Category: Press Releases

The Reserve Bank of India had constituted a Working Group (WG) on digital lending including lending through online platforms and mobile apps on January 13, 2021, with Shri Jayant Kumar Dash, Executive Director, RBI as the Chairman. The WG was set up in the backdrop of business conduct and customer protection concerns arising out of the spurt in digital lending activities. The WG has since submitted its report. The thrust of the report has been on enhancing customer protection and making the digital lending ecosystem safe and sound while encouraging innovation. The following are a gist of the key recommendations:

1. Subjecting the Digital Lending Apps to a verification process by a nodal agency to be setup in consultation with stakeholders.

2. Setting up of a Self-Regulatory Organisation (SRO) covering the participants in the digital lending ecosystem.

3. A separate legislation to prevent illegal digital lending activities.

4. Development of certain baseline technology standards and compliance with those standards as a pre-condition for offering digital lending solutions.

5. Disbursement of loans directly into the bank accounts of borrowers; disbursement and servicing of loans only through bank accounts of the digital lenders.

6. Data collection with prior and explicit consent of borrowers with verifiable audit trails.

7. All data to be stored in servers located in India.

8. Algorithmic features used in digital lending to be documented to ensure necessary transparency.

9. Each digital lender to provide a key fact statement in a standardised format including the Annual Percentage Rate.

10. Use of unsolicited commercial communications for digital loans to be governed by a Code of Conduct to be put in place by the proposed SRO.

11. Maintenance of a ‘negative list’ of Lending Service Providers by the proposed SRO.

12. Standardised code of conduct for recovery to be framed by the proposed SRO in consultation with RBI.

The Report is being placed on the RBI website today for comments of stakeholders and members of the public. Comments may be submitted by December 31, 2021 through email. The comments will be examined before a final view is taken on the recommendations and suggestions made by the WG.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2021-2022/1224

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1222

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1221

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1220

In the underwriting auctions conducted on November 18, 2021 for Additional Competitive Underwriting (ACU) of the undernoted Government securities, the Reserve Bank of India has set the cut-off rates for underwriting commission payable to Primary Dealers as given below:

Ajit Prasad           
Director (Communications)

Press Release: 2021-2022/1219

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

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