Tag: RBI

Continue preserving demonetisation period CCTV footage at branches and currency chests: RBI to banks

Banking & Finance

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The Reserve Bank of India (RBI) has advised all banks to preserve the CCTV recordings of operations at their branches and currency chests during the demonetisation period (from November 08, 2016 to December 30, 2016) in a proper way, till further orders.

This is in view the investigations pending with law enforcement agencies and proceedings pending at various courts, RBI said in a notification.

The Government had issued a notification on November 8, 2016, withdrawing the legal tender status of ₹500 and ₹1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India.

The Government then said demonetisation of the aforementioned notes was done to tackle counterfeiting Indian banknotes, to effectively nullify black money hoarded in cash and curb funding of terrorism with fake notes.

As per RBI’s mint street memo of August 2017, currency notes of denominations of ₹1000 and ₹ 500 (specified bank notes or SBNs), valued at ₹15.4 lakh crore and constituting 86.9 per cent of the value of total notes in circulation were demonetised.

Preserving CCTV footages

On December 13, 2016, RBI had issued a notification, wherein the banks were advised to preserve the CCTV recordings of operations at bank branches and currency chests for the period from November 08, 2016 to December 30, 2016, until further instructions, to facilitate coordinated and effective action by the enforcement agencies in dealing with matters relating to illegal accumulation of new currency notes.

“In continuation to the above, keeping in view the investigations pending with law enforcement agencies, proceedings pending at various courts, you are advised to preserve the CCTV recordings of operations at bank branches and currency chests for the period from November 08, 2016 to December 30, 2016 in a proper way, till further orders,” RBI said in its notification to banks on Tuesday.

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RBI imposes Rs 2 lakh penalty on Dhrangadhra People’s Co-op Bank, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) on Tuesday imposed a penalty of Rs 2 lakh on Dhrangadhra People‘s Co-operative Bank, Surendranagar, Gujarat, for non-compliance with certain norms. The RBI said the penalty has been imposed for non-compliance with RBI directions on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Depositor Education and Awareness Fund Scheme 2014’.

Giving details, the RBI said the statutory inspection of the bank conducted by it with reference to the bank’s financial position as on March 31, 2018, and the inspection report thereto, revealed, inter alia, non-compliance with the directions.

Subsequently, a notice was issued to the Dhrangadhra People’s Co-operative Bank.

“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 charges were substantiated and warranted imposition of monetary penalty,” the RBI said.

The central bank added that the penalty 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.



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RBI asks banks not to delete CCTV footage from 2016 demonetisation period

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“Banks were advised to preserve the CCTV recordings of operations at bank branches and currency chests for the period from November 08, 2016, to December 30, 2016, until further instructions, to facilitate coordinated and effective action by the enforcement agencies in dealing with matters relating to the illegal accumulation of new currency notes,” the RBI said in a circular.

The Reserve Bank of India (RBI) on Tuesday asked banks not to delete the CCTV recordings of their branch operations and currency chests from the 2016 demonetisation period. The move is aimed at helping enforcement agencies in their probe against illegal activities during the demonetisation period.

“Banks were advised to preserve the CCTV recordings of operations at bank branches and currency chests for the period from November 08, 2016, to December 30, 2016, until further instructions, to facilitate coordinated and effective action by the enforcement agencies in dealing with matters relating to the illegal accumulation of new currency notes,” the RBI said in a circular.

It may be noted that the government had banned the circulation of high denomination notes (Rs 500 and Rs 1,000) on November 8, 2016, in order to curb black money. As a part of the exercise, the government had allowed people to exchange high currency notes (Rs 500 and Rs 1,000) at banks or deposit them in their bank accounts. The government also issued new Rs 500 and Rs 2,000 notes. People lined up in front of banks and ATMs to get new currency notes. There were reports of illegal accumulation of new currency notes.

In order to help in the investigation of such matters, the RBI has asked banks to preserve CCTV footage. “Keeping in view the investigations pending with law enforcement agencies, proceedings pending at various courts, you are advised to preserve the CCTV recordings of operations at bank branches and currency chests for the period from November 08, 2016, to December 30, 2016, in a proper way, till further orders,” RBI said in the circular.

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RBI approves re-appointment of GC Chaturvedi as part-time chairman of ICICI Bank

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The Reserve Bank of India has approved the re-appointment of Girish Chandra Chaturvedi as the part-time Chairman of ICICI Bank for a period of three years starting July 1, 2021.

“The shareholders at the Annual General Meeting held on August 14, 2020 had already approved the re-appointment of Girish Chandra Chaturvedi as non-executive (part-time) Chairman of the Bank for a period of three years effective from July 1, 2021,” ICICI Bank said in a regulatory filing on Tuesday.

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RBI Dy Governor Mahesh Jain gets two-year extension

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The Appointments Committee of the Cabinet on Tuesday approved the re-appointment of Mahesh Kumar Jain, Deputy Governor, Reserve Bank of India (RBI), for two years with effect from June 22.

It may be recalled that Jain’s three-year term as RBI Deputy Governor is due to get completed on June 21.

With the re-appointment of Jain, the Centre has stuck to the tradition of having a commercial banker occupy the post of RBI Deputy Governor (reserved for bankers). As a result, the central bank now has four serving RBI Deputy Governors. The other three serving deputy governors are Michael Patra, M Rajeshwar Rao and Rabi Sankar.

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RBI imposes Rs 6 cr penalty on BoI, PNB, BFSI News, ET BFSI

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MUMBAI: The RBI on Monday imposed penalty aggregating to Rs 6 crore on Bank of India and Punjab National Bank for contravention of norms, including one related to “Frauds – Classification and Reporting”.

A penalty of Rs 4 crore has been imposed on Bank of India and Rs 2 crore on Punjab National Bank.

In a statement, the RBI said the statutory Inspection for Supervisory Evaluation (lSE) of Bank of India was conducted with reference to its financial position as on March 31, 2019.

The bank had also conducted a review and submitted a Fraud Monitoring Report (FMR) dated January 1, 2019 pertaining to detection of fraud in an account.

Examination of the risk assessment report pertaining to the ISE and the FMR revealed non-compliance with/contravention of directions, viz., breach of stipulated transaction limits; delay in transfer of unclaimed balances to DEA Fund; delay in reporting a fraud to RBI and sale of a fraudulent asset, the statement said.

In a separate statement, the Reserve Bank said the statutory ISE of Punjab National Bank was conducted with reference to its financial position as on March 31, 2018 (ISE 2018) and March 31, 2019 (ISE 2019).

The examination of the risk assessment reports pertaining to ISE 2018 and 2019 revealed non-compliance with/contravention of the aforesaid directions, viz., delay in reporting of frauds and not ensuring data accuracy and integrity while submitting data on CRILC platform/ to RBI, it said.

In both cases, notices were issued to show cause as to why penalty should not be imposed on them for such violations of the directions.

The RBI, however, added that the penalties have been imposed based on the deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into them with their customers.



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RBI buys 70% of 10-year G-Sec to keep yields in check

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The Reserve Bank of India has mopped up about 70 per cent of the benchmark 10-year Government Security (coupon rate: 5.85 per cent) the government has issued since December 1, 2020, thereby keeping G-Sec yields under check and ensuring that banks have enough liquidity to subscribe at the weekly bond auctions.

The current outstanding in the 10-year benchmark G-Sec is ₹1.05-lakh crore. Of this, around 70 per cent is with the RBI. The central bank has accumulated all this via open market operation (purchases), the G-Sec Acquisition Programme and via the secondary market. What this means is the RBI is providing liquidity to banks to encourage them to buy G-Secs at the weekly auctions.

Marzban Irani, CIO-Fixed Income, LIC Mutual Fund, said: “Due to the Covid-19 related uncertainty, central banks all over the world have intervened in the financial markets. Similarly, the RBI is supporting the huge domestic borrowing. However, once the new 10-year benchmark is issued, the current one will become illiquid due to lower float in the market.”

Irani opined that if the RBI had not intervened, the yield on the current 10-year G-Sec, which closed at 6.0227 per cent on Monday, would have been much higher.

He estimated the coupon rate of the new 10-year benchmark G-Sec, which is likely to be issued by the government either this week or next, to be in the 5.95 to 6.05 per cent band. Ever since the 5.85 per cent G-Sec 2030 was issued in December 2020, it is among the top three traded G-Secs.

Bond market expert K Boovendran observed that at the appropriate time, the RBI will offload the 10-year G-Sec to the banks. “The RBI will not hold them permanently. It is only because of the peculiar situation (triggered by the pandemic) that it Is holding so much of this paper.

“… The RBI is very actively operating in the G-Sec market. That is why the G-Sec yield has been kept under check,” he said.

Boovendran, however, noted that since the paper is not available in the market, there could be more demand for it from market participants. More demand will translate into higher price and lower yield for the paper. Bond yield and price are inversely related and move in opposite directions.

He said that whenever the RBI feels that banks have enough money to subscribe to G-Sec auctions on their own, it will sell the 10-year G-Sec from its portfolio.

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RBI imposes monetary penalty on two banks

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The Reserve Bank of India has imposed a monetary penalty of ₹4 crore on Bank of India and of ₹2 crore on Punjab National Bank.

The statutory Inspection for Supervisory Evaluation (lSE) of Bank of India was conducted by RBI with reference to its financial position as on March 31, 2019, the RBI said.

The bank had also conducted a review and submitted a Fraud Monitoring Report (FMR) dated January 1, 2019 pertaining to detection of fraud in an account. Examination of the risk assessment report on the ISE and the FMR revealed non-compliance with or contravention of the directions including breach of stipulated transaction limits; delay in transfer of unclaimed balances to DEA Fund; delay in reporting a fraud to RBI and sale of a fraudulent asset, it said.

Penalty on PNB

Meanwhile, the monetary penalty on Punjab National Bank was imposed for non-compliance of certain provisions of directions issued by RBI contained in the Master Directions on ‘Frauds – Classification and Reporting by commercial banks and select FIs’ dated July 1, 2016 and the circular on ‘Creation of a Central Repository of Large Common Exposures – Across Bank’ dated September 11, 2013, the RBI said in a separate statement.

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NPAs may remain within projections: RBI Governor Shaktikanta Das

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The earlier FSR released in January 2021 had projected that the gross non-performing assets (GNPAs) of banks may rise to 13.5% by September 2021 in the baseline scenario.

By Ankur Mishra

Reserve Bank of India Governor Shaktikanta Das on Friday said that non-performing assets (NPAs) in the banking sector may remain within the range of projections made in the last financial stability report (FSR).

However, Das specified that final details would be out in the upcoming FSR, which will be released later this month.

The earlier FSR released in January 2021 had projected that the gross non-performing assets (GNPAs) of banks may rise to 13.5% by September 2021 in the baseline scenario.

“On the NPA situation, whatever projection we had given earlier in the last FSR. I think it will be within that (range),” RBI Governor Shaktikanta Das said in a press conference on Friday after releasing policy.

“I think the figures (NPAs) are quite manageable, but I would not say anything beyond that because our teams are assessing the numbers and we will spell out details in the upcoming financial stability report (FSR) later this month, ” Das further said.

In the policy statement, the RBI Governor also emphasised on building capital buffers and adequate provisioning for banks and NBFCs to mitigate the impact of Covid-19. Last week, RBI in its annual report, said that gross NPA ratio of banks decreased to 6.8% in December 2020 from 8.2% in March 2020.

The prudent provisioning by banks, even over and above regulatory prescriptions for accounts availing moratorium and undergoing restructuring, resulted in an improvement in the provision coverage ratio (PCR) of banks, RBI had said.

PCR improved to 75.5% at end-December 2020 from 66.6% in March 2020. Similarly, the capital to risk-weighted assets ratio (CRAR) of banks rose to 15.9% in December 2020, compared to 14.8% in March 2020.

The capital adequacy ratio of banks was aided by capital raising from the market by public and private sector banks, and retention of profits.

The central bank, in its annual report had, however, cautioned that asset quality of the banks needs to be closely monitored in the coming quarters.

The regulator had given the warning as the lenders will have to show a true picture of the bad loans after Supreme Court (SC) lifted interim stay on classifying NPAs in March 2021.

In August 2020, RBI had announced a six months moratorium for all term loan borrowers in the wake of Covid-19 impact on borrowers. The Supreme Court had directed lenders to waive compound interest of the borrowers during the moratorium period.

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RBI doubles exposure threshold to ₹50 crore

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To expand the coverage of the Resolution Framework 2.0, the Reserve Bank of India on Friday announced a doubling of the maximum aggregate exposure to ₹50 crore.

“With a view to enabling a larger set of borrowers to avail of the benefits under Resolution Framework 2.0, it has been decided to expand the coverage of borrowers under the scheme by enhancing the maximum aggregate exposure threshold from ₹25-50 crore for MSMEs, non-MSME small businesses and loans to individuals for business purposes,” RBI Governor Shaktikanta Das said on Friday as part of the Monetary Policy Statement.

The Resolution Framework 2.0 was announced by the RBI on May 5 to help small borrowers tide over the impact of the second Covid-19 wave and State-level lockdowns.

“The above categories of borrowers to whom the lending institutions have aggregate exposure of not more than ₹50 crore as on March 31, 2021, and which have not been restructured earlier under any of the specified restructuring frameworks, shall be eligible for resolution under Resolution Framework 2.0,” said the Statement on Developmental and Regulatory Policies.

All other conditions will be the same. Banks were seeking an expansion in the aggregate exposure limit as it would help more borrowers. The expectation is that the higher limit will help a majority of such borrowers.

Welcome move

According to Subodh Rai, Chief Ratings Officer and Senior Director, CRISIL Ratings, almost two-thirds of the CRISIL-rated mid-size companies in the corporate sector (standard accounts as on March 31, 2021) now come under its ambit, compared with only half as per the previous threshold.

“Specifically, this will support companies with relatively weaker credit profiles,” he said.

 

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