RBI Became a member of Network for Greening the Financial System
Reserve Bank of India (RBI) joined as a member of Central Banks and Supervisors’ Network for Greening the Financial System (NGFS).
Important points about NGFS:
• It was launched at the Paris One Planet Summit on December 12, 2017 and RBI became a member of it in April 23,2021.
• NGFS consists of a group of central banks and supervisors willing, on a voluntary basis, they will share best practices and experiences for the development of environment and climate risk management in the financial sector.
• The central Banks will organize the finance to support the transition towards a sustainable economy. RBI as a member, will contribute to global efforts on green finance and climate change.
About Network for Greening the Financial System (NGFS):
Establishment – December 2017 Headquarters – Paris, France Members – 90 members and 13 observers. Chair – Frank Elderson (Dutch central banker)
RBI Imposed Monetary Penalty of Rs 3 crore on ICICI Bank for Contravention of Rules
On May 03,2021, The Reserve Bank of India (RBI) imposed a Rs 3 crore monetary penalty on ICICI Bank for contravention of certain directions issued by the RBI on ‘Prudential Norms for Classification, Valuation and Operation of Investment Portfolio by Banks in July 2015.
RBI’s Comprehensive Credit Support Measures Against the Second wave of COVID-19
On May 05, 2021, the Reserve Bank of India(RBI) announced a series of measures and Comprehensive strategies to support all stakeholders from the second wave of COVID-19 led economic difficulties.
Measures undertaken by RBI against the pandemic:
-Term Liquidity Facility of ₹50,000 crores to Ease Access to Emergency Health Services
-Classification of SFB loan to MFIs for on-lending as PSL
RBI permitted the Small Finance Banks’ (SFBs) lending to Micro-Finance Institutions (MFIs) for on-lending to individuals under the classification of priority sector lending (PSL) for which the MFIs need to have Rs 500 crore asset size (Currently, the SFB’s PSL is not permitted for MFIs for on-lending).
• This facility is made to be available up to March 31, 2022.
-Special Long-Term Repo Operations (SLTRO) for SFBs
-Rationalisation of Compliance to KYC Norms
In order to enhance customer convenience, RBI rationalised certain components of the extant KYC norms.
i.Extension of V-CIP: The scope of video KYC i.e. V-CIP – (video-based customer identification process) was extended for new categories of customers such as proprietorship firms, authorised signatories and beneficial owners of Legal Entities.
ii.Conversion: Allowed the conversion of limited KYC accounts into fully KYC-compliant accounts (For accounts that are opened on the basis of Aadhaar e-KYC authentication in non-face-to-face mode).
iii. Enabled the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V-CIP.
iv.Introduced the use of digital channels for the purpose of periodic updating of KYC details of customers.
-RBI Increased State Governments’ OD Facility Tenor to 50 days
To support State Governments to manage their fiscal situation, RBI has increased the maximum number of days of the OverDraft (OD) facility in a quarter from 36 to 50 days and the number of consecutive days of OD from 14 to 21 days.
• Availability – up to September 30, 2021
RBI Announced 2nd G-Sec Purchase under G-SAP 1.0 for Rs 35,000 crore; G-sec Yields Softens
RBI announced the second government securities(G-sec) purchase under G-SAP 1.0 for an amount of Rs.32,000 crore on May 20, 2021. This purchase announcement leads the yield on the benchmark 10-year bond to fell below the crucial 6 percent mark.
RBI set up Advisory Group Under S Janakiraman to Assist RRA 2.0
The Reserve Bank of India’s (RBI) Regulations Review Authority (RRA 2.0) has constituted a 6-member Advisory Group headed by S Janakiraman, Managing Director of State Bank of India to support in reviewing the RBI’s regulations and compliance procedures to streamline/ rationalise them to make them more effective.
RBI Revised the Guidelines for Private Banks to Undertake Govt Business; Amended the Master Direction on KYC
On May 10, 2021, The Reserve Bank of India (RBI), revised the existing guidelines on “Appointment of Scheduled Private Sector Banks as Agency Banks of RBI” for authorising Scheduled Private Sector Banks as agency banks of RBI for conducting government business (Central and/or State).
Note – In February 2021, the Finance Ministry had removed the embargo (an official ban) imposed in September 2012 on the allocation of government business to private sector banks.
-RBI Amended the Master Direction on KYC
RBI Amended the Master Direction on know your customer(KYC) to further leverage the Video-based Customer Identification Process (V-CIP) and simplify the process of periodic updating of KYC.
Central Govt in consultation with RBI issued Sovereign Gold Bonds Scheme FY22
The Government of India(GoI), in consultation with the Reserve Bank of India, has decided to issue Sovereign Gold Bonds for FY22. The Sovereign Gold Bonds will be issued in 6 tranches from May 2021 to September 2021.
RBI Excluded Lakshmi Vilas Bank from the Second Schedule of the RBI Act
Reserve Bank of India(RBI) has excluded Lakshmi Vilas Bank Ltd.(LVB) from the Second Schedule of the RBI Act, 1934 after it was merged with DBS Bank India Ltd (DBIL) in 2020.
RBI Board Approved Transfer of Rs 99,122 crore as Surplus to Govt
On May 21, 2021, the board of Reserve Bank of India(RBI) approved the transfer of Rs 99,122 crore as surplus to the Central government for the accounting period of 9 months from July 2020 to March 2021 under the 589th virtual meeting of the Central Board of Directors of the RBI.
• The current surplus fund transfer is 50 percent higher than Rs 57,128 crore, the transfer approved in the accounting year 2019-2020.
• The board also decided to maintain the Contingency Risk Buffer at 5.50% in line with recommendations of the Bimal Jalan Committee report.
• The meeting was held under the chairmanship of Shaktikanta Das, RBI governor.
RBI Issued Guidelines for Amalgamation of District Central Co-op Banks with State Co-op Banks
On May 24, 2021, the Reserve Bank of India(RBI) notified the guidelines for the Amalgamation of one or more District Central Co-operative Banks (DCCBs) in a State with State Co-operative Bank (StCB) or amalgamation of one DCCB with another.
• RBI issued the guidelines as some of the State governments approached RBI for amalgamation of DCCBs with the StCB as a two-tier Short-term Co-operative Credit Structure (STCCS).
Highlights of RBI Annual Report 2020-21; Fall in Bank Fraud, Rise in Forex Earning, Increased Surplus
On May 27, 2021, the Reserve Bank of India (RBI) released its Annual Report for 2020-21, a statutory report of its Central Board of Directors, which covers the working and functions of the RBI for the transition period of 9 months (July 2020 – March 2021).
Note – To make the Accounting year equivalent to Financial year, the accounting year of RBI was changed from July – June to April – March.
Growth – Due to the onset of the second wave of COVID-19, RBI has stated a raft of revisions to growth projections of FY22 towards the RBI’s earlier projection of 10.5 percent (26.2 percent in Q1, 8.3 percent in Q2, 5.4 percent in Q3 and 6.2 per cent in Q4)
T Rabi Sankar appointed as the 4th Deputy Governor of RBI
The Appointment Committee of the Cabinet(ACC) chaired by Prime Minister Narendra Modi has appointed T Rabi Sankar, the Executive Director of Reserve Bank of India(RBI) as the 4th Deputy Governor of RBI. ACC has cleared his appointment for a period of 3 years or till his date of superannuation.
• He succeeds B P Kanungo, who retired on 2nd April 2021 after serving one year extension period.
• He is also incharge of the payments system, fintech, information technology and risk management at the RBI.
Jose J Kattoor Appointed as Executive Director of RBI
The Reserve Bank of India(RBI) has appointed Jose J Kattoor as its Executive Director (ED) with effect from 4th May 2021. He has been serving as the Regional Director for Karnataka at the Bengaluru Regional Office of RBI. His appointment comes after RBI’s Executive Director, T Rabi Sankar appointed as the 4th Deputy Governor of RBI in April 2021. As the ED of RBI he will manage the Human Resource Management Department, Corporate Strategy and Budget Department and Rajbhasha Department.
Padmakumar M. Nair to Take Charge as 1st CEO of NARCL
Padmakumar Madhavan Nair, Chief General Manager of Stressed Assets Resolution Group at State Bank of India(SBI) appointed as the 1st Chief Executive Officer(CEO) of the National Asset Reconstruction Company Ltd (NARCL). (At present, he will be joining the company on deputation basis)
• NARC (the name coined for the bad bank) is expected to be operational in June,2021. It will be created in collaboration with both public and private sector banks.
Note – Bad bank refers to a financial institution that takes over bad loans of lenders and undertakes resolution.
Govt Extends Vivad Se Vishwas Deadline for Payments to June 30
The Government of India has extended the deadline for making payments under the Direct Tax Vivaad Se Vishwas dispute resolution scheme to another 2 months till 30th June 2021 and also extended the deadlines for various compliance under Income Tax Act due to the COVID-19 pandemic.
Airtel Payments Bank become the first payments bank to enable ₹2 lakh of day-end balance account limit
As per the Reserve Bank of India’s (RBI’s) guidelines, Airtel Payments Bank has increased the day-end account balance limit for customers from ₹ 1 lakh to ₹ 2 lakh and become the first payments bank in the country to do so
Goldman Sachs Revised India’s GDP Forecast for FY22 to 11.1% from 11.7%
Goldman Sachs, brokerage has reduced India’s economic growth forecast for FY22 to 11.1 percent from 11.7 percent due to the local restrictions and increasing COVID-19 cases.
LIC Became 10th Most valuable & 3rd Strongest Insurance Brand Globally
Brand Finance, a London-based brand valuation consultancy firm in its annual report on the most valuable and strongest insurance brands – “Insurance 100 2021”, reported the Life Insurance Corporation (LIC) as the 3rd strongest and the 10th most valuable insurance brand globally.
ADB launches Asia Pacific Tax Hub to enhance International Tax Cooperation
The Asian Development Bank (ADB) has launched the ‘Asia Pacific Tax Hub’ to enhance International Tax Cooperation.
i.The Hub will create an open and inclusive platform for promoting strategic policy dialogue, improving knowledge sharing & strengthening coordination on tax policy and administration among ADB members and development partners.
ii.It will maximise the regional and international resources to strengthen domestic resource mobilisation and international tax cooperation among ADB’s Developing Member Countries (DMCs).
SEBI Issued Disclosure Norms on BRSR Reporting for Top 1000 Listed Companies
On May 11,2021, under Section 11(1) of the Securities and Exchange Board of India(SEBI) Act, 1992 read with Regulation 101 of the Listing of Obligations and Disclosure Requirements (LODR), SEBI issued new disclosure norms over the Business Responsibility and Sustainability Report (BRSR), for the top 1,000 listed companies (by market capitalisation) by FY23.
SEBI Proposed Framework for Regulated Gold Exchange in India – Electronic Gold Receipt
On May 17, 2021, the Securities and Exchange Board of India(SEBI) issued a Consultation Paper detailing the Proposed framework for the Gold Exchange in India and the draft SEBI (Vault Managers) Regulations, 2021 for regulating the gold exchange-related business of the Vault Managers.
• The Gold Exchange instruments are termed as “Electronic Gold Receipt” (EGR)
• With annual gold demand of ~800-900 tonne, India is the 2nd largest consumer of gold globally. (First – China)
• Objective: Gold exchange(EGR) is intended to ‘one nation one price’ of gold
BSE, Dun & Bradstreet India Partners to Promote MSME Growth
Leading stock exchange Bombay Stock Exchange(BSE) has signed a memorandum of understanding (MoU) with Dun & Bradstreet Information Services India to create an ecosystem for promoting, aiding and fostering the growth of Small and Medium Enterprises(SME).
LIC Hiked its Stake in Union Bank to over 5%
On May 21, 2021, The Life Insurance Corporation of India (LIC) acquired around a 2 percent stake in the state-run Union Bank of India(UBI) and hiked its stake hold in UBI to 5.06 percent.
• Earlier, the LIC held a 3.09 percent stake in UBI, representing 19,79,23,251 equity shares of the bank, now it was increased to 5.06 percent (34,57,64,764 shares).
• UBI had closed its Qualified Institutions Placement (QIP), in which it raised a total of Rs 1,447.17 crore.
RBI Imposed Rs 10 crore Penalty on HDFC Bank
On May 28, 2021, The Reserve Bank of India (RBI) imposed a monetary penalty of Rs 10 crore on HDFC Bank Limited for contravention of provisions of section 6(2) and section 8 of the Banking Regulation Act, 1949 (the Act). RBI imposed the penalty in the exercise of powers vested with the RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Act, after finding irregularities with the HDFC bank’s auto loan portfolio.