The World Opinion

Tag: RBI

  • Paytm Receives NPCI Approval To Onboard New UPI Users | Personal Finance News

    New Delhi: One 97 Communications Limited, which owns the Paytm brand, on Tuesday said that it has receivesd approval from The National Payments Corporation of India (NPCI) to onboard New UPI users.

     

    “Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we would like to inform you that vide letter dated October 22, 2024, the National Payments Corporation of India (NPCI) has granted approval to the Company to onboard new UPI users, with adherence to all NPCI procedural guidelines and circulars. A copy of the NPCI letter is enclosed for your reference,” One 97 Communications Limited said in a regulatory filing.

    The update comes months after the Reserve Bank of India’s regulatory freeze. The Reserve Bank of India had in February this year said since the Paytm Payments Bank cannot accept further credits into its customer accounts and wallets after March 15, 2024, certain additional steps have become necessary to ensure seamless digital payments by UPI customers using ‘@paytm’ handle operated by the Paytm Payments Bank, and minimise concentration risk in the UPI system by having multiple payment app providers. 

    RBI said that the actions are undertaken in the sole interest of protecting the customers and payment system from any possible disruptions and are without any prejudice to the regulatory or supervisory actions initiated by RBI against Paytm Payments Bank.

    However, a day ahead of the Reserve Bank deadline asking customers and merchants of Paytm Payments Bank Ltd (PPBL) to shift their accounts to other banks by March 15, NCPI granted approval to Paytm-owner One97 Communications Ltd to participate in UPI as a Third-Party Application Provider (TPAP) under the multi-bank model. Axis Bank, HDFC Bank, State Bank of India, and YES Bank will act as Payment System Provider (PSP) banks to Paytm. YES Bank shall also be acting as a merchant acquiring bank for existing and new UPI merchants for One97 Communications Ltd (OCL).

  • Interest Rate Cut Likely Soon? RBI Governor Drops Major Hint | Economy News

    New Delhi: The Reserve Bank of India’s (RBI) Governor Shaktikanta Das on Friday said that interest rate cut at this stage will be ‘premature, and very, very risky’. Speaking at the fireside chat at the India Credit Forum event in Mumbai by Bloomberg, Governor Das warned against any premature interest rate cuts when inflation risk is still there. RBI still maintains a growth forecast of 7.2 per cent for FY25 and expecting the inflation to moderate by November.

    “We are not behind the curve. Indian growth story remains intact. India is poised to grow at 7.2 per cent. Growth is steady and resilient, inflation is moderating with certain risk, so a rate cut at this point will be premature and very, very risky,” Das said

    While inflation is expected to moderate, Governor Das also said that there are ‘significant risks’ to the growth outlook. During the October monetary policy announcement, RBI had maintained the status quo on rate and changed stance to ‘Neutral’ from ‘Withdrawal of Accommodation.’

    “There can be differences of opinion, but the broad expectations of the market are quite aligned with our policies,” he said, countering criticisms that the RBI may be behind the curve in managing the economic outlook.

    He further elaborated on India’s overall economic resilience, highlighting the country’s stable macroeconomic fundamentals and strong confidence from international investors. According to Das, these factors have helped maintain the stability of the Indian rupee, which has depreciated only modestly in response to global market movements.

    He assured that while private credit poses global risks, India’s regulatory framework for non-banking financial companies (NBFCs) ensures stability. Das’s remarks come amid broader discussions about India’s economic momentum, with the nation recently overtaking China in population and maintaining a faster economic growth rate than its neighbour.

    He emphasized that India’s growth story remains intact, even as the country navigates inflationary pressures and global economic challenges. Answering to the question on Private credit, the RBI governor further said that it is posing certain risks to every central bank but there is no danger for India.

    “So far as India is concerned, it’s not a problem at the moment in the sense that private credit in the Indian context is mostly offered by the non-banking financial companies which are regulated by the reserve bank,” he added.

    Reflecting on the RBI’s contributions over the past few years, Das highlighted several key initiatives that have strengthened India’s financial sector. He pointed to the RBI’s proactive stance in regulating the banking sector, stating that the RBI is maintaining a close vigil over the credit markets and taking action whenever necessary.

    The governor underscored the RBI’s role in enhancing the stability of banks, reducing the gap between credit and deposit growth, and supporting the rapid rise of non-banking financial companies (NBFCs), which now account for roughly 30 per cent of India’s credit market.

    Pointing out regarding KYC issues, Das said, “I think there are some complaints about KYC related issues, know your customer related issues and knowing the, you know, knowing the ultimate, the beneficial ownership of investments. Now, this is not something which is our creation, but this is a FATF requirement.”

    KYC norms are essential for ensuring that funds entering India are from legitimate sources, given the complexities of global financial markets. “We get often representations about issues relating to procedural issues, relating to know your customer. That is the KYC-related issues. And that is being addressed not just by us, but also by the securities market regulator, particularly for foreign portfolio investors. It’s more to do with the securities market regulator, the SEBI, which is dealing with it,” he added.

  • RBI Takes Action Against 4 NBFCs Over Excessive Interest Rates, Non-Compliance With Financial Regulations On Loans | Economy News

    New Delhi: The Reserve Bank of India (RBI) has directed four non-banking financial companies (NBFCs), including two microfinance institutions (MFIs), to halt the sanction and disbursal of new loans starting on concerns over their excessive interest rates and non-compliance with established financial regulations.

    According to RBI, Asirvad Micro Finance Limited (Chennai), Arohan Financial Services Limited (Kolkata), DMI Finance Private Limited (New Delhi), and Navi Finserv Limited (Bengaluru) were directed to cease and desist from sanction and disbursal of loans, effective from close of business of October 21, 2024.

    These business restrictions aim to address several supervisory concerns observed during inspections and data analysis. “This action is based on material supervisory concerns observed in the Pricing Policy of these companies in terms of their Weighted Average Lending Rate (WALR) and the Interest Spread charged over their cost of funds, which are found to be excessive and not in adherence with the regulations as laid down in the Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022 dated March 14, 2022 (updated as on July 25, 2022) and Master Direction – Reserve Bank of India (Non-Banking Financial Company-Scale Based Regulation) Directions, 2023, dated October 19, 2023 (updated as on March 21, 2024).

    These are also found to be not in conformity with the provisions laid down under Fair Practices Code issued by the Reserve Bank,” read the RBI statement. The companies were found to be charging excessive interest rates, which did not comply with the guidelines outlined in the RBI’s regulations for microfinance loans and non-banking financial companies.

    The RBI had previously urged regulated entities to ensure fair and transparent pricing, especially for small-value loans, but irregularities persisted despite these warnings. “Over the last few months, the Reserve Bank has been sensitising its Regulated Entities through various channels on the need to use their regulatory freedom responsibly and ensure fair, reasonable and transparent pricing, especially for small-value loans.

    However, unfair and usurious practices continued to be seen during onsite examinations as well as from the data collected and analysed offsite,” added the statement.The companies were also found to be in violation of income recognition and asset classification norms, which led to problems like “evergreening” of loans, where new loans were used to repay old debts.

    “In addition to usurious pricing, these NBFCs were variously found to be in nonadherence with the regulatory guidelines on the assessment of household income and consideration of existing/proposed monthly repayment obligations in respect of their microfinance loans. Deviations were also observed with respect to Income Recognition & Asset Classification (IR&AC) norms resulting in the evergreening of loans, conduct of gold loan portfolio, mandated disclosure requirements on interest rates and fees, outsourcing of core financial services, etc,” added the statement.

    Other compliance failures included issues with managing gold loan portfolios, disclosing interest rates and fees, and outsourcing core financial services. While the RBI has restricted new loan approvals, these companies are still permitted to manage existing customer accounts and continue their loan recovery processes in line with the rules. The restrictions will not affect current borrowers, allowing for ongoing collections and servicing of existing loans.

    The RBI will review the restrictions once the companies take suitable corrective measures to adhere to regulatory guidelines. This includes revising their pricing policies, improving risk management processes, and enhancing customer service and grievance redressal mechanisms.

  • Retail Loans By Banks, Finance Companies In India May Triple By 2030 | Economy News

    Mumbai: Retail loans by banks and finance companies in India could triple by 2030, driving household leverage to 34 per cent by fiscal year 2031 from about 23 per cent at the end of 2024, according to a new report. Finance companies will sustain loan growth stronger than the banking sector, which is expected to grow at 14 per cent, according to the Global Ratings report.

    The finance companies’ loan book is unseasoned. Strong economic growth has supported retail repayment capacity. “We see the strength in retail lending as a competitive edge, with finance companies dominating in some retail products,” said Geeta Chugh, credit analyst. 

    Generally, upper-layer finance companies have strong capital levels, which will support credit growth over the next two years and provide downside buffers. Chugh added the recent actions by the Reserve Bank of India (RBI) will curtail lenders’ overexuberance, enhance compliance and safeguard customers.

    Indian lenders’ strong underwriting will support asset quality. This is reflected in their focus on lending primarily to low-risk customers and generally low loan approval rates, the report noted.

    Funding for finance companies remains sensitive to confidence levels, but companies with strong parentage have better access to competitive rates. Emerging co-lending models are easing funding pressure.

    Rated and unrated finance companies have strong capital levels to support high loan growth, according to the report. As per the Reserve Bank of India (RBI), the Indian financial system remains resilient and is gaining strength from broader macroeconomic stability.

    The banking sector’s well-capitalised and unclogged balance sheet is reflective of higher risk absorption capacity while the NBFC sector and the Urban Cooperative Banks also continue to show improvements.

    However, amid the stable financial sector conditions, the emphasis cannot shift away from proactive identification of potential risks and challenges, if any, according to the Central Bank.

  • Sovereign Gold Bond Scheme 2019-20 Series IV Premature Redemption Today: Check How Much Money Will You Get | Economy News

    New Delhi: You may prematurely redeem Sovereign Gold Bond Scheme 2019-20 Series IV issued in 2019 today, September 17.

    “SGB 2019-20 Series IV – Issue date September 17, 2019) on Sovereign Gold Bond Scheme, premature redemption of Gold Bond may be permitted after fifth year from the date of issue of such Gold Bond on the date on which interest is payable. Accordingly, the due date of premature redemption of the above tranche shall be September 17, 2024,” the RBI has said.

    Sovereign Gold Bond Scheme: How Much Money Will You Get?

    Further, the redemption price of SGB shall be based on the simple average of closing gold price of 999 purity of previous three business days from the date of redemption, as published by the India Bullion and Jewellers Association Ltd (IBJA). Accordingly, the redemption price for premature redemption due on September 17, 2024 shall be Rs 7,278 per unit of SGB based on the simple average of closing gold price for the three business days i.e., September 12, September 13 and September 16, 2024.

    What is Sovereign Gold Bond Scheme?

    Sovereign Gold Bond Scheme are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.

    How Is Sovereign Gold Bond Scheme being sold?

    The bonds will be sold through scheduled commercial banks (except Small Finance Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), designated post offices, and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange Limited.

    Who can buy Sovereign Gold Bond Scheme?

    The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.

  • Bank Holiday In THESE States Today For Milad-Un-Nabi — Check Full List | Personal Finance News

    New Delhi: As per the RBI holiday guidelines, banks are closed on account of gazetted and non-gazetted holidays depending on regional festivities and functions. Banks across several states will remain closed today (September 16) on account of Milad-un-Nabi or Id-e Milad (Birthday of Prophet Mohammad) (bara vafat).

    Banks in Ahmedabad, Aizawl, Belapur, Bengaluru, Chennai, Dehradun, Andhra Pradesh, Telangana, Imphal, Jammu, Kanpur, Kochi, Lucknow, Mumbai, Nagpur, New Delhi, Ranchi, Srinagar, and Thiruvananthapuram will be closed on account of Milad-un-Nabi.

    Banks in Kerala were closed on account of Onam. Meanwhile, September 14 also also being a second saturday of the month, banks across all the states were be closed. 

    Following Bank Holidays Are To Be Observed By Various States From September 16 September 18. But all the states will not observe holidays on all the below mentioned dates.

     

     

     

    September 16 — Eid-e-Milad (Monday) — All over India

    September 17 — Indra Jatra (Tuesday) — Sikkim

    September 18 — Sree Narayana Guru Jayanti (Wednesday) — Kerala

    Bank Closures for Weekends in September 2024

    In addition to the holidays, banks will be closed on the following weekends:

    – Sundays: September 1, 8, 15, 22, 29

    – Second Saturday: September 14

    – Fourth Saturday: September 28

    The Reserve Bank of India categorises its holidays into three groups: Holidays under the Negotiable Instruments Act; Holidays under the Negotiable Instruments Act and Real Time Gross Settlement Holiday; and Banks’ Closing of Accounts. However, it’s important to note that bank holidays differ from state to state and are not observed by all banks. These holidays are often based on local festivals or specific occasions announced in those states.

  • RBI’s Forex Reserves Set To Cross 700 Bn Dollars Sooner Than Expected In FY25 | Economy News

    New Delhi: Despite global economic headwinds and deepening geopolitical uncertainties, the forex reserves are at record all-time high levels and are set to cross $700 billion in FY25 sooner than expected.

    According to the latest note by global investment firm Jefferies, RBI’s forex reserve is estimated to go up by a massive $53 billion to reach $700 billion in the current fiscal (FY25E). The rupee is now the most stable currency among major economies, it added.

    However, the way forex reserves are surging in FY25, the $700 billion mark does not look very far. India’s forex reserves jumped $5.2 billion to a fresh all-time high of $689.24 billion (in the week ended September 6). According to the weekly RBI data, foreign currency assets (FCAs) grew by $5.10 billion to $604.1 billion.

    The country is currently seeing strong domestic flows. FPI flows into debt markets have also picked up. FPIs bought equities in the Indian stock market worth Rs 16,800 crore last week, taking the total buying to Rs 27,856 crore (till September 13).

    As per the NSDL data, FPIs were buyers of equity in the cash market on all days last week. In 2024, the total investments by FPIs now stand at Rs 70,737 crore to date.

    According to market watchers, positive FPI flows have helped in achieving record forex levels in the country. This is set to create external sector resilience and boost the economy across sectors.

    The substantial foreign exchange reserves will provide the RBI with greater flexibility in monetary policy and currency management. India’s reserve position with the International Monetary Fund (IMF) has gone up $9 million to $4.631 billion.

    According to market experts, India’s strong forex will boost its economic growth trajectory by strengthening its position internationally, drawing in foreign investments, and promoting domestic trade and industry.

    Meanwhile, with the inflation in the second quarter of FY25 likely to remain below the RBI forecast of 4.4 per cent, amid the cooling of food prices, the central bank may consider rate cuts in the forthcoming Monetary Policy Committee (MPC) meetings.

    According to Jefferies, interest rates across the world have seen a sharp jump and a cycle reversal seems likely in the coming quarters which would create headroom for the RBI to also taper down benchmark interest rates in India.

  • RBI’s New Rules For Credit Cards: Mastercard, RuPay, Or Visa – Which Network Is Right for You? | Personal Finance News

    RBI New Rules For Credit Card: Good News For Credit Card Holders! Now, users will have the freedom and flexibility to choose their card network from the available ones – Visa, MasterCard, and RuPay while applying for a new credit card or renewing the existing one. 

    This initiative follows the Reserve Bank of India’s introduction of guidelines aimed at improving customer experience and fostering competition in the digital payments sector.

    Rule For New Credit Card Applicants And Existing Cardholders:

    New credit card applicants can now choose their preferred network—Mastercard, RuPay, or Visa. Existing cardholders also have the option to switch networks during the renewal process, providing flexibility to select a different network if preferred. 

    Notably, there are several banks including YES Bank and Bank of Baroda (BOBCARD), have already adopted these changes. Customers applying for credit cards with these banks can select their network preference online or offline. 

    Exemptions For CreditCard Issuers 

    Card issuers with fewer than 10 lakh active cards are not required to comply with these guidelines. Meanwhile, the Issuers that operate their own authorised networks are also exempt. 

    Authorised Card Networks 

    In India, there are five authorised card networks that operate within the payment ecosystem. These include American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India-Rupay, and Visa Worldwide Pte. Ltd.

    These networks play a significant role in enabling electronic transactions and promoting digital payments across the country. However, the RBI has made an exception for American Express, as it operates its independent network. Consequently, American Express is not obligated to adhere to the RBI’s guidelines. 

    Visa and Mastercard Credit Card Benefits

    These cards are accepted in over 200 countries worldwide. Both offer premium benefits like access to airport lounges, travel insurance, and discounts at international merchants. 

    However, they often come with higher fees, particularly for transactions in foreign currencies. 

    RuPay Credit Card Benefits 

    RuPay cards are ideal for domestic because of their lower transaction fees, which make them budget-friendly. Thanks to UPI integration, digital payments in India have become seamless.

  • RBI Board Reviews Global And Domestic Economic Scenario, Outlook | Personal Finance News

    New Delhi: The 610th meeting of the Central Board of Directors of the Reserve Bank of India was held on Wednesday in Mumbai under the Chairmanship of Governor Shaktikanta Das. As per a statement from the central bank, they reviewed the global and domestic economic scenario and outlook, including associated challenges.

    The Board also reviewed various areas of operations of the Reserve Bank of India, including the functioning of Local Boards and activities of select Central Office Departments. Deputy Governors Michael Debabrata Patra, M Rajeshwar Rao, T Rabi Sankar and other Directors of the Central Board -Satish K Marathe, Revathy Iyer, Prof Sachin Chaturvedi, Venu Srinivasan, Pankaj Ramanbhai Patel and Ravindra H Dholakia – attended the meeting.

    Ajay Seth, Secretary, Department of Economic Affairs and Nagaraju Maddirala, Secretary, Department of Financial Services, also attended the meeting. 

  • AU Small Finance Bank Submits Application To RBI For Universal Bank Licence | Economy News

    New Delhi: AU Small Finance Bank (AUSFB) on Tuesday submitted an application to the RBI seeking approval for a universal bank licence. The RBI in April invited applications from small finance banks meeting specified criteria, including a minimum net worth of Rs 1,000 crore, for becoming regular or universal banks.

    AUSFB submitted an application to the central bank seeking approval for the voluntary transition from a small finance bank to a universal bank on September 3, 2024, the lender said in a BSE filing.

     

    In November 2014, the RBI issued guidelines for the licensing of small finance banks (SFBs) in the private sector. As per the April guidelines of RBI, an SFB aiming to become a universal bank should have a minimum net worth of Rs 1,000 crore at the end of the previous quarter and shares of the bank should have been listed on a recognised stock exchange.

    It should also have a net profit in the last two financial years and gross NPA and net NPA of less than or equal to 3 per cent and 1 per cent, respectively, in the last two financial years.

    Jaipur-based AUSFB acquired Fincare Small Finance Bank, and the merger became effective on April 1 this year. With the merger, the total business mix of the merged entity crossed Rs 1.8 lakh crore.