Author: root

RBI, BFSI News, ET BFSI

Banking & Finance

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In the fortnight ended November 6, 2020, bank loans stood at Rs 104.19 lakh crore and deposits at Rs 144.03 lakh crore, according to the RBI‘s Scheduled Banks’ Statement of Position in India as on November 5, 2021, data released on Wednesday.

In the previous fortnight ended October 22, 2021, bank credit had grown by 6.84 per cent and deposits by 9.94 per cent. In FY2020-21, bank credit had risen by 5.56 per cent and deposits by 11.4 per cent.

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Private banks lead, overall NPA provisioning falls in Q2, BFSI News, ET BFSI

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The worst seems to be over for banks in the pandemic, going by the drop in bad loan provisioning numbers. The bad loan provisioning by banks fell sequentially for the second consecutive quarter in the three months ended September 2021, led by a significant drop in some of the private sector banks. The trend is likely to continue on account of improved collections and lower slippages.

The aggregate provisioning towards non-performing assets (NPA) or loan loss provision for a sample of 29 banks fell by 20.5 per cent sequentially and 10.9 per cent year-on-year to Rs 30,400 crore. It has softened over the past two quarters after peaking at Rs 65,986.9 crore in the March 2021 quarter when banks resumed accounting for slippages.

Private banks at the forefront

The fall in the September quarter was driven by a sharp 43.9 per cent drop in loan loss provisioning by the private sector banks at the aggregate level. Top banks including HDFC Bank, Axis Bank, Kotak Bank, and IndusInd Bank recorded a double-digit sequential drop in the NPA provisioning.

The public sector banks on the other hand reported a modest 1.6 per cent fall in the NPA provisioning. Their share in the sample’s NPA provisioning increased to 68.5 per cent from 55.3 per cent in the previous quarter.

Analysts expect the asset quality of banks to improve gradually in the coming quarters following a pick up in economic activity and recovery in collections.

“Banks slippage ratios reduced substantially by 100 basis points QoQ on an average in the September quarter. The asset quality situation is likely to improve further driven by a reduction in retail as well as SME nonperforming loans in the coming quarters,” a Macquarie Capital Securities (India) note said.

The banks’ net interest income increased by 3.7 per cent sequentially and 2.4 per cent year-on-year to Rs 1.3 lakh crore. The sequential growth was faster for PSU banks at 5 per cent compared with 2.1 per cent for the private sector banks.



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Payment channels show pick-up in Oct driven by festive spends

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However, the recovery in the economy is yet to become entrenched and broad-based, many believe.

Most digital payment channels recorded an increase in the value of transactions on a month-on-month basis in October as festive-season spending gave a boost to consumption.

According to data available on the Reserve Bank of India’s website, spends through the National Electronic Funds Transfer (NEFT) rose 2% MoM to Rs 24.76 lakh crore, Immediate Payment Service (IMPS) spends were up 14% to Rs 3.7 lakh crore, Unified Payments Interface (UPI) spends grew 18% to Rs 7.71 lakh crore, credit card spends rose 21% to Rs 76,274 crore and debit card spends grew 19% to Rs 61,416 crore. Electronic toll payments also recorded an increase. The value of transactions through prepaid payment instrument (PPI) cards, however, fell 16% MoM to Rs 2,498 crore.

Several indicators suggest a pick-up in consumption during October. The RBI said in its State of the Economy report for November that the outcome of improved mobility – both passenger and goods – was reflected in a surge in fuel consumption in October. The consumption of petrol touched pre-pandemic levels, while aviation turbine fuel (ATF) and diesel consumption exhibited sequential improvement.

Players in the payments ecosystem witnessed strong traction in volumes during the month. On Wednesday, PhonePe said it processed over two billion transactions on its platform in October on the back of rapid traction across tier II, tier III cities and beyond, which accounted for 80% of transactions. Banks, too, have reported an uptick in consumption. HDFC Bank said in an investor call that early results for the first 10 days of October showed a 42% growth in card spends over a similar time period in September, driven by festive spends.

However, the recovery in the economy is yet to become entrenched and broad-based, many believe. RBI governor Shaktikanta Das on Tuesday said that the Q1FY22 GDP data revealed that there still exists a significant gap in both private consumption and investment, relative to their pre-pandemic levels in FY20.

“Contributing the largest share of aggregate demand, around 56% of GDP, private consumption is critical for inclusive, durable and balanced growth of our country. Daily wage earners and workers at the lower rungs of the society have incurred significant losses of income and employment during the pandemic that will take time to repair,” Das said.

At the same time, he expressed confidence that consumption demand triggered by the festive season and the recent cut in levies on fuel by the central and state governments will augment purchasing power of people and create space for additional consumption.

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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India (RBl) has imposed, by an order dated November 17, 2021, a monetary penalty of ₹10.50 lakh (Rupees Ten lakh Fifty Thousand only) on Shri Kanyaka Nagari Sahakari Bank Limited, Chandrapur (the bank) for contravention of/ non-compliance with Supervisory Action Framework issued by RBI under section 36 (1) read with section 56 of the Banking Regulation Act, 1949 (the Act), directions issued by the RBI to Urban Co-operative Banks on opening of On-site ATMs, Frauds – Classification and Reporting, Exposure Norms and Statutory/ Other Restrictions – UCBs and Board of Directors-UCBs. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The inspection report of the bank based on its financial position as on March 31, 2018 and March 31, 2019, revealed, inter alia, that the bank had (i) given fresh loans to the real estate sector in violation of the operational instructions issued by RBI under the provisions of the Act, (ii) opened On-site ATMs without the required permission of RBI, (iii) delayed reporting of frauds on many occasions, and (iv) granted director related loans in contravention of/ non-compliance of directions issued by the RBI. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.

After considering the bank’s replies, oral submissions made during the personal hearing and additional submissions made by the bank, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1217

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Reserve Bank of India – Press Releases

Press Releases

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April 14, 2015




Dear All




Welcome to the refurbished site of the Reserve Bank of India.





The two most important features of the site are: One, in addition to the default site, the refurbished site also has all the information bifurcated functionwise; two, a much improved search – well, at least we think so but you be the judge.




With this makeover, we also take a small step into social media. We will now use Twitter (albeit one way) to send out alerts on the announcements we make and YouTube to place in public domain our press conferences, interviews of our top management, events, such as, town halls and of course, some films aimed at consumer literacy.




The site can be accessed through most browsers and devices; it also meets accessibility standards.



Please save the url of the refurbished site in your favourites as we will give up the existing site shortly and register or re-register yourselves for receiving RSS feeds for uninterrupted alerts from the Reserve Bank.



Do feel free to give us your feedback by clicking on the feedback button on the right hand corner of the refurbished site.



Thank you for your continued support.




Department of Communication

Reserve Bank of India


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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India (RBI) has imposed, by an order dated November 17, 2021, a monetary penalty of ₹2.50 lakh (Rupees two lakh fifty thousand only) on The Nizamabad District Co-operative Central Bank Ltd., Nizamabad, Telangana for non-adherence / violation of certain directions issued by RBI contained in the Master Circular on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’ and Section 9 read with Section 56 of Banking Regulation Act, 1949(AACS). This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The inspection report of the bank based on its financial position as on March 31, 2019 revealed inter alia, violation / non-compliance with aforesaid directions. Based on the same a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions.

After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1215

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RBI may pilot digital currency in Q1 of FY23

Banking & Finance

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The Reserve Bank of India may do a pilot of its central bank digital currency (CBDC) in the first quarter of the next fiscal year.

“We are on the job and looking into the various issues and nuances related to CBDC. It’s not a simple thing to just say that CBDC can be a habit from tomorrow on,” said P Vasudevan, chief general manager at the RBI’s Department of Payment and Settlement, at a banking event here on Wednesday.

“The banking system has been taking the lead in terms of currency distribution as a tiered model, whether the same model should be accepted for CBDC as well, we will have to see,” Vasudevan added.

As now being explored by the RBI for retail and international trade payments, the CBDC could have a much larger impact on the financial ecosystem, according to industry experts. It will be instrumental in promoting grassroots-level financial inclusivity and modernising the banking sector apart from creating a cashless economy.

Digital replica

While many see CBDCs as a legalised replacement of cryptocurrencies, in reality, CBDCs could just be a digital replica of the physical cash in circulation.

Russia, Japan and China are already working on the same.

According to a 2021 BIS survey, quoted in the RBI report, 86 per cent of the central banks surveyed are actively researching the potential for CBDCs, 60 per cent were experimenting with the technology and 14 per cent were deploying pilot projects.

A major use case for CBDCs will likely be in the insurance and lending space and also for managing non-performing assets. Using digital currencies will bring in more transparency and traceability across levels for the financial services sector, according to experts.

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Crypto investments gaining currency – The Hindu BusinessLine

Banking & Finance

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With cryptocurrency trading booming in the country, the average investment by individual investors is on the rise. Despite concerns around the legality of cryptocurrencies and regulatory uncertainties , the average investment per individual has gone up to ₹10,000 from ₹6,000-8,000 a year or two back.

Targeting next-gen

Sathvik Vishwanath, co-founder of cryptocurrency exchange Unocoin, said the average investment on an industry basis has increased by about 25 per cent within the last two years. This despite, “for most investors, their disposable income not increasing significantly,” he pointed out.

Similarly, CrossTower, which launched operations on September 7, said the average per person investment is ₹6,000 per month. There have been over 1 lakh downloads of its app, it claimed. It also reported a more than 3,000 per cent increase in customers since September 30.

Most players say that crypto trading continues to be dominated by those in the 25-35 age group with limited disposable income. Many are experimenting with investments in this category and prefer to stay cautious. According to crypto industry sources, Indian investors continue to maintain discipline towards crypto investments as they understand that there is some amount of risk associated.

SIP option, too

But some platforms are reporting much higher investments. “At Bitbns, we offer a SIP option to our customers called Bitdroplets. Currently, we have over 2.5 lakh active SIP folios with an average ticket size of investment of ₹22,000. In the last one year, the exchange has seen the average investment ticket-size increase by 120 per cent,” said CEO and Co-founder Gaurav Dahake.

More bourses lining up

With investor interest on the rise, many more exchanges are setting up shop in India even as the government is still undecided on regulating or banning cryptocurrencies.

“Based on our previous operations, the average size ranged above ₹1 lakh but the new investors are in the range of ₹50,000,” said Praveen Kumar, Founder, and CEO, Belfrics Group, which recently relaunched its cryptocurrency exchange in India.

It plans to offer a total of 25 coins for its traders and expects more than 30 per cent of its monthly volume to come from India. It also plans to open over 200 physical crypto centres in the next six months.

Crypto exchange WazirX reported a trading volume of over $36 billion in the year-to-date 2021, marking an average of 44 per cent month-on-month growth. Sign-ups on its platform from Tier-2 and -3 cities grew 2,648 per cent.

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Reserve Bank of India – Press Releases

Press Releases

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The Reserve Bank of India will conduct a Variable Rate Reverse Repo auction on November 18, 2021, Thursday, as under:

Sl. No. Notified Amount
(₹ crore)		 Tenor
(day)		 Window Timing Date of Reversal
1 5,50,000 15
(November 19, 2021 being a holiday)		 10:30 AM to 11:00 AM December 3, 2021
(Friday)

2. The operational guidelines for the auction as given in the Reserve Bank’s Press Release 2019-2020/1947 dated February 13, 2020 will remain the same.

Ajit Prasad            
Director (Communications)

Press Release: 2021-2022/1214

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Reserve Bank of India – Press Releases

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(Amount in Crore of ₹)
  SCHEDULED COMMERCIAL BANKS
(Including RRBs and SFBs)		 ALL SCHEDULED BANKS
06-NOV-2020 22-OCT-2021 * 05-NOV-2021 * 06-NOV-2020 22-OCT-2021 * 05-NOV-2021 *
I LIABILITIES TO THE BKG.SYSTEM (A)            
  a) Demand & Time deposits from bks. 203185.48 169593.04 205956.6 208097.89 173775.68 210178.54 **
  b) Borrowings from banks 54589.72 60659.55 54007.05 54594.22 60659.71 54012.05
  c) Other demand & time liabilities 16483.17 19964.35 20152.38 16686.81 20286.84 20474.11
II LIABILITIES TO OTHERS (A)            
  a) Deposits (other than from banks) 14403311.87 15713020.89 16048797.14 14818365.47 16135885.11 16476381.15
  i) Demand 1495021.98 1827340.52 1973113.89 1530338.89 1866802.08 2014881.66
  ii) Time 12908289.89 13885680.45 14075683.33 13288026.58 14269083.11 14461499.56
  b) Borrowings @ 258273.62 257033.07 261010.06 262546.1 261680.92 265536.55
  c) Other demand & time liabilities 606654.95 570504.64 633348.22 618043.3 581105.29 644615.34
III BORROWINGS FROM R.B.I. (B) 114463 93603 96985.79 114463 93603 96985.79
  Against usance bills and / or prom. Notes            
IV CASH 85516.38 107400.62 98093.88 87848.9 109997.65 100393.93
V BALANCES WITH R.B.I. (B) 450856.68 638588.93 670135.27 463596.17 655138.3 687427.36
VI ASSETS WITH BANKING SYSTEM            
  a) Balances with other banks            
  i) In current accounts 22416.71 30921.74 45803.72 24562.17 33139.02 48355.64
  ii) In other accounts 135463.06 134408.15 143374.44 166672.81 167845.67 176623.9
  b) Money at call & short notice 11775.22 13913.35 15679.24 32822.71 30115.28 31515.16
  c) Advances to banks (i.e. due from bks.) 21018.15 23913.28 24470.58 21538.12 24296.72 24849.87 £
  d) Other assets 31795.41 29434.9 26798.95 36336.74 32285.68 29647.88
VII INVESTMENTS (At book value) 4476662.44 4638657.96 4687218.95 4608684.6 4780663.2 4830702.87
  a) Central & State Govt. securities+ 4475234.72 4637469.1 4685927.8 4601028.41 4773438.31 4823421.94
  b) Other approved securities 1427.72 1188.85 1291.16 7656.18 7224.87 7280.94
VIII BANK CREDIT (Excluding Inter Bank Advance) 10419270.55 11044619.18 11163569.74 10753340.54 11388360.47 11516102.43
  a) Loans, cash credits & Overdrafts $ 10250983.34 10833854.34 10946453.79 10583086.38 11175625.04 11296985.62
  b) Inland Bills purchased 24203.07 32685.23 33131.2 24475.17 32716.63 33168.62
  c) Inland Bills discounted 99094.76 128560.05 131775.57 100064.86 129834.05 133063.84
  d) Foreign Bills purchased 16555.97 18104.32 19349 16775.73 18267.99 19559.1
  e) Foreign Bills discounted 28433.41 31415.26 32860.14 28938.42 31916.77 33325.22
NOTE
* Provisional figures incorporated in respect of such banks as have not been able to submit final figures.
(A) Demand and Time Liabilities do not include borrowings of any Scheduled State Co-operative Bank from State Government and any reserve fund deposits maintained with such banks by any co-operative society within the areas of operation of such banks.
** This excludes deposits of Co-operative Banks with Scheduled State Co-operative Banks. These are included under item II (a).
@ Other than from Reserve Bank, National Bank for Agriculture and Rural Development and Export Import Bank of India.
(B) The figures relating to Scheduled Commercial Banks’ Borrowings in India from Reserve Bank and balances with Reserve Bank are those shown in the statement of affairs of the Reserve Bank. Borrowings against usance bills and/ or promissory notes are under Section 17(4)(c) of the Reserve Bank of India Act, 1934. Following a change in the accounting practise for LAF transactions with effect from July 11, 2014, as per the recommendations of Malegam Committee formed to review the Format of Balance Sheet and the Profit and Loss Account of the Bank, the transactions in case of Repo/ Term Repo/MSF are reflected under “Borrowings from RBI”.
£ This excludes advances granted by Scheduled State Co-operative Banks to Co-operative banks. These are included under item VIII (a).
+ Includes Treasury Bills, Treasury Deposits, Treasury Savings Certificates and postal obligations.
$ Includes advances granted by Scheduled Commercial Banks and State Co-operative Banks to Public Food Procurement Agencies (viz. Food Corporation of India, State Government and their agencies under the Food consortium).

Food Credit Outstanding as on
(₹ in Crore)
Date 06-Nov-20 22-Oct-21 05-Nov-21
Scheduled Commercial Banks 83631.04 63697.47 76866.29
State Co-operative Banks 30402.08 35817.5 35817.22

The expression ‘ Banking System ‘ or ‘ Banks ‘ means the banks and any other financial institution referred to in sub-clauses (i) to (vi) of clause (d) of the explanation below Section 42(1) of the Reserve Bank of India Act, 1934.

No. of Scheduled Commercial Banks as on Current Fortnight:135

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1213

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