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AKP Banking & Finance Digest- November 21, 2022

1. INDIA


1.1.RBI issues notification on Agency Commission for Direct Tax collection under the TIN 2.0 regime


On November 14, 2022, the Reserve Bank of India directed agency banks to submit their claims for agency commission in the prescribed format to CAS Nagpur for central government transactions and the respective regional office of the Reserve Bank of India for state government transactions.


Paragraph 21 of Master Circular on Conduct of Government Business by Agency Banks - Payment of Agency Commission dated April 1, 2022, has been modified as follows as a result of this notification:


"Agency banks must submit their agency commission claims in the prescribed format to CAS Nagpur for central government transactions and to the respective regional office of the Reserve Bank of India for state government transactions."


However, agency commission claims for GST receipt transactions and transactions related to direct tax collection under the TIN 2.0 regime will be settled only at the Reserve Bank of India's Mumbai Regional Office, and all agency banks authorised to collect GST and direct tax collection under the TIN 2.0 regime are advised to submit their agency commission claims pertaining to the respective receipt transactions only at the Mumbai Regional Office[1]


1.2. Exim Bank’s GoI supported Line of Credit of USD 300 Mn to the SBM (Mauritius) Infrastructure Development Company Ltd. for the Construction of Phase-IV of the Mauritius Metro Express Project in Mauritius


Export-Import Bank of India (Exim Bank) has entered into an agreement with the SBM (Mauritius) Infrastructure Development Company Ltd (SBMIDCL) dated October 17, 2022, to make available to the latter a Government of India-supported Line of Credit (LoC) of USD 300 million (USD Three Hundred Million Only) for the purpose of financing the latter's participation through Redeemable Preference Shares in public sector entities to implement the construction of Phase-IV of the Metro Express.


Out of the total credit provided by Exim Bank under the agreement, the seller must supply goods, works, and services worth at least 75% of the contract price from India, and the remaining 25% of goods and services may be procured from outside India for the purpose of the eligible contract[2].


1.3. RBI imposes a penalty on cooperative banks for violation of KYC norms


RBI has imposed a monetary penalty of INR 2.5 lakhs (Indian Rupee Two Lakhs and Fifty Thousand only), INR 1 lakh (Indian Rupees One Lakh only) and INR 3.10 lakhs (Indian Rupees Three Lakhs and Ten Thousand only) on Osmanabad Janata Sahakari Bank[3], Renuka Nagrik Sahakari Bank Maryadit of Ambikapur[4], Berhambpur Cooperative Urban Bank Ltd of Odisha[5], respectively for violation of the Know- You Customer (“KYC”) norms. The violations were with respect to risk categorization, KYC periodic upgradation, exposure limits system of detection of suspicious transactions, and allotment of the unique customer identification numbers.

1.4. RBI imposes monetary penalty on Nawanagar Co-operative Bank


RBI has imposed a monetary penalty of INR 25,000 (Indian Rupees Twenty-Five Thousand only) on Nawanagar Co-operative Bank Ltd., Jamnagar for contravention of RBI directions on ‘Loans and advances to directors etc.- directors as surety/ guarantors- Clarification’. The inquiry conducted by RBI revealed that the bank had sanctioned a loan, wherein a relative of its director stood as surety/guarantor, resulting in contravention of aforesaid directions issued by RBI [6].


1.5. RBI imposes monetary penalty on Jila Sahakari Kendriya Maryadit Bank


RBI has imposed a penalty of INR 1 lakh (Indian Rupee One Lakh only) on Jila Sahakary Bank of Balaghat, Madhya Pradesh for violation of NABARD directions on ‘Frauds- Guidelines for Classification, Reporting and Monitoring’. The inquiry conducted by RBI revealed that the bank had (i) delayed submission of OSS returns to NABARD and (ii) had reported frauds to NABARD with delay in contravention of/ non-compliance with the provisions of the Act and aforesaid directions issued by NABARD [7].


1.6. RBI imposes monetary penalty on Krishna Mercantile Co-operative Bank


RBI has imposed a penalty of INR 50, 000 (Indian Rupees Fifty Thousand only) on Krishna Mercantile Co-operative Bank, Bhopal for violation of RBI directions to Urban Co-operative banks on Exposure Norms and Statutory/ Other Restrictions. The inquiry conducted by RBI revealed that the bank had exceeded the prudential inter-bank (Gross) exposure limit, in contravention of/ non-compliance with the aforesaid directions issued by RBI. [8]


1.7. RBI imposes monetary penalty on Jamshedpur Urban Co-operative Bank Ltd., Jamshedpur, Jharkhand


RBI has imposed a penalty of INR 1 lakh (Indian Rupees One Lakh only) on Jamshedpur Urban Cooperative Bank Ltd, Jamshedpur for contravention of specific directions under the Supervisory Action Framework. The inquiry conducted by RBI revealed that the bank based on its financial position as on March 31, 2020, revealed, inter alia, non-adherence/violation of specific directions issued to the bank by RBI under SAF. [9]


2. Bangladesh


2.1. Bangladesh bank forms Tk 5,000cr refinance scheme for farmers to boost food production


Bangladesh Bank has established a Tk 5,000 crore refinance scheme for farmers, with the goal of ensuring food security by increasing domestic production in the face of a worsening global food crisis. According to a central bank notice, farmers will receive loans for cultivating paddy, fish, and vegetables at a 4% interest rate, which they can repay in 18 months, including three months grace period. Furthermore, banks will be able to borrow from the central bank at a 0.5% interest rate in order to provide loans to farmers under this scheme.


2.2. Encashment certificate against inward remittances on account of Information Technology Enabled Services (ITES) exports

Central Bank of Bangladesh ("CBB") has issued a circular allowing mobile financial service (MFS) providers to repatriate (conversion of foreign currency into local currency) export income and inward remittance. Accordingly, all authorized dealers will provide encashment certificates to MFS providers against inward remittance, on account of information technology-enabled services (ITES) exports. [10]


2.3. Bangladesh Bank curtails banks’ power to waive interest on loans

Central Bank of Bangladesh ("CBB") has issued a circular seeking to curtail the powers of the board of directors of banks to waive interest on loans without consultations with the relevant departments. The circular stated that in essential cases, the opinion of the head of internal control and compliance (“HICC”) should be taken through the internal audit department of the bank to confirm the rationale for the relaxation of the conditions for the collection of funds.

[1] Press Release: 2022-2023/1177 Reserve Bank of India, November 10, 2022 [2] Press Release: 2022-2023/1177 Reserve Bank of India, November 10, 2022 [3] Press Release: 2022-2023/1200, Reserve Bank of India, November 14, 2022. [4] Press Release: 2022-2023/1198, Reserve Bank of India, November 14, 2022. [5] Press Release: 2022-2023/1196, Reserve Bank of India, November 14, 2022. [6] Press Release: 2022-2023/1202, Reserve Bank of India, November 14, 2022. [7] Press Release: 2022-2023/1199, Reserve Bank of India, November 14, 2022. [8] Press Release: 2022-2023/1197, Reserve Bank of India, November 14, 2022. [9] Press Release: 2022-2023/1194, Reserve Bank of India, November 14, 2022. [10] FE Circular No. 31 Bangladesh Bank, November 14, 2022


* Image credits: RBI


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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