Tag: reserve bank of india

RBI slaps Rs 1.95-cr fine on StanChart for lapses in compliance

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The examination of the risk assessment report, inspection report and all related correspondence revealed non-compliance with directions issued by the regulator

The Reserve Bank of India (RBI) on Monday imposed a fine of Rs 1.95 crore on the Indian operations of Standard Chartered Bank for non-compliance with multiple regulatory directions. The foreign bank was found to be non-compliant with directions pertaining to reversal of the amount involved in unauthorised electronic transactions and reporting of cyber security incidents, among others.

The statutory inspection for supervisory evaluation of the bank was conducted by the RBI with reference to its financial position as on March 31, 2020. The examination of the risk assessment report, inspection report and all related correspondence revealed non-compliance with directions issued by the regulator.

The non-compliance pertained to failure to credit (shadow reversal) the amount involved in unauthorised electronic transactions, not reporting cyber security incident within the prescribed time period, authorising direct sales agents to conduct KYC verification, and failure to ensure integrity and quality of data submitted in the central repository of information on large credits.

“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 on it for contravention of / non-compliance with the aforesaid directions, as stated therein. After considering the bank’s replies to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, the RBI came to the conclusion that the charge of contravention of / non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” the RBI said on its website.

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RBI imposes penalty of Rs 1.95 crore on Standard Chartered Bank, BFSI News, ET BFSI

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The Reserve Bank of India has imposed a penalty of Rs 1.95 crore on Standard Chartered Bank – India, for non-compliance with the directions on customer protection, cyber security, credit card operations, among others, the central bank said in a circular.

Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions, Cyber Security Framework in Banks, Credit Card Operations of banks and Creation of a Central Repository of Large Common Exposures – Across Banks – were the norms the bank failed to comply with, according to the RBI.

A Statutory Inspection for Supervisory Evaluation of the bank had been conducted with reference to its financial position as on March 31, 2020, and the examination of the risk assessment report, inspection report and all related correspondence pertaining to the same revealed the non-compliance with the above-mentioned directions to the extent of failure to credit the amount involved in the unauthorised electronic transactions, not reporting cyber security incident within the prescribed time period, authorising direct sales agents to conduct KYC verification, and failure to ensure integrity and quality of data submitted.

Based on this, the RBI had issued an notice to the bank advising it to show cause as to why penalty should not be imposed on it.

After receiving the bank’s replies to the notice, the RBI came to the conclusion that it would charge a fee for the non-compliance.



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India’s Forex reserves rise by $2.04 billion to $639.51 billion, BFSI News, ET BFSI

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The country’s foreign exchange reserves rose by $2.039 billion to $639.516 billion in the week ended October 8, according to RBI data. In the previous week ended October 1, the reserves had dipped by $1.169 billion to $637.477 billion. The reserves had surged by $8.895 billion to a lifetime high of $642.453 billion in the week ended September 3.

During the reporting week ended October 8, the rise in the reserves was on account of an increase in the Foreign Currency Assets (FCAs), Reserve Bank of India‘s (RBI) weekly data released on Friday showed.

FCA rose by $1.55 billion to $577.001 billion in the reporting week, as per the data.

Expressed in dollar terms, FCA include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves were up by $464 million to $38.022 billion in the reporting week.

The Special Drawing Rights (SDRs) with the International Monetary Fund (IMF) rose by $28 million to $19.268 billion.

The country’s reserve position with the IMF declined by $3 million to $5.225 billion in the reporting week, the data showed.



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RBI clears re-appointment of Amitabh Chaudhry as MD of Axis Bank, BFSI News, ET BFSI

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The Reserve Bank on Thursday approved re-appointment of Amitabh Chaudhry as managing director of private sector Axis Bank for a period of three years.

The extended three-year term would be effective from January 1, 2022, Axis Bank said in a regulatory filing. ”The Reserve Bank of India vide its letter dated October 14, 2021, has approved the re-appointment of Amitabh Chaudhry as the Managing Director & CEO of the bank, with effect from January 1, 2022 till December 31, 2024,” it said.

The board of the bank had in April approved the extension of his tenure for further period of three years subject to regulatory clearance.

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What is tokenisation, and how can it ensure safe transactions?, BFSI News, ET BFSI

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When buying a product online, we are often forced to store our credit or debit card details on the e-commerce platform. To ensure safety of this, the Reserve Bank of India issued guidelines last month, allowing card-on-file tokenisation.

Recently, Visa, a digital payments platform, launched its card-on-file tokenisation service in India.

Here’s what you need to know about the upcoming advancement in India’s digital payments system:

What is tokenisation?

As per guidelines, tokenisation is when credit or debit card details can be replaced with an alternate code, called “token”, which can be generated by the holder to make payments without entering their account details.

This devaluation of card details reduces risk and vulnerability of sensitive data, thereby reducing the chances of fraud arising from sharing card details.

Furthermore, if the customer wants to convert its token back to their actual card details, they can do so. This process is known as de-tokenisation.

What is a token, and how can it be used?

The 16-character “token” generated is free-of-cost, and can be used to perform contactless card transactions at point-of-sale (PoS) terminals, QR code payments, and now for card-on-file (CoF) transactions.

A customer can make a CoF transaction, after authorising a token to their merchant. The merchant can store the token, and use that to bill the customer’s products. Merchants here can be refered to e-commerce companies, airlines and supermarket chains.

The RBI has directed merchants not to store customers’ card details in their systems from January 1, 2022.

How do you generate a token?

The cardholder can generate a token by first requesting for a token on the app provided by the token requestor – the entity that accepts request from the customer for tokenisation of a card. Then, the company will pass the request on to the card network to issue a token. The card network, after seeking consent of the card issuer, will issue a token, which will have a combination of the card, the token requestor, and the device.

This process can be done through mobile phones or tablets for all use cases and channels like contactless card transactions, payments through QR codes and apps.

Tokens are generated by payment companies, which act like Token Service Providers (TSPs). They will provide tokens to mobile payment or e-commerce platforms so that the token can be used during transactions.

If a customer enters their card details in a virtual wallet like Google Pay, these platforms ask one of these TSPs for a token. Only after the TSPs get the go-ahead from the customer’s bank, a code is generated and sent to the user’s device. Once the token has been generated, it remains linked to the device and cannot be replaced.
Consequently, each time a customer uses their device to make a payment, the payments platform can authorise the transaction by simply sharing the token.

How can you register for tokenisation, and is it mandatory?

The ability to tokenise and de-tokenise card data will be with the same TSP, and if a customer wishes to register their card for tokenisation, they will have to first give their consent through Additional Factor of Authentication (AFA), RBI says. Tokenisation is not mandatory, and the customer will be given a choice of selecting the use case and setting-up of limits. The stakeholders involved in a tokenised card transaction are the merchant, the merchant’s acquirer, card network, token requestor, issuer and customer.



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RBI authorises Karur Vysya Bank to collect direct taxes, BFSI News, ET BFSI

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Private sector Karur Vysya Bank on Tuesday said it has commenced the integration process with the Central Board of Direct Taxes to collect direct taxes on its behalf, following the approval it received from the Reserve Bank. “Reserve Bank of India has authorised Karur Vysya Bank to collect direct taxes on behalf of Central Board of Direct Taxes. Following the approval received, the bank has initiated the integration process with CBDT“, the Tamil Nadu based-bank said in a statement.

Once the integration process gets completed, the bank customers can remit the direct taxes through any branch or through net banking or mobile banking services (DLite Mobile application).

“It has been the long standing requirement of our customers that they should be able to pay their direct taxes through our bank. We are happy that we will be in a position to offer this service to our customers”, the bank’s MD and CEO, B Ramesh Babu said.

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RBI bans audit firm Haribhakti & Co for two years

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Haribhakti & Co was the auditor of Srei Infrastructure Finance, whose board was superseded by the RBI and against which insolvency proceedings were initiated last week.

The Reserve Bank of India (RBI) on Tuesday banned chartered accountant firm Haribhakti & Co from undertaking any type of audit assignments for regulated entities for a period of two years, starting April 1, 2022.

The action was taken for the firm’s failure to comply with a specific direction issued by the RBI with respect to its statutory audit of a systemically important non-banking financial company (NBFC), the central bank said in a statement.

This is the first time the RBI has taken such action against an auditor of a systemically important NBFC.

“The RBI has by an order dated September 23, 2021, debarred Haribhakti & Co from undertaking any type of audit assignment/s in any of the entities regulated by RBI for a period of two years with effect from April 1, 2022,” the statement said.

The action has been taken under Section 45 MAA of the RBI Act, which allows the banking regulator to act against auditors. The ban will not impact audit the firm’s assignments in RBI-regulated entities for the financial year 2021-22, the statement said.

In 2019, the RBI had imposed a one-year ban on SR Batliboi & Co, an affiliate of global auditing firm EY, after it found lapses in the audit report of a bank.

Haribhakti & Co was the auditor of Srei Infrastructure Finance, whose board was superseded by the RBI and against which insolvency proceedings were initiated last week.

The Kolkata Bench of the National Company Law Tribunal on October 8 gave its approval to start insolvency proceedings against Srei Infrastructure Finance and its wholly owned subsidiary Srei Equipment Finance after the RBI filed insolvency applications.

According to rating reports of March 6, 2021, by CARE Ratings, Srei Infrastructure Finance owed banks loans worth Rs 11,117.71 crore, apart from outstanding bonds and NCDs worth Rs 710.63 crore.

Srei Equipment Finance had outstanding bank loans worth Rs 16,912.21 crore and other debt instruments worth Rs 499.45 crore. All these facilities and instruments were rated ‘D’, or default grade, in March.

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Bank FD to fetch negative real interest with elevated inflation, BFSI News, ET BFSI

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New Delhi, Oct 12 (PTI) Senior citizens and others depending upon income from bank fixed deposit (FD) schemes will be at the receiving end with the retail inflation exceeding the interest rates. The Reserve Bank of India (RBI) in its latest monetary policy review has projected retail inflation at 5.3 per cent for the current financial year.

Last week, the RBI said that the Consumer Price Index (CPI)-based inflation is now projected to be at 5.3 per cent for 2021-22 with risks evenly balanced.

At this level, the fixed deposit for one year with the country’s largest lender State Bank of India (SBI) would rather earn negative interest. The real interest rate would be (-) 0.3 per cent for the saver.

Real rate of interest is card rate minus inflation rate. The retail inflation for August stood at 5.3 per cent.

Even for higher tenure 2-3 years, the interest rate earned is 5.10 per cent lower than expected inflation for the current fiscal.

In the private sector, the market leader HDFC Bank offers 4.90 per cent interest rate for 1-2 year fixed deposits while 5.15 per cent for 2-3 years.

However, small savings schemes run by the government offers better return compared to fixed deposit rates of banks. For term deposits 1-3 years, the interest rate offered is 5.5 per cent higher than inflation target.

There is natural advantage of moving money from bank FD to government saving schemes as rates are slightly higher. Thus, the real rate of interest is in the positive territory.

Experts said that it is a usual phenomenon that real returns are negative in a crisis and post-recovery world, given the way fiscal stimulus to overcome difficulty.

India is no exception and in fact, new asset allocation patterns would need to emerge, with more allocation to real assets from financial assets.

Real rates are going to be negative for a while, given that the post crisis repairs may take some time and it is imperative that financial literacy initiatives guide people into making the right investment choices, Grant Thornton Bharat partner Vivek Iyer said.

“A negative rate of interest, for savers on bank deposits, these days, is a reality, which the depositors have to face because of a complex set of factors.

“The present average savings deposit rate offered by banks which is around 3.5 per cent and less than five per cent rate on one year deposit indicates a negative return, not even covering the expected inflation rate,” Resurgent India Managing Director Jyoti Prakash Gadia said.

The impact of negative interest on bank savings deposits is obvious, with lower growth of such deposits and the public now seeking alternatives like mutual funds and equity for better returns.

The options although involving more risk have shown phenomenal growth which is likely to continue till inflation is tamed or bank deposit rates are substantially increased, Gadia added. PTI DP CS HRS hrs



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Bank Holidays October 2021: Banks to remain shut for up to 14 days from Oct 12; check full list here

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On 12 October 2021, banks in Agartala and Kolkata will remain shut due to Durga Puja (Maha Saptami). Image: Reuters

Bank Holidays in October: As the festive season has started, banks in India will remain closed for up to 14 days, starting from today in October 2021, including second and fourth Saturdays, and Sundays. Apart from the weekly offs, banks will not be closed for all 14 days for all states as these are state-specific holidays for different occasions. The Reserve Bank of India (RBI) has categorised holidays under three categories — Holiday under Negotiable Instruments Act; Holiday under Negotiable Instruments Act and Real-Time Gross Settlement Holiday; and Banks’ Closing of Accounts. The list of holidays given below has been notified by RBI.

Festive Holidays in October 2021

12 October 2021 – Durga Puja (Maha Saptami)
13 October 2021 – Durga Puja (Maha Ashtami)
14 October 2021 – Durga Puja/Dussehra (Maha Navami)/Ayutha Pooja
15 October 2021 – Durga Puja/Dasara/Dusshera (Vijaya Dashmi)
16 October 2021 – Durga Puja (Dasain)
18 October 2021 – Kati Bihu
19 October 2021 – Id-E-Milad/Eid-e-Miladunnabi/Milad-i-Sherif (Prophet Mohammad’s Birthday)/Baravafat
20 October 2021 – Maharishi Valmiki’s Birthday/Lakshmi Puja/Id-E-Milad
22 October 2021 – Friday following Eid-i-Milad-ul-Nabi
26 October 2021 – Accession Day

On 12 October 2021, banks in Agartala and Kolkata will remain shut due to Durga Puja (Maha Saptami). On the next day, banks in Agartala, Bhubaneswar, Gangtok, Guwahati, Imphal, Kolkata, Patna, and Ranchi will observe a holiday on account of Durga Puja (Maha Ashtami). On 14 October, banks across Agartala, Bengaluru, Chennai, Gangtok, Guwahati, Kanpur, Kochi, Kolkata, Lucknow, Patna, Ranchi, Shillong, and Thiruvananthapuram will be closed for Durga Puja/Dussehra (Maha Navami)/Ayutha Pooja.

On 15 October 2021, except for Imphal and Shimal, banks across the country will remain closed for Durga Puja/Dasara/Dusshera (Vijaya Dashmi). Only banks in Gangtok will remain closed on 16 October to observe Durga Puja (Dasain). On 18 October, banks in Guwahati will be closed; on 19 October, banks in Ahmedabad, Belapur, Bhopal, Chennai, Dehradun, Hyderabad, Imphal, Jammu, Kanpur, Kochi, Lucknow, Mumbai, Nagpur, New Delhi, Raipur, Ranchi, Srinagar, Thiruvananthapuram will remain shut for Id-E-Milad/Eid-e-Miladunnabi/Milad-i-Sherif. Banks in Agartala, Bengaluru, Chandigarh, Kolkata, Shimla, will be closed on 20 October for Maharishi Valmiki’s Birthday. On 22 and 26 October, banks in Jammu and Srinagar will remain closed for Eid-i-Milad-ul-Nabi, and Accession Day, respectively.

Weekend Bank Holidays in October 2021

17 October 2021 – Sunday
23 October 2021 – 4th Saturday
24 October 2021 – Sunday
31 October 2021 – Sunday

All the public and private sector banks in India remain closed on the second and fourth Saturdays of every month, along with a weekly holiday on Sunday. Even as banks will remain shut on the above-mentioned days, customers can avail net banking and other online services. Mobile and internet banking will also remain operational.

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RBI, BFSI News, ET BFSI

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Mumbai, The Reserve Bank of India is reviewing its scheme of penalising banks for non-replenishment of ATMs after getting feedback from lenders, its Deputy Governor T Rabi Sankar said on Friday. In August this year, RBI had announced that it will penalise banks for failure to timely replenish currency notes in ATMs. The scheme, which is aimed at ensuring availability of sufficient cash for the public through ATMs, has come into effect from October 1, 2021.

“We have received various feedback– some positive and some raising concerns. There are issues specific to locations. We are trying to take all the feedback and have a review and see how best it can be implemented,” Sankar told reporters in a post policy call with reporters on Friday.

He said the idea behind the penalty on outages in ATMs is to ensure that cash is available in all ATMs, specially in rural and semi urban areas, all the time.

As per the scheme, cash-out of more than ten hours at any ATM in a month will attract a flat penalty of Rs 10,000 per ATM.

In case of White Label ATMs (WLAs), the penalty would be charged on the bank which is meeting the cash requirement of that particular WLA.

Replying to a query on lower interest rates affecting senior citizens due to fall in fixed deposit rates amid higher inflation, RBI Governor Shaktikanta Das said the cut in repo rate was considered absolutely necessary during the pandemic to support the economy.

“If you are not able to support the overall economy which is collapsing or is moving into a contraction zone, then there would be other major issues for all, including for senior citizens,” he told reporters.

He, however, said one should invest in small savings schemes that are currently offering much higher rates than their actual formula-based rates.

Citing an example, he said the one-year term deposit rate in small savings schemes is at least 170-180 basis points higher than the actual rate which is arrived at by the guidelines.

“In this crisis situation, we should see this (small savings scheme rates) as a fiscal support to senior citizens and middle class and small savers,” Das said. PTI HV

ANU ANU



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