Tag: bank of india

RBI imposes Rs 5 crore penalty on Axis Bank, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India (RBI) on Tuesday said it has imposed a penalty of Rs 5 crore on Axis Bank for contravention of certain provisions of directions issued by the RBI, including on cybersecurity framework. The penalty has been imposed for “contravention of/non-compliance” with certain provisions of directions issued by the RBI. They include ‘Strengthening the Controls of Payment Ecosystem between Sponsor Banks and SCBs/UCBs as a Corporate Customer’; ‘Cyber Security Framework in Banks’; and ‘Reserve Bank of India (Financial Services provided by Banks) Directions, 2016′.

They also include ‘Financial Inclusion-Access to Banking Services-Basic Savings Bank Deposit Account’; and ‘Frauds-Classification and Reporting’.

The RBI said the statutory inspections for supervisory evaluation (ISE) of the bank were conducted with reference to its financial position as on March 31, 2017, (ISE 2017), March 31, 2018, (ISE 2018), and March 31, 2019 (ISE 2019).

The contravention of/ non-compliance with the directions has been revealed by – the examination of the Risk Assessment Reports pertaining to ISE 2017, ISE 2018 and ISE 2019; the report of scrutiny carried out by RBI in the backdrop of the incident relating to a fraud and related correspondence thereto; and the incident report submitted by the bank in June 2020 related to a few suspected transactions and related correspondence.

Notices were issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the directions.

After considering the bank’s replies, oral submissions, and examination of additional submissions made by the bank, the RBI came to the conclusion that the charges of non-compliance with/contravention of the directions were substantiated and warranted imposition of monetary penalty, the central bank said.

The RBI, however, added the imposition of penalty is based on the 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.

Meanwhile, the RBI has also imposed a penalty of Rs 5 lakh on Alibag Co-operative Urban Bank Limited, Raigad, and Rs 1 lakh on The Mahabaleshwar Urban Cooperative Bank Limited, Mahabaleshwar, for deficiencies of regulatory compliance.



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Banks feel the regulatory heat as RBI imposes penalties amid pandemic shadow, BFSI News, ET BFSI

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As it moves to risk-based supervision, the Reserve Bank of India has stepped up the heat on banks.

In the first half of this year, the central bank has imposed fines of over Rs 43 crore on 23 banks for various regulatory non-compliances and lapses. The RBI had imposed a fine of Rs 20 crore on eight banks in 2020.

After the Nirav Modi scam, RBI had stepped up its surveillance and imposed a hefty Rs 143 crore fine on 49 banks in 2019. While the amount of fine was small individually in 2019, the RBI has increased it multifold as it has fined HDFC BankRs 10 crore, Bank of India Rs 4 core, Punjab National Bank Rs 2 crore and SBI Rs 50 lakh.

In January this year, the central bank had imposed Rs 2 crore penalties on Deutsche Bank and Standard Chartered Bank. It has imposed penalties on various cooperative banks during the year.

Risk based supervison

In May this year the Reserve Bank has decided to review and strengthen the Risk Based Supervision (RBS) of the banking sector with a view to enable financial sector players to address the emerging challenges.

The RBI uses the RBS model, including both qualitative and quantitative elements, to supervise banks, urban cooperatives banks, non-banking financial companies and all India financial institutions.

“It is now intended to review the supervisory processes and mechanism in order to make the extant RBS model more robust and capable of addressing emerging challenges, while removing inconsistencies, if any,” the RBI said while inviting bids from technical experts/consultants to carry forward the process for banks.

In case of UCBs and NBFCs, the Expression of Interest (EOI) for ‘Consultant for Review of Supervisory Models’ said the supervisory functions pertaining to commercial banks, UCBs and NBFCs are now integrated, with the objective of harmonising the supervisory approach based on the activities/size of the supervised entities (SEs).

“It is intended to review the existing supervisory rating models under CAMELS approach for improved risk capture in forward looking manner and for harmonising the supervisory approach across all SEs,” it said.

Annual financial inspection of UCBs and NBFCs is largely based on CAMELS model (Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Systems & Control).

The RBI undertakes supervision of SEs with the objective of assessing their financial soundness, solvency, asset quality, governance framework, liquidity, and operational viability, so as to protect depositors’ interests and financial stability.

The Reserve Bank conducts supervision of the banks through offsite monitoring of the banks and an annual inspection of the banks, where applicable.

In the case of Urban Cooperative Banks (UCBs) and NBFCs, it conducts the supervision through a mix offsite monitoring and on-site inspection, where applicable.

A technical advisory group consisting of senior officers of the RBI would examine the documents submitted by the applicants in connection with EOI.



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Private banks too want the bad bank pie, BFSI News, ET BFSI

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With public sector banks queueing up to buy a bad bank stake, private lenders are also looking to invest in it.

Some private banks are seeking approvals to buy into National Asset Reconstruction Company Ltd (NARCL) or bad bank, though their stake will be lower than the PSBs.

Having secured a licence from the Registrar of Companies, the Indian Banks’ Association (IBA) will soon move an application to the Reserve Bank of India (RBI) to set up a Rs 6,000-crore National Asset Reconstruction Company Ltd (NARCL) or bad bank.

The process

With the registration of the company, the process for putting an initial capital of Rs 100 crore is on as per the guidelines, the sources said adding that the next step will be audit and then move an application to the RBI seeking a licence for the asset reconstruction company.

The RBI in 2017 raised the capital requirement to Rs 100 crore from the earlier level of Rs 2 crore keeping in mind the higher amount of cash required to buy bad loans.

Legal consultant AZB & Partners has been engaged for seeking various regulatory approvals and fulfilling other legal formalities.

The initial capital would come from eight banks who have committed, and the NARCL would expand the capital base to Rs 6,000 crore subsequently after the RBI’s nod.

Other equity partners would join after the RBI’s licence and even the board would be expanded.

SBI veteran to steer

IBA, entrusted with the task of setting up a bad bank, has put a preliminary board for NARCL in place. The company has hired P M Nair, a stressed assets expert from the State Bank of India (SBI), as the managing director. The other directors on the board are IBA Chief Executive Sunil Mehta, SBI Deputy Managing Director S S Nair and Canara Bank‘s Chief General Manager Ajit Krishnan Nair.

Finance Minister Nirmala Sitharaman in Budget 2021-22 announced that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books.

Several banks are moving to divest their stake from Asset Reconstruction Companies (ARCs) to free up capital in preparation to launch the bad bank.

Three public sector banks—Union Bank of India, Indian Bank, and Bank of India—said they jointly intend to sell up to 88.4 million shares, constituting up to 90.31 per cent of the total equity share capital of ASREC India Ltd, a Mumbai based ARC.



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Chairman, BFSI News, ET BFSI

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HDFC Bank, largest lender by market capital, has created a new business segment of commercial and rural banking to capture the next wave of growth, said Atanu Chakraborty, the bank’s non-executive chairman, in the annual general meeting held on July 17.

“This will not only reinforce your bank’s top position in the MSME segment but also strengthen efforts to serve customers in both India and Bharat,” Chakraborty said, adding that the tech savvy young customers too would be benefited out of this move.

The delivery channels will be complemented with digital marketing, even as your bank leverages the branch channel and virtual relationship channel.

This was Chakraborty’s first AGM after the Reserve Bank of India approved his appointment in April for a period of three years. Chakraborty, a 1985 batch IAS officer of Gujarat cadre, earlier retired as secretary of department of economic affairs in the central government more than a year ago.

The bank continues its focus on corporate and Government business to drive growth.

Chakraborty put emphasis on being “future ready”, a key lubricant for growth in coming days. This, according to him, means that growth engines of corporate banking, MSME, agricultural and rural, government and institutions banking and others will be powered by robust technology and digital platforms.

“These growth engines will account for the bulk of our future investments and can be broadly classified as Business Verticals and Delivery Channels,” said Chakraborty.

During April-June quarter, HDFC Bank reported a 16.1 percent year-on-year growth in standalone profit at Rs 7,730 crore, its slowest pace since December 2016. It was lower than Rs 7,931 crore estimated by analysts in a Bloomberg poll.

In between, the chairman highlighted the lender’s efforts for environment, social and government or ESG, a global cult that qualifies for a cheap international cash pool.

“The bank has taken cognizance of ESG in its business plans and has put in place a broad strategy, which will be fine-tuned as we move ahead,” said Chakraborty.

“Your bank realizes the importance of environment protection and that it is a vital aspect within the ESG framework.”

During the pandemic many bank employees suffered due to the infection. The chairman made a special mention for those as he credited the bank for running bank operations seamlessly braving the odds.

“Many of them lost their lives. They are our unsung heroes. I join all of you in paying my respects to them,” he said.



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NPCI in talks to take UPI, RuPay to global markets, BFSI News, ET BFSI

Personal Finance

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National Payment Corporation of India (NPCI) is in talks with several global agencies to expand the global footprint of indigenous payment networks RuPay and UPI (unified payment interface), possibly in West Asia, the United States, and Europe.

“We are aiming to expand RuPay and UPI acceptance across world destinations, where Indians travel for holidays, study or profession or even stay,” said Ritesh Shukla, chief executive of NPCI International Payments (NIPL), a wholly-owned subsidiary of NPCI for international business. “We are in talks with global agencies through which we are looking to introduce RuPay and UPI to the world.”

Those international agencies may include regulatory authorities, large banks, fintech companies, or even umbrella payment organisations from respective countries.

Some of the likely destinations include Gulf countries like Saudi Arabia, the UAE and Bahrain, European and North American countries, Mauritius and Singapore, payment industry insiders said.

Shukla did not disclose names of agencies NIPL is in talks with, but a senior payment industry executive told ET, “US-based Zelle or The Clearing House could well be partners.”

Zelle Network is a payment platform in the US that deals with banks and credit unions while The Clearing House Payments Company operates core payments system infrastructure in the US.

Zelle Network and The Clearing House did not reply to ET’s queries as of press time Sunday.

The development comes at a time when global payment giant MasterCard is facing regulatory roadblocks in India.

The Reserve Bank of India had last week banned MasterCard from issuing new cards for non-compliance with data storage localisation rules. The development will likely prompt some banks using its services to reach out to RuPay, industry experts said.

RuPay already holds more than 60 per cent market share in terms of number of cards in India, outpacing both MasterCard and Visa which had till recently dominated the turf.

Launched in 2016, UPI reported a 285 per cent compounded annual growth rate (CAGR) in payment volume since 2017 to hit $457 billion in 2020.

To take UPI payment system to global markets, NIPL would be reaching out to tie up with existing QR (quick response) code infrastructure operators.

RuPay acceptance can be made available through point of sale (PoS) terminals and ATMs.

Bhutan recently became the first country to adopt UPI standards for its QR code. It is also the second country after Singapore to have Bhim-UPI acceptance at merchant locations, NIPL had said last week.

Both UPI and RuPay are payment services delivered through NPCI’s multi-rail payment network.



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Federal Bank gets RBI nod to re-appoint Shyam Srinivasan as MD & CEO for 3 years, BFSI News, ET BFSI

Banking & Finance

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Private sector Federal Bank on Friday said it has received approval from the RBI to re-appoint Shyam Srinivasan as its MD and CEO for three years.

Srinivasan took charge as MD and CEO of the lender on September 23, 2010.

“We wish to inform you that the approval from Reserve Bank of India has been received on July 9, 2021 for the re-aFederal Bank gets RBI nod to re-appoint Shyam Srinivasan as MD & CEO for 3 yearsppointment of Shyam Srinivasan as the MD & CEO of the bank for a period of three years with effect from September 23, 2021 till September 22, 2024,” Federal Bank said in a regulatory filing.

Earlier in July 2020, the South-based lender had received RBI’s nod for reappointment of Srinivasan as Managing Director and Chief Executive Officer till September 22, 2021.

He had joined Federal Bank with the experience of over 20 years with leading multinational banks in India, Middle East and South East Asia. He has significant expertise in retail lending, wealth management and small and medium enterprises (SME) banking, it said.

Srinivasan is an alumnus of the Indian Institute of Management, Calcutta, and Regional Engineering College, Tiruchirapally.



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Bank employees posted in sensitive positions to get surprise leave every year, BFSI News, ET BFSI

Banking & Finance

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Bank employees posted in sensitive positions will get surprise leave for not less than 10 consecutive working days every year.

The Reserve Bank of India has directed banks to adopt a ‘mandatory leave’ policy for such employees.

They will be sent on leave without any prior intimation.

This policy will come into effect within six months from now.

“Banks shall ensure that the employees, while on ‘mandatory leave’, do not have access to any physical or virtual resources related to their work responsibilities, with the exception of internal/ corporate email which is usually available to all employees for general purposes,” RBI said in a note to banks Friday.

The regulator told banks to adopt board-approved policy and prepare a list of sensitive positions to be covered under ‘mandatory leave’ requirements.

“Implementation of this policy shall be reviewed under the supervisory process,” RBI said.



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Fall in outward remittances good news for India’s current account, BFSI News, ET BFSI

Banking & Finance

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India’s outward remittances fell by as much as $6 billion in FY21 as the pandemic put brakes on ordinary overseas travel and student traffic to campuses abroad, partly contributing to the current account surplus of $24 billion.

This is the first time annual remittance outflows contracted since 2015 when the Reserve Bank of India (RBI) doubled the annual limit for sending money abroad to $250,000 and allowed more current account transactions under the Liberalised Remittance Scheme (LRS).

Total outflows contracted 32% in FY21 as major heads like travel, overseas studies and maintenance of close relatives saw a sharp dip. But outflows under permissible capital account transactions like investment in overseas deposits picked up.

“The fall is largely due to complete restrictions on travel. Nil MICE (meetings & incentive) movements, and there are no trade fairs and exhibitions due to Covid,” said Harsh Kumar Bhanwala, executive chairman of Capital India Finance, which makes outward remittances under the RemitX brand.

Curbs on leisure travel contributed to this trend while outbound student traffic was almost nil last year as overseas universities moved online to check the spread of the pandemic, Bhanwala said.

Outward remittances fell to $12.7 billion during FY21, from $18.7 billion in FY20, RBI data showed. Under the LRS started in 2004, all resident individuals, including minors, are allowed to remit up to $250,000 per financial year for any permissible current or capital account transaction or a combination of both.

These include private visits to any country (except Nepal and Bhutan), gift or donation, going abroad for employment, emigration, maintenance of close relatives abroad, travel for business, or for meeting medical expenses, or for studies abroad or any other current account transaction which is not covered under the definition of current account in FEMA 1999.

Two heads — travel and remittance for studies abroad – accounted for about 56% of outward remittance during the year as the pandemic induced lockdown globally even restricted essential travel forcing students to defer their travel plans for overseas studies. While travel outgo dipped 53% to $3.2 billion, expenses for studies abroad dipped 23% to $3.8 billion during the year.

Significantly, capital account transactions like resident individual investments in overseas financial markets rose during the year, albeit on a small base, with investors likely eying the combined benefit of rising yields and dollar strength over a period of time. Investment in overseas equity and debt rose 9.4 per cent to $472 million and investment in overseas deposits rose per 9.1 cent to $680.4 million.



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Bajaj Allianz General Insurance, Bank of India in distribution tie-up

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Bajaj Allianz General Insurance and Bank of India have entered into a corporate agency agreement.

This will enable distribution of Bajaj Allianz General Insurance’s products through the bank’s vast network of 5,084 branches, 80 retail business centres and 60 SME city centres across the country.

How Bajaj Allianz Life’s agency channel revved up to face pandemic woes

Personal and commercial products

“As a part of this agreement, Bajaj Allianz General Insurance will be offering a bouquet of personal lines of products such as motor insurance, health insurance, home insurance, travel insurance along with commercial line of products like engineering insurance, marine insurance to bank’s customers,” the two said in a statement on Wednesday.

ULIPs are gaining popularity, says Bajaj Allianz Life study

“Our tie-up with Bank of India is a great opportunity for us to not only strengthen our presence in urban areas, but also enhance our distribution to the remotest corners of the country,” said Tapan Singhel, MD and CEO, Bajaj Allianz General Insurance.

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RBI imposes Rs 25 lakh penalty on Punjab and Sind Bank, BFSI News, ET BFSI

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The Reserve Bank of India on Friday imposed a penalty of Rs 25 lakh on Punjab and Sind Bank for non-compliance with certain provisions of directions on ‘Cyber Security Framework in Banks’.

The state-owned bank had reported a few cyber incidents to the RBI on May 16 and 20, 2020, the central bank said while giving details.

“Examination of the incident reports and the report of the forensic analysis of the said incidents revealed, non-compliance with aforesaid directions,” it said.

The RBI issued a show-cause notice to the bank.

“After considering the bank’s reply to the show-cause notice, oral submissions made during the personal hearing and examination of further clarifications/ documents furnished by the bank, RBI came to the conclusion that to the extent the charges of non-compliance with RBI directions were substantiated, it warranted imposition of monetary penalty,” the central bank said.

Meanwhile, a penalty of Rs 1 lakh on the Nagar Sahkari Bank Limited, Etawah for contravention of certain regulations, including the one on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.

In both cases, the RBI said the penalty is based on the 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.



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