The World Opinion

Tag: Reserve Bank of India

  • Reserve Bank Of India Cancels Licence Of City Co-operative Bank | Personal Finance News

    New Delhi: The Reserve Bank of India (RBI) has cancelled the licence of “The City Co-operative Bank Ltd., Mumbai, Maharashtra.” 

    RBI in a release said, consequently, the bank ceases to carry on banking business, with effect from the close of business on June 19, 2024. The Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.

    The Reserve Bank cancelled the licence of the bank due to the following reasons

    – The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949.

    – The bank has failed to comply with the requirements of Sections 22(3) (a), 22(3) (b), 22(3)(c), 22(3) (d) and 22(3)(e) read with Section 56 of the Banking Regulation Act, 1949;

    – The continuance of the bank is prejudicial to the interests of its depositors;

    – The bank with its present financial position would be unable to pay its present depositors in full; and

    Public interest would be adversely affected if the bank is allowed to carry on its banking business any further, added RBI.

    Consequent to the cancellation of its licence, “The City Co-operative Bank Ltd., Mumbai, Maharashtra.” is prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits as defined in Section 5 (b) read with Section 56 of the Banking Regulation Act, 1949 with immediate effect.

    Deposit Insurance and Credit Guarantee Corporation 

    On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961. As per the data submitted by the bank, about 87% of the depositors are entitled to receive full amount of their deposits from DICGC. As on June 14, 2024, DICGC has already paid ₹230.99 crore of the total insured deposits under the provisions of Section 18A of the DICGC Act, 1961 based on the willingness received from the concerned depositors of the bank.

  • Stock Markets Gain 3 Per Cent As Political Stability Returns | Markets News

    New Delhi: In a week full of political surprises, the Indian Indices saw high volatility but ended up gaining more than 3 per cent, buoyed by Prime Minister Narendra Modi’s return for the record third term and RBI’s monetary policy announcements. The BSE Sensex hit a fresh all-time high of 76,795.31 while the Nifty reached a record high of 23,338.70.

    On Friday, the Sensex surged 2,732 points or 3.69 per cent to close at 76,693.36. On the other hand, Nifty went up 759 points or 3.37 per cent to end at 23,290. The investors’ losses prior to the new government’s formation moves were almost recovered in just three trading sessions, at more than Rs 28 lakh crore. (Also Read: Sensex Touches All-Time High, Nifty Up 2% On Announcement Of PM Modi Taking Oath)

    The BSE Small-cap index surged 3 per cent and Mid-cap Index also went up 3 per cent during the week. The large-cap Index saw 3 per cent rise. The foreign institutional investors (FIIs) sold equities worth Rs 13,718.42 crore. On the other hand, domestic institutional investors (DIIs) bought equities worth Rs 5,578.71 crore. (Also Read: BSE Denies Technical Glitch On June 4 Causing Mutual Fund To Lose Money On Election Day)

    According to market experts, the Nifty moved up significantly after a flat closing in the previous trading session. Going forward, the market remains a buy on dips as long as 23,000 is not broken. “On the higher end, the index might move towards 23500-23600. On the lower end, profit booking might occur only below 23000,” said Rupak De, senior technical analyst, LKP Securities.

    Bank Nifty has also shown bullish momentum, taking support near its 10-day moving average and forming a bullish engulfing candle on the daily chart. It closed near its resistance level, indicating strong buying interest. The key resistance level for Bank Nifty is 50,500, while 49,200 will act as crucial support, said experts. The rupee also traded strong, appreciating by Rs 0.11 to close at 83.40 against the dollar.

    This strength is attributed to ongoing capital market gains and a continued buying spree following the general election, with the market showing confidence in the NDA 3.0 government maintaining economic stability, the experts noted.

  • Sensex Touches All-Time High, Nifty Up 2% On Announcement Of PM Modi Taking Oath | Markets News

    New Delhi: Indian markets continued their upward trend and Sensex touched all-time high after the Reserve Bank of India (RBI) announced on Friday that it would keep policy rates unchanged at 6.5 percent and it became clear that Narendra Modi will again take oath as Prime Minister of India.

    The BSE Sensex touched an all-time high, while the Nifty 50 index closed positively at 23,267.75, marking a gain of 446.35 points or 1.96 percent, and hitting a high of 23,320.20. The Sensex followed suit, closing at 76,693.36, up by 1,618.85 points or 2.16 percent. (Also Read: India’s Forex Reserves At Historic High Of $651.5 Bn, CAD To Dip: RBI)

    “At the RBI MPC meeting earlier today, the benchmark interest rate was left unchanged, as expected, with a continued focus on inflation. U.S. jobless claims data came in at 229,000, slightly above the expected 220,000. Later today, investors will focus on the U.S. Non-Farm Payrolls and Unemployment Rate data for further insights into Federal Reserve actions” said Shrikant Chouhan, Head equity Research, Kotak Securities (Also Read: RBI Announces UPI Lite Integration With E-Mandate Framework; Now You Can Autofill Your UPI Lite Balance)

    Top performers in the Nifty 50 included M&M, Wipro, Tech Mahindra, Bharti Airtel, and Infosys, whereas SBI Life Insurance and Tata Consumer Products experienced losses. Across sectors, all indices showed gains, with the IT sector leading with a 3.37% increase, followed by the Auto, Oil & Gas, Metal, and Realty sectors, each up by more than 2 percent.

    During the Monetary Policy announcement, the RBI also revised upwards its FY25 gross domestic product (GDP) forecast to 7.2 percent from the previous 7 percent, boosting investor confidence in Indian markets.

    “The anticipation of stability within the coalition government at the center, coupled with the RBI’s upward revision of its growth forecast for FY25 to 7.2%, fuelled a broad-based rally in the domestic market. The Indian market surpassed its previous record high set on exit-poll day and reached a fresh peak. Though the last mile towards the inflation target remains sticky, investors are expecting the MPC to be one step closer to the easing cycle” said Vinod Nair, Head of Research, Geojit Financial Services.

    In the broader market, the BSE SmallCap rose by 2.16 per cent, while the BSE MidCap climbed by 1.20 per cent. European shares, on the other hand, opened slightly lower, with the Stoxx 600 index down by 0.1 per cent. Despite this, technology stocks saw gains, while real estate and insurance stocks faced losses due to the European Central Bank’s cautious approach towards rate cuts.

  • RBI to set up digital payments intelligence platform to combat online fraud |

    New Delhi: In a bid to bolster the safety and security of digital payments and enhance regulatory frameworks, the Reserve Bank of India (RBI) unveiled a series of proposals aimed at fostering innovation, inclusivity, and efficiency in the financial ecosystem.

    These initiatives, announced by RBI Governor Shaktikanta Das, signify the central bank’s commitment to fortifying India’s digital infrastructure and promoting a conducive environment for financial transactions. One of the key announcements made by Governor Das pertained to the establishment of a Digital Payments Intelligence Platform.

    This platform, leveraging advanced technologies, aims to mitigate payment fraud risks and enhance the safety of digital transactions. According to the annual report released by the Reserve Bank of India (RBI) on May 30, there was a significant surge in the number of financial frauds reported by banks, increasing by 166 per cent year-on-year in the financial year 2023- 24 to reach 36,075 cases. This figure starkly contrasts with the 13,564 cases reported in the previous fiscal year, FY23.

    Despite the notable rise in the number of fraud cases, there was a substantial decrease in the total amount involved in these incidents. The amount of money associated with total bank frauds plummeted by 46.7 per cent year-on-year in the financial year 2023-24, totaling Rs 13,930 crore. In comparison, the amount recorded in FY23 stood at Rs 26,127 crore.

    RBI has proposed a revision of the limit of bulk deposits for Scheduled Commercial Banks (SCBs) and Small Finance Banks (SFBs). This move, aimed at enhancing flexibility and aligning with evolving market dynamics, underscores the RBI’s commitment to fostering a conducive environment for the banking sector.

    Currently, banks have the discretion to offer differential rates of interest on bulk deposits based on their requirements and Asset-Liability Management (ALM) projections. The existing bulk deposit limit for SCBs (excluding Regional Rural Banks) and SFBs, set at ‘Single Rupee term deposits of Rs 2 crore and above,’ was established in 2019.

    However, following a comprehensive review, the RBI has proposed to revise this definition to ‘Single Rupee term deposits of Rs 3 crore and above’ for SCBs and SFBs. In addition to the proposed revision for SCBs and SFBs, the RBI has also suggested defining the bulk deposit limit for Local Area Banks (LABs) as ‘Single Rupee term deposits of Rs 1 crore and above,’ mirroring the criteria applicable to Regional Rural Banks (RRBs).

    RBI has also unveiled plans to rationalize export and import regulations under the Foreign Exchange Management Act (FEMA), 1999. This initiative, driven by the imperative of progressive liberalization and operational flexibility, underscores the RBI’s commitment to fostering a conducive environment for international trade and investment.

    By eliminating redundancies, enhancing clarity, and reducing procedural complexities, the RBI aims to promote ease of doing business for all stakeholders involved in cross-border trade. The RBI aims to streamline and simplify operational procedures related to export and import transactions, thereby reducing administrative burdens and enhancing efficiency for businesses and authorized dealer banks.

    By aligning regulations with international best practices and market realities, the RBI seeks to create a business-friendly environment conducive to foster trade and investment growth. Simplified regulations will facilitate smoother trade transactions, encouraging businesses to explore new markets and expand their global footprint.

    While promoting ease of doing business, the RBI remains committed to ensuring compliance with regulatory requirements and safeguarding the integrity of the financial system. The proposed rationalization will uphold the principles of transparency, accountability, and risk management in cross-border transactions.

    As part of the process, the RBI plans to publish draft regulations and directions on its official website by the end of June 2024. In a bid to enhance the convenience and efficiency of digital payments, RBI has unveiled plans to expand the e-mandate framework to include recurring payments for Fastag, National Common Mobility Card (NCMC), and similar services.

    This initiative, aimed at modernizing payment systems and promoting financial inclusion, underscores the RBI’s commitment to foster innovation and leveraging technology to meet evolving consumer needs. The current UPI Lite service permits customers to load their UPI Lite wallets with up to Rs 2000/- and conduct transactions of up to Rs 500 from the wallet.

    To enhance the seamless usage of UPI Lite for customers, and in response to feedback from various stakeholders, it is suggested to integrate UPI Lite into the e-mandate framework. This integration would introduce an auto-replenishment feature for UPI Lite wallets, automatically refilling the wallet balance when it falls below a predetermined threshold set by the customer.

    Since the funds remain under the customer’s control (transferring from their account to the wallet), it is proposed to eliminate the need for additional authentication or pre-debit notifications. The relevant guidelines pertaining to this proposal will be issued shortly.

    RBI has embarked on a mission to foster innovation and transformation in the financial sector with the launch of its third edition of the global hackathon, “HARBINGER 2024 – Innovation for Transformation.”

    It will feature two primary themes: ‘Zero Financial Frauds’ and ‘Being Divyang Friendly.’ Solutions aimed at bolstering the safety and security of digital transactions, with a specific emphasis on identifying, preventing, and combating financial frauds, will be solicited. Additionally, there will be a focus on fostering inclusivity for individuals with physical disabilities. Further details regarding the hackathon will be unveiled shortly.

  • RBI Imposes Rs 36.38 Lakh Fine On HSBC Ltd For Violating Norms | Companies News

    New Delhi: The Reserve Bank of India (RBI) has imposed a penalty of Rs 36.38 lakh on HSBC Limited for violation of directions on reporting requirements under the Liberalised Remittance Scheme of FEMA. The RBI had issued a show-cause notice to the bank, in response to which the bank submitted a written reply and also made oral submissions.

    After considering the facts of the case and the bank’s reply in the matter, the RBI came to the conclusion that the violations were substantiated and warranted the imposition of penalty, according to a statement by the central bank. (Also Read: From HDFC To IDFC: 4 Important Credit Card Changes You Need To Know)

    The RBI also said that the action 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. (Also Read: HDFC Bank To Stop SMS Alerts For Small UPI Transactions Starting From THIS Date: Find Out Why)

  • RBI Fines Hero FinCorp Rs 3.1 Lakh For Violating Fair Practices Code | Companies News

    New Delhi: The RBI has announced on Friday that it has imposed a penalty of Rs 3.1 lakh on Hero FinCorp Limited for not complying with certain provisions of the fair practices code.The Reserve Bank clarified that the penalty is due to regulatory compliance issues and it does not affect any validity of transaction or agreement Hero FinCorp Limited has with its customers.

    The RBI conducted a statutory inspection of Hero FinCorp Limited based on its financial position as of March 31, 2023. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the directions, it said. (Also Read: HDFC Bank Customers Alert! UPI, Net Banking, And Mobile Banking Services Will Be Down On THIS Date & Time- Details Inside)

    “After considering the company’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the … Charge against the company was sustained, warranting imposition of monetary penalty,” the central bank said. (Also Read: Google Infuses $350 Million In Walmart-Owned Flipkart)

    Hero FinCorp did not convey the terms and conditions of loans in writing to borrowers in the vernacular language understood by them, it said. The RBI also said imposition of the monetary penalty is without prejudice to any other action that may be initiated by it against the company. (With PTI Inputs)

  • RBI Revises Timeline For Government Treasury Bill Auctions | Economy News

    New Delhi: The Reserve Bank of India (RBI) has announced a revised schedule for the auction of Government of India treasury bills. As part of this update RBI has reduced the amount of treasury bills being sold. Further, a new selection of bonds has been introduced for the government’s buyback operations.

    “The Reserve Bank of India, in consultation with the Government of India, will have the flexibility to modify the notified amount and timing for auction of Treasury Bills depending upon the requirements of the Government of India, evolving market conditions and other relevant factors, after giving due notice to the market,” the RBI stated. (Also Read: Stock Market Special Session Today, Sensex Jumps 120 Points)

    It further added, “Thus, the calendar is subject to change, if circumstances so warrant, including for reasons such as intervening holidays. Such changes, if any, will be communicated through press releases.” (Also Read: Wipro COO Amit Choudhary Resigns; Sanjeev Jain To Take Over)

    What are T-bills?

    T-bills are short-term debt which are issued by the Government of India to cover its short-term borrowing needs. They are highly liquid and are considered safe investments as they are backed by the government. T-bills come with three different maturity periods with 91 days, 182 days, and 364 days options.

    T-bills are sold at a discount to their face value which means that they are sold for less than their nominal value. The return for investors is the difference between the purchase price and the face value.

  • RBI Lifts Ban On Bank of Baroda's BoB World App, Allowing New Customer Registrations

    The Bank of Baroda had subsequently taken out corrective measures to address the concerns highlighted by the RBI. 

  • RBI Tweaks Rules To Cut Risk Banks Face In Exposure To Capital Markets | Economy News

    New Delhi: The RBI on Friday tweaked rules to reduce the risk faced by banks in their exposure to capital market in the case of issue of Irrevocable Payment Commitments (IPCs). The RBI issued a circular stating that “only those custodian banks will be permitted to issue IPCs, who have a clause in the agreement with clients giving the banks an inalienable right over the securities to be received as payout in any settlement.”

    However, this clause will not be insisted upon if the transactions are pre-funded i.e., either clear INR funds are available in the customer’s account or, in the case of FX deals, the bank’s nostro account has been credited before the issuance of the IPC. 

    The maximum intraday risk to the custodian banks issuing IPCs would be reckoned as Capital Market Exposure (CME) at 30 per cent of the settlement amount. This is based on the assumption of 20 per cent downward price movement of the equities on T+1, with an additional margin of 10 per cent for further downward movement of price, the RBI said.

    In case the margin is paid in cash, the exposure will stand reduced by the amount of margin paid. In case the margin is paid by way of permitted securities to Mutual Funds / Foreign Portfolio Investors, the exposure will stand reduced by the amount of margin after adjusting for a ‘haircut’ as prescribed by the Exchange on the permitted securities accepted as margin, the RBI added.

    Under T+1 settlement cycle, the exposure shall normally be only for intraday. However, in case any exposure remains outstanding at the end of T+1 Indian Standard Time, capital will have to be maintained on the outstanding capital market exposure in terms of the Master Circular – Basel III Capital Regulations dated April 1, 2024, as amended from time to time.

    The underlying exposures of banks to their counterparties, emanating from the intraday CME, will be subject to limits prescribed under Large Exposure Framework dated June 3, 2019, as amended from time to time. The RBI said that these instructions shall come into force with immediate effect.

    The RBI also explained that the risk mitigation measures prescribed in its earlier circular were based on T+2 rolling settlement for equities (T being the Trade day). The Stock Exchanges have since introduced T+1 rolling settlement, and accordingly, the extant guidelines on issuance of IPCs by banks have been reviewed. Henceforth, all IPCs issued by custodian banks under the T+1 settlement cycle will comply with the new instructions.

  • RBI Lays Out Criteria For Small Finance Banks To Achieve Universal Banks License

    The bank intending to transit must have their shares listed on a recognized stock exchange.