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AKP Banking & Finance Digest- November 7, 2022

  1. INDIA

1.1. RBI launches its first pilot in the Digital Rupee – Wholesale segment on 1st November 2022.

On November 1, 2022, the Reserve Bank of India ("RBI") launched its first pilot in the Digital Rupee - Wholesale segment (e-W). The use of e-W is expected to improve the efficiency of the interbank market. Settlement in central bank money would reduce transaction costs by pre-empting the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk. RBI has identified nine banks to participate in the pilot project, and details about the pilot's implementation will be communicated in due course[1].

1.2. RBI notifies eligibility criteria for offering Internet Banking Facility by Regional Rural Banks, 2022.

To encourage the spread of digital banking for rural customers, the RBI has revised the eligibility criteria for Regional Rural Banks (“RRB”) to offer Internet Banking with a transactional facility to their customers on November 1, 2022. The revised eligibility criteria to seek approval for providing Internet Banking with transactional facility by RRBs includes criteria like the full implementation of Core Banking Solutions (CBS) and migration to IPv6, Compliance with minimum prescribed CRAR requirements as applicable from time to time. The net worth of ₹50 crores or more as on March 31 of the previous financial year, Net NPA of not more than 5% as on March 31 of the previous financial year and net profit in the two immediately preceding financial years etc[2].

1.3. Meeting of the Monetary Policy Committee, November 3, 2022,

On November 3, 2022, a separate meeting of the Monetary Policy Committee (MPC) was held to discuss and draft the report that the Reserve Bank of India would send to the Government. MPC meet to discuss why it failed to keep retail inflation below the target for three consecutive quarters[3].

1.4. RBI imposes monetary penalty on LIC Housing Finance Limited, Mumbai

The Reserve Bank of India (RBI) has, by an order dated October 21, 2022, imposed a monetary penalty of ₹5.00 lakh (Rupees Five lakh only) on LIC Housing Finance Limited, Mumbai (the company) for non-compliance with certain provisions of “The Housing Finance Companies (NHB) Directions, 2010” issued by the National Housing Bank (NHB) on July 02, 2018, read with the press release dated August 13, 2019, issued by the Reserve Bank of India (the Bank) on “Transfer of Regulation of Housing Finance Companies (HFCs) to Reserve Bank of India”. The investigation by RBI revealed that the company’s failure to create a floating charge in favour of its depositors on a portion of the assets invested by it in terms of Section 29B of the National Housing Bank Act, 1987, and non-registration of such charge with the Registrar of Companies[4].

1.5. RBI imposes monetary penalty on The Jammu and Kashmir State Co-operative Bank Limited, Srinagar, Jammu and Kashmir

The Reserve Bank of India (RBI) has imposed, by an order dated October 28, 2022, a monetary penalty of ₹30.00 lakh (Rupees Thirty Lakh only) on The Jammu and Kashmir State Co-operative Bank Limited, Srinagar, Jammu and Kashmir (the bank) for non-compliance with RBI directions on ‘Income Recognition, Assets Classification, Provisioning and Other Related Matters. The investigation by NABARD revealed that with reference to the bank’s financial position as on March 31, 2020, revealed, inter alia, non-compliance by the bank with aforesaid directions issued by RBI[5].

1.6. Cancellation of license to carry on banking business in India of Rupee Co-operative Bank Ltd., Pune

The Reserve Bank of India, vide order No.DOR.MON.LC-04/12.22.218/2022-23 dated August 08, 2022, had cancelled the banking license of Rupee Co-operative Bank Ltd, Pune on August 10, 2022, under Section 22 read with Section 56 of the Banking Regulation Act, 1949[6].

1.7. RBI imposes monetary penalty on The Pratap Co-operative Bank Ltd., Mumbai

The Reserve Bank of India (RBI) has, by an order dated October 17, 2022, imposed a monetary penalty of ₹6 lakh (Rupees Six lakh only) on The Pratap Cooperative Bank Ltd., Mumbai (the bank) for non-compliance with certain provisions of the ‘Reserve Bank of India – (Know Your Customer (KYC)) Direction, 2016. The investigation by RBI revealed that the bank had failed to put in place (i) a system for periodic updates of KYC of accounts, (ii) a system of periodic review of risk categorisation of accounts and (iii) a robust software to throw alerts as part of effective identification and reporting of suspicious transactions.[7]


2. Bangladesh


2.1. The Central Bank of Bangladesh (“CBB”) directed Banks to remain open 10 am-5 pm from November 15

The Bangladesh Bank has established a new schedule for office and transaction hours at banks across the country, effective November 15. According to the circular, banks will be open from 10 a.m. to 5 p.m., with banking transactions continuing until 3:30 p.m. The new office hours will begin on November 15.[8]


3. Sri Lanka


3.1. Sri Lanka Bank releases Complaint Resolution Process for CBSL Financial Consumer Protection Framework


The Central Bank of Sri Lanka introduced a 2 Stage Complaint Resolution Process for Financial Consumers under CBSL Financial Consumer Protection Framework. In the new simplified process, the customer can refer the complaint to the Financial Consumer Relations Department for Central Bank of Sri Lanka intervention to reach an amicable settlement with the financial service provider.


[1] Press Release: 2022-2023/1118 Reserve Bank of India, October 31, 2022

[2] Notification: RBI/2022-23/135 Reserve Bank of India, November 01, 2022

[3] Press Release: 2022-2023/1141 Reserve Bank of India, November 03, 2022

[4] Press Release: 2022-2023/1121 Reserve Bank of India, October 31, 2022

[5] Press Release: 2022-2023/1113 Reserve Bank of India, October 31, 2022

[6] Press Release: 2022-2023/1136 Reserve Bank of India, November 02, 2022

[7] Press Release: 2022-2023/1120 Reserve Bank of India, October 31, 2022

[8] DOS Circular Letter No. 35, Central bank of Bangladesh November 3, 2022



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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