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AKP Banking & Finance Digest- March 13, 2023

Weekly Round-Up | Updates


1. INDIA


Reserve Bank of India (RBI) vide directive DoS.CO.SUCBs-West/S2399/12.22.159/2021-22 dated December 06, 2021,t had placed Nagar Urban Co-operative Bank Ltd., Ahmednagar under directions from the close of business on December 06, 202,,1 for a period of six months. In the exercise of powers vested in it under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949, RBI has directed that the aforesaid directions shall continue to apply to the bank till June 06, 2023, as per the directive DOR.MON.D-81/12.22.159/2022-23 dated March 06, 2023, subject to review. Further, it is notified that the aforesaid extension and/or modification should not per-se be construed to imply that RBI is satisfied with the financial position of the bank.[1]


Reserve Bank of India is satisfied that in the public interest, it is necessary to extend the period of operation of the direction DCBS.CO.PCC D-4/12.26.004/2018-19 dated November 02, 2018, from close of business on November 09, 2018, for a period of six months, which were extended from time to time, last being up to March 09, 2023, for a period of one month, vide Directive DOR.MON/D-74/12.26.004/2022-23 dated February 09, 2023. The directive DCBS.CO.PCC D-4/12.26.004/2018-19 dated November 02, 2018, shall continue for one more month, which is up from March 10, 2023, to April 9, 2023.[2]


Reserve Bank of India (RBI) issued directions to Dwarkadas Mantri Nagari Sahakari Bank Ltd., Beed, Maharashtra under Section 35A read with Section 56 of the Banking Regulation Act, 1949 vide Directive DoS.CO.NSUCBs-West/D-4/S3706/12.07.005/2021-22 dated March 9, 2022, which were extended from time to time, last being up to March 9, 2023, vide Directive DOR.MON/D-48/12.22.613/2022-23 dated December 8, 2022. RBI, in the public interest, has decided to extend the period of operation of Directive DoS.CO.NSUCBs-West/D-4/S3706/12.07.005/2021-22 dated March 9, 2022, for a period of three months from March 10, 2023, to June 9, 2023.[3]


Reserve Bank of India (RBI), in the exercise of powers vested in it under sub-section (1) of Section 35A of the Banking Regulation Act, 1949 (AACS) read with Section 56 of the Banking Regulation Act, 1949, hereby directs that the directive dated October 26, 2018, issued to the above bank, the validity of which was last extended up to March 09, 2023, shall continue to apply to the bank for a further period of three months from March 10, 2023, to June 09, 2023, vide directive dated March 08, 2023, subject to review.[4]


On March 10, 2023, RBI released a list of 17 Non-Banking Financial Companies (NBFC) which have surrendered their Certificate of Registration (CoR). RBI, in the exercise of powers conferred on it under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has therefore cancelled the said CoRs. There were three reasons for the surrender of CoR:

  1. Due to exit from Non-Banking Financial Institution (NBFI) business.

  2. Due to meeting the criteria prescribed for unregistered Core Investment Companies (CIC) that do not require registration.

  3. Due to NBFC ceasing to be a legal entity due to amalgamation/ merger/dissolution/ voluntary strike-off, etc.[5]

Reserve Bank of India (RBI) has, by an order dated March 06, 2023, imposed a monetary penalty of ₹9.60 lakhs (Rupees nine lakh sixty thousand only) on Nuvama Wealth Finance Limited (formerly known as Edelweiss Finance and Investments Limited) for non-compliance with certain provisions of the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934. After the statutory inspection of the company, it was found that it failed to put in place robust software for the effective identification and reporting of suspicious transactions.[6]


The banks shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrower of funds and acceptance of fresh deposits, disburse or agree to disburse any payment whether in the discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI Direction dated March 09, 2023.


A sum not exceeding ₹30,000 (Rupees thirty thousand only) of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn subject to the conditions stated in the above RBI directions. The eligible depositors would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh only).[7]


Considering the bank's present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI directions. The eligible depositors would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh only).[8]


Considering the bank's present liquidity position, no amount from the total balance across all savings bank or current accounts or any other account of a depositor may be allowed to be withdrawn, but are allowed to set off loans against deposits subject to the conditions stated in the above RBI Directions. The eligible depositors would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh only).[9]


A sum not exceeding ₹30,000 (Rupees thirty thousand only) of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn subject to the conditions stated in the above RBI directions. The eligible depositors would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh only).[10]


A sum not exceeding ₹10,000/- (Rupees ten thousand only) of the total balance across all savings bank or current accounts or any other account of a depositor, may be allowed to be withdrawn subject to the conditions stated in the above RBI directions. The eligible depositors would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5,00,000/- (Rupees five lakh only).[11]


2. Bangladesh


Attention of Authorized Dealers (ADs) is invited to paragraph 13, chapter 8 of the Guidelines for Foreign Exchange Transactions (GFET)-2018, Vol-1 regarding the prescribed period of four months to realize export proceeds and relevant other instructions thereof. To bring the realization of export proceeds, it has been decided to initiate appropriate measures in cases where export proceeds are not realized within the prescribed period. In cases of delayed realization, ADs shall apply the prevailing exchange rate for encashment into Taka but shall make payments to exporters applying the rate on the date at which the export proceeds should have been realized as per regulatory instructions.[12]


Bangladesh Bank has issued instructions under its powers conferred by Section 45 of the Bank Companies Act, 1991, with respect to the loan repayment process of said institutions. It has substituted Paragraphs (e) and (f) as follows:


(e) Bank may charge interest at the maximum cost of funds rate on the loan balance after interest waiver (if any). However, banks regarding relaxation of cost of funds in the areas mentioned in the Memorandum issued by the Finance Department of the Ministry of Finance on 12/02/2008 during the interest period.


(f) The customer should apply to the concerned bank within 30/06/2023 by paying the required amount in cash for the down payment under the said policy.[13]


3. Sri Lanka


Further to the T-bill auction held on 08 March 2023, Rs. 21,250 million being the maximum aggregate amount offered at phase II, was raised from the Treasury bills bearing the International Securities Identification Numbers (ISINs) LKA09123F099, LKA18223I082 and LKA36424C087at the Weighted Average Yield Rates of 28.75%, 27.77% and 26.43% determined at the auction, out of the total market subscription of Rs. 74,142 million. The date of settlement is March 1oth, 2023.[14]

[1] Press Release: 2022-2023/1838, March 06, 2023, Reserve Bank of India [2] Press Release: 2022-2023/1848, March 09, 2023, Reserve Bank of India [3] Press Release: 2022-2023/1849, March 09, 2023, Reserve Bank of India [4] Press Release: 2022-2023/1850, March 10, 2023, Reserve Bank of India [5] Press Release: 2022-2023/1854, March 10, 2023, Reserve Bank of India [6] Press Release: 2022-2023/1856, March 10, 2023, Reserve Bank of India [7] Press Release: 2022-2023/1860, March 10, 2023, Reserve Bank of India [8] Press Release: 2022-2023/1861, March 10, 2023, Reserve Bank of India [9] Press Release: 2022-2023/1862, March 10, 2023, Reserve Bank of India [10] Press Release: 2022-2023/1863, March 10, 2023, Reserve Bank of India [11] Press Release: 2022-2023/1864, March 10, 2023, Reserve Bank of India [12] FE Circular No.04, March 06, 2023, Bangladesh Bank [13] BRPD Circular Letter No. 08, March 06, Bangladesh Bank [14] Public Debt Department, March 10, 2023, Central Bank of Sri Lanka

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



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