Internal Ombudsman and MSME Classification

Internal Ombudsman

• The Internal Ombudsman does not handle complaints directly from the public but deals with complaints that have already been examined by the regulated entity and rejected.
• The Internal Ombudsman submits reports on their activities to the Board’s Committee on a quarterly basis, at least semi-annually.

### MSME Classification

• The Ministry of MSME revised the criteria for classifying enterprises as MSMEs in June 2020.
• The Reserve Bank of India (RBI) amended its Master Direction based on clarifications from the Ministry.
• All enterprises require online registration on the Udyam Registration portal to obtain the Udyam Registration Certificate.
• Banks are required to use the classification recorded in the Udyam Registration Certificate (URC) for Priority Sector Lending (PSL) purposes.

### Minimum Holding Period for Transfer of Receivables

• The RBI issued a Master Direction in 2021 regarding the transfer of loan exposures to facilitate a robust secondary market.
• The transferor can transfer loans after a minimum holding period (MHP) of 3 months for loans with a tenure of up to 2 years and 6 months for loans with tenures over 2 years.
• SBICAP, a subsidiary of the State Bank of India, created an SPV (SLS Trust) to manage these operations.

### NPS Contribution via UPI

• The Pension Fund Regulatory and Development Authority (PFRDA) allows National Pension System (NPS) subscribers to make contributions using Unified Payments Interface (UPI) QR codes under the D-Remit scheme.
• Contributions made before 9:30 AM are invested on the same day, optimizing returns for investors.

### India-Korea Electronic Origin Data Exchange System (EODES)

• The Central Board of Indirect Taxes & Customs (CBIC) launched the India-Korea EODES.
• EODES facilitates the implementation of the India-Korea Comprehensive Economic Partnership Agreement (CEPA) by electronically exchanging origin information between both customs administrations.
• The data from Certificates of Origin (CoO) issued by the exporting country are shared with the importing country, expediting the clearance of imported goods.

### Banking Sector Performance

• Higher net interest income and lower provisioning boosted Net Interest Margin (NIM) and profitability in 2022-23.
• Non-banking financial companies (NBFCs) saw their consolidated balance sheets expand by 14.8% in 2022-23, primarily due to double-digit credit growth.
• The NBFC sector is well-capitalized with CRAR exceeding regulatory requirements.
• The number of fraud cases in the banking sector increased during the first half of the current financial year, while the amount involved in the frauds significantly decreased.

### Fintechs Surpassing Traditional Bank Lending

• The Reserve Bank of India's (RBI) order on unsecured loans has slowed down bank growth in aggressive retail lending.
• This has discouraged the reliance on unsecured retail loans for growth by the Indian middle class.
• The impact of the regulator's action will be a 3-10 bps cut on the Return on Asset (RoA) and a 20-100 bps cut on the Return on Equity (RoE).
• Fintech companies are expected to benefit from this change as banks distance themselves from lucrative retail loans.

This quiz covers the roles of the Internal Ombudsman in handling complaints and the criteria for classifying MSMEs as revised by the Ministry of MSME. It also discusses the Udyam Registration process and relevant RBI directives. Test your knowledge on these important regulatory frameworks.