December 05, 2022, for (Transfer of Loan Exposures) which is applicable to Scheduled Commercial Banks, Regional Rural Banks, Primary (Urban) Co-operative Banks/State Co-operative Banks/ Central Co-operative Banks, All India Financial Institutions (NABARD, NHB, EXIM Bank, and SIDBI), Small Finance Banks, and All Non-Banking Finance Companies (NBFCs) including Housing Finance Companies (HFCs). Overseas branches of these lenders shall be permitted to-

  • Acquire only ‘not in default’ loan exposures from a financial entity operating and regulated as a bank in the host jurisdiction.

  • Transfer exposures ‘in default’ as well as ‘not in default’ pertaining to resident entities to a financial entity operating and regulated as a bank in the host jurisdiction.

  • Transfer exposures ‘in default’ as well as ‘not in default’ pertaining to non-residents, to any entity regulated by a financial sector regulator in the host jurisdiction.[6]


1.7. RBI imposes monetary penalty on the Bharat Co-operative Bank Limited, Bengaluru, Karnataka

The Bharat Cooperative Bank Limited, Bengaluru, was fined Rs 5 lakh by the Reserve Bank of India (RBI) on December 5. The fine was levied for failure to comply with instructions given under the Exposure Norms and for violating UCBs that were statutory or otherwise mandated. The investigation conducted by RBI revealed that the bank's commercial paper investment exceeded the prudential individual exposure limit of 15% of capital funds, according to the inspection report based on the bank's financial situation as of March 31, 2021.[7]


2. Bangladesh


2.1. Bangladesh Bank (“BB”) opens a short-term tool to channel funds into Islamic banks

BB introduced the "Islami Banks Liquidity Facility" (IBLF), a short-term funding instrument for funnelling funds into the local Shariah-based banking system to replenish their cash vaults. This facility will provide short-term liquidity in the shariah based banks operating in Bangladesh. The liquidity to be provided by the BB shall be credited to the current account of the respective institution at the close of the same business day and BB reserves full discretion to accept or reject the application or provide partial investment.


2.2. Bangladesh Bank forms Tk 5000 crore GTF

BB has formed a Tk 5000 crore Green Transformation Fund (GTF) to provide finance for environment-friendly infrastructures in production and export-oriented industries. Long-term loans will be given from this fund. The maximum interest rate will be 5 per cent. Loan facilities include water efficiency in irrigation, water conservation and management, waste management, resource efficiency and recycling, renewable energy, energy efficiency, heat and temperature management, ventilation and wind flow efficiency, working environment improvement initiatives and other areas.


3. Sri Lanka


3.1. Issue Of Rs 160,000 million Treasury Bonds

Rs. 40,000 million Treasury Bonds under the series of 22.50%2024'A', Rs. 50,000 million Treasury Bonds under the series of 22.50% 2025 'A' and Rs. 70,000 million Treasury Bonds under the series of 22.50% 2026'A' is to be issued through an auction on December 13, 2022. These Bonds will pay a fixed rate of interest, which can provide a steady income stream.



[1] Press Release: 2022-2023/1330 Reserve Bank of India, December 08, 2022 [2] Press Release: 2022-2023/1321 Reserve Bank of India, December 07, 2022 [3]Press Release: 2022-2023/1324 Reserve Bank of India, December 07, 2022 [4] Press Release: 2022-2023/1320 Reserve Bank of India, December 07, 2022 [5] Press Release: 2022-2023/1317 Reserve Bank of India, December 06, 2022 [6] Notification RBI/DOR/2021-22/86 Reserve Bank of India, December 05, 2022 [7]Press Release: 2022-2023/1306 Reserve Bank of India, December 05, 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.


* Image credits: RBI


For further queries or details you may contact:

Mr Anuroop Omkar,

Partner, AK & Partners

anuroop@akandpartners.in

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