AKP Banking & Finance Digest- June 20, 2022
Updated: Sep 22
Read this week in our update, business restrictions imposed on Mastercard Asia/Pacific lifted by RBI. RBI released report of the Regulations Review Authority.
Highlights of the Week:
RBI lifts ban on Mastercard Asia / Pacific Pte. Ltd.
RBI releases report of the Regulations Review Authority
RBI increases AFA limit for recurring transactions
RBI publishes Payments Vision 2025
RBI advises banks to check compliance regarding bank finance to Government-owned entities
The Reserve Bank of India (RBI) has released the report of the Regulations Review Authority (RRA). The report contains recommendations on ease of compliance and reduction in regulatory burden, streamlining of reporting mechanisms and dissemination and ease of accessibility of regulatory instructions. Some of the major highlights in the report are as follows:
The regulatory instructions shall include a concise Statement of Object underlining the rationale for issuing instructions;
Periodic assessment of existing regulations to ensure that they are in line with changing industry practices and the financial landscape;
RRA has recommended that paper-based returns be phased out and the regulatory and supervisory returns filed by regulated entities should be reviewed at least once every three years to ensure their relevance and periodicity;
Any ad hoc return created for the purpose of capturing specialized data shall be subject to a 6-month sunset clause;
Wherever possible, RRA recommended that the master circulars must be updated on a regular basis and eventually converted into master directions;
All of the information on the RBI website shall be updated in real time. Further, all instructions on the RBI website shall be categorized subject-wise, function-wise and based on category of regulated entities; and
RRA has also suggested creating a common master direction and circular template, as well as standardizing the procedure for revising regulatory directives in the future.
2. RBI advises banks to check compliance regarding bank finance to Government-owned entities RBI has advised all scheduled commercial banks to carry out a review and prepare a comprehensive report on the status of compliance with respect to the financing of infrastructure/ housing projects of government-owned entities. The specific instructions are contained in the paragraphs referred to in the Annex of the circular. The status of compliance with instructions shall have to reported before their Boards within three months from the date of this circular.
RBI has notified the nomination of the following as part-time non-official Directors on the Central Board of RBI:
Shri Anand Gopal Mahindra;
Shri Venu Srinivasan;
Shri Pankaj Ramanbhai Patel; and
Dr Ravindra H. Dholakia.
They shall be nominated for a period of four years with effect from June 14, 2022.
RBI has lifted the ban imposed on Mastercard Asia / Pacific Pte. Ltd. (Company) with immediate effect in view of satisfactory compliance with storage of payment system data. The Company shall now be able to on-board domestic customers onto their card network.
RBI has increased the Additional Factor of Authentication (AFA) limit for processing the first transaction in case of e-mandates / standing instructions on cards, prepaid payment instruments and Unified Payments Interface. The limit has been enhanced from INR 5000 to INR 15,000.
RBI has released the draft directions regarding the exchange of variation margin and initial margin for non-centrally cleared over the counter (OTC) derivatives. Further, RBI has invited banks and market participants to send their comments on the draft directions.
RBI has published a strategic direction and implementation plan called ‘Payments Vision 2025’ for the structured development of the payment and settlement systems (PSS) in India. The core theme of ‘Payments Vision 2025’ is ‘E-Payments for Everyone, Everywhere, Everytime’ (4Es). Some of key points highlighted in the vision document are as follows:
The Payment Vision 2025 has identified 5 (five) goalposts namely, Integrity, Inclusion, Innovation, Institutionalization, and Internationalization;
The above-mentioned goalposts cover 47 (forty-seven) specific initiatives including (but not limited to) the following:
o Weave in alternate authentication mechanism(s) for digital payment transactions;
o Enable geotagging of digital payment infrastructure and transactions;
o Facilitate framework for Internet of Things and context-based payments;
o Comprehensive review of legislative aspects of PSS Act provisions and regulations; and
o Global outreach of Real Time Gross Settlement, National Electronic Funds Transfer, Unified Payments Interface and RuPay cards.
Further, these goalposts have identified around 10 (ten) expected outcomes. Some of the outcomes enumerated in the report are as follows:
o To increase digital payment transactions by more than triple the existing number;
o Increase in debit card transactions at PoS by 20%;
o Increase in prepaid payment instrument transactions by 150%; and
o To increase card acceptance infrastructure to 250 lakhs.
 Press Release: 2022-2023/360, Reserve Bank of India, June 13, 2022  RBI/2022-23/71DOR.CRE.REC.No.47/13.03.00/2022-23, Reserve Bank of India, June 14, 2022  Press Release: 2022-2023/366, Reserve Bank of India, June 14, 2022  Press Release: 2022-2023/379, Reserve Bank of India, June 16, 2022  RBI/2022-23/73CO.DPSS.POLC.No.S-518/02.14.003/2022-23, Reserve Bank of India, June 16, 2022  Press Release: 2022-2023/377, Reserve Bank of India, June 16, 2022  Press Release: 2022-2023/388, Reserve Bank of India, June 17, 2022