AK & Partners
AKP Banking & Finance Digest- November 28, 2022
1.1. Inclusion of Goods and Service Tax Network (GSTN) as a Financial Information Provider under Account Aggregator Framework
RBI has provided for the inclusion of the Goods and Service Tax Network (GSTN) as a Financial Information Provider under the Account Aggregator Framework in a circular dated November 23, 2022. For this purpose, the Department of Revenue will be the GSTN's regulator, and Goods and Services Tax (GST) Returns, namely Form GSTR-1 and Form GSTR-3B, will be the Financial Information.
1.2. Basel III Framework on Liquidity Standards – Standing Deposit Facility
On November 23, 2022, the Reserve Bank of India announced that overnight balances held by banks with the RBI under the Standing Deposit Facility (SDF) will be eligible as 'Level 1 High-Quality Liquid Assets (HQLA)' for the calculation of Liquidity Coverage Ratio (LCR).
RBI made this announcement in response to banks' requests for clarification on the treatment of SDF under the liquidity risk management framework, and this circular will apply to all commercial banks (excluding Local Area Banks, Regional Rural Banks and Payments Banks).
1.3. Interest subvention on Kisan Credit Card crop loan to continue in FY23, FY24
Reserve Bank of India (RBI) announced that the interest rate for short-term loans up to Rs 300,000 made through Kisan Credit Cards (KCC) will be 7%, with a 1.5% interest subsidy for the current fiscal year (FY23) and the following fiscal year (FY24).
Farmers who repay their loans on time will receive an additional 3% subsidy. As a result, the interest rate charged to these farmers will be 4%. On the basis of their own resources, the subvention will be provided to lenders such as Public Sector Banks (PSBs) and Private Sector Banks (rural and semi-urban branches), Small Finance Banks (SFBs), and computerized Primary Agriculture Cooperative Societies (PACS).
1.4. RBI imposes monetary penalty on The Parwanoo Urban Co-operative Bank Limited, Parwanoo, Himachal Pradesh
Reserve Bank of India (RBI) has imposed, by an order dated November 15, 2022, a monetary penalty of ₹3.00 lakh (Rupees Three Lakh only) on The Parwanoo Urban Co-operative Bank Limited, Parwanoo, Himachal Pradesh (the bank) for contravention of section 35A and section 36 (1) (a) read with section 56 of the Banking Regulation Act, 1949. The investigation conducted by RBI revealed that the bank failed to comply with specific directions issued to it by RBI under Supervisory Action Framework (SAF).
2.1. CMSMEs will get a credit facility from the 25,000Cr refinancing scheme
Apart from term loans, now a cottage, micro, small and medium enterprises (CMSMEs) will get credit-guarantee facility against working capital and trading capital under the Tk25,000 crore refinancing scheme. According to the circular, the loan limit under the credit guarantee scheme is fixed between Tk25,000 and Tk1 crore for the clients involved in cottage and micro-level production and service sectors. The customers in the small-level production sector will get credit ranging from Tk1 lakh to Tk3 crore, while such groups of people in the service sector will get loans from Tk25,000 to Tk1 crore.
2.2. Banks urged to speed up disbursing agricultural loans
Bangladesh Bank on Tuesday instructed private banks to expedite their farm loan disbursements to enhance domestic food security. Lenders have been asked to give out 30% more loans instead of sticking to the annual disbursement target set by the central bank. Bangladesh Bank formed a Tk5,000 crore refinance scheme last week to ensure food security in the country as the banking regulator thinks the world might face a food crisis in the days to come. The prices of several food items have gone up in the global market, which is why the central bank has formed a fund such that farmers can get low-cost loans.
3. Sri Lanka
3.1. Central Bank of Sri Lanka inflation at 4%-5% by the end of 2023
Central Bank of Sri Lanka published a report stating that Sri Lanka’s inflation is expected to significantly cool in the coming months after peaking near 70 per cent this year. Further consumer price gains are seen to ease to 4-5 per cent by the end of 2023 as per the report.
 Press Release: RBI/2022-23/140 Reserve Bank of India, November 23, 2022  Press Release: RBI/2022-23/141 Reserve Bank of India, November 23, 2022  Press Release: RBI/2022-23/139 Reserve Bank of India, November 23, 2022  Press Release: 2022-2023/1238 Reserve Bank of India, November 23, 2022
* Image credits: RBI
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