Category: Press Releases

The Reserve Bank of India (RBI) has today announced the following enhancements to the extant framework on card tokenisation services:

1. the device-based tokenisation framework advised vide circulars of January 2019 and August 2021 has been extended to Card-on-File Tokenisation (CoFT) services as well, and

2. card issuers have been permitted to offer card tokenisation services as Token Service Providers (TSPs). The tokenisation of card data shall be done with explicit customer consent requiring Additional Factor of Authentication (AFA).

The above enhancements are expected to reinforce the safety and security of card data while continuing the convenience in card transactions.

Citing the convenience and comfort factor for users while undertaking card transactions online, many entities involved in the card payment transaction chain store actual card details [also known as Card-on-File (CoF)]. In fact, some merchants force their customers to store card details. Availability of such details with a large number of merchants substantially increases the risk of card data being stolen. In the recent past, there were incidents where card data stored by some merchants have been compromised / leaked. Any leakage of CoF data can have serious repercussions because many jurisdictions do not require an AFA for card transactions. Stolen card data can also be used to perpetrate frauds within India through social engineering techniques.

Reserve Bank had, therefore, stipulated in March 2020 that authorised payment aggregators and the merchants onboarded by them should not store actual card data. This would minimise vulnerable points in the system. On a request from the industry, the deadline was extended to end-December 2021 (RBI circular CO.DPSS.POLC.No.S33/02-14-008/2020-2021 dated March 31, 2021), as a one-time measure. RBI has been in regular consultation with the industry to facilitate the transition.

It may be noted that introduction of CoFT, while improving customer data security, will offer customers the same degree of convenience as now. Contrary to some concerns expressed in certain sections of the media, there would be no requirement to input card details for every transaction under the tokenisation arrangement. The efforts of Reserve Bank to deepen digital payments in India and make such payments safe and efficient shall continue.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/823

The Reserve Bank of India (RBI) has, by an order dated September 07, 2021, imposed a monetary penalty of ₹3.00 lakh (Rupees three lakh only) on The Sutex Co-operative Bank Ltd., Surat (Gujarat) (the bank) for contravention of directions issued by RBI on ‘Loans and advances to directors, relatives and firms /concerns in which they are interested’ and ‘Loans and advances to directors etc. – directors as surety/guarantors – Clarification’. 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 statutory inspection of the bank conducted by the RBI with reference to the bank’s financial position as on March 31, 2018, the Inspection Report pertaining thereto and examination of all related correspondence revealed, inter alia, non-compliance with aforesaid directions issued by the RBI. In furtherance to 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 aforesaid directions issued by the RBI. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the aforesaid charge was substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/822

The Result of the auction of State Development Loans for 11 State Governments held on September 07, 2021.

Ajit Prasad
Director   

Press Release: 2021-2022/821

Ajit Prasad
Director   

Press Release: 2021-2022/820

Ajit Prasad
Director   

Press Release: 2021-2022/819

Today, the Reserve Bank released data on the performance of the private corporate sector during the first quarter of 2021-22 drawn from abridged quarterly financial results of 2,610 listed non-government non-financial (NGNF) companies. Data pertaining to Q1:2020-21 and Q4:2020-21 are also presented in the tables to enable comparison. The data can be accessed at the web-link https://dbie.rbi.org.in/DBIE/dbie.rbi?site=statistics#!2_42.

Highlights

Sales

• Sales of 1,647 manufacturing companies recorded extraordinarily high growth (y-o-y) of 75.0 per cent in Q1:2021-22, which was aided by very low base {(-) 41.1 per cent decline in Q1:2020-21}, reflecting the COVID-19 pandemic impact on operations; all the major sectors recorded high growth during the quarter (Table 2A and Table 5A).

• Sales growth (y-o-y) of information technology (IT) sector companies, which remained in positive terrain throughout the pandemic, accelerated to 17.5 per cent in Q1:2021-22 from 6.4 per cent in the previous quarter (Table 2A).

• Sales of non-IT services companies also surged (y-o-y) in Q1:2021-22, but the revenues of telecom companies within this group declined (Table 2A and Table 5A).

Expenditure

• Manufacturing companies increased their expenditure on raw materials during Q1:2021-22 in tandem with the rise in sales (Table 2A).

• Staff cost growth (y-o-y) accelerated for all sectors during Q1:2021-22 (Table 2A).

Operating profit

• Operating profits of manufacturing as well as services sector companies (both IT and non-IT) recorded high growth in Q1:2021-22 in line with the rise in sales (Table 2A).

Interest

• Interest coverage ratio (ICR)¹ of manufacturing companies remained steady at 7.5 in Q1:2021-22 (7.3 in the previous quarter); the ICR of non-IT services companies remained below unity (Table 2B).

Pricing power

• Operating profit margin remained stable for manufacturing and IT companies during the quarter, but it moderated for the non-IT services companies (Table 2B).

Notes:

• The coverage of companies in different quarters varies, depending on the date of declaration of results; this is, however, not expected to significantly alter the aggregate position.

• Explanatory notes detailing the compilation methodology, and the glossary (including revised definitions and calculations that differ from previous releases) are appended.

Ajit Prasad
Director   

Press Release: 2021-2022/817

The Reserve Bank of India (RBI) has imposed, by an order dated September 06, 2021, a monetary penalty of ₹2.00 lakh (Rupees two lakh only) on Sarvodaya Co-operative Bank Ltd., Bhandup (W), Mumbai (the bank) for contravention of/non-compliance with directions issued by RBI on Know Your Customers (KYC). 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.

The 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, that the bank had not put in place the system of periodic review of risk categorization of accounts. 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 aforesaid directions.

After considering the bank’s reply to the Notice, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/816