Tag: reserve bank of india

Rupee Bank admins express merger hope after Bapat’s Parliament speech, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The current administrators of the stressed Rupee Cooperative Bank have expressed hope of a resolution of the financial institution, including a possible merger after Lok Sabha member Girish Bapat raised the issue in Parliament during the monsoon session.

Bapat urged the government to intervene regarding Rupee Bank, which has been run by Reserve Bank of India (RBI)-appointed administrators following allegations against the bank’s erstwhile management of misappropriation of funds and has been placed by the central bank under severe restrictions regarding withdrawals and advances.

Bapat said due to the restrictions, deposits worth more than a thousand crores of rupee could not be accessed by its customers, many of whom were senior citizens. He requested the Centre to revive talks of the bank’s possible merger with the Bank of Maharashtra.

When approached by TOI, a Bank of Maharashtra official declined to comment on Bapat’s speech. A source familiar with the issue said talks between the banks went on till 2018 when the Bank of Maharashtra was scheduled to take over Rupee Bank’s assets and liabilities under a scheme formulated by the RBI. However, the talks cooled after that. Rupee Bank is currently awaiting clearance from the RBI to merge with the Maharashtra State Cooperative Bank (MSCB), which is largely involved in agricultural banking, rather than retail.

“Bapat’s speech sparks hope of some resolution to the situation of the bank. If the Centre or the RBI decides to revive Rupee Bank’s merger with Bank of Maharashtra, we are ready to take the necessary steps,” said Sudhir Pandit, the administrator of Rupee Bank.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , ,

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

Banking & Finance

[ad_1]

Read More/Less


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.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , ,

RBI opens up RTGS, NEFT to non-banks in phases

Banking & Finance

[ad_1]

Read More/Less


Authorised non-banks payment system providers including prepaid payment issuers, card networks and white label ATM operators will be eligible to participate in central payment systems like RTGS and NEFT in the first phase, according to the Reserve Bank of India (RBI).

By extending access to payment systems to more entities, the central bank is seeking to provide impetus to digital payments.

As per RBI’s notification on “access for Non-banks to Centralised Payment Systems” to authorised non-bank payment system providers (PSPs), non-banks include entities like PSPs and NBFCs that are regulated by Reserve Bank as also entities that are under the remit of other financial sector regulators like PFRDA, IRDAI, SEBI.

Currently, apart from banks, very few select non-banks have been given approval to participate in CPS so far. Banks have been providing the services to non-banks for their payment and settlement needs.

Also read: RBI’s digital index shows online payment is on the rise

“Direct access for non-banks to CPS lowers the overall risk in the payments ecosystem,” RBI noted, adding that it also brings advantages to non-banks like reduction in cost of payments, minimising dependence on banks, reducing the time taken for completing payments, eliminating the uncertainty in finality of the payments as the settlement is carried out in central bank money.

A non-bank getting direct access to CPS will be allotted a separate Indian Financial System Code (IFSC), can open a Current Account with the Reserve Bank in its core banking system (e-Kuber), maintain a settlement account with RBI, and get membership of Indian Financial Network (INFINET) and use of Structured Financial Messaging System (SFMS) to communicate with CPS.

Eligibility criteria

For access to CPS, non bank PSPs would require, among others, a valid certificate of authentication by the RBI under the Payment and Settlement Systems Act, 2007, networth of at least ₹25 crore, incorporation in India, adequate technical and system readiness including cyber resilience and compliance with local payment data storage requirements.

Also read: Mastercard to file an independent audit report

“Entities incorporated outside India shall empower their local offices to carry out all operations in respect of CPS, but the responsibility for all operations and management of any contingency, including settlement obligations, shall remain with the foreign parent institution, which has taken authorisation as PSP,” the RBI further said.

Nature of transactions that can be executed will depend upon the type of membership approved for RTGS while some categories of PSPs will be permitted to participate in NEFT also.

RTGS/ NEFT customer payments can be initiated by PPI issuers to merchants/ payment aggregators; WLA operators to agencies handling ATMs; and Full-KYC PPI customers to load the PPIs from their bank account.

RTGS inter-bank transfers can be initiated by non-bank PSPs to maintain sufficient balance in their escrow account with member bank/s based on net debit or credit position; and WLA operators and PPI issuers to other member banks/ non-banks.

Also read: Cryptocurrency, CBDC and the RBI Act

RBI said card networks will not be allowed to use the RBI current account for their settlement guarantee and related activities. Non-banks would be expected to submit applications for membership to CPS to the RBI.

“Reserve Bank shall endeavour to complete the process of scrutinising the applications, that are complete with all required documents, within 60 days of receipt,” it said.

The RBI had in April this year proposed to enable regulated payment system operators to take direct membership in Central Payment Systems such as RTGS and NEFT.

[ad_2]

CLICK HERE TO APPLY

Leave a comment , , ,

RBI announces Digital Payments Index, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


The Reserve Bank of India had earlier announced the construction of a composite Reserve Bank of India – Digital Payments Index (RBI-DPI) with March 2018 as base to capture the extent of digitisation of payments across the country.

The index for March 2021 stands at 270.59 as against 207.84 for March 2020, announced while launching the index on January 1, 2021.

The RBI-DPI comprises of 5 broad parameters that enable measurement of deepening and penetration of digital payments in the country over different time periods. These parameters are – (i) Payment Enablers (weight 25%), (ii) Payment Infrastructure – Demand-side factors (10%), (iii) Payment Infrastructure – Supply-side factors (15%), (iv) Payment Performance (45%) and (v) Consumer Centricity (5%). Each of these parameters have sub-parameters which, in turn, consist of various measurable indicators.

The RBI-DPI index has demonstrated significant growth in the index representing the rapid adoption and deepening of digital payments across the country in recent years.

The RBI-DPI has been constructed with March 2018 as the base period, i.e. DPI score for March 2018 is set at 100. The DPI for March 2019 and March 2020 work out to 153.47 and 207.84 respectively, indicating appreciable growth.

The index series since its inception is as under:

March 2018 (Base) : 100
March 2019 : 153.47
September 2019 : 173.49
March 2020: 207.84
September 2020: 217.74
March 2021: 270.59



[ad_2]

CLICK HERE TO APPLY

Leave a comment ,

Yes Bank and Indiabulls Housing Finance enter into a co-lending partnership, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


YES BANK and Indiabulls Housing Finance Limited have entered into a strategic co-lending agreement to offer home loans to homebuyers at competitive interest rates.

The co-lending framework laid down by Reserve Bank of India provides a collaboration tool to benefit from the low-cost funding model of a bank and the cost-efficient sourcing and servicing capabilities of a non-bank.

Rajan Pental, Global Head – Retail Banking, YES BANK said, “We are pleased to partner with Indiabulls Housing Finance Limited. This is in line with YES BANK’s strategy of expanding its retail franchise through a mix of organic and partnership-led origination model. The Bank is looking forward to further build a profitable and quality home loan portfolio through this partnership.”

The partnership aims at synergizing capabilities to provide an efficient and seamless experience to retail home loan customers.

Gagan Banga, Vice Chairman & CEO, Indiabulls Housing Finance Limited said “We can now leverage YES BANK’s deposit-led franchise and complement that with our technology-led distribution to provide efficient solutions around home Loans to a wide gamut of customers across geographies, ticket-size and yield spectrum, to give us balance-sheet light growth and profitability.”



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , ,

Fast growing gold loans turn sour hit by lockdowns, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


High yielding advances against gold jewellery, once the hottest loan product for banks, have turned sour this year as collections are affected due to the lockdown in the first quarter. Kerala-based Federal Bank and CSB Bank, besides large private sector lenders such as ICICI Bank, have seen slippages increase from this portfolio.

Although lenders say the pain is transitory, the second quarter is crucial for this portfolio to not become a big source of NPAs.

Banks for which gold loans contribute substantial amount to their profits, were hit in the first quarter. Out of the Rs 640 crore slippages that Federal Bank saw during the quarter, Rs 86 crore was from gold loans or linked to the product as a result, the bank’s gross NPAs rose to 3.50% of advances, up from 2.96% a year.

Similarly, Federal Bank’s smaller peer CSB Bank’s gross NPAs rose to 4.88% in June 2021 from 3.51% a year earlier due to the rise in NPAs from the gold loan business. Out of the Rs 435 crore of new NPAs during the quarter, Rs 361 crore was from gold loans including reversal of interest for the bank where gold loan makes up 38% of its assets.

Gold loans were the pain point even for larger lenders like ICICI which reported fresh slippages of Rs 6773 crore from its retail book out of which Rs 1123 crore were from such loans.

Analysts said the rise in delinquencies reflects the challenges banks faced in loan collections and also the cash flows issues faced by gold loan borrowers most of whom are micro entrepreneurs.

“There is also the impact of the fall in gold prices since last year which has made lending a little more risky. The fall in gold prices means that the strong growth that we saw in this portfolio last fiscal may slow down this year as banks will be more cautious,” said Prakash Agarwal, head financial institutions at India Ratings & Research.

Gold prices have fallen from a peak of Rs 52,827 per 10 grams in August 2020 to Rs 47,640 per grams now, though it is higher than the Rs 44,739 per 10 grams reported in March 2021. The rise in gold prices had also prompted the Reserve Bank of India to increase the loan to value ratio (LTV) to 90% from 75% in August. The LTV has since been restored to 75% from April.

Bankers however said despite the recent hiccups gold loans continue to be a well performing portfolio which can be built over the long term.

“We still believe in this portfolio and will continue to build it. There is no need for any caution. We are confident that as things improve both demand for loans and recovery of will improve. Already we are seeing an increase in recovery and we continue to expect growth in this fiscal year,” said CVR Rajendran, CEO at CSB Bank.

The growth though is going to be slower than the 61% growth the bank recorded in the fiscal ended March 2021. The banking system itself had recorded a 82% growth in fiscal 2021.

Bankers said the high yields and low risk offered by gold loans make it a winning product. CSB Bank for got a 11.50% quarterly yield in March 2021.

“In good times or bad gold loans are always a good product to have. Out NPAs in the segment is 0.20% which is very low with average loan to value (LTV) of about 80%. The loans at LTV of 93% are in single digits; so it is a very small portion,” said Shyam Srinivasan, CEO at Federal Bank.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

RBI’s communication key to handling excess liquidity, says StanChart’s Sahay, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


NEW DELHI: Over the last few weeks, a conundrum has resurfaced for the Reserve Bank of India — how to keep the liquidity surplus in the banking system from ballooning past a point that would be difficult to tackle in the future.

Standard Chartered Bank‘s head of economic research – South Asia, Anubhuti Sahay, is of the view that while it is important to permit a surplus of liquidity, it is equally important that “unnecessary excesses” are mopped off.

“I would suggest the following to the RBI Governor. The stock of liquidity if it becomes too large can become very difficult to absorb later on. Thus it is important that timely action is taken to ensure that liquidity remains in surplus, allows monetary policy transmission but unnecessary excesses are mopped off,” she said.

At present, liquidity in the banking system is estimated to be around 6 lakh crore rupees while the government is expected to be sitting on around 4 lakh crores, taking the core liquidity above 10 lakh crores.

Liquidity in the banking system in seen rising in the Jul-Sep quarter because of redemptions of Treasury Bills worth around 1.7 lakh crores, treasury officials said. In addition, the RBI is regularly infusing durable liquidity through its bond purchases under the recently announced ‘Government Securities Acqusition Programme’.

For the current quarter, the central bank has committed bond purchases worth 1.2 lakh crores.

From the perspective of its bond purchases there is little that the RBI can do because it is necessary for the central bank to be an active buyer of gilts and anchor sovereign borrowing costs at a time when the government borrowing programme is huge.

Moreover, the surplus liquidity conditions maintained by the RBI have had a significant role to play when it comes to keeping credit costs in the economy low at a time when the coronavirus crisis has crippled demand.

Sahay said that the RBI’s communication to markets would play a key factor in how the central bank manages episodes of a large accretion to liquidity.

In January 2021, markets were spooked when the RBI unexpectedly announced variable rate reverse repo operations as the step was taken as a precursor to policy normalisation.

At the time, the liquidity surplus was comparable to what it is now. The RBI has since, several times assured markets that it is not taking any steps to commence policy normalisation.

“It is important that measures are announced on a regular frequency while clarifying that these are not measures towards policy normalisation,” Sahay said.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

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

Banking & Finance

[ad_1]

Read More/Less


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.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , ,

Desi startup starts taking Bitcoin in payments despite govt warnings, BFSI News, ET BFSI

Personal Finance

[ad_1]

Read More/Less


NEW DELHI: Till now, Bitcoin and other cryptocurrencies are seen largely as an asset class to invest in to gain from price appreciation.

In the US, some businesses have also started accepting them as currencies for payments. Tesla famously started accepting it and then stopped it a few months back, citing environmental concerns. But CEO Elon Musk now says they may accept it again soon.

Microsoft, Coca Cola and AXA Insurance have also shown willingness to accept cryptocurrency as payment for select services and products in some territories.

In India, amid heavy resistance from the government and the Reserve Bank of India, cryptocurrencies are yet to gain a broader acceptance.

But one Indian startup has ventured out to start accepting cryptocurrencies for payments. The Rug Republic – a homegrown décor brand – is one. The Okhla, Delhi-based firm said it would accept top 20 cryptocurrencies for payments, but only from Indian customers.

Cryptocurrencies are neither legal, nor illegal in India. Lately, banks, likely on the insistence of RBI, have started disassociating from cryptocurrency exchanges. Other government agencies have also started tightening their noose against these tokens.

Their major concern is the anonymity that the blockchain network — the technology on which cryptocurrencies are based on — will lead to tax evasion, terror funding or any other nefarious activity. However, businesses are taking additional measures to track where the money is coming from.

“It is a misconception that crypto transactions cannot be tracked. It is easily verifiable on the blockchain, as opposed to the incredibly difficult ways money can be hidden in the real world. As we have seen with so many people during the Panama Papers episodes. Our invoices clearly mention that money was taken in certain currency on this date and at this price. Everything is absolutely above board,” said Raghav Gupta, Director at The Rug Republic.

Some sovereign countries such as Nicaragua and El Salvador have embraced cryptocurrencies, with the latter becoming the first country in the world to adopt Bitcoin as legal tender.

Gupta, who exports his products outside India as well, said his firm will not accept crypto payments outside India, as such transactions could be in violation of the Foreign Exchange Management Act (FEMA), as they constitute cross-border payments in a currency not recognised by RBI.

Is it a publicity stunt? Why else is he taking such a risk when the rules regarding cryptocurrencies are not clear? The promoter says he believes these tokens will eventually gain prominence in India. And, it will form a good asset base for him in some years.

“It is clear that not even 5 per cent of my revenue will come from it. I am extremely bullish on it in a 5-10 year scale. I am very happy to take this risk. Ethereum will be much more valuable by then,” said Gupta.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,

RBI raises loan limit to Directors on bank boards to Rs 5 cr, BFSI News, ET BFSI

Banking & Finance

[ad_1]

Read More/Less


Mumbai, The Reserve Bank of India (RBI) has raised the limit of loan that can be given by banks to a Director on the board of a bank to Rs 5 crore from the previous cap of Rs 25 lakh.

In a circular issued on Friday, the central bank said that unless sanctioned by the Board of Directors or the Management Committee, banks should not grant loans and advances aggregating Rs 5 crore and above to any relative other than spouse and minor or dependent children of their own Chairmen and Managing Directors or other Directors. Same would be the rule in terms of relatives of Chairman or Managing Director or other directors of other banks.

Further, any credit facility given to the Directors and relatives of Directors have to be sanctioned by the appropriate authority in the financing bank, and the matter has to be reported to the board, it said.

Board approval would be required for loans given to major shareholders of the bank, or his relatives, where the shareholder holds more than 10 per cent in the bank.

There have been instances in the past wherein existing Directors allegedly misused their position to grant loans to favour their family members, as in the case of the former ICICI bank MD & CEO Chanda Kochhar who is alleged to have misused her official post to grant a massive Rs 3,250 crore loan to Videocon.

Allegedly, the loan was part of a quid pro quo arrangement under which Venugopal Dhoot invested Rs 64 crore in Chanda Kochhar’s husband’s NuPower Renewables.



[ad_2]

CLICK HERE TO APPLY

Leave a comment , , , , , , , , ,
1 … 24 25 26 27 28 … 55