Ruti Rajeshwari
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News
Summary
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RBI on Friday decided to transfer its FY22
surplus of Rs 30,307 crore to the government
RBI surplus transfer lowest in a decade
Board decided to maintain the contingency risk buffer at 5.5%.
The dividend is less than a third of the central bank’s generous
transfer of Rs 99,122 crore for FY21, which was, in fact, based
on the RBI’s surplus over a nine-month period through March
2021
Low payout by the central bank, partly due to its heavy
investments in reverse repo operations (interest paid to banks).
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RBI issues norms for interoperable card-
less cash withdrawal at ATMs
The Reserve Bank of India (RBI) on May 19 issued guidelines
for interoperable card-less cash withdrawal at all banks and
ATMs using the Unified Payments Interface (UPI) facility. All
banks, ATM networks and White Label ATM Operators (WLAO)
may provide the option of card-less cash withdrawals at their
ATMs, the central bank said in a release.
While UPI would be used for customer authorisation in such
transactions, settlement would be through the National Financial
Switch (NFS) or ATM networks.
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Frauds in PSBs dip 51% to Rs 40,295 crore;
number of cases not falling fast enough: RBI
The 12 PSBs (Public Sector Banks) had reported frauds worth
Rs 81,921.54 crore in preceding fiscal 2020-21
However, the number of fraud cases didn’t fall at the same pace
as a total of 7,940 frauds reported by the PSBs in 2021-22,
against 9,933 incidents reported in FY21
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Regulations Review Authority
The Reserve Bank of India has scrapped 239 circulars on the recommendation of the
Regulations Review Authority, according to a press release today.
This is part of the fourth tranche of recommendations by the Regulations Review
Authority.
In the first tranche on Nov 16 last year, the authority had recommended the withdrawal
of 150 circulars. On Feb 18, it recommended the withdrawal of 100 circulars, and on
May 2 withdrawal of 225.
With this, the total number of circulars which stand withdrawn would be 714.
In Apr 2021, the central bank had constituted the Regulations Review Authority 2.0
with a focus on streamlining regulatory instructions, reducing compliance burden of the
regulated entities by simplifying procedures and reducing reporting requirements
wherever possible.
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RBI issues Guidelines on Compensation of
KMPs & Senior Management in NBFCs;
On the lines of the revised Scale Based Regulatory (SBR)
framework for Non-Banking Finance Companies (NBFCs) that was
put in place in October 2021, the Reserve Bank of India (RBI) has
issued guidelines on compensation of Key Managerial Personnel
(KMPs) and senior management in NBFCs under SBR framework
w.e.f. April 1, 2023. However, these will not be applicable to Base
Layer and Government owned NBFCs.
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RBI Modifies Norms for Lis on Short
Term Crop Loan Scheme
RBI modified norms for banks to claim the amount of interest
subvention scheme for short term loans for Agriculture and
Allied Activities that was provided to farmers through Kisan
Credit Card (KCC) during the FY22.
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IRDAI allows Insurance Companies to Invest up to
30% of Assets in Financial and Insurance activities
The Insurance Regulatory and Development Authority of India
(IRDAI) in exercise of its powers conferred under Regulation
14(2) of the IRDAI (Investment) Regulations, 2016, has
increased the investment limit of all insurance companies to
invest in the Financial and Insurance activities (as per section K
of NIC classification) to 30% of investment assets from 25%.
Notably, this move comes just before Life Insurance Corp of
India’s (LIC) Rs 21,000 crore IPO (Initial Public Offering), the
largest from India. It can increase the insurer’s participation in
this IPO.
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Indian Economy to grow at 6.5-8.5% in
Medium Term: RBI’s RCF 2021-22
The Reserve Bank of India (RBI) released the ‘Report on
Currency and Finance (RCF)’ for the year 2021-22 on the theme
‘Revive and Reconstruct’. In accordance to its Chapter-VI ‘A
Policy Agenda for Post-Covid-19 India’s feasible range for the
medium-term steady state GDP (Gross Domestic Product)
growth is 6.5-8.5%.
Taking the actual growth rate of -6.6% for 2020-21, 8.9% for
2021-22 and assuming growth rate of 7.2% for 2022-23, and
7.5% beyond that, India is expected to overcome Covid-19
losses in 2034-35 i.e., around 13 years.
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SEBI Modifies Operational Guidelines
for FPIs, Depository Participants
The Securities and Exchange Board of India (SEBI) has
modified the operational guidelines, issued in November 2019,
for Foreign Portfolio Investors (FPIs), Designated Depository
Participants (DDPs), and Eligible Foreign Investors pertaining to
Certificate of Registration, and Name change w.e.f. May 9,
2022.
This modification by SEBI has been done by exercising its
powers conferred under Section 11 (1) of the SEBI Act, 1992.
These will be applicable from May 9, 2022.
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IIFL & Open Financial Technologies Forms JV
To Launch India’s First Neobank for MSMEs
JV b/w: IIFL Finance Limited & Open Financial Technologies Private
Ltd Purpose: to launch India’s first neo-bank to serve the banking and
credit requirements of Micro, Small and Medium Enterprises
(MSMEs).
The new joint venture would be known as “IIFL Open Fintech Private
Limited”, with an initial capital of Rs. 120 crores. The ratio of IIFL
Finance to Open Financial Technologies in the joint venture is 51:49.
A neo-bank is a type of digital bank that does not have any physical
locations. They use artificial intelligence and technology to provide
personalized services to clients while lowering operating expenses.
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Highlights of RBI’s Monetary Policy
Committee Off-Cycle Meeting
On May 2 & May 4, 2022, the Reserve Bank of India (RBI) held an off-cycle
meeting of RBI’s Monetary Policy Committee. Following are its highlights
The meeting saw the rise in policy repo rate under the liquidity adjustment
facility (LAF) by 40 basis points to 4.40% with immediate effect, amid rising
inflationary pressures in the economy.
Consequently, the Standing Deposit Facility (SDF) rate stands adjusted to
4.15% and the Marginal Standing Facility (MSF) rate and the Bank Rate to
4.65%.
Cash Reserve Ratio (CRR) hiked by 50 bps to 4.5% w.e.f. May 21,
2022.The Statutory Liquidity Ratio (SLR) currently stands at 18%.
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UBI Becomes 1st Public Sector Bank to Go
Live in Account Aggregator Framework
Union Bank of India (UBI) has become the first Public Sector Bank (PSB)
to go live on the Account Aggregator (AA) Framework, an initiative of
Reserve Bank India (RBI) to improve credit delivery.
With significant participation from banks and Non-Banking Financial
Companies (NBFCs) in India, the Account Aggregator (AA) Framework
went live in September 2021.
An Account Aggregator obtains information about a customer’s financial
assets from data providers (referred to as Financial Information Providers
(FIPs)) and aggregates, consolidates, and delivers it to the customer or
specified users (referred to as Financial Information Users (FIUs)).
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SEBI Restructures Secondary Market
Advisory Panel
The Securities and Exchange Board of India (SEBI) has
restructured its Secondary Market Advisory Committee (SMAC),
which makes recommendations to the capital markets regulator
on improving market safety, efficiency, and transparency.
Gurumoorthy Mahalingam, a former fulltime member of SEBI,
will now chair the 18member advisory body. The panel
previously consisted of 17 members and was headed by SEBI
chairperson Madhabi Puri Buch.
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SEBI forms Advisory Committee for ESGrelated
matters; Headed by Navneet Munot
The Securities and Exchange Board of India (SEBI) has formed
an advisory committee for advising on Environmental Social and
Governance (ESG) related matters pertaining to the securities
markets.
The committee will be chaired by Navneet Munot, the Chief
Executive Officer (CEO) of HDFC Mutual Fund. In terms of
the Business Responsibility and Sustainability report the
committee will look at reviewing leadership indicator & it will also
examine evolving disclosures relevant to the Indian context, as
well as suggesting areas for assurance and a plan for
implementation.
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UPI hits record 5.58 Bn transactions
worth Rs 9.83 trillion in April 2022
According to the National Payments Corporation of India (NPCI), Unified
Payments Interface (UPI), India’s flagship digital payments platform, has
recorded 5.58 billion(bn) transactions worth Rs 9.83 trillion in April 2022.
This is the highest ever number of transactions recorded by UPI.
The monthly UPI recorded a 3.33 % increase in transaction volume from
5.4 billion transactions worth Rs 9.6 trillion in March 2022.
Compared to April 2021, the transaction volume increased by 111% and
the transaction value increased by nearly 100%. In April 2021, UPI
processed 2.64 billion transactions worth Rs 4.93 trillion. The UPI had
breached the USD 1 trillion mark in transaction values in the financial year
2021-22.
