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AKP Banking & Finance Digest- May 02, 2022

Updated: Sep 22

Read this week in our update, Compensation guidelines for KMPs and senior management in NBFCs issued by RBI. RBI issued master direction on the issuance of credit cards and debit cards.


Highlights of the Week:
RBI issues master direction for issuance and conduct of credit card and debit card
RBI issues Guidelines on Compensation of Key Managerial Personnel (KMP) and Senior Management in NBFCs
RBI extends the applicability of Legal Entity Identifier guidelines
RBI penalizes banks



1. RBI issues master direction for issuance and conduct of credit card and debit card

RBI has issued master direction for the issuance of credit and debit cards (Directions). These Directions shall apply to every scheduled bank and all NBFCs operating in India and shall take effect on July 1, 2022. These Directions address general and conduct regulations for credit, debit, and co-branded cards, and shall be read along in conjunction with prudential, payment, and technological and cyber security directions for credit, debit, and co-branded cards. [1]



2. RBI extends the applicability of Legal Entity Identifier guidelines

RBI has extended guidelines on Legal Entity Identifier (LEI) to primary (urban) co-operative banks (UCBs) and NBFCs. Non-individual borrowers with a total exposure of INR 5 crore or more to banks and financial institutions (FIs) shall get LEI codes within the deadline prescribed.[2]



3. RBI issues Guidelines on Compensation of KMP and Senior Management in NBFCs

The Reserve Bank of India (RBI) has issued guidelines on the compensation of key managerial personnel (KMP) and senior management for all non-banking finance companies (NBFCs) to address the issues arising from excessive risk taking caused by misaligned compensation packages. NBFCs shall now be required to put in place a board-approved compensation policy. These guidelines shall come into effect from April 01, 2023.[3]


4. RBI penalizes banks

RBI has imposed monetary penalty on:

Name of the Bank

Penalty Imposed (in INR)

Reason

Central Bank of India[4]

36 lakhs (Indian Rupees Thirty-Six Lakh only) Hundred and Sixty-Five Only)

Contravention of/non-compliance with certain directions issued by RBI on ‘Customer Protection–Limiting Liability of Customers in Unauthorized Electronic Banking Transactions’.

Bank of Maharashtra[5]

1.12 Crore (Indian Rupees One Crore and Twelve Lakh only)

Contravention of/non-compliance with certain directions issued by RBI on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’ ‘Creation of a Central Repository of Large Common Exposures - Across Banks’ read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, and ‘Guidelines on Managing Risks and Code of Conduct in Outsourcing of Financial Services by banks’.





[1] RBI/2022-23/92DoR.AUT.REC.No.27/24.01.041/2022-23, Reserve Bank of India, April 21, 2022 [2] RBI/2022-23/34DOR.CRE.REC.28/21.04.048/2022-23, Reserve Bank of India, April 21, 2022 [3] RBI/2022-23/36DOR.GOV.REC.No.29/18.10.002/2022-23, Reserve Bank of India, April 29,2022 [4] Press Release: 2022-2023/105, Reserve Bank of India, April 22, 2022

[5] Press Release: 2022-2023/111, Reserve Bank of India, April 25, 2022

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