• AK & Partners

AKP Banking & Finance Digest- May 09, 2022

Updated: Sep 22

Read this week in our update, 225 circulars were withdrawn by RBI as recommended by Regulations Review Authority. RBI revised the policy repo rate.


Highlights of the Week:
RBI withdraws 225 circulars
RBI changes policy repo rate
RBI directs banks to remain open on May 8, 2022 to facilitate processing of applications for LIC IPO
RBI increases Cash Reserve Ratio


1. RBI withdraws 225 circulars

The Reserve Bank of India (RBI) has notified the withdrawal of 225 circulars as proposed by the Regulations Review Authority (RRA) in the third tranche of recommendations. Further, lists of circulars recommended for withdrawal have been issued separately.[1]



2. RBI held its 595th Board meeting

RBI held its 595th meeting of the Central Board of Directors (Board) under the chairmanship of Shri Shaktikanta Das, Governor, RBI. In its meeting, the Board approved the nomination of Dr. Rajiv Ranjan, Executive Director, RBI as an ex-officio member of the Monetary Policy Committee.[2]



3. RBI changes policy repo rate

RBI has released the Monetary Policy Statement wherein it was announced to increase the policy Repo rate under the Liquidity Adjustment Facility (LAF) by 40 basis points from 4.00% to 4.40%. Further, the standing deposit facility (SDF) rate and marginal standing facility (MSF) rate has been increased from 3.75% to 4.15% and from 4.25% to 4.65% respectively. [3]



4. RBI directs banks to remain open on May 8, 2022 to facilitate processing of applications for LIC IPO

RBI has directed all banks to open their branches designated to process Application Supported by Blocked Amount (ASBA) on Sunday, May 8, 2022. This is done in order to facilitate bidding for Life Insurance Corporation (LIC) Initial Public Offering (IPO). Further, RBI has directed banks to ensure compliance with master circular on customer service in banks dated July 1, 2015 for the above-mentioned purpose.[4]



5. RBI announces repo rate under Standing Liquidity Facility

RBI has notified that the revised repo rate of 4.40% shall be applicable under Standing Liquidity Facility provided to primary dealers. This shall be applicable from May 4, 2022.[5]



6. RBI revises Bank rate

RBI has notified the revision of the Bank rate from 4.25% to 4.65%. This shall come into effect from May 4, 2022. All penal interest rates linked to Bank rate has been annexed in the notification dated May 4, 2022.[6]



7. RBI increases Cash Reserve Ratio

RBI has notified all banks to increase their Cash Reserve Ratio by 50 basis points from 4.00% to 4.50% of their Net Demand and Time Liabilities (NDTL). This shall come into effect from May 21, 2022. [7]



8. RBI penalizes NBFCs

RBI has imposed monetary penalty on the following non-banking finance companies (NBFCs):

Name of the NBFC

Penalty Imposed (in INR)

Reason

Daimler Financial Services India Private Limited, Pune, Maharashtra[8]

5 (five) lakhs

Non-compliance with the ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016’ issued by RBI.

​KKR India Financial Services Limited, Mumbai[9]

5 (five) lakhs

Non-compliance with the ‘Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016’ issued by RBI.



[1] Press Release: 2022-2023/145, Reserve Bank of India, May 2, 2022 [2] Press Release: 2022-2023/148, Reserve Bank of India, May 2, 2022 [3] RBI/2022-23/42FMOD.MAOG.No.144/01.01.001/2022-23, Reserve Bank of India, May 4, 2022 [4] RBI/2022-23/43DOR.LEG.REC.No.35/09.07.005/2022-23, Reserve Bank of India, May 4, 2022 [5] RBI/2022-23/44REF.No.MPD.BC.S33/07.01.279/2022-23, Reserve Bank of India, May 4, 2022 [6] RBI/2022-23/45DOR.RET.REC.32/12.01.001/2022-23, Reserve Bank of India, May 4, 2022 [7] RBI/2022-23/46DOR.RET.REC.33/12.01.001/2022-23, Reserve Bank of India, May 4, 2022

[8] Press Release: 2022-2023/174, Reserve Bank India, May 6, 2022 [9] Press Release: 2022-2023/173, Reserve Bank India, May 6, 2022

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