News Analysis India

Tag: Reserve Bank of India

  • RBI To Set Up Digital Payments Intelligence Platform To Combat Online Fraud |

    New Delhi: In a bid to bolster the safety and security of digital payments and enhance regulatory frameworks, the Reserve Bank of India (RBI) unveiled a series of proposals aimed at fostering innovation, inclusivity, and efficiency in the financial ecosystem.

    These initiatives, announced by RBI Governor Shaktikanta Das, signify the central bank’s commitment to fortifying India’s digital infrastructure and promoting a conducive environment for financial transactions. One of the key announcements made by Governor Das pertained to the establishment of a Digital Payments Intelligence Platform. 

    This platform, leveraging advanced technologies, aims to mitigate payment fraud risks and enhance the safety of digital transactions. According to the annual report released by the Reserve Bank of India (RBI) on May 30, there was a significant surge in the number of financial frauds reported by banks, increasing by 166 per cent year-on-year in the financial year 2023-24 to reach 36,075 cases.
    This figure starkly contrasts with the 13,564 cases reported in the previous fiscal year, FY23.

    Despite the notable rise in the number of fraud cases, there was a substantial decrease in the total amount involved in these incidents. The amount of money associated with total bank frauds plummeted by 46.7 per cent year-on-year in the financial year 2023-24, totaling Rs 13,930 crore. In comparison, the amount recorded in FY23 stood at Rs 26,127 crore.

    RBI has proposed a revision of the limit of bulk deposits for Scheduled Commercial Banks (SCBs) and Small Finance Banks (SFBs). This move, aimed at enhancing flexibility and aligning with evolving market dynamics, underscores the RBI’s commitment to fostering a conducive environment for the banking sector.

    Currently, banks have the discretion to offer differential rates of interest on bulk deposits based on their requirements and Asset-Liability Management (ALM) projections. The existing bulk deposit limit for SCBs (excluding Regional Rural Banks) and SFBs, set at ‘Single Rupee term deposits of Rs 2 crore and above,’ was established in 2019.

    However, following a comprehensive review, the RBI has proposed to revise this definition to ‘Single Rupee term deposits of Rs 3 crore and above’ for SCBs and SFBs. In addition to the proposed revision for SCBs and SFBs, the RBI has also suggested defining the bulk deposit limit for Local Area Banks (LABs) as ‘Single Rupee term deposits of Rs 1 crore and above,’ mirroring the criteria applicable to Regional Rural Banks (RRBs).

    RBI has also unveiled plans to rationalize export and import regulations under the Foreign Exchange Management Act (FEMA), 1999. This initiative, driven by the imperative of progressive liberalization and operational flexibility, underscores the RBI’s commitment to fostering a conducive environment for international trade and investment.

    By eliminating redundancies, enhancing clarity, and reducing procedural complexities, the RBI aims to promote ease of doing business for all stakeholders involved in cross-border trade.
    The RBI aims to streamline and simplify operational procedures related to export and import transactions, thereby reducing administrative burdens and enhancing efficiency for businesses and authorized dealer banks.

    By aligning regulations with international best practices and market realities, the RBI seeks to create a business-friendly environment conducive to fostering trade and investment growth. Simplified regulations will facilitate smoother trade transactions, encouraging businesses to explore new markets and expand their global footprint.

    While promoting ease of doing business, the RBI remains committed to ensuring compliance with regulatory requirements and safeguarding the integrity of the financial system. The proposed rationalization will uphold the principles of transparency, accountability, and risk management in cross-border transactions.

    As part of the process, the RBI plans to publish draft regulations and directions on its official website by the end of June 2024. In a bid to enhance the convenience and efficiency of digital payments, RBI has unveiled plans to expand the e-mandate framework to include recurring payments for Fastag, National Common Mobility Card (NCMC), and similar services.

    This initiative, aimed at modernizing payment systems and promoting financial inclusion, underscores the RBI’s commitment to fostering innovation and leveraging technology to meet evolving consumer needs. The current UPI Lite service permits customers to load their UPI Lite wallets with up to Rs 2000/- and conduct transactions of up to Rs 500 from the wallet.

    To enhance the seamless usage of UPI Lite for customers, and in response to feedback from various stakeholders, it is suggested to integrate UPI Lite into the e-mandate framework. This integration would introduce an auto-replenishment feature for UPI Lite wallets, automatically refilling the wallet balance when it falls below a predetermined threshold set by the customer.

    Since the funds remain under the customer’s control (transferring from their account to the wallet), it is proposed to eliminate the need for additional authentication or pre-debit notifications. Relevant guidelines pertaining to this proposal will be issued shortly.

    RBI has embarked on a mission to foster innovation and transformation in the financial sector with the launch of its third edition of the global hackathon, “HARBINGER 2024 – Innovation for Transformation.”

    It would feature two primary themes: ‘Zero Financial Frauds’ and ‘Being Divyang Friendly.’ Solutions aimed at bolstering the safety and security of digital transactions, with a specific emphasis on identifying, preventing, and combating financial frauds, will be solicited. Additionally, there will be a focus on fostering inclusivity for individuals with physical disabilities. Further details regarding the hackathon will be unveiled shortly.

  • Rs 2000 note exchange begins today

    Express News Service

    MUMBAI:  A day before the Reserve Bank of India opens the window for exchange of Rs 2,000 denomination currency notes, RBI governor Shaktikanta Das on Monday dismissed rumours of a new Rs 1,000 currency note being in the works. “There’s no such proposal right now,” he told reporters here on Monday in his first media interaction after the decision to withdraw the highest denomination note from circulation last Friday.

    As the window for customers to exchange Rs 2,000 notes in their possession will start on Tuesday, Das said there is no need to panic. Urging the public not to rush to banks, he said enough time has been given to exchange the notes. He reiterated the notes will remain legal tender (valid for transaction). The RBI governor’s comments came after reports said people and businesses have stopped accepting Rs 2,000 notes as a mode of payment.

    “Let me clarify and re-emphasise that it is a part of the currency management operations of the Reserve Bank. For a long time, the Reserve Bank has been following a clean note policy,” he said, adding: “From time to time, RBI withdraws notes of a particular series and issues fresh notes. We are withdrawing the Rs 2,000 notes from circulation but they continue as legal tender.”

    He expects most of the notes to be returned to the exchequer by the deadline of September 30 and no scarcity of other notes. “We have given a deadline so that the process will be taken seriously. We can’t leave it open-ended,” he said.

    RBI has urged the public to exchange or deposit these notew by September 30. “We have more than adequate quantities of printed notes already available in the system, not just with RBI but with currency chests operated by banks. There is no reason for worry. We have sufficient stocks, no need to worry,” Das clarified.

    The impact of the withdrawal on the economy will be “very very marginal”, he said, adding Rs 2,000 currency notes made up for just 10.8% of the total currency in circulation. While the withdrawn Rs 2,000 rupee notes can either be deposited in bank accounts or exchanged for other denomination notes, banks have been advised to make necessary arrangements for exchange.

    MUMBAI:  A day before the Reserve Bank of India opens the window for exchange of Rs 2,000 denomination currency notes, RBI governor Shaktikanta Das on Monday dismissed rumours of a new Rs 1,000 currency note being in the works. “There’s no such proposal right now,” he told reporters here on Monday in his first media interaction after the decision to withdraw the highest denomination note from circulation last Friday.

    As the window for customers to exchange Rs 2,000 notes in their possession will start on Tuesday, Das said there is no need to panic. Urging the public not to rush to banks, he said enough time has been given to exchange the notes. He reiterated the notes will remain legal tender (valid for transaction). 
    The RBI governor’s comments came after reports said people and businesses have stopped accepting Rs 2,000 notes as a mode of payment.

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    “Let me clarify and re-emphasise that it is a part of the currency management operations of the Reserve Bank. For a long time, the Reserve Bank has been following a clean note policy,” he said, adding: “From time to time, RBI withdraws notes of a particular series and issues fresh notes. We are withdrawing the Rs 2,000 notes from circulation but they continue as legal tender.”

    He expects most of the notes to be returned to the exchequer by the deadline of September 30 and no scarcity of other notes. “We have given a deadline so that the process will be taken seriously. We can’t leave it open-ended,” he said.

    RBI has urged the public to exchange or deposit these notew by September 30. “We have more than adequate quantities of printed notes already available in the system, not just with RBI but with currency chests operated by banks. There is no reason for worry. We have sufficient stocks, no need to worry,” Das clarified.

    The impact of the withdrawal on the economy will be “very very marginal”, he said, adding Rs 2,000 currency notes made up for just 10.8% of the total currency in circulation. While the withdrawn Rs 2,000 rupee notes can either be deposited in bank accounts or exchanged for other denomination notes, banks have been advised to make necessary arrangements for exchange.

  • SC directs Centre, RBI to put on record relevant records relating to govt’s decision on demonetisation

    By PTI

    NEW DELHI: The Supreme Court on Wednesday directed the Centre and the Reserve Bank of India (RBI) to put on record relevant records relating to the government’s 2016 decision to demonetise currency notes of Rs 1000 and Rs 500 denominations.

    Reserving its verdict on a batch of pleas challenging the Centre’s 2016 decision, a five-judge constitution bench headed by Justice S A Nazeer heard the submissions from Attorney General R Venkataramani, RBI’s counsel and the petitioners’ lawyers including senior advocates P Chidambaram and Shyam Divan.

    “Heard. judgement reserved. Learned counsels of the Union of India and Reserve Bank of India are directed to produce the relevant records,” the bench also comprising Justices B R Gavai, A S Bopanna, V Ramasubramanian, and B V Nagarathna,” said.

    The AG submitted before the bench that he will submit relevant records in a sealed cover.

    The top court was hearing a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.

    NEW DELHI: The Supreme Court on Wednesday directed the Centre and the Reserve Bank of India (RBI) to put on record relevant records relating to the government’s 2016 decision to demonetise currency notes of Rs 1000 and Rs 500 denominations.

    Reserving its verdict on a batch of pleas challenging the Centre’s 2016 decision, a five-judge constitution bench headed by Justice S A Nazeer heard the submissions from Attorney General R Venkataramani, RBI’s counsel and the petitioners’ lawyers including senior advocates P Chidambaram and Shyam Divan.

    “Heard. judgement reserved. Learned counsels of the Union of India and Reserve Bank of India are directed to produce the relevant records,” the bench also comprising Justices B R Gavai, A S Bopanna, V Ramasubramanian, and B V Nagarathna,” said.

    The AG submitted before the bench that he will submit relevant records in a sealed cover.

    The top court was hearing a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.

  • Report info on accounts of 10 terrorists to government: RBI tells banks 

    By PTI

    MUMBAI: The Reserve Bank on Thursday asked banks and other financial institutions to report to the government details about accounts resembling 10 individuals who have been designated as terrorists by the Union home ministry earlier this month.

    On October 4, the Union Ministry of Home Affairs (MHA) designated a total of 10 members of Hizbul Mujahideen (HM), Lashkar-e-Taiba (LeT) and other proscribed outfits as terrorists under the Unlawful Activities (Prevention) Act (UAPA). 

    Those designated as terrorists include Habibullah Malik alias Sajid Jutt, a Pakistani national, Basit Ahmad Reshi, who hails from Jammu and Kashmir’s Baramulla but is currently based in Pakistan, Imtiyaz Ahmad Kandoo alias Sajad, who hails from Jammu and Kashmir’s Sopore but now lives in Pakistan, Zafar Iqbal alias Salim, who is from Poonch but presently residing in Pakistan, and Sheikh Jameel-ur-Rehman alias Sheikh Sahab, who hails from Pulwama.

    The others are Bilal Ahmad Beigh alias Babar, who hails from Srinagar but is currently based in Pakistan, Rafiq Nai alias Sultan of Poonch, Irshad Ahmad alias Idrees from Doda, Bashir Ahmad Peer alias lmtiyaz of Kupwara and Showkat Ahmad Sheikh alias Showkat Mochi of Baramulla, currently based in Pakistan.

    In separate notifications, the MHA said Habibullah Malik was the key handler of the terrorists who carried out an attack on Indian soldiers in Poonch and has been involved in air-dropping of arms and communication systems through drones in the Jammu region for terrorists based in Jammu and Kashmir.

    “Regulated Entities (REs) are advised to take note of the aforementioned Gazette notifications issued by MHA for necessary compliance,” the RBI said in a notification.

    As per the RBI’s master direction on know your customer: “Details of accounts resembling any of the individuals/entities in the lists shall be reported to FIU-IND apart from advising Ministry of Home Affairs”.

    The Reserve Bank’s REs include, banks, all-India financial institutions (viz.Exim Bank, NABARD, NHB, SIDBI, and NaBFID), and NBFCs.

    MUMBAI: The Reserve Bank on Thursday asked banks and other financial institutions to report to the government details about accounts resembling 10 individuals who have been designated as terrorists by the Union home ministry earlier this month.

    On October 4, the Union Ministry of Home Affairs (MHA) designated a total of 10 members of Hizbul Mujahideen (HM), Lashkar-e-Taiba (LeT) and other proscribed outfits as terrorists under the Unlawful Activities (Prevention) Act (UAPA). 

    Those designated as terrorists include Habibullah Malik alias Sajid Jutt, a Pakistani national, Basit Ahmad Reshi, who hails from Jammu and Kashmir’s Baramulla but is currently based in Pakistan, Imtiyaz Ahmad Kandoo alias Sajad, who hails from Jammu and Kashmir’s Sopore but now lives in Pakistan, Zafar Iqbal alias Salim, who is from Poonch but presently residing in Pakistan, and Sheikh Jameel-ur-Rehman alias Sheikh Sahab, who hails from Pulwama.

    The others are Bilal Ahmad Beigh alias Babar, who hails from Srinagar but is currently based in Pakistan, Rafiq Nai alias Sultan of Poonch, Irshad Ahmad alias Idrees from Doda, Bashir Ahmad Peer alias lmtiyaz of Kupwara and Showkat Ahmad Sheikh alias Showkat Mochi of Baramulla, currently based in Pakistan.

    In separate notifications, the MHA said Habibullah Malik was the key handler of the terrorists who carried out an attack on Indian soldiers in Poonch and has been involved in air-dropping of arms and communication systems through drones in the Jammu region for terrorists based in Jammu and Kashmir.

    “Regulated Entities (REs) are advised to take note of the aforementioned Gazette notifications issued by MHA for necessary compliance,” the RBI said in a notification.

    As per the RBI’s master direction on know your customer: “Details of accounts resembling any of the individuals/entities in the lists shall be reported to FIU-IND apart from advising Ministry of Home Affairs”.

    The Reserve Bank’s REs include, banks, all-India financial institutions (viz.Exim Bank, NABARD, NHB, SIDBI, and NaBFID), and NBFCs.

  • Digital Rupee coming soon, on pilot basis

    By Express News Service

    BENGALURU: The Reserve Bank of India (RBI) is close to launching a ‘sovereign’ cryptocurrency to counter the growth of private digital currencies. It will soon begin a pilot launch of digital rupee (e`) or Central Bank Digital Currency (CBDC) for specific use cases.

     The central bank will introduce the digital rupee in a phased manner. “Currently, we are at the forefront of a watershed movement in the evolution of currency that will decisively change the very nature of money and its functions,” the RBI said in a statement on Friday.

    CBDC is the legal tender issued by a central bank in a digital form, and its introduction is expected to offer a range of benefits, such as reduced dependency on cash, lesser overall currency management cost, and reduced settlement risk.

    The Central bank issued a concept note on CBDC to create more awareness about the digital rupee. In the note said the CBDCs will give the public the benefits of virtual currencies while ensuring consumer protection by avoiding the damaging social and economic consequences of private virtual currencies. RBI will issue two types of CBDCs — wholesale and retail.

    While retail would be available to all, wholesale CBDC is for the settlement of interbank transfers and related wholesale transactions. A significant feature of the CBDC is that its offline feature will be beneficial in remote areas because of availability and resilience benefits when power or mobile network is unavailable.

    BENGALURU: The Reserve Bank of India (RBI) is close to launching a ‘sovereign’ cryptocurrency to counter the growth of private digital currencies. It will soon begin a pilot launch of digital rupee (e`) or Central Bank Digital Currency (CBDC) for specific use cases.

     The central bank will introduce the digital rupee in a phased manner. “Currently, we are at the forefront of a watershed movement in the evolution of currency that will decisively change the very nature of money and its functions,” the RBI said in a statement on Friday.

    CBDC is the legal tender issued by a central bank in a digital form, and its introduction is expected to offer a range of benefits, such as reduced dependency on cash, lesser overall currency management cost, and reduced settlement risk.

    The Central bank issued a concept note on CBDC to create more awareness about the digital rupee. In the note said the CBDCs will give the public the benefits of virtual currencies while ensuring consumer protection by avoiding the damaging social and economic consequences of private virtual currencies. RBI will issue two types of CBDCs — wholesale and retail.

    While retail would be available to all, wholesale CBDC is for the settlement of interbank transfers and related wholesale transactions. A significant feature of the CBDC is that its offline feature will be beneficial in remote areas because of availability and resilience benefits when power or mobile network is unavailable.

  • GDP to expand at 9.5 per cent as growth impulses strong: RBI Governor

    The fiscal and taxation reforms have played key role in driving growth and reviving confidence, Das said.

  • RBI issues revised Prompt Corrective Action framework for banks

    By PTI

    MUMBAI: The RBI on Tuesday issued a revised Prompt Corrective Action (PCA) framework for banks to enable supervisory intervention at “appropriate time” and also act as a tool for effective market discipline.

    Capital, asset quality and leverage will be the key areas for monitoring in the revised framework, the RBI said. The revised PCA framework will be effective from January 1, 2022.

    “The objective of the PCA Framework is to enable Supervisory intervention at an appropriate time and require the Supervised Entity to initiate and implement remedial measures in a timely manner, so as to restore its financial health,” the central bank said.

    The PCA framework is also intended to act as a tool for effective market discipline. The central bank also stressed that the PCA Framework does not preclude the Reserve Bank of India from taking any other action as it deems fit at any time, in addition to the corrective actions prescribed in the framework.

    “Indicators to be tracked for capital, asset quality and leverage would be CRAR/Common Equity Tier I Ratio, Net NPA Ratio and Tier I Leverage Ratio, respectively,” according to the revised framework.

    Breach of any risk threshold may result in invocation of the PCA. The framework will apply to all banks operating in India, including foreign banks operating through branches or subsidiaries based on breach of risk thresholds of identified indicators.

    “A bank will generally be placed under PCA framework based on the Audited Annual Financial Results and the ongoing Supervisory Assessment made by RBI.

    “RBI may impose PCA on any bank during the course of a year (including migration from one threshold to another) in case the circumstances so warrant,” it said. The framework also details conditions for exit from PCA and withdrawal of restrictions. If a bank is put under the PCA, several restrictions are placed on it.

    The restrictions are imposed on dividend distribution and remittance of profits, bringing in the capital (in the case of foreign banks), branch expansion, and capital expenditure. The framework was last revised in April 2017.

  • NBFCs: Reserve Bank of India to step up vigil with four-layered regulatory framework

    By PTI

    MUMBAI: The Reserve Bank of India (RBI) will put in place a four-layered regulatory structure for non-banking financial companies to keep a stricter vigil on the shadow banking sector and minimise risks for the overall financial system.

    The detailed set of norms, which will come into force from October 2022, provides for a Scale Based Regulation (SBR) framework that takes into consideration capital requirements, governance standards, prudential regulation and other aspects of the Non-Banking Financial Companies (NBFCs).

    The central bank’s latest move, after extensive stakeholder consultations, also comes against the backdrop of previous instances, including the collapse of IL&FS in 2018 and later DHFL, that had a spillover impact on the entire financial system, especially in terms of liquidity woes.

    Since then, the focus shifted to having tighter regulations rather than a light touch approach for the country’s shadow banking sector.

    Unveiling the four-layered framework, RBI on Friday said that over the years, the NBFC sector has undergone considerable evolution in terms of size, complexity, and interconnectedness within the financial sector.

    Many entities have grown and become systemically significant, and hence there is a need to align the regulatory framework for NBFCs keeping in view their changing risk profile, it said in a statement.

    To begin with, the central bank will issue an integrated regulatory framework for NBFCs, providing a holistic view of the SBR structure, set of fresh regulations being introduced and respective timelines.

    NBFCs will be split into four layers — Base Layer (BL), Middle Layer (ML), Upper Layer (UL) and Top Layer (TL).

    The Base Layer will consist of NBFCs currently classified as non-systemically important NBFCs (NBFC-non deposit taking), besides Type I NBFCs, non-operative financial holding company, NBFC-P2P (Peer to Peer lending platform) and NBFC-AA (Account Aggregator).

    The asset size threshold for this layer will be less than Rs 1,000 crore.

    Currently, the threshold for systemic importance is Rs 500 crore.

    The Middle Layer will consist of all non-deposit taking NBFCs classified currently as NBFC-ND-SI (Non-Deposit Taking Company-Systematically Important) with asset size of over Rs 1,000 crore and all deposit taking NBFCs irrespective of size.

    The upper layer will comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters.

    The top ten eligible NBFCs in terms of their asset size shall always reside in the upper layer, irrespective of any other factor, RBI said.

    “The Top Layer will ideally remain empty. This layer can get populated if the Reserve Bank is of the opinion that there is a substantial increase in the potential systemic risk from specific NBFCs in the Upper Layer. Such NBFCs shall move to the Top Layer from the Upper Layer,” it noted.

    Regulatory minimum Net Owned Fund (NOF) for NBFC-Investment and Credit Companies (ICC), NBFC Micro Finance Institution (MFI) and NBFC-Factors would be increased to Rs 10 crore and a glide path has been charted out for meeting this requirement.

    However, for NBFC-P2P, NBFC-AA, and NBFCs with no public funds and no customer interface, the NOF will continue to be Rs 2 crore.

    The extant NPA classification norm stands changed to the overdue period of more than 90 days for all categories of NBFCs.

    A glide path is provided to NBFCs in base layer to adhere to the 90 days NPA norm, the statement said.

    In order to enhance the quality of regulatory capital, RBI said that NBFC-UL would maintain Common Equity Tier 1 capital of at least 9 per cent of Risk Weighted Assets while they will be required to hold differential provisioning towards different classes of standard assets.

    In addition to the CRAR, NBFC-UL will also be subjected to leverage requirement to ensure that their growth is supported by adequate capital, among other factors.

    A suitable ceiling for leverage will be prescribed subsequently for these entities as and when necessary.

    According to RBI, Housing Finance Companies would continue to follow specific regulation on sensitive sector exposure, as are currently applicable.

    There shall be a ceiling of Rs 1 crore per borrower for financing subscription to Initial Public Offer (IPO).

    NBFCs can fix more conservative limits, RBI said.

    Further, the central bank has outlined large exposure limit for all counterparties and groups of connected counterparties and for the capital market and commercial real estate.

    To strengthen corporate governance, it has suggested inclusion of independent directors on the board, among other requirements.

  • RBI remains laser-focused to bring back inflation to 4 per cent: Governor Das

    He opined that continued monetary support is necessary as the economic recovery process even now is delicately poised and growth is yet to take firmer roots.

  • RBI penalises 2 co-op banks for deficiencies in regulatory compliance

    By PTI

    MUMBAI: The Reserve Bank of India (RBI) on Wednesday said it has imposed penalties on two cooperative banks for deficiencies in certain regulatory compliance.

    A penalty of Rs 5 lakh has been imposed on The Swasakthi Mercantile Cooperative Urban Bank, Vijayawada, for contravention of/ non-compliance with certain provisions of the directions issued under a 2015 circular on ‘Board of Directors- UCBs’.

    In another statement, the RBI said a penalty of Rs 40,000 has been imposed on Shikshak Sahakari Bank, Nagpur, for non-compliance with regulatory directions contained in the directive on ‘Membership of Credit Information Companies (CICs)’ and the provisions of Credit Information Companies Rules, 2006.

    In both cases, however, the central bank said the action on the lenders was based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by them with their customers.