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AKP Banking & Finance Digest- November 14, 2022

Updated: 6 days ago

  1. INDIA

1.1. RBI releases the Report on Municipal Finances

Reserve Bank of India (RBI) published the Municipal Finances Report. The report's theme is 'Alternative Sources of Financing for Municipal Corporations,' and it compiles and analyses budgetary data for 201 municipal corporations (MCs) across all states. Reserve Bank of India (RBI) has identified several flaws in the functioning of municipal corporations, stating that despite the structure of local governance in India, there has been no discernible improvement in their functioning. As per an RBI report, municipal corporations should adopt sound and transparent accounting practices, including proper monitoring and documentation of various receipts and expenditure items[1].

1.2. RBI cancels Certificate of Registration of two NBFCs

Reserve Bank of India (RBI), in the exercise of powers, conferred to it under Section 45-IA (6) of the Reserve Bank of India Act, 1934, has cancelled the Certificate of Registration of two companies namely Grihastha Finance Limited and Pawan Motor and General Finance Private Limited. In accordance with this, the above companies shall not transact the business of a non-banking financial institution, as defined in clause (a) of Section 45-I of the RBI Act, 1934[2].

1.3. RBI imposes monetary penalty on Pragati Mahila Nagarik Sahakari Bank Maryadit, Bhilai (Chhattisgarh)

Reserve Bank of India (RBl) has imposed, by an order dated November 04, 2022, a monetary penalty of ₹1 lakh (Rupees one lakh only) on Pragati Mahila Nagarik Sahakari Bank Maryadit, Bhilai (Chhattisgarh) (the bank) for contravention of/ non-compliance with the directions issued by RBI to urban co-operative banks on “Exposure Norms and Statutory / Other Restrictions – UCBs”. An investigation by RBI revealed that the bank had sanctioned unsecured advances above the permissible limit in certain cases, in contravention of/ non-compliance with the aforesaid directions issued by RBI[3].


1.4. RBI cancels the licence of Babaji Date Mahila Sahakari Bank Limited, Yavatmal, Maharashtra

Reserve Bank of India (RBI), vide order dated November 09, 2022, has cancelled the licence of “Babaji Date Mahila Sahakari Bank Limited, Yavatmal, Maharashtra”. Consequently, the bank ceases to carry on banking business, with effect from the close of business on November 11, 2022. Consequent to the cancellation of its license, "Babaji Date Mahila Sahakari Bank Limited, Yavatmal, Maharashtra" is prohibited from conducting the business of "banking," which includes, among other things, accepting deposits and repaying deposits, as defined in Section 5(b) read with Section 56 of the Banking Regulation Act, 1949[4].


2. BANGLADESH


2.1. Central Bank of Bangladesh (“CBB”) raised the interest rate on dollar loans from the Export Development Fund (EDF)


To rein in depleting forex reserves, Bangladesh Bank has raised the interest rate on dollar loans from the Export Development Fund (EDF) to export-oriented apparel manufacturers. The central bank will now charge 2.5% per year and banks will charge 4% on EDF loans extended to banks[5].


2.2. Central bank of Bangladesh (“CBB”) allows banks can now lend to CMSMEs from refinancing scheme

Central Bank of Bangladesh ("CBB") has approved loans for working capital to the cottage, micro, small, and medium enterprises (CMSMEs) under the 25,000 (TK) crore refinance scheme. According to the circular issued by the SME and Special Programs Department on Tuesday, the entrepreneurs of the CMSME sector in Bangladesh are also facing huge losses as a result of the ongoing Russia-Ukraine war and rising global inflation.

2.3. Central bank of Bangladesh (“CBB”) allows the removal of a cap to loan coal-based power plants

Bangladesh Bank (BB) has withdrawn the lending limit for coal-fired power plants in an effort to increase power generation. According to the directive, banks can lend money to set up coal-based power plants as needed for power generation over the next five years, according to UNB. As a result, for the next five years, the calculation of lending 25% of the reserved capital to obtain bank loans will be ineffective.

3. SRI LANKA


3.1. Central Bank publishes “Recent Economic Developments: Highlights of 2022 and Prospects for 2023


Central Bank of Sri Lanka published a report on “Recent Economic Developments: Highlights of 2022 and Prospects for 2023”. According to the report, the economy has "shown signs of stability in the second half of the year thus far, aided by a plethora of multifaceted policy interventions undertaken to steer the economy toward a path of stable and sustainable growth over the medium term."



[1] Press Release: 2022-2023/1175 Reserve Bank of India, November 10, 2022

[2] Press Release: 2022-2023/1177 Reserve Bank of India, November 10, 2022

[3] Press Release: 2022-2023/1177 Reserve Bank of India, November 10, 2022

[4] Press Release: 2022-2023/1186 Reserve Bank of India, November 11, 2022

[5] FE Circular No. 30, November 8, 2022, Bangladesh Bank




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.


For further queries or details you may contact:

Mr Anuroop Omkar,

Partner, AK & Partners

anuroop@akandpartners.in


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