MCIR May 2024 Monetary & Credit Information Review PDF

MONETARY & CREDIT MCIR INFORMATION REVIEW Volume XX Issue 2 May 2024...

MONETARY & CREDIT MCIR INFORMATION REVIEW Volume XX Issue 2 May 2024 I. Regulation Meeting with major stakeholders in UPI ecosystem Governor held a meeting on May 8, 2024, with the major stakeholders in the UPI ecosystem viz. Banks, National Payments Corporation of India (NPCI), Third Party Application Providers and Technology Service Providers to discuss potential strategies for further expanding the reach of UPI. The meeting was also attended by Deputy Governor, Shri T. Rabi Sankar along with Senior Officials of RBI. Contents There were discussions on enhancing the adoption and usage of UPI, with stakeholders providing valuable inputs and suggestions on several key areas: strategies Sections Page for scaling up UPI infrastructure and expanding the product portfolio, addressing I. Regulation 1-2 challenges faced by the ecosystem with innovative solutions and integrating potential users into the digital payment’s ecosystem. The Reserve Bank will review these II. Fintech 2 suggestions and take appropriate actions in due course. III. Financial Markets 2 Conference for the Heads of Assurance Functions of Non- IV. Foreign Exchange 2 Banking Financial Companies (NBFCs) V. Supervision 3 The Reserve Bank of India on May 15, 2024 held a conference for Heads of VI. Issuer of Currency 3 Assurance Functions from select Non-Banking Financial Companies (NBFCs) in VII. Statistics & Mumbai. The theme of the conference was ‘Resilient Financial System – Role of Effective Assurance Functions’. Deputy Governors Shri M. Rajeshwar Rao and Shri Swaminathan Information 3 J. emphasized the importance of robust assurance functions in managing risks and VIII. Publication 3 ensuring transparency, governance and resilience in NBFC operations. The conference IX. Data Release 4 included technical sessions and presentations on best practices, concluding with an open house interaction with senior RBI officials. To read more, please click here. Conference for the Heads of Assurance Functions of Urban Note from the Editor Co-operative Banks (UCBs) Welcome to another edition of The Reserve Bank of India on May 16, 2024 held a conference for Heads of the Monetary and Credit Assurance Functions from select Urban Co-operative Banks (UCBs) in Mumbai. The Information Review (MCIR). This conference was attended by about 300 participants from over 120 UCBs. The theme of monthly periodical of Reserve Bank the conference was ‘Resilient Financial System – Role of Effective Assurance Functions’. of India helps keep abreast with Deputy Governors Shri M. Rajeshwar Rao and Shri Swaminathan J. emphasized the new developments and important importance of effective and independent assurance functions, highlighting the need for policy initiatives taken by the proactive risk management, compliance and internal audit practices. The conference Reserve Bank during the month of included technical sessions and concluded with an open house interaction between May 2024 in the world of money participants and senior RBI officials. To read more, please click here. and credit. MCIR can be accessed Conference for the Directors and MD/CEOs of Asset at https://mcir.rbi.org.in as well as by scanning the QR code. Reconstruction Companies (ARCs) Through this communication The Reserve Bank of India on May 17, 2024 held a conference in Mumbai for tool, we aim to share information, Directors and MD/CEOs of Asset Reconstruction Companies (ARCs), attended by over educate and stay in touch while 80 participants from all 27 ARCs. The theme of the Conference was ‘Governance in ensuring factual accuracy and consistency in disseminating the ARCs – Towards Effective Resolutions’ as part of the RBI's supervisory engagements. information. Deputy Governors Shri M. Rajeshwar Rao and Shri Swaminathan J. highlighted the We welcome your feedback at importance of strong governance, ethical conduct and compliance with regulations. [email protected] They emphasized the roles of Boards in establishing robust business models, the need for Puneet Pancholy transparent recovery practices and the critical role of risk management, compliance and Editor internal audit. The conference included technical sessions on regulatory aspects and an interactive session with RBI Executive Directors. To read more, please click here. 1 Volume XX Issue 2 MCIR May 2024  608th Meeting of Central Board of the Reserve Bank of India The Reserve Bank on May 22, 2024 conducted the 608th meeting of the Central Board of Directors at Mumbai under the Chairmanship of Shri Shaktikanta Das, Governor. The Board reviewed the global and domestic economic scenario, including risks to the outlook. The Board also discussed the working of the Reserve Bank during the year April 2023 – March 2024 and approved the Reserve Bank’s Annual Report and Financial Statements for the year 2023-24. The Board approved the transfer of ₹2,10,874 crore as surplus to the Central Government for the accounting year 2023-24. The Board also approved the Bank’s budget for the accounting year 2024-25. Deputy Governors Dr. Michael Debabrata Patra, Shri M. Rajeshwar Rao, Shri T. Rabi Sankar, Shri Swaminathan J. and other Directors of the Central Board – Shri Satish K. Marathe, Smt. Revathy Iyer, Shri Anand Gopal Mahindra, Shri Venu Srinivasan, Shri Pankaj Ramanbhai Patel and Dr. Ravindra H. Dholakia – attended the meeting. Shri Ajay Seth, Secretary, Department of Economic Affairs and Dr. Vivek Joshi, Secretary, Department of Financial Services, also attended the meeting. Prudential Framework for Projects Under adherence to high standards. Eligible non-profit entities that represent a significant portion of the FinTech sector, Implementation – Draft Guidelines demonstrate robust governance and promote ethical The Reserve Bank on May 3, 2024 released a draft practices can apply. Applications must include Direction on the prudential framework for financing governance details, financial statements and evidence of project loans. The revised guidelines aim to provide an sector representation. The RBI will review applications enabling framework for regulated entities while addressing and publish eligible entities on its website. To read the complexities and risks of project finance. Public and more, please click here. stakeholder comments on the draft guidelines are invited by June 15, 2024. To read more, please click here. III. Financial Markets Certificate of Registration Master Direction – Margining for 15 Non-Banking Financial Companies (NBFC) have Non-Centrally Cleared OTC surrendered the Certificate of Registration (CoR) granted Derivatives to them by the Reserve Bank of India (RBI). The RBI, in The Reserve Bank on May 8, 2024 issued directions exercise of powers conferred on it under Section 45-IA (6) regarding exchange of variation margin (VM) and initial of the Reserve Bank of India Act, 1934, has therefore margin (IM) for non-centrally cleared derivatives cancelled their CoR. To read more, please click here. (NCCDs) in exercise of the powers conferred under Section 45W of the Reserve Bank of India Act, 1934 and II. Fintech Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and of all the Launch of PRAVAAH, RBI Retail Direct powers enabling it in this behalf. To read more, please Mobile Application and FinTech click here. Repository IV. Foreign Exchange Shri Shaktikanta Das, Governor on May 28, 2024 launched three significant initiatives: the PRAVAAH portal, Instructions on Money Changing the Retail Direct Mobile App and a FinTech Repository, in the presence of dignitaries and senior officials of the Activities Reserve Bank, banks, NBFCs, and other financial entities. The Reserve Bank on May 27, 2024 updated the FED These initiatives, previously announced in RBI's bi-monthly Master Direction No.3/2015-16 on Money Changing Activities, effective July 1, 2024, requiring Full Fledged Statements on Development and Regulatory Policies in Money Changers (FFMCs) and non-bank Authorised April 2023, April 2024 and December 2023 respectively, Dealers (ADs) Category-II to sell at least 75% of aim to streamline regulatory approvals through the purchased foreign currency notes to the public quarterly. PRAVAAH portal, provide retail investors seamless access They must maintain data for audits and submit their to government securities through the Retail Direct Mobile annual audited balance sheets and net owned funds App and enhance understanding of the Indian FinTech certificates to the RBI by October 31 each year. These sector through the Fintech Repository. The PRAVAAH updates are issued under the Foreign Exchange portal will facilitate online applications for regulatory Management Act, 1999, and the Master Direction will be approvals, improving efficiency in the approval processes, revised to reflect these changes. To read more, please while the Retail Direct Mobile App will simplify retail click here. investors' access to government securities transactions. The Action against Authorised Dealer Fintech Repository will offer comprehensive information on Bank – The HSBC Limited the Indian FinTech sector for regulatory purposes. To read more, please click here. The Reserve Bank on May 29, 2024 imposed a monetary penalty of ₹36,38,000 on HSBC Limited for Framework for Recognising SRO(s) for violating reporting requirements under the Liberalised FinTech Sector Remittance Scheme of FEMA 1999. Following a Show The Reserve Bank of India has finalised the Framework Cause Notice, the RBI found the violations substantiated for Recognising Self-Regulatory Organisations (SROs) in after reviewing the bank's written and oral submissions. the FinTech sector, encouraging self-regulation and To read more, please click here. Volume XX 2 MCIR Issue 2 May 2024  V. Supervision VI. Issuer of Currency Monetary Penalty Withdrawal of ₹2000 denomination The Reserve Bank imposed monetary penalty during Banknotes the month of May 2024 on the following entities under The Reserve Bank on June 3, 2024 released the various sections of Banking Regulation Act, 1949. status of withdrawal of ₹2000 denomination banknotes. As per the data, the total value of ₹2000 banknotes in Name of the Entity Amount of circulation declined to ₹ 7755 crore at the close of Monetary business on May 31, 2024. Thus, 97.82% of the ₹2000 Penalty banknotes in circulation as on May 19, 2023, has since ₹ 88.70 lakh been returned. To read more, please click here. SBM Bank (India) Limited Bharati Sahakari Bank Limited, Pune ₹ 20.00 lakh VII. Statistics and Information ₹ 25.00 lakh Survey on Computer Software and The Greater Bombay Co-operative Bank Limited, Mumbai Information Technology Enabled ₹ 91.00 lakh Services (ITES) Exports: 2023-24 Yes Bank Ltd ₹ 1.00 crore The Reserve Bank on June 3, 2024 initiated its ICICI Bank Ltd annual survey on Computer Software and Information ₹ 3.10 lakh Technology Enabled Services (ITES) Exports for the Hero FinCorp Limited 2023-24 period. This survey collects data on computer The Urban Co-operative Bank Ltd., ₹ 7.00 lakh services exports, ITES and business process outsourcing Budaun (BPO), disseminating results publicly and contributing to ₹ 59.10 lakh India's external sector statistics. All software and Karnataka Bank Ltd The Sutex Co-operative Bank Ltd., ITES/BPO exporting entities are required to complete the ₹ 5.00 lakh Surat, Gujarat survey schedule, with the updated format available on The Vaijapur Merchants Co-operative the RBI's website. The soft form of the survey schedule, in ₹ 2.50 lakh Bank Ltd., Vaijapur, Maharashtra both Hindi and English, can be filled and submitted via email by July 15, 2024, facilitating regulatory reporting ₹ 3.10 lakh Belstar Microfinance Limited, Chennai and data compilation. To read more, please click here. Noida Commercial Co-operative Bank ₹ 2.50 lakh Survey on Foreign Liabilities and Ltd., Ghaziabad, Uttar Pradesh Assets of Mutual Funds and Asset Lokmangal Co-operative Bank ₹ 5.00 lakh Limited, Solapur, Maharashtra Management Companies: 2023-24 The Satara Sahakari Bank Limited, ₹ 2.00 lakh The Reserve Bank on June 3, 2024 launched the Mumbai 2023-24 edition of its annual survey on 'Foreign The Bhadohi Urban Co-operative ₹ 2.00 lakh Liabilities and Assets of Mutual Funds and Asset Bank Ltd., Bhadohi, Uttar Pradesh Management Companies'. This survey gathers data from The Bapunagar Mahila Co-operative ₹ 1.00 lakh mutual fund companies and asset management firms on Bank Ltd., Ahmedabad, Gujarat their external financial liabilities and assets as of the end The Gandhinagar Urban Co-operative ₹ 1.00 lakh of March of the latest financial year. The survey results Bank Ltd., Gandhinagar, Gujarat are shared publicly and contribute to India's external sector statistics. To read more, please click here. Action against ECL Finance Limited and Edelweiss Asset Reconstruction VIII. Publication Company Limited The Reserve Bank on May 29, 2024 imposed business Half Yearly Report on Management restrictions on two Edelweiss Group entities, ECL Finance of Foreign Exchange Reserves Ltd (ECL) and Edelweiss Asset Reconstruction Company Limited (EARCL). ECL Finance Ltd (ECL) to cease and The Reserve Bank on May 13, 2024 released the desist, with immediate effect, from undertaking any Report on Management of Foreign Exchange Reserves as structured transactions in respect of its wholesale part of its efforts towards enhanced transparency and exposures, other than repayment and/ or closure of levels of disclosure. The present report (42nd in the series) accounts in its normal course of business. Edelweiss Asset is with reference to the position as at end-March 2024. Reconstruction Company Limited (EARCL) to cease and The report is divided into two parts: Part I contains the desist from acquisition of financial assets including security developments regarding movement of foreign exchange receipts (SRs) and reorganising the existing SRs into senior reserves, information on the external liabilities vis-à-vis the and subordinate tranches. Despite engagement with the entities' senior management, no substantial corrective reserves, adequacy of reserves, etc., during the half-year measures were taken, prompting the RBI's restrictions. The under review. Objectives of reserve management, RBI has directed both companies to strengthen their statutory provisions, risk management practices, compliance functions, with the restrictions to be reviewed information on transparency and disclosure practices upon satisfactory rectification of the observed deficiencies. followed by the RBI with regard to reserve management To read more, please click here. are covered in Part II. To read more, please click here. Volume XX 3 MCIR Issue 2 May 2024  Appointment of Executive Director The Reserve Bank on May 9, 2024 appointed Shri R. Lakshmi Kanth Rao as Executive Director with effect from May 9, 2024. Prior to being appointed as Executive Director, Shri Rao was serving as Chief General Manager-in- Charge in the Department of Regulation. Shri Rao has experience of over three decades in the Reserve Bank having worked in the areas of Regulation of Banks and NBFCs, Supervision of Banks and Consumer Protection. He had served as Banking Ombudsman at RBI Chennai and as RegionalV.Director Issuerof of Uttar Pradesh at Lucknow. Currency As Executive Director, Shri Rao will look after 1. Deposit lnsurance and Credit Guarantee Corporation, 2. Right to lnformation Act (FAA), 3. Department of Communication. Annual Report RBI - Working Paper The Reserve Bank on May 30, 2024 under section The Reserve Bank in the month of May 2024 53 (2) of the Reserve Bank of India Act, 1934 released released the following working paper: Assessing the its Annual Report of the year 2023-24. The report is a Impact of Macroprudential Policies on Housing Credit statutory report of its Central Board of Directors. It Dynamics: Evidence from India by Amar Nath Yadav, covers the working and functions of Reserve Bank for Vivek Kumar, Alok Kumar Chakrawal and Jyoti Kumari the period April 2023 - March 2024. published on May 3, 2024. The major objective of Major Highlights of the Annual Report are: macroprudential (MaP) policies is to strengthen the i) The report indicates a positive economic outlook for banking and financial system through pre-emptive India despite challenges. However, it notes that regulatory measures, aiming to prevent or mitigate the climate-related risks could pose uncertainties to consequences of credit cycle busts by utilizing buffers inflation and growth. built during booms. To read more, please click here. ii) India's GDP growth is projected to remain robust at 7% for the fiscal year 2024-25. This growth is RBI Bulletin underpinned by strong investment demand, healthy balance sheets of banks and corporations, and The Reserve Bank on May 21, 2024 released the May 2024 issue of its monthly Bulletin. The Bulletin effective government policies focused on capital includes three speeches, four articles, and current expenditure. statistics. The four articles are: iii) Unclaimed deposits in banks saw a significant I. State of the Economy increase of 26% year-on-year, reaching ₹78,213 II. Decentralised Finance: Implications for Financial crore by the end of March 2024. The RBI has System introduced new guidelines to help banks manage and III. Currency Swaps of the Reserve Bank of India: Role in reduce these unclaimed deposits the GFSN and Fostering International Financial iv) The RBI's net income surged to ₹2.11 lakh crore, Cooperation primarily due to a significant rise in interest from IV. Consumer Confidence in India: A Regional foreign securities. The central bank's balance sheet Perspective. To read more, please click here. grew by 11.08%, reaching ₹70.48 lakh crore as of March 31, 2024. IX. Data Release v) There was a notable decline in FDI inflows into the manufacturing sector, which fell by 18% to $9.3 Important data released by the Reserve Bank during the billion. Overall FDI inflows into India dropped slightly month of May 2024 are as follows: to $44.4 billion from $46 billion in the previous fiscal year. S/N Title vi) The number of bank frauds increased dramatically by 166% year-on-year, with over 36,075 cases 1 Scheduled Banks’ Statement of Position reported in FY24. But the amount involved in the total in India as on May 17, 2024 bank frauds almost halved (down by 46.7 percent) to Rs 13,930 crore from Rs 26,127 crore in the previous 2 Overseas Direct Investment for April year 2024 vii) While there was a decrease in FDI in several sectors, including financial services and retail, the 3 Lending and Deposit Rates of Scheduled electricity transmission and generation sector saw a Commercial Banks – May 2024 substantial increase in FDI inflows. viii) The RBI maintained a cautious stance, adjusting 4 Data on ECB / FCCB / RDB for March the policy repo rate to 6.50% to balance growth and 2024 inflation. Continued focus on liquidity management to ensure adequate system liquidity while avoiding 5 Sectoral Deployment of Bank Credit – excesses. April 2024 ix) The expenditure on security printing increased to ₹5,101.4 crore in 2023-24 from ₹4,682.8 crore in 6 All-India House Price Index (HPI) for the previous year, reflecting higher production and Q4:2023-24 security measures. Edited and published by Puneet Pancholy for Reserve Bank of India, Department of Communication, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001. MCIR can be also accessed at https://mcir.rbi.org.in.