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AKP Banking & Finance Digest- February 14, 2022

Read this week in our update- RBI releases statement on developmental and regulatory policies and increases the investment limit under the voluntary retention route scheme.

Highlights of the Week:
RBI releases statement on developmental and regulatory policies
RBI issues consolidated master circular on asset reconstruction companies
RBI reopens allotment of investment limit under the voluntary retention route for investments by foreign portfolio investors
RBI releases master direction on credit derivatives

1. RBI releases statement on developmental and regulatory policies

Reserve Bank of India (RBI) has listed the additional measures relating to payment and settlement systems in the Statement on Developmental and Regulatory Policies, which are as follows:[1]

• Enhancement of the cap under e-RUPI (Prepaid digital Vouchers using UPI):

The National Payments Corporation of India (NPCI) had launched the e-RUPI pre-paid digital voucher in August 2021. The maximum cap on the single-use cashless payment voucher is INR 10,000 (Indian Rupees Ten Thousand Only). RBI has recommended that the cap on e-RUPI vouchers issued by the Central Government and State Governments be raised from INR 10,000 (Indian Rupees Ten Thousand Only) to INR 1,00,000 (Indian Rupees One Lakh Only) per voucher and that such e-RUPI coupons be used multiple times (until the amount of the voucher is completely redeemed).

• Enabling Better Infrastructure for MSME Receivables Financing – Increasing NACH Mandate Limit for TReDS Settlements:

RBI has recommended extending the national automated clearing house (NACH) mandate limit for trade receivables discounting system (TReDS) related settlements from INR 1 crore (Indian Rupees One Crore Only) to INR 3 crores (Indian Rupees Three Crores Only) in response to stakeholder requests and to further improve the ease of funding for the expanding liquidity requirements of MSMEs.


2. RBI issues consolidated master circular on asset reconstruction companies

RBI has issued a master circular consolidating all the existing instructions applicable to all asset reconstruction companies.[2]


3. Extension of on-tap liquidity window for contact-intensive sectors

RBI has extended on-tap liquidity facilities for contact-intensive sectors from March 31, 2022, to June 30, 2022, due to the persistent uncertainty caused by the third wave of COVID-19.[3]

4. Extension of on-tap term liquidity facility to ease access to emergency health services

RBI has extended on-tap liquidity facilities to ease access to emergency health services from March 31, 2022, to June 30, 2022, due to the persistent uncertainty caused by the third wave of COVID-19.[4]

5. RBI reopens allotment of investment limit under the voluntary retention route for investments by foreign portfolio investors

RBI has increased the investment limit under the voluntary retention route (VRR) scheme by INR 1 lakh crore (Indian Rupees One Lakh Crore Only) i.e. from INR 1.5 lakh crore (Indian Rupees One Lakh Fifty Thousand Crore Only) to INR 2.5 lakh crore (Indian Rupees Two Lakhs Fifty Thousand Crores Only), with effect from April 1, 2022. Further, the minimum retention period shall be three years and investment limits shall be available ‘on tap’ and allotted on a ‘first come, first serve' basis.[5]

6. RBI releases master direction on credit derivatives

RBI has revised and finalized guidelines for credit default swaps (CDS) based on inputs received from stakeholders on the draft Reserve Bank of India (Credit Derivatives) Directions, 2021 as issued on February 16, 2021. After finalization, RBI has released Master Direction – Reserve Bank of India (Credit Derivatives) Directions, 2022. [6]

7. RBI amends Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019

RBI has allowed Indian banks to deal with non-residents and other market makers in the offshore foreign currency settled-overnight indexed swap (FCS-OIS) market based on the Overnight Mumbai Interbank Outright Rate (MIBOR) benchmark. Non-residents shall now be able to buy Rupee interest rate derivatives such as overnight indexed swaps (OIS) from Indian banks.[7]

8. RBI penalizes M/s Pooram Finserv Pvt Limited, Thrissur, Kerala

RBI has imposed monetary penalty on:

Name of the NBFC

Penalty Imposed (in INR)

Reason

M/s Pooram Finserv Pvt Limited, Thrissur, Kerala[8]

10 (ten) lakhs

​Contravention of / non-compliance with certain provisions of the RBI Master Direction - Know Your Customer (KYC) Direction, 2016 dated February 25, 2016, and RBI direction on Raising Money Through Private Placement of Non-Convertible Debentures (NCDs) by NBFCs dated February 20, 2015.





[1] Press Release: 2021-2022/1694, Reserve Bank of India, February 10, 2022

[2] RBI/2021-22/154 DOR.SIG.FIN.REC 84/26.03.001/2021-22, Reserve Bank of India, February 10, 2022

[3] Press Release: 2021-2022/1697, Reserve Bank of India, February 10, 2022 [4] Press Release: 2021-2022/1698, Reserve Bank of India, February 10, 2022 [5] Press Release: 2021-2022/1701, Reserve Bank of India, February 10, 2022

[6] RBI/2021-22/88 FMRD.DIRD.10/14.03.004/2021-22, Reserve Bank of India, February 10, 2022

[7] RBI/2021-22/157 FMRD.DIRD.12/14.03.046/2021-22, Reserve Bank of India, February 10, 2022

[8] Press Release: 2021-2022/1685, Reserve Bank of India, February 08, 2022

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