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AKP Banking & Finance Digest- July 25, 2022

Updated: Sep 22


1. Four entities exit RBI’s Second Cohort of Regulatory Sandbox on Cross-border Payments’

The Reserve Bank of India (RBI) has released a circular stating that out of the eight entities that have commenced testing of their product in the second cohort under the Regulatory Sandbox (RS) on ‘Cross – Border Payments’, four entities have completed the ‘Test Phase’. The four entities that have completed the test phase are as follows:

  • Cashfree Payments India Private Limited

  • Fairex Solutions Private Limited

  • Nearby Technologies Private Limited

  • Open Financial Technologies Private Limited

The products tested by the above-mentioned entities may be considered for adoption by regulated entities subject to compliance with the applicable regulatory requirements[1].


2. RBI renews its Statement of Commitment to the FX Global.

RBI has signed a renewed Statement of Commitment (SoC) to the FX Global Code (“Code”) which is a compilation of best market practices and was developed under the auspices of Bank for International Settlements (BIS), Basel. The Code was initially launched on May 25, 2017 and was subsequently reviewed holistically and the updated Code was later published by Global FX Committee on July 15, 2021[2].


3. RBI ssued directions to Co-operative Banks.

RBI issued directions to the following co-operative banks-


S. No.

Name of the Co-operative Bank

Sanctions Imposed

Permissible Withdrawal Limit (savings or/ and current account)

1.

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.

INR 25,000 (Indian Rupees twenty-five thousand only)

2.

Suri Friends’ Union Co-operative Bank Ltd., Suri (West Bengal)[4].

Same as above.

INR 50,000 (Indian Rupees fifty thousand only)

3.

United India Co-operative Bank Limited, Nagina, Bijnor[5]

Same as above.

No withdrawal is allowed but loans can be set off against deposits.

4.

National Urban Co-operative Bank Ltd., Bahraich (U.P.)[6]

Same as above.

INR 10,000 (Indian Rupees ten thousand only)

5.

Nashik Zilla Girna Sahakari Bank Limited, Nashik[7]

Same as above.

No withdrawal is allowed but loans can be set off against deposits.

6.

Sri Mallikarjuna Pattana Sahakari Bank Niyamita, Maski, Karnataka[8]

Same as above.

No withdrawal is allowed but loans can be set off against deposits.

7.

Raigad Sahakari Bank Limited, Mumbai.[9]

Same as above.

INR 15,000 (Indian Rupees fifteen thousand only)

4. RBI released revised regulatory framework for Urban Co-operative Banks (UCBs).

RBI had constituted an Expert Committee on Urban Co-operative Banks under the Chairmanship of Shri N. S. Vishwanathan, former Deputy Governor of RBI. The committee has recommended a four-tiered regulatory framework based on size of deposits of the banks and their area of operations. The key parameters for such regulatory framework shall be net worth, capital to risk-weighted assets ratio (CRAR), branch expansion and exposure limits[10].


5. RBI penalizes Suryoday Small Finance Bank Ltd.

RBI has imposed monetary penalty on:

Name of the Entity

Penalty Imposed

Reason

Suryoday Small Finance Bank Ltd[11].

INR 57,75,000 (Indian Rupees fifty-seven lakhs seventy-five thousand only)

Non-compliance with the ‘Reserve Bank of India (Frauds classification and reporting by commercial banks and select Financial Institutions) Directions 2016’ dated July 01, 2016.

6. RBI penalizes Shri Chhatrapati Rajarshi Shahu Urban Co-operative Bank Limited, Beed, (M.H.)

Name of the Entity

Penalty Imposed

Reason

Shri Chhatrapati Rajarshi Shahu Urban Co-operative Bank Limited, Beed, (M.H.)[12]

INR 6,00,000 (Indian Rupees six lakhs only)

Contravention of/ non-compliance with the directions issued by RBI to Urban Cooperative Banks on Frauds - Classification and Reporting.



.

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

[1] Press Release: 2022-2023/559. Reserve Bank of India, July 19, 2022. [2] Press Release: 2022-2023/564, Reserve Bank of India, July 20, 2022. [3] Press Release: 2022-2023/584, Reserve Bank of India, July 22, 2022. [4] Press Release: 2022-2023/583, Reserve Bank of India, July 22, 2022. [5] Press Release: 2022-2023/580, Reserve Bank of India, July 22, 2022. [6] Press Release: 2022-2023/579, Reserve Bank of India, July 22, 2022. [7] Press Release: 2022-2023/556, Reserve Bank of India, July 19, 2022. [8] Press Release: 2022-2023/555, Reserve Bank of India, July 19, 2022. [9] Press Release: 2022-2023/552, Reserve Bank of India, July 18, 2022. [10] Press Release: 2022-2023/561, Reserve Bank of India, July 19, 2022. [11] Press Release: 2022-2023/578, Reserve Bank of India, July 22, 2022. [12] Press Release: 2022-2023/551, Reserve Bank of India, July 28, 2022.

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