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AKP Banking & Finance Digest- March 20, 2023

Weekly Round-up | Updates


1. INDIA


The government of India has decided that the date of closure of residual transactions for the month of March 2023 to be fixed as April 10, 2023. RBI has referred to a circular that advises the procedure to be followed for reporting and accounting of Central Government transactions (including CBDT, CBIC, departmentalized ministries and non-civil ministries) at the receiving/nodal/focal point branches of each bank for the financial year 2021-22. To sum up, the nodal/focal point branches will be required to prepare a separate set of scrolls, one pertaining to March 2023 residual transactions and another for April transactions during the first 10 days of April 2023. The nodal/focal point branches should also ensure that the accounts for all transactions are effected at the receiving branches up to March 31, 2023, in the accounts for the current financial year itself and are not mixed up with the transactions of April 2023.[1]


The Ministry of External Affairs (MEA) has informed about UNSC press release SC/15229 dated March 15, 2023, where the Security Council Committee approved an amendment to 102 entries (attached in Annex) on its ISIL (Da’esh) and al-Qaida sanctions list of individuals and entities subject to the assets freeze, travel ban and arms embargo set out in paragraph 1 of Security Council Resolution 2610 (2021), and these entries were amended following the 2021 annual review conducted in accordance with paragraphs 90 and 91 of Resolution 2610 (2021). This is in compliance with Section 51 of RBI’s Master Direction on KYC dated February 25, 2016, as amended on May 10, 2021.[2]


Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) signed a Memorandum of Understanding (MoU) in Abu Dhabi, to enhance cooperation and jointly enable innovation in financial products and services. Under the MoU, the two central banks will collaborate on various emerging areas of fintech, especially Central Bank Digital Currencies (CBDCs) and explore interoperability between the CBDCs of CBUAE and RBI. CBUAE and RBI will jointly conduct proof-of-concept (PoC) and pilot(s) of bilateral CBDC bridge to facilitate cross-border CBDC transactions of remittances and trade. The MoU also provides for technical collaboration and knowledge sharing on matters related to fintech and financial products and services.[3]


Reserve Bank of India (RBI) has, by an order dated March 13, 2023, imposed a monetary penalty of ₹5 lakh (Rupees five lakh only) on Housing Development Finance Corporation Limited, Mumbai (the company) for non-compliance with certain provisions of ‘The Housing Finance Companies (NHB) Directions, 2010’ issued by the National Housing Bank (NHB) read with the press release dated August 13, 2019 issued by RBI on ‘Transfer of Regulation of Housing Finance Companies (HFCs) to Reserve Bank of India’. 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 52A read with clause (aa) of subsection (3) of Section 49 of the National Housing Bank Act, 1987.[4]


Reserve Bank of India (RBI) has, by an order dated March 15, 2023, imposed a monetary penalty of ₹11.25 lakh (Rupees eleven lakh twenty-five thousand only) on IGH Holdings Private Limited, Mumbai (the company) for non-compliance with the provisions of Section 45-IC of the Reserve Bank of India Act, 1934 (RBI Act) and the directions issued by RBI under sub-section (1) of Section 11 of Credit Information Companies (Regulation) Act, 2005 [CIC (R) Act] on membership of Credit Information Companies (ClCs) and submission of credit information to CICs contained in ‘Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016’. This penalty has been imposed in the exercise of powers vested in RBI under the provisions of clause (a) of sub-section (1) of Section 58-G read with sub-section (6) of Section 58-B of the RBI Act and clause (iii) of subsection (1) of Section 25 read with sub-section (4) of Section 23 of CIC (R) Act.[5]


2. Bangladesh


Bangladesh Bank on March 16th, 2023 issued comprehensive guidelines on Cloud Computing which all companies, banks, non-bank financial institutions, mobile financial service providers, payment service providers, payment system operators, and other financial services providers have to follow and comply with. In the case of the continuation of all currently running cloud services, this policy has to be complied with by December 31st, 2023.[6]


Banks and financial institutions shall notify the small & medium-sized enterprises (SME) and special programs department by the last working day of January every year on the basis of their previous year’s loan and advance status for CMSME loans. The amount of CMSME loans and advances among banks and financial institutions should be increased to at least 25% by 2024 with an increase of at least 1% every year. These instructions are issued under the powers provided in Section 45 of the Banking Companies Act, 1991 and Section 18 of the Financial Institutions Act, 1993.[7]


Bangladesh Bank has issued a Master Circular on the Schedule of Charges and has stated that unless otherwise provided that individual retail accounts shall be exempt from the minimum deposit obligation and no account maintenance fee shall be levied against such accounts. These instructions are issued under the powers conferred by Section 45 of the Bank Companies Act, 1991 and shall come into effect immediately.[8]


Bangladesh Bank has observed that Export Development Fund (EDF) loans are not being realized in accordance with the instructions as provided in FE Circular No. 45/2017. In view of the situation, it has been decided that penal interest (compensation in case of Shariah-based Islamic Banking) will be charged by Bangladesh Bank to ADs at 4% p.a., above the prevailing interest rate on the overdue amount of EDF loans for the delayed period. In accordance with the above decision, ADs will submit a debit authority to Bangladesh Bank for realizing the principal and accrued interest, including penal interest/compensation (as the case may be), at the time of application for an EDF loan as per the revised Form-A.[9]


3. Sri Lanka


Further to the treasury bond auction held on March 13th, 2023, Rs. 8,947 million was raised from the treasury bond bearing the International Securities Identification Number (ISIN) LKB00527E019 at the Weighted Average Yield Rate of 28.11% determined at the auction. The date of settlement of the above issuance is March 15th, 2023.[10]


Further to the treasury bill auction held on March 15th, 2023, Rs. 30,000 million being the maximum aggregate amount offered in Phase II, was raised from the treasury bills bearing the International Securities Identification Numbers (ISINs) LKA09123F164, LKA18223I157 and LKA36424C152 at the Weighted Average Yield Rates of 27.94%, 27.34% and 25.92% determined at the auction, out of the total market subscription of Rs. 87,140 million. The date of settlement is March 17th, 2023.[11]

[1] Notification: RBI/2022-23/184, March 16, 2023, Reserve Bank of India [2] Notification: RBI/2022-23/185, March 17, 2023, Reserve Bank of India [3] Press Release: 2022-2023/1874, March 15, 2023, Reserve Bank of India [4] Press Release: 2022-2023/1879, March 17, 2023, Reserve Bank of India [5] Press Release: 2022-2023/1880, March 17, 2023, Reserve Bank of India [6] BRPD Circular No.05, March 16, 2023, Bangladesh Bank [7] SMESPD Circular Letter No. 04, March 16, 2023, Bangladesh Bank [8] BRPD Circular Letter No. 09, March 19, 2023, Bangladesh Bank [9] FE Circular Letter No. 05, March 19, 2023, Bangladesh Bank [10] Public Debt Department, March 15, 2023, Central Bank of Sri Lanka [11] Public Debt Department, March 17, 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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