Latest RBI Guidelines on Financial Awareness & Current Affairs (August 2024) PDF

[LATEST RBI & REGULATORY GUIDELINES] ================================================ **[AUGUST 2024]** **RESOLUTION OF THE MONETARY POLICY COMMITTEE (MPC) AUGUST 6 TO 8, 2024:** ***The Monetary Policy Committee (MPC) at its meeting on August 8, 2024 decided to:*** - ***Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.*** - ***Consequently, the SDF rate remains unchanged at 6.25 per cent and the MSF rate and the Bank Rate at 6.75 per cent.*** - ***These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.*** ***OUTLOOK*** - ***The global economic outlook remains resilient although with some moderation in pace. Inflation is retreating in major economies but services price inflation persists.*** - ***Domestic economic activity continues to sustain its momentum. After a weak and delayed start, the cumulative southwest monsoon rainfall has picked up with improving spatial spread. By August 7, 2024, it was 7 per cent above the long period average.*** - ***Real GDP growth for 2024-25 is projected at 7.2 per cent with Q1 at 7.1 per cent; Q2 at 7.2 per cent; Q3 at 7.3 per cent; and Q4 at 7.2 per cent. Real GDP growth for Q1:2025-26 is projected at 7.2 per cent.*** - ***CPI inflation for 2024-25 is projected at 4.5 per cent with Q2 at 4.4 per cent; Q3 at 4.7 per cent; and Q4 at 4.3 per cent. CPI inflation for Q1:2025-26 is projected at 4.4 per cent.*** **STATEMENT ON DEVELOPMENTAL AND REGULATORY POLICIES DATED 08 AUG 2024: *The highlights of announcements made by RBI on 08 Aug 2024 in its Statement of Developmental and Regulatory policies are:*** - ***Public Repository of Digital Lending Apps: To aid the customers in verifying the claim of Digital Lending App's (DLAs) association with REs, Reserve Bank is creating a public repository of DLAs deployed by the REs which will be available on RBI's website. The repository will be based on data submitted by the REs (without any intervention by RBI) directly to the repository.*** - ***Frequency of Reporting of Credit Information to Credit Information Companies: At present credit institutions (CIs) are required to report the credit information of their borrowers to credit information companies (CICs) at monthly or such shorter intervals as mutually agreed between the CI and CIC. With a view to provide a more up-to-date picture of a borrower's indebtedness, it has been decided to increase the frequency of reporting of credit information to CICs from monthly intervals to fortnightly basis or at such shorter intervals as mutually agreed between the CI and CIC.*** - ***Enhancement in transaction limit for tax payment through UPI to Rs.5.00 Lakh: Currently, the transaction limit for UPI is capped at ₹1 lakh except for a few categories like capital markets, IPO subscriptions, loan collections, insurance, medical and educational services etc.*** ***As direct and indirect tax payments are common, regular and high value, it has been decided to enhance the limit for tax payments through UPI from ₹1 lakh to ₹5 lakh per transaction.*** - ***Introduction of Delegated Payments through UPI: It is proposed to introduce \"Delegated Payments\" in UPI. "Delegated Payments" would allow an individual (primary user) to set a UPI transaction limit for another individual (secondary user) on the primary user's bank account.*** - ***Continuous Clearing of Cheques under Cheque Truncation System (CTS): Cheque Truncation System (CTS) currently processes cheques with a clearing cycle of up to two working days. To improve the efficiency of cheque clearing and reduce settlement risk for participants, and to enhance customer experience, it is proposed to transition CTS from the current approach of batch processing to continuous clearing with \'on-realisation-settlement\'. Cheques will be scanned, presented, and passed in a few hours and on a continuous basis during business hours. The clearing cycle will reduce from the present T+1 days to a few hours.*** **RBI CONSTITUTES AN EXPERT COMMITTEE ON BENCHMARKING OF ITS STATISTICS:** The Reserve Bank has constituted an Expert Committee to: (a) benchmark the statistics regularly disseminated by it against global standards / best practices; (b) study the quality of other regular data, where such benchmarks do not exist (e.g., sectors of national priority); and (c) provide guidance on the scope for any further data refinement. The committee will be chaired by Dr. Michael Debabrata Patra, Deputy Governor, Reserve Bank of India. **RBI RELEASES FRAMEWORK FOR FINANCIAL MARKET SELF-REGULATORY ORGANISATIONS:** The Reserve Bank of India issued a framework for recognition of self-regulatory organisations in the financial markets setting **a minimum ₹10 crore eligibility threshold** to help strengthen compliance culture and provide a consultative platform for policy making. The proposed self-regulatory organisations (SROs) can play a vital role in developing industry standards and best practices and ensuring that members adhere to these. They will also establish minimum benchmarks and conventions for professional market conduct. The SROs will be expected to ally with the RBI in ensuring better compliance with regulatory guidelines and for detection of early warning signals, among other things. **RESERVE BANK OF INDIA TIGHTENS HFC NORMS TO BRING THEM ON A PAR WITH NBFCs:** RBI tightened norms related to public deposit acceptance by housing finance companies (HFCs), which were so far subject to relaxed prudential norms compared to NBFCs. According to the revised guidelines, the RBI has reduced the ceiling on the quantum of public deposits that a deposit-taking HFC, can hold from 3 times to **1.5 times its net owned fund (NoF).** As a result, deposit-taking HFCs holding deposits in excess of the revised limit will not accept fresh public deposits or renew existing deposits till they conform to the revised limit. However, the existing excess deposits will be allowed to run off till maturity. **INTEREST EQUALIZATION SCHEME ON PRE AND POST SHIPMENT RUPEE EXPORT CREDIT:** Government of India, on July 10, 2024 has allowed for an extension of the Interest Equalization Scheme for Pre and Post Shipment Rupee Export Credit (\'Scheme\') up to August 31, 2024. With effect from July 1, 2024, **only MSME Manufacturer** exporters would be eligible under the Scheme. Hence, the Scheme benefits will not be available to non-MSME exporters, and such claims are not to be entertained beyond June 30, 2024. Further, the interest equalization will be capped at **₹1.66 Crore per Importer-Exporter Code (IEC)** for the aforesaid extended period of the scheme. **SNAPSHOT ON LENDING AND DEPOSIT RATES OF SCHEDULED COMMERCIAL BANKS (AUGUST 2024):** Data on lending and deposit rates of scheduled commercial banks (SCBs) (excluding regional rural banks and small finance banks) received during the month of August 2024 are; - The weighted average lending rate (WALR) on fresh rupee loans of SCBs stood at 9.40 per cent in July 2024 against 9.32 per cent in June 2024. - The WALR on outstanding rupee loans of SCBs remained unchanged at 9.91 per cent in July 2024. - 1-Year median MCLR of SCBs increased to 8.90 per cent in August 2024 against 8.85 per cent in July 2024. - The weighted average domestic term deposit rate (WADTDR) on fresh rupee term deposits of SCBs stood at 6.48 per cent in July 2024 as compared to 6.46 per cent in June 2024. - The weighted average domestic term deposit rate (WADTDR) on outstanding rupee term deposits of SCBs was at 6.92 per cent in July 2024 (6.91 per cent in June 2024). **ALL-INDIA HOUSE PRICE INDEX (HPI) FOR Q1:2024-25:** As per the latest data released by RBI, All-India HPI increased by 3.3 per cent YoY in Q1:2024-25 as compared to 4.1 per cent growth in the previous quarter and 5.1 per cent a year ago. The growth rate varied widely across the cities - ranging from a high of 8.9 per cent in Kolkata to a low of -1.7 per cent in Delhi. **HIGHLIGHTS OF SECTORAL DEPLOYMENT OF BANK CREDIT; JULY 2024:** - Non-food bank credit registered a growth of 15.1 per cent in July 2024 as compared with 14.7 per cent a year ago. - Credit to agriculture and allied activities remained robust registering a growth of 18.1 per cent YoY in July 2024, compared with 16.7 per cent a year ago. - Credit growth to industry strengthened significantly at 10.2 per cent YoY in July 2024 compared with 4.6 per cent in July 2023. Among major industries, credit to 'chemicals and chemical products', 'food processing', 'petroleum, coal products and nuclear fuels' and 'infrastructure' recorded a higher growth. - Credit growth to services sector moderated to 15.4 per cent YoY in July 2024 from 19.7 per cent a year ago, primarily driven down by relatively lower credit growth in NBFCs and trade segments. - Personal loans growth was lower at 17.8 per cent YoY in July 2024 as compared to 18.4 per cent a year ago, largely due to moderation in growth recorded in 'other personal loans' and 'vehicle loans'. However, credit growth to 'housing', the largest constituent of the segment, accelerated. **CABINET APPROVES AMENDMENT IN "PRADHAN MANTRI JI-VAN YOJANA:** - To encourage 2G ethanol capacity in the country and attract investment in this sector, "Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal awashesh Nivaran) Yojana" was notified on 07.03.2019 for providing financial assistance to 2G Bio-ethanol projects. - The Union Cabinet, on 9^th^ August 2024 has approved the modified Pradhan Mantri JI-VAN Yojana for providing financial support to Advanced Biofuel Projects using lignocellulosic biomass and other renewable feedstock. - The modified scheme extends timeline for implementation of scheme by **5 year i.e. till 2028-29** and includes advanced biofuels produced from lignocellulose feed stocks i.e. agricultural and forestry residues, industrial waste, synthesis (syn) gas, algae etc. in its scope. "Bolt on" plants & "Brownfield projects" would also now be eligible to leverage their experience and improve their viability. The scheme aims to provide remunerative income to farmers for their agriculture residue, address environmental pollution, create local employment opportunities, and contribute to India\'s energy security and self-reliance. It also helps in achieving India's ambitious target for net-zero GHG emissions by 2070. - The Government has been promoting blending of ethanol in petrol under the Ethanol Blended Petrol (EBP) Programme wherein Public Sector Oil Marketing Companies (OMCs) sell petrol blended with ethanol. - OMCs are on course to achieve the 20% blending target by the end of ESY 2025-26. **CABINET APPROVES THE CLEAN PLANT PROGRAMME UNDER MISSION FOR INTEGRATED DEVELOPMENT OF HORTICULTURE:** The Union cabinet on 9^th^ August approved the Clean Plant Programme (CPP) with an investment of **Rs.1,765.67 crore**, to revolutionize the horticulture sector enhancing the quality and productivity of fruit crops across the nation. The important features of the programme are; - The CPP will provide access to virus-free, high-quality planting material, leading to increased crop yields and improved income opportunities for farmers. - Streamlined certification processes and infrastructure support will enable nurseries to efficiently propagate clean planting material, fostering growth and sustainability. - Ensure that consumers benefit from superior produce that is free from viruses, enhancing the taste, appearance, and nutritional value of fruits. - By producing higher-quality, disease-free fruits, India will strengthen its position as a leading global exporter, expanding market opportunities and increasing its share in the international fruit trade. - **Clean Plant Centers (CPCs):** Nine world class state-of-the-art CPCs, equipped with advanced diagnostic therapeutics and tissue culture labs, will be established across India. These include Grapes (NRC, Pune), Temperate Fruits - Apple, Almond, Walnuts etc. (CITH, Srinagar &Mukteshwar), Citrus Fruits (CCRI, Nagpur & CIAH, Bikaner), Mango/Guava/Avacado (IIHR, Bangaluru), Mango/Guava/Litchi (CISH, Lucknow), Pomegranate (NRC, Sholapur) and Tropical/Sub-Tropical Fruits in Eastern India. These centers will play a crucial role in producing and maintaining virus-free planting material meant for larger propagation. - **Certification and Legal Framework:** A robust certification system will be implemented, supported by a regulatory framework under the Seeds Act 1966, to ensure thorough accountability and traceability in planting material production and sale. - **Enhanced Infrastructure:** Support will be provided to large-scale nurseries for the development of infrastructure, facilitating the efficient multiplication of clean planting material. - This programme will be implemented by the National Horticulture Board in association with Indian Council of Agricultural Research (ICAR). **30 MILLION NEW ACCOUNTS: FM SITHARAMAN\'S PMJDY EXPANSION PLAN FOR FY25:** On the eve of the 10th anniversary of Pradhan Mantri Jan-Dhan Yojana (PMJDY), Union Finance Minister Nirmala Sitharaman announced that the government aims to open over 30 million new PMJDY accounts during 2024-25. Sitharaman revealed that as of August 14, 2024, a total of 531.3 million Jan-Dhan accounts have been opened since the scheme's launch a decade ago, with a cumulative deposit balance of Rs 2.3 trillion. The average balance per account has increased from Rs 1,065 in March 2015 to Rs 4,352 as of August 16, 2024. Roughly 80 per cent of these accounts are currently active. **KVIC PARTNERS WITH DEPARTMENT OF POSTS TO ACCELERATE PMEGP UNIT VERIFICATION:** Khadi and Village Industries Commission (KVIC) signed an MoU with the Department of Posts, to foster cooperation between the two government departments and facilitate the prompt settlement of margin money subsidy for PMEGP units. Through this arrangement, along with physical verification of PMEGP units, margin money subsidy will also be settled at a faster pace. **NEW ACCOUNTING STANDARDS FOR INSURANCE NOTIFIED, RAISE INVESTMENT CHANCES:** Ministry of Corporate Affairs notified new accounting norms for "insurance contracts", aligning the Indian standards with the global ones and paving the way for a major revamp in the country's accounting practices adopted in the insurance industry. The Accounting Standard (Ind AS 117) would be applicable from April 1, 2024. The insurance regulator could now announce the date of adoption of the new standards by relevant entities. The government had in 2021 raised the FDI limit in insurance to 74% from 49% and allowed foreign ownership and control of these firms with certain safeguards. **GOVT ROLLS BACK LTCG TAX**: In a major relief for property owners, the central government has proposed an amendment to the long-term capital gains (LTCG) taxes for properties bought before July 23, 2024. According to the new amendments, homeowners who bought properties before July 23, 2024, will have the option to choose between the new regime taxed at 12.5 percent without indexation benefits or the old regime taxed at 20 percent with indexation benefits. However, owners who bought the property on July 23 or after will have to follow the new tax regime by default. **DAY-NRLM LAUNCHES "MILLION DESIGNERS, BILLION DREAMS" WITH LEAP:** The Deendayal Antyodaya Yojana--National Rural Livelihoods Mission (DAY-NRLM) announced the launch of the initiative \"Million Designers, Billion Dreams.\" This innovative program aims to empower individuals across India with systems design know-how to tackle complex societal challenges. Spearheaded by LEAP in collaboration with the DAY-NRLM, LEAP is a catalyst organization that emerged from the multidisciplinary work developed in India by the Design Laboratory at the Harvard T.H. Chan School of Public Health (D-Lab) and the Transform Rural India Foundation (TRIF), with seed investment provided by the Bill and Melinda Gates Foundation (BMGF). \"Million Designers, Billion Dreams\" is a unique initiative designed to enhance the capacity of individuals through systems design know-how. **LGBTQ PERSONS CAN OPEN JOINT BANK ACCOUNT:** The finance ministry said in an advisory dated August 28 that, there are no restrictions for persons of the LGBTQ community to open a joint bank account and to nominate a person in a queer relationship as a nominee. A clarification in this regard has also been issued by the Reserve Bank of India to all the scheduled commercial banks on August 21, 2024. **CBDT ROLLS OUT DISPUTE RESOLUTION SCHEME (E-DRS), 2022, TO MINIMISE LITIGATION:** In pursuance of section 245MA in the Income-tax Act, 1961, the Central Board of Direct Taxes (CBDT) had notified the e-Dispute Resolution Scheme, 2022 (e-DRS) with the aim to reduce litigation and provide relief to eligible taxpayers. The e-DRS enables the taxpayer, who fulfils certain specified conditions as stipulated in section 245MA of the Act, to file an application electronically for dispute resolution to the DRC designated for the region of Principal Chief Commissioner of Income-tax having jurisdiction over the taxpayer. As per e-DRS, a taxpayer can opt for e-Dispute Resolution against the 'specified order' as defined in clause (b) of the Explanation to section 245MA of the Act, which includes an order in which the aggregate sum of variations proposed or made does not exceed Rs.10 lakh and returned income for the relevant assessment year does not exceed Rs. 50 lakh. The DRC is mandated to pass its order within six months from the end of month in which application for dispute resolution is admitted by it. [JULY 2024] ----------------------- **EXIM BANK's GOI-SUPPORTED LINE OF CREDIT OF USD 2.50 MN TO THE REPUBLIC OF GUYANA, FOR INSTALLATION OF SOLAR PHOTO VOLTAIC POWER PLANT AT CHEDDI JAGAN INTERNATIONAL AIRPORT:** Exim Bank has entered into an agreement with the Government of the Co-operative Republic of Guyana (GO-GUY), for Government of India supported Line of Credit (LoC) of USD 2.50 Million for installation of Solar Photo Voltaic Power Plant at Cheddi Jagan International Airport in Guyana. Out of the total credit by Exim Bank under the agreement, goods, works and services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India, and the remaining 25 per cent of goods and services may be procured by the seller for the purpose of the eligible contract from outside India. **CHANGES IN FRAMEWORK OF DOMESTIC MONEY TRANSFER:** On a review of the framework for Domestic Money Transfer (DMT) which was introduced in 2011, RBI has made the following changes with effect from November 01, 2024. **CASH PAY-OUT SERVICE:** The remitting bank shall obtain and keep a record of the name and address of the beneficiary. **CASH PAY-IN SERVICE**: - Remitting banks / Business Correspondents (BCs) shall register the remitter based on a **verified cell phone number and a self-certified 'Officially Valid Document (OVD).** - Every transaction by a remitter shall be validated by an Additional Factor of Authentication (AFA). - Remitting banks and their BCs shall conform to provisions of the Income Tax Act, 1961 and the rules / regulations framed thereunder (as amended from time to time), pertaining to cash deposits. - Remitter bank shall include remitter details as part of the IMPS / NEFT transaction message. - The transaction message shall include an identifier to identify the fund transfer as a cash-based remittance. **RBI RESTRICTS THE BANK FINANCE AGAINST SHARES AND DEBENTURES BY UCBs AT 20 PERCENT OF THEIR TIER I CAPITAL:** As per existing guidelines, Primary (Urban) Co-operative Banks (UCBs) were advised that the aggregate of their all loans against the security of shares and debentures should be within the overall ceiling of 20 per cent of their owned funds. On a review, it has been decided that the aforementioned overall ceiling of 20 per cent shall be linked to Tier I capital of the bank as on 31st March of the previous financial year. The change stipulated shall be effective from January 01, 2025. **UCBs TO HAVE AT LEAST 50 PER CENT OF THEIR AGGREGATE LOANS AND ADVANCES COMPRISING OF SMALL VALUE LOANS BY 31^ST^ MARCH 2026:** UCBs were required, inter alia, to have at least 50 per cent of their aggregate loans and advances comprising of Small Value Loans, i.e., loans of value not more than ₹25 lakh or 0.2 per cent of their Tier I capital, whichever is higher, subject to a maximum of ₹1 crore, per borrower. The target date for complying with the above requirement was March 31, 2024. Now it has been decided to extend the glide path to achieve the aforementioned target by two years i.e 40% by 31^st^ March 2025 and 50% by 31^st^ March 2026. **RBI -- DIGITAL PAYMENTS INDEX FOR MARCH 2024:** RBI has been publishing a composite Reserve Bank of India -- Digital Payments Index (RBI-DPI) since January 1, 2021 with March 2018 as base to capture the extent of digitisation of payments across the country. The index for **March 2024 stands at 445.50** as against 418.77 for September 2023. The RBI-DPI index has increased across all parameters driven by significant growth in payment performance and payment infrastructure across the country over the period. **FINANCIAL INCLUSION INDEX FOR MARCH 2024:** RBI had constructed a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country, which was first published in August 2021 for the FY ending March 2021. The FI-Index for **March 2024 stands at 64.2** vis-à-vis 60.1 in March 2023, with growth witnessed across all sub-indices. Improvement in FI-Index is mainly contributed by Usage dimension, reflecting deepening of financial inclusion. **RBI RELEASES DRAFT CIRCULAR ON BASEL III FRAMEWORK ON LIQUIDITY COVERAGE RATIO (LCR):** In order to further enhance the liquidity resilience of banks, RBI has released the draft guidelines on 'Basel III Framework on Liquidity Standards -- Liquidity Coverage Ratio (LCR) -- Review of Haircuts on High Quality Liquid Assets (HQLA) and Run-off Rates on Certain Categories of Deposits'. This circular is applicable to all Commercial Banks (excluding Payments Banks, Regional Rural Banks and Local Area Banks).The changes proposed in the draft guidelines are; - Banks shall assign an **additional 5 per cent run-off factor for retail deposits which are enabled with internet and mobile banking facilities (IMB),** i.e., stable retail deposits enabled with IMB shall have 10 per cent run-off factor and less stable deposits enabled with IMB shall have 15 per cent run-off factor. ( Internet and Mobile Banking facilities (IMB) includes all facilities which enables a customer to digitally transfer funds from their account/s). - Unsecured wholesale funding provided by non-financial small business customers shall be treated in accordance with the treatment of retail deposits as mentioned above. - Level 1 HQLA in the form of Government securities shall be valued at an amount not greater than their current market value, adjusted for applicable haircuts in line with the margin requirements under the Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF). **RESERVE BANK OF INDIA AND ASEAN COUNTRIES TO CREATE A PLATFORM TO FACILITATE INSTANTANEOUS CROSS-BORDER RETAIL PAYMENTS:** The Reserve Bank of India has now joined the **Project Nexus,** a multilateral international initiative to enable instant cross-border retail payments by interlinking domestic FPSs. Nexus, conceptualized by the Innovation Hub of the Bank for International Settlements (BIS), aims to connect the FPSs of four ASEAN countries (Malaysia, Philippines, Singapore, and Thailand); and India, who would be the founding members and first mover countries of this platform. An agreement to this effect was signed by the BIS and the central banks of the founding countries i.e., Bank Negara Malaysia (BNM), Bank of Thailand (BOT), Bangko Sentral ng Pilipinas (BSP), Monetary Authority of Singapore (MAS), and Reserve Bank of India on June 30, 2024, in Basel, Switzerland. Indonesia, which has been involved from the early stages, continues to be involved as a special observer. The platform is expected to go live by 2026. **ALL NEW SECURITIES OF 14-YEAR AND 30-YEAR TENORS ARE EXCLUDED FROM THE FULLY ACCESSIBLE ROUTE. FOR INVESTMENT BY NON-RESIDENTS:** Fully Accessible Route introduced by the Reserve Bank, on March 30, 2020, wherein certain specified categories of Central Government securities were opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well. On a review and in consultation with the Government, it has been decided to exclude all new securities of 14-year and 30-year tenors from the Fully Accessible Route. Existing stocks of Government Securities in 14-year and 30-year tenors already included as 'specified securities' under the Fully Accessible Route shall, however, continue to be available under the Fully Accessible Route for investments by non-residents in the secondary market. **GOVT SEEKS INDUSTRY INPUTS ON INDICATORS, QUESTIONS FOR NEW WORLD BANK SURVEY:** In support of the World Bank's flagship 'Business Ready' (B-READY) project, which will replace the group's Doing Business survey that ran into trouble after data irregularity reports in 2020, India has started evaluating the indicators and questions related to the new framework, including those on international trade, and has sought inputs from the industry for the same. **GOVT EXTENDS ELECTRIC MOBILITY SCHEME, INCREASES OUTLAY TO RS 778 CRORE:** The government announced about the extension of the Electric Mobility Promotion Scheme by two months till the September end and increased the total outlay to Rs 778 crore from Rs 500 crore. The scheme was launched by the Ministry of Heavy Industries in March this year and aims to boost the adoption of electric vehicles (EVs) across the country. The EMPS scheme was originally set to run from April 1, 2024, to July 31, 2024, with a total outlay of Rs 500 crore. \"The scheme has been extended by two more months i.e. up to September 30, 2024. [JUNE 2024] ----------------------- **STATEMENT ON DEVELOPMENTAL & REGULATORY POLICIES:** The highlights of Statement on developmental and regulatory policy measures relating to Regulations, Payment Systems and FinTech are as hereunder; - **REVIEW OF LIMIT OF BULK DEPOSITS FOR SCHEDULED COMMERCIAL BANKS (EXCLUDING RRBS), SMALL FINANCE BANKS AND LOCAL AREA BANKS**: It is proposed to revise the definition of bulk deposits as 'Single Rupee term deposits of **₹3 crore and above'** for SCBs (excluding RRBs) and SFBs and **₹1 crore and above for Local Area Banks as applicable in case of RRBs.** - **Setting up a Digital Payments Intelligence Platform:** RBI has proposed to set up a Digital Payments Intelligence Platform which will harness advanced technologies to mitigate payment fraud risks. To take this initiative forward, the Reserve Bank has constituted a committee (Chairman: **Shri A.P. Hota**, former MD & CEO, NPCI) to examine various aspects of setting up a digital public infrastructure for Digital Payments Intelligence Platform. The Committee is expected to give its recommendations within two months. - **Inclusion of recurring payments for Fastag, National Common Mobility Card (NCMC), etc. with auto-replenishment facility under the e-mandate framework:** The Framework for processing of e-Mandate for recurring transactions, issued by RBI on January 10, 2020 currently enables recurring payments with fixed periodicity such as daily, weekly, monthly, etc. It is now proposed to include payments, such as replenishment of balances in Fastag, NCMC, etc. which are recurring in nature but without any fixed periodicity, into the e-mandate framework. The current e-mandate framework requires a **pre-debit notification at least a 24-hours before** the actual debit from customer's account. It is proposed to exempt this requirement for payments made from customer's account for automatic replenishment of balances in Fastag, NCMC, etc. under the e-mandate framework. - **Introducing auto-replenishment of UPI Lite wallet - Inclusion under the e-mandate framework:** The UPI Lite facility currently allows a customer to load his UPI Lite wallet upto ₹2000/- and make payments upto ₹500/- from the wallet. In order to enable the customers to use the UPI Lite seamlessly, it is proposed to bring UPI Lite within the ambit of the e-mandate framework by introducing an auto-replenishment facility for loading the UPI Lite wallet by the customer, if the balance goes below a threshold amount set by him/her. Since the funds remain with the customer (funds move from his/her account to wallet), the requirement of additional authentication or pre-debit notification is proposed to be dispensed with. - **RBI Hackathon HARBINGER 2024 -- Innovation for Transformation:** The third edition of the global hackathon, "HaRBInger 2024 -- Innovation for Transformation" will be launched with two overarching themes viz., **'Zero Financial Frauds' and 'Being Divyang Friendly'.** **RESERVE BANK OF INDIA LAUNCHES ITS THIRD GLOBAL HACKATHON -- HaRBInger 2024:** Reserve Bank is organising its third global hackathon - 'HaRBInger 2024 - Innovation for Transformation'. The Hackathon invites participants to develop solutions using technology and innovative approaches under the following themes and problem statements: - **Theme 1: "Zero Financial Frauds":** Real time prediction, detection and prevention of frauds in financial transactions using alternate sources of data including publicly available information. Ensuring transaction anonymity in token-based (CBDC) transactions while maintaining financial system integrity. Identifying mule bank accounts/ payment wallets. - **Theme 2: "Being Divyang Friendly":** Accurately identifying banknotes by visually impaired. Winner across each problem statement will be awarded with prize money of Rs.40 Lakh. There will be special prize of Rs.20 Lakh to the best 'all woman team' (a team comprising of only woman members'), across all the four problem statements. Stipend per team shortlisted for solution development for meeting the cost of development of prototype will be Rs.5 Lakh. **RATE OF INTEREST ON GOVERNMENT OF INDIA FLOATING RATE BOND 2031**: The rate of interest on Government of India Floating Rate Bond 2031 (FRB 2031) applicable for the half year June 07, 2024 to December 06, 2024 shall be **7.98 per cent** per annum. FRB 2031 carries a coupon, which has a base rate equivalent to the average of the Weighted Average Yield of last three auctions (from the rate fixing day i.e. June 07, 2024) of 182 Day T-Bills, plus a fixed spread of One per cent. **SAARC CURRENCY SWAP FRAMEWORK FOR THE PERIOD 2024 TO 2027:** RBI has decided to put in place a revised Framework on Currency Swap Arrangement for SAARC countries for the period **2024 to 2027**. Under this Framework, the Reserve Bank would enter into bilateral swap agreements with SAARC central banks, who want to avail of the swap facility. The SAARC Currency Swap Facility came into operation on November 15, 2012 with an intention to provide a backstop line of funding for short term foreign exchange liquidity requirements or balance of payment crises of the SAARC countries till longer term arrangements are made. Under the Framework for 2024-27, a separate INR Swap Window has been introduced with various concessions for swap support in Indian Rupee. The total corpus of the Rupee support is **₹250 billion.** The RBI will continue to offer swap arrangement in US\$ and Euro under a separate US Dollar/ Euro Swap Window with an overall corpus of US\$ 2 billion. **RBI UPS FINANCIAL ACCOMMODATION FOR STATES/UTS BY 28% TO ₹60,118 CRORE:** RBI has revised the WMA limits of the State Governments/ UTs, effective from July 01, 2024. The revised aggregate WMA limit for State Governments/ UTs will be **₹60,118 crore** as against the existing limit of ₹47,010 crore. SDF availed by State Governments/ UTs shall continue to be linked to the quantum of their investments in marketable securities, issued by the Government, including Auction Treasury Bills (ATBs). Based on the recommendations made by the Working Group constituted by the Reserve Bank on Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) it has been decided that the maximum limit of SDF that can be availed by the States / UTs against the investments held under CSF/ GRF shall be **50 per cent** of the lower of (i) outstanding balance of the funds as on the last date of the second preceding quarter, and (ii) the current balance held in CSF/ GRF. For investments held in ATBs, the maximum limit of SDF shall be 50 per cent of the lower of (i) outstanding balance in ATBs (91/182/364 days) as on the last date of the second preceding quarter, and (ii) the current ATB balance. **EXCHANGE RATE AUTOMATION MODULE (ERAM) BY CBIC TO COME INTO EFFECT ON 4TH JULY 2024:** The Central Board of Indirect Taxes and Customs (CBIC) has issued a Circular for the launch of Exchange Rate Automation Module (ERAM). The automated system of ascertaining and publishing the exchange rate will replace the existing manual process, and shall come into effect from 4th July, 2024. **ERAM** is a significant step towards trade facilitation as the exchange rates of 22 currencies would now be published online in advance for ease of consumption by all importers and exporters. These exchange rates would be made available on the ICEGATE website twice a month i.e. on the evening of the 1st and 3rd Thursdays of the month and would be effective from midnight of the following day. **STOCK DERIVATIVE VOLUMES THAT CROSS A SET THRESHOLD IN SIX MONTHS NEED TO BE DISCONTINUED:** SEBI board has approved a framework that, to ensure a link between the cash market and derivative segment volume. A stock will be eligible for entry in the F&O segment only if the average daily delivery value in the cash market over the previous six months would be at **Rs 35 crore** (earlier it was pegged at Rs 10 crore). Further, the stock\'s market wide position limit on a rolling basis will have to be at least **Rs 1500 crore** from the earlier Rs 500 crore. **RECOMMENDATIONS OF 53RD GST COUNCIL MEETING:** The 53rd GST Council met under the Chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman held on 22^nd^ June. The highlights of the recommendations made are as under; - GST Council recommends **waiving interest and penalties** for demand notices issued under Section 73 of the CGST Act (i.e. the cases not involving fraud, suppression or wilful misstatement, etc.) for the fiscal years 2017-18, 2018-19 and 2019-20, if the full tax demanded is paid upto 31.03.2025. - Council has recommended monetary limit of Rs. 20 lakh for GST Appellate Tribunal, Rs. 1 crore for High Court and Rs. 2 crore for Supreme Court, for filing of appeals by the Department, to reduce litigation. - The GST Council recommended reducing the amount of pre-deposit for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs. 25 crores CGST and Rs. 25 crores SGST to Rs. 20 crores CGST and Rs. 20 crores SGST. Further, the amount of pre-deposit for filing appeal with the Appellate Tribunal has been reduced from 20% with a maximum amount of Rs. 50 crores CGST and Rs. 50 crores SGST to **10 % with a maximum of Rs. 20 crores CGST and Rs. 20 crores SGST.** - GST Council recommends amending provisions of CGST Act to provide that the three-month period for filing appeals in GST Appellate Tribunal will start from a date to be notified by the Government. - GST Council recommends to not levy interest u/s 50 of CGST Act in case of delayed filing of return, on the amount which is available in Electronic Cash Ledger (ECL) on the due date of filing of the said return. - GST Council recommends sunset clause from April 1st, 2025 for receipt of any new application for Anti-profiteering. - The Council recommends exemption from Compensation Cess leviable on the imports in SEZ by SEZ Unit/developer for authorized operations from 1st July, 2017. - GST Council recommends **12% GST on milk cans** (steel, iron, aluminum) irrespective of use; Carton, Boxes And Cases of both corrugated and non-corrugated paper or paper-board; Solar cookers whether single or dual energy source; and sprinklers including fire water sprinklers. - Recommends roll-out the biometric-based Aadhaar authentication of registration applicants on pan-India basis in a phased manner. - All solar cookers whether single or dual energy source will attract 12% GST. - IGST exemption on imports of specified items for defence forces for a further period of **five years till 30th June, 2029.** - The council recommends to exempt the services provided by Indian Railways to general public, namely, sale of platform tickets, facility of retiring rooms/waiting rooms, cloak room services and battery-operated car services and to also exempt the Intra-Railway transactions. - Further sharing of the incentive by acquiring bank with other stakeholders, where the sharing of such incentive is clearly defined under Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions and is decided in the proportion and manner by NPCI in consultation with the participating banks is not taxable. **IRDAI BARS INSURERS FROM ADVERTISING UNIT-LINKED POLICIES AS INVESTMENT PRODUCTS, ISSUES ADVERTISING RULES:** The Insurance Regulatory and Development Authority of India (IRDAI) has barred insurers from advertising unit linked and/or index linked products as **'investment products'**. It has laid out detailed guidelines to be followed by insurers while advertising insurance products. In the circular IRDAI said, "An advertisement on the unit linked insurance product, index linked product and annuity products with variable annuity pay-out option shall contain adequate, accurate, explicit and updated information, in simple language." **FATF PLACES INDIA IN 'REGULAR FOLLOW-UP' CATEGORY:** India joined the UK, France, Italy and other G20 group of countries which have been accorded 'regular follow-up' category by Financial Action Task Force (FATF). This was announced after the forum adopted **'Mutual Evaluation Report' of India**. India's performance on the FATF Mutual Evaluation accrues significant advantages to our growing economy, as it demonstrates the overall stability and integrity of the financial system. FATF places member countries in any of the four categories namely, **'regular follow-up', 'enhanced follow-up', 'grey list' and 'black list',** regular follow up being the top most category amongst 4.**Only 5 countries in G20 including India have been placed in regular follow up** after Mutual evaluation report. **SEBI RAISES BASIC DEMAT ACCOUNT LIMIT TO RS 10 LAKH:** To boost participation of small investors in the securities market, SEBI increased the threshold for the basic service demat account to **Rs 10 lakh from the current Rs 2 lakh w.e.f September 1.** Basic services demat account, or BSDA, is a more basic version of a regular demat account. The facility was introduced by markets regulator SEBI in 2012 to reduce the burden of demat charges on investors with small portfolios. **IRDAI MANDATES LIFE INSURERS TO PROVIDE LOANS AGAINST POLICIES:** IRDAI has mandated insurance companies to provide loans on policies across all life insurance savings products with effect from 30^th^ September 2024 enabling policyholders to meet liquidity requirements. Facility of policy loan is now mandatory in all life insurance savings products. **IRDAI ASKS LIFE INSURERS TO OFFER SURRENDER VALUE IN FIRST YEAR:** IRDAI issued a master circular, which mandates insurers to pay special surrender value (SSVs) after the first policy year, provided one full year\'s premium has been received. For policies with limited premium payment terms of less than five years and single premium policies, SSVs become payable immediately after receipt of the first full-year premium or single premium. Previously, the surrender value for guaranteed return products was zero in the first year and up to 30-35% in the second and third years. **SEBI EASES FPIs\' DISPOSAL OF SECURITIES AFTER THEIR REGISTRATION HAS EXPIRED:** The market regulator has issued guidelines that make it easier for foreign portfolio investors (FPIs) to deal with their securities holdings after their FPI registration has expired. The FPI can either choose to renew their registration for another three years by paying a fee to the Designated Depository Partner (DDP) or, it fails to reactivate its registration, will need to dispose off its securities within **180 days** from the expiry of the 30 days prescribed for reactivation of its registration. [MAY 2024] ---------------------- **RBI RELEASES DRAFT GUIDELINES ON 'PRUDENTIAL FRAMEWORK FOR INCOME RECOGNITION, ASSET CLASSIFICATION AND PROVISIONING PERTAINING TO ADVANCES - PROJECTS UNDER IMPLEMENTATION':** RBI on May 03 2024 issued draft guidelines for financing of project loans, while addressing the underlying risks. The important aspects of the draft guidelines are as follows; **IMPORTANT DEFINITIONS:** - **Appointed Date:** It is the date as defined in the concession agreement entered into between the concessionaire and the concession granting authority (applicable only in the case of infrastructure projects under Public Private Partnership (PPP) model). - **Credit Event:** A credit event shall be deemed to have occurred if there is a default; and/or lenders determine a need for extension of the originally envisaged DCCO of the project or any subsequent extension of already amended DCCO; and/or lenders determine a need for infusion of additional debt; and/or if there is a diminution in the net present value (NPV) of the project. - **Date of Commencement of Commercial Operations (DCCO):** The date by which the project is expected to be put to commercial use and completion certificate/provisional completion certificate is issued to the concessionaire. In the case of CRE projects, DCCO will be the date on which Occupancy Certificate from the competent authority is obtained. - **Date of Financial Closure:** The date on which the capital structure of the project, including both equity and debt, accounting for minimum 90 per cent of total project cost becomes legally binding on all stakeholders and all applicable approvals/clearances for implementing/constructing the project are obtained. - **Endogenous Risks:** Risks which are endogenous to the specific project, and mainly arise on account of deficiencies in planning/execution capability of the project sponsor/concessionaire. These may lead to cost overruns, time overruns, change in ownership, etc. - **Exogenous Risks:** Risks which are exogenous to a specific project and which may adversely impact some or most of the entities in the economy or in a specific sector or in a specific geographic region. These factors may be natural calamities, pandemic, change in government policy/regulation/law, etc., and their impact may give rise to cost overruns and/or time overruns. - **Interest During Construction (IDC):** Interest accrued and capitalized during the construction phase of the project. **PHASES OF PROJECT:** Projects shall be broadly divided into three phases namely, - **Design phase**: This is the first phase which starts with the conception of the project and includes, inter-alia, designing, planning, and obtaining all applicable clearances/approvals till its financial closure. - **Construction phase**: This is the second phase which begins after the financial closure and ends on the day before the DCCO. - **Operational Phase**: This is the last phase which starts with commencement of commercial operation by the project. **PRUDENTIAL CONDITIONS FOR PROJECT FINANCE:** - For any project, all mandatory pre-requisites such as availability of land, statutory clearances etc should be in place before financial closure. However, for infrastructure projects under PPP model, land availability to the extent of 50% or more can be considered sufficient by lenders to achieve financial closure. - In projects financed under consortium arrangements, where the aggregate exposure of the participant lenders to the project is upto ₹1,500 crores, no individual lender shall have an exposure which is less than **10%** of the aggregate exposure. For projects where aggregate exposure of lenders is more than ₹1,500 crores, this individual exposure floor shall be **5% or ₹150 crores, whichever is higher**. - In cases where a **moratorium on repayments beyond DCCO** is granted, the same **shall not exceed six months** from the commencement of commercial operations. - The original or revised repayment tenor, including the moratorium period, if any, **shall not exceed 85% of the economic life of the project.** - A positive net present value (NPV) is a prerequisite for any Project financed by lenders. Any subsequent diminution in NPV during the construction phase, either due to changes in projected cash flows, project life-period or any other relevant factor which may lead to credit impairment, shall be construed as a credit event. Accordingly, lenders shall get the project NPV independently re-evaluated every year. **[RESOLUTION AND PRUDENTIAL NORMS]:** - Occurrence of a credit event, during the construction phase, with any of the lenders in the project finance arrangement, within or outside the consortium, shall trigger a collective resolution in terms of the Prudential Framework for Resolution of Stressed Assets dated June 7, 2019 ('Prudential Framework'). The reference to 'default' in the Prudential Framework shall be read as 'credit event' for the purpose of project finance accounts, unless specified otherwise. - Any such Credit Event shall be reported to the Central Repository of Information on Large Credit (CRILC) by the lenders in the prescribed weekly as well as the CRILC-Main report. **RESOLUTION PLANS INVOLVING EXTENSION OF DCCO:** A project finance account classified as 'standard' in the books of REs shall continue to be classified as 'standard' on account of extension of DCCO and consequential shift in repayment schedule for equal or shorter duration (including the start date and end date of revised repayment schedule) under the following conditions: **Reason for Extension of DCCO** ------------------------------------------------------------------------------------------- -------------------------------------- ------------------------------------------------------------------------------------------------------------------- -------------------------------------- **Exogenous Risks** **Endogenous Risks** **Litigation (Court cases)** Allowable deferment of DCCO from the DCCO originally envisaged in the financing agreement Upto 1 year (including CRE projects) Upto 2 years for Infrastructure Projects and upto 1 year for Non-infrastructure Projects (excluding CRE projects) Upto 1 year (including CRE projects) In cases where exogenous and endogenous risks materialise together, the longer of the permissible deferments of DCCO as given above may be availed of. However, the cumulative deferment of DCCO for any project on account of reasons specified above (occurring concurrently or otherwise), **shall not exceed 3 years and 2 years respectively for infrastructure and non-infrastructure projects** (including commercial real estate projects). Extension of DCCO beyond these limits would not qualify for asset classification dispensation. If the resolution plan involving change in DCCO is not successfully implemented, within 180 days from the end of review period (30 days), then the account shall be downgraded to NPA immediately. Project finance accounts downgraded to NPA can be upgraded after 360 days from the end of Review Period, provided the RP has been successfully implemented, no further diminution in fair value of asset has happened and no further request for DCCO is made. **CHANGE IN REPAYMENT SCHEDULE DUE TO INCREASE IN THE PROJECT OUTLAY:** Any change in the repayment schedule of a project loan caused due to an increase in the project outlay on account of increase in scope and size of the project, shall continue to be classified as 'standard' if: - The increase in scope and size of the project takes place before commencement of commercial operations of the existing project. - The rise in project cost excluding any cost-overrun in respect of the original project is 25% or more of the original outlay as the case may be. - Lenders re-assess the viability of the project before approving the enhancement of scope and fixing a fresh DCCO. - On re-rating, (if already rated) the new rating is not below the previous rating by more than one notch. If the project debt was unrated at the time of increase in scope or size, then it should be rated investment grade upon such increase in scope or size. The standard asset classification benefit for changes in repayment schedule on account of 'change in scope' shall be allowed only once during the lifetime of the project. **PROVISIONS TO FUND COST OVERRUN:** - In cases where lenders have specifically sanctioned a 'Standby Credit Facility (SBCF) at the time of initial financial closure to fund cost overruns arising on account of extension in DCCO, they may fund cost overruns as per the agreed terms and conditions up to a **maximum of 10% of the original project cost**. - However, in cases where SBCF was not sanctioned at the time of financial closure or sanctioned but not renewed subsequently, lenders may fund cost overruns arising on account of extension in DCCO as per the agreed terms and conditions, up to a maximum of 10% of the original project cost (excluding IDC), provided the additional funding shall be priced at a premium to what would have been applicable on a pre-sanctioned SBCF. Lenders shall ensure that the loan-contracts shall ab-initio specify the additional risk premium to be charged on such SBCF, which may be revised upwards based on actual risk assessment at the time of sanction of such facilities. The additional risk premium shall be subject to a floor of 1.00 per cent. - Provided that the provisions to fund cost overrun shall only be available for infrastructure projects. Post-RP, financial parameters like D/E ratio, DSCR. etc., and external credit rating, if any, shall remain unchanged or enhanced in favour of lenders. **INCOME RECOGNITION:** Lenders may recognise income on accrual basis in respect of loans to projects under implementation, which are classified as 'standard'. In cases involving DCCO deferred accounts which are classified as 'standard' and where there is a moratorium on payment of interest and principal; lenders shall book income only on cash basis beyond original DCCO, considering the high risk involved in such accounts. For NPA accounts, income recognition shall be as per extant instructions. **PROVISIONING FOR STANDARD ASSETS:** - **Construction Phase:** A general provision of 5% of the funded outstanding shall be maintained on all existing as well as fresh exposures on a portfolio basis. - **Operational Phase:** Once the project reaches the 'Operational phase', the above provisions made during construction phase, can be reduced to 2.5% of the funded outstanding. This can be further reduced to 1% of the funded outstanding provided that the project has (a) a positive net operating cash flow that is sufficient to cover current repayment obligation to all lenders, and (b) total long-term debt of the project with the lenders has declined by at least 20% from the outstanding at the time of achieving DCCO. - **Provisioning for DCCO deferred accounts:** For accounts which have availed DCCO deferment and are classified as 'standard', and wherein the cumulative deferments are more than 2 years and 1 year for infrastructure and non-infrastructure projects respectively, lenders shall maintain additional specific provisions of 2.5% over and above the applicable standard asset provision as above. This additional provision of 2.5% shall be reversed on commencement of commercial operation. - The provisioning of 5% for Standard Assets during construction phase shall be achieved in a phased manner as per the following timeline: 2 per cent -- with effect from March 31, 2025 (spread over the four quarters of 2024-25), 3.50 per cent -- with effect from March 31, 2026 (spread over the four quarters of 2025-26) and 5.00 per cent -- with effect from March 31, 2027 (spread over the four quarters of 2026-27). **RBI LAUNCHES 'PRAVAAH', RBI RETAIL DIRECT MOBILE APPLICATION AND FinTech REPOSITORY:** Governor, Reserve Bank of India on 28^th^ May 2024 launched three major initiatives, namely the PRAVAAH ((Platform for Regulatory Application, VAlidation and AutHorisation)) portal, the Retail Direct Mobile App and a FinTech Repository. The PRAVAAH portal will make it convenient for any individual or entity to apply online for various regulatory approvals in a seamless manner. The Retail Direct Mobile App will provide retail investors a seamless and convenient access to the retail direct platform and provide ease of transacting in government securities (G-Secs). **RBI TO ALLOW OPENING OF RUPEE ACCOUNT OUTSIDE INDIA TO BOOST CURRENCY USE:** RBI allowed the opening of rupee accounts outside India to internationalise the domestic currency. The RBI said it has finalised a strategic action plan for 2024-25 and envisaged liberalisation of external commercial borrowing (ECB) framework and \'Go-live\' for phase I of software platform for ECBs and trade credits reporting and approval (SPECTRA) project. The RBI will permit opening of rupee (INR) accounts outside India by persons resident outside India (PROIs) as part of the 2024-25 agenda for internationalisation of the domestic currency. **RBI FINALISES FRAMEWORK FOR SELF-REGULATORY ORGANISATIONS IN FINTECH SECTOR:** The Reserve Bank of India released the final framework for recognising self-regulatory organisations in the financial technology sector (SRO-FT), encouraging entities to have a representative membership from the fintech sector. An SRO-FT may have membership from fintechs currently regulated by the RBI, including NBFC-account aggregators (NBFC-AA), NBFC-peer-to-peer (P2P) lending platforms, among others, excluding banks. Given the dynamics of the sector, it is likely that fintechs could have membership of more than one SRO. **IRDAI RELEASES MASTER CIRCULAR ON HEALTH INSURANCE WITH VARIOUS NEW REGULATIONS:** IRDAI on 29 may 2024 came out with master circular on Health Insurance products. Following are some highlights of the new guidelines; - Insurers are required to make available products/add-ons/riders to provide wider choice to the policyholders/prospects catering to all ages, all types of existing medical conditions, pre-existing diseases and chronic conditions, all systems of medicine and treatments including Allopathy, AYUSH and other systems of medicine, every situation of treatment including domiciliary hospitalization, outpatient treatment (OPD), Day Care and Homecare treatment and all types of Hospitals and Health Care Providers to suit the affordability of the policyholders/prospects. Policyholder shall not be denied coverage in case of emergency situations. - A **free look period of 30 days** (from the date of receipt of the policy document) is available to the policyholder to review the terms and conditions of the policy. If he/she is not satisfied with any of the terms and conditions, he/she has the option to cancel his/her policy. - The policyholder **may cancel his/her policy at any time** during the term, **by giving 7 days' notice** in writing and the insurer shall refund proportionate premium for unexpired policy period, if the term of policy **upto one year** and there is no claim (s) made during the policy period. - The grace period of fifteen days (where premium is paid on a monthly installments) and thirty days (where premium is paid in quarterly/half yearly/annual installments) is available on the premium due date, to pay the premium. - An Insurer shall not deny the renewal on the ground that the policyholder had made a claim (s) in the preceding policy years. - No policy and claim of health insurance shall be contestable on any grounds of non-disclosure and/or misrepresentation except for established fraud, after the completion of the Moratorium Period, i.e. **60 months of continuous coverage.** - The Insurer may reward the policyholders who do not make claim in the form of No Claim Bonus (NCB). - Insurer shall decide on the request for cashless authorization immediately but not more than **one hour of receipt of request.** Necessary systems and procedures shall be put in place by the Insurer immediately and not later than 31 st July, 2024. Insurer shall grant **final authorization within three hours** of the receipt of **discharge authorization** request from the hospital. - The Insurer is required to comply with the award of the Insurance Ombudsman within 30 days of receipt of award by the Insurer. In case the Insurer does not honour the ombudsman award, a penalty of **Rs. 5000/- per day** shall be payable to the complainant. **CBDT EXEMPTS RBI FROM SPECIAL NORMS ON TDS, TAX COLLECTED AT SOURCE:** The Central Board of Direct Taxes (CBDT) has exempted the Reserve Bank of India from the special provisions of the Income Tax Act, 1961, regarding the tax deducted at source, and the tax collected at source for non-filers of an income-tax return. The ministry also issued a notification along the same lines under section 206AB of the Income Tax Act. Section 206CCA of the Income Tax Act, 1961, provides tax collection at source (TCS) on amounts received by a specified person at rates higher than specified in the act. Under this, the tax is collected at twice the rate specified in the relevant provision of the Act, or at the rate of 5%, whichever is higher. **SEBI REDUCES TURNOVER REQUIREMENT FOR AGRI COMMODITY OPTIONS TO RS 100 CR:** Capital markets regulator SEBI has lowered the required average daily turnover for launching options on agricultural and agri-processed commodities to **Rs 100 crore** from Rs 200 crore earlier with effect from June 1 2024. **SEBI ENHANCES DYNAMIC-PRICE BAND SETTING TO PROTECT AGAINST SUDDEN PRICE MOVES:** For better protection against sudden price-movements or fat-finger errors, the market regulator has improved the way in which dynamic price bands for stocks in the derivatives segment are set. Dynamic price bands start at 10 percent of the previous day\'s closing price of the scrip or contract. **GOVERNMENT RAISES RETIREMENT & DEATH GRATUITY LIMITS TO RS 25 LAKH:** GoI has increased the maximum limit for Retirement Gratuity and Death Gratuity is increased by 25%, from Rs 20 lakh to **Rs 25 lakh, effective January 1, 2024**. [APRIL 2024] ------------------------ **HIGHLIGHTS OF STATEMENT ON DEVELOPMENTAL AND REGULATORY POLICIES 5^TH^ APRIL 2024:** Th***e highlights of Statement on Developmental and Regulatory policies announced by RBI on 5^th^ April are hereunder;*** - ***Trading of Sovereign Green Bonds (SGrBs) in IFSC: At present, foreign portfolio investors (FPIs) registered with SEBI are permitted to invest in SGrBs under the different routes available for investment by FPIs in government securities. With a view to facilitating wider non-resident participation in SGrBs, it has been decided to permit eligible foreign investors in the International Financial Services Centre (IFSC) to also invest in such bonds.*** - ***Dealing in Rupee Interest Rate Derivative products -- Small Finance Banks: Extant guidelines permit Small Finance Banks (SFBs) to use only Interest Rate Futures (IRFs) for the purpose of proprietary hedging. It has now been decided to allow them to deal in permissible rupee interest derivative products in terms of Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019.*** - ***Enabling UPI for Cash Deposit Facility: The facility of cash deposit is presently available only through use of debit cards. It is now proposed to facilitate cash deposit facility through use of UPI.*** - ***UPI access for Prepaid Payment Instruments (PPIs) through third-party applications: At present, UPI payments from bank accounts can be made by linking a bank account through the UPI App of the bank or using any third-party UPI application. However, the same facility is not available for PPIs. To provide more flexibility to PPI holders, it is now proposed to permit linking of PPIs through third-party UPI applications. This will enable the PPI holders to make UPI payments like bank account holders.*** - ***Distribution of CBDCs through Non-bank Payment System Operators: It is proposed to make CBDC-Retail accessible to a broader segment of users in a sustained manner, by enabling non-bank payment system operators to offer CBDC wallets.*** **RBI ADVISED BANKS TO START SUBMITTING STATUTORY RETURNS ON CIMS PORTAL:** As per the existing system, Banks submit the statutory Form A, Form VIII and Form IX (on unclaimed deposits) Returns in electronic form on the eXtensible Business Reporting Language (XBRL) Portal. Following the launch of Reserve Bank's next generation data warehouse, viz., the **Centralised Information Management System (CIMS)**, it has been decided to shift the submission of Form A, Form VIII and Form IX Returns from the XBRL Portal to the CIMS Portal. **RBI PERMITS RESIDENT ENTITIES TO HEDGE THEIR EXPOSURES TO PRICE RISK OF GOLD USING OTC DERIVATIVES IN THE IFSC:** Resident entities were permitted to hedge their exposure to price risk of gold on exchanges in the International Financial Services Centre (IFSC) recognised by the International Financial Services Centres Authority (IFSCA). To provide further flexibility to resident entities to hedge their exposures to price risk of gold, it has now been decided to permit resident entities to hedge their exposures to price risk of gold using OTC derivatives in the IFSC in addition to the derivatives on the exchanges in the IFSC. **RBI MANDATES ALL REGULATED ENTITIES TO PROVIDE KEY FACTS STATEMENT (KFS) FOR LOANS & ADVANCES TO RETAIL AND MSME BORROWERS:** RBI has decided to harmonize the instructions in cases of all retail and MSME term loan products extended by all regulated entities (REs). - Key Facts Statement (KFS) is a statement of key facts of a loan agreement, in simple and easier to understand language, provided to the borrower in a standardised format. - REs shall provide a KFS to all prospective borrowers to help them take an informed view before executing the loan contract, as per the standardised format. - The KFS shall be written in a language understood by such borrowers. Contents of KFS shall be explained to the borrower and an acknowledgement shall be obtained that he/she has understood the same. - Further, the KFS shall be provided with a unique proposal number and shall have a **validity period of at least three working days** for loans having **tenor of seven days or more**, and a validity period of **one working day** for loans having **tenor of less than seven days**. Validity period refers to the period available to the borrower, after being provided the KFS by the RE, to agree to the terms of the loan. - The KFS shall also include a computation sheet of annual percentage rate (APR), and the amortisation schedule of the loan over the loan tenor. APR will include all charges which are levied by the RE. Annual Percentage Rate (APR) is the annual cost of credit to the borrower which includes interest rate and all other charges associated with the credit facility. - Charges recovered from the borrowers by the REs on behalf of third-party service providers on actual basis, such as insurance charges, legal charges etc., shall also form part of the APR and shall be disclosed separately. In all cases wherever the RE is involved in recovering such charges, the receipts and related documents shall be provided to the borrower for each payment, within a reasonable time. - Any fees, charges, etc. which are not mentioned in the KFS, cannot be charged by the REs to the borrower at any stage during the term of the loan, without explicit consent of the borrower. - The KFS shall also be included as a summary box to be exhibited as part of the loan agreement. - However, **Credit card receivables are exempted** from the provisions of this guideline. REs shall put in place the necessary systems and processes to implement the above guidelines at the earliest. In any case, all new retail and MSME term loans sanctioned on or after **October 1, 2024**. **RBI ALLOWED SMALL FINANCE BANKS TO DEAL IN PERMISSIBLE RUPEE INTEREST RATE DERIVATIVE PRODUCTS FOR HEDGING INTEREST RATE RISK:** As per the extant guidelines, Small Finance Banks (SFBs) are permitted to use only Interest Rate Futures (IRFs) for the purpose of proprietary hedging. In order to expand the avenues available to the SFBs for hedging interest rate risk in their balance sheet and commercial operations more effectively as well as with a view to provide them with greater flexibility, RBI has now allowed them to deal in permissible rupee interest rate derivative products for hedging interest rate risk in terms of the Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019 dated June 26, 2019. **RBI ANNOUNCED LIMITS FOR INVESTMENT IN DEBT AND SALE OF CREDIT DEFAULT SWAPS BY FOREIGN PORTFOLIO INVESTORS (FPIS) FOR FY 2024-25:** On the captioned matter, RBI vide notification dated 26 April 2024, has made following announcements; - The **limits for FPI investment** in government securities (g-secs), state government securities (SGSs) and corporate bonds shall remain unchanged at **6 per cent, 2 per cent and 15 per cent** respectively, of the outstanding stocks of securities for 2024-25. - All investments by eligible investors in the 'specified securities' shall be reckoned under the Fully Accessible Route (FAR). Under Fully Accessible Route, certain specified categories of Central Government securities would be opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well.) - The allocation of incremental changes in the g-sec limit (in absolute terms) over the two sub-categories -- 'General' and 'Long-term' -- shall be retained at 50:50 for 2024-25. - The aggregate limit of the notional amount of Credit Default Swaps sold by FPIs shall be 5 per cent of the outstanding stock of corporate bonds. **RBI DEFINES CRITERIA FOR VOLUNTARY TRANSITION OF SMALL FINANCE BANKS TO UNIVERSAL BANKS:** As per the guidelines notified by RBI on 26^th^ April 2024, the eligibility criteria for an SFB to transition into a Universal bank will now be as follows: - Should have scheduled bank status with a satisfactory track record of performance for a **minimum period of five years**. - The shares of the bank should have been **listed** on a recognised stock exchange. - Should have a **minimum net worth of ₹1,000 crore** as at the end of the previous quarter (audited). - Meeting the prescribed CRAR requirements for SFBs. - Having a **net profit in the last two financial years**, and - Having **Gross NPA and Net NPA** of less than or equal to **3 percent and 1 percent** respectively in the last two financial years. - There is no mandatory requirement for an eligible SFB to have an identified promoter. However, the existing promoters of the eligible SFB, if any, shall continue as the promoters on transition to Universal Bank. Addition of new promoters or change in promoters shall not be permitted for an eligible SFB while transitioning to Universal Bank. - There shall be no new mandatory lock-in requirement of minimum shareholding for existing promoters in the transitioned Universal Bank and there shall be no change to the promoter shareholding dilution plan already approved by the Reserve Bank. - The eligible SFBs having diversified loan portfolio will be preferred. **RBI INITIATES SUPERVISORY ACTION AGAINST KOTAK MAHINDRA BANK LTD:** On 24^th^ April 2024, Reserve Bank of India, in exercise of its powers under Section 35A of the Banking Regulation Act, 1949, directed Kotak Mahindra Bank Ltd. to cease and desist, from **onboarding of new customers through its online and mobile banking channels and issuing fresh credit cards.** The bank shall, however, continue to provide services to its existing customers, including its credit card customers. These actions are necessitated based on significant concerns arising out of Reserve Bank's IT Examination of the bank for the years 2022 and 2023 and the continued failure on part of the bank to address these concerns in a comprehensive and timely manner. **RBI COMMEMORATES ITS 90TH YEAR:** The Reserve Bank of India, set up under the RBI Act, 1934, commenced its operations on April 1, 1935, marked the 90th year from its establishment. A commemorative coin was released by the Hon'ble Prime Minister to mark this special occasion of '**RBI\@90'**. **NO ENTITY EXCEPT CARD ISSUER, CARD NETWORKS CAN STORE TRANSACTION DATA FROM AUGUST 2025:** RBI issued a significant directive, stating that from August 1, 2025, no entity involved in card transactions, except for the card issuer and card networks, will be permitted to store data. This directive aims to enhance the security and privacy of cardholders\' information during transactions. This regulation will have implications for various stakeholders in the payment ecosystem, including banks, payment gateways, and merchants. **PENSION PORTALS OF ALL PENSION DISBURSING BANKS TO BE INTEGRATED IN THE INTEGRATED PENSIONERS' PORTAL OF DEPARTMENT OF PENSION & PENSIONERS:** Pension Portals of all Pension Disbursing Banks to be integrated in the Integrated Pensioners' Portal of Department of Pension & Pensioners' Welfare to ensure Ease of Living of Pensioners. In line with the objective of transparency, digitization and service delivery, the **Bhavishya platform** has ensured End-to-End digitization of the Pension processing and payment which commences from the retiree filing his/her papers online till issue of the PPO in electronic format and going into the Digilocker. The 'Bhavishya' platform, an integrated online pension processing system was made mandatory for all central government departments w.e.f. 01.01.2017. **PSBs DON\'T HAVE POWER TO ISSUE \'LOOK OUT CIRCULARS\' AGAINST DEFAULTERS: HC:** Bombay High Court held as unconstitutional the clause of an office memorandum issued by the central government empowering the chairpersons of public sector banks to issue LOCs against default borrowers. The court passed its verdict on a bunch of petitions challenging validity of the said clause. The bench said the Bureau of Immigration shall not act upon such LOCs (issued by banks against defaulters). While the office memorandum issued by the Centre was not ultra vires the Constitution, the clause empowering the chairperson of a public sector bank to issue LOC was \"arbitrary and without power in law\", the HC said. The Centre\'s office memorandum, in 2018, empowered the PSBs to issue LOCs in the \"economic interest of India\". This restrained a person from travelling abroad if his/her departure could be detrimental to the economic interest of the country. **IRDAI HAS REMOVED THE AGE LIMIT OF 65 YEARS FOR INDIVIDUALS BUYING HEALTH INSURANCE POLICIES:** Insurance regulator IRDAI has removed the age limit of 65 years for individuals buying health insurance policies. As per the earlier guidelines, individuals were allowed to purchase a new insurance policy only till the age of 65. However, with the recent amendment, which has been effective from April 1, anyone, regardless of age, is eligible to buy a new health insurance policy. **NABARD PARTNERS WITH RBI INNOVATION HUB TO FAST-TRACK DIGITAL AGRI LENDING:** NABARD has partnered with Reserve Bank\'s arm RBIH to put in place a system which will enable faster processing of agricultural loans. NABARD said it will integrate its e-KCC loan origination system portal with the Public Tech Platform for Frictionless Credit (PTPFC) of Reserve Bank Innovation Hub (RBIH), a wholly-owned subsidiary of the RBI. NABARD has developed the loan origination system portal to facilitate digital Kisan Credit Card (KCC) loan processing for cooperative banks and Regional Rural Banks (RRBs). **NABARD INTRODUCES INCENTIVE SCHEME FOR CUSTOMER SERVICE POINTS (CSPs) / BUSINESS CORRESPONDENTS (BCs) OF BANKS OPERATING IN HILLY STATES/UTs:** A pilot scheme for providing financial assistance to CSPs/BCs of Banks operating in North Eastern States was introduced by NABARD in August 2023. Now, it has been decided to extend the similar scheme to CSPs/BCs of banks operating in Hilly States/UTs viz., Himachal Pradesh, Jammu & Kashmir, Ladakh and Uttarakhand. The incentive under this scheme will be over and above the fixed commission and variable commission already being paid by the Banks. The brief of the scheme is as follows; - The operative period of the scheme will be one year, i.e., from 01 April 2024 to 31 March 2025. - The scheme will be applicable to all Banks operating in hilly states/UTs (Himachal Pradesh, Jammu & Kashmir, Ladakh, Uttarakhand). - **Eligible Individuals:** Operators directly engaged by Banks or Operators engaged by Banks through Corporate BCs. In other words, the individual providing the service will be eligible for the incentive and not the agency which has engaged them. - **Eligible Locations:** The Operators working in rural centres, i.e., **Tier 5 & Tier 6 Centres** (population up to 9,999) as per population Census 2011. - Financial Incentive of **₹1,000/- per month** to be paid to Operators of banks placed in hilly states/UTs for performing **50 and above financial transactions per month** on an average, subject to a maximum of two top performing Operators per village. - Banks to submit the proposal to the respective Regional Office of NABARD in the state/UT where the Operators are providing their services with details. - Upon sanction by NABARD, Banks to submit the annual reimbursement claim of the previous Financial Year by 30th June of the next Financial Year. **AMENDMENT IN FEDAI RULES:** FEDAI has circulated the following amendments in FEDAI Rules 10^th^ edition which shall come in force with effect from 5^th^ April 2024. **Existing Rule** **Revised Rule** ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- The normal market hours for FCY/INR transactions in Inter-bank forex market as well as client transactions in India would be from 9.00 a.m. to 5.00 p.m. IST on all working days. The normal market hours for on shore deliverable FCY/INR transactions in Interbank forex market as well as client transactions in India would be as prescribed by the Reserve Bank of India from time to time for inter-bank transactions. Normal transit period (comprises of the average period normally involved from the date of negotiation/purchase/discount till the receipt of bill proceeds) in case of Bill drawn on DP/At Sight Basis and not under LC for Exports to Russia where reimbursement is provided by RBI is 20 days. Normal transit period in such case for Exports where reimbursement is provided by RBI under state credit will be 20 days. - In the event of late delivery of any currency (including Indian Rupee) in foreign exchange contract, interest for the number of days of delay shall be payable by the seller-bank. The interest for the overdue period shall be payable at the rate of 2% over the benchmark rate of the currency concerned. FEDAI has now announced that, the benchmark rates will be Alternative Reference Overnight Rate for respective currency. - The Term WORKING DAY is replaced by BUSINESS DAY in various rules of FEDAI. **SEBI UNVEILS SCORES 2.0: ENHANCING INVESTOR COMPLAINT REDRESS SYSTEM:** The Securities and Exchange Board of India (SEBI) has launched SCORES 2.0, an upgraded version of its Complaint Redress System (SCORES), to strengthen mechanisms for addressing investor complaints. This enhanced system features automated routing, oversight by designated authorities, and streamlined processes. Understanding SEBI SCORES: SEBI Complaint Redress System (SCORES) is an online platform launched in June 2011, allowing investors to lodge complaints in the securities market via web URL and an app. **INTERNET BANKING FACILITIES TO CLIENTS OF IBUs:** The International Financial Services Centres Authority (IFSCA) has directed all IFSC Banking Units (IBUs) situated within GIFT IFSC in Gandhinagar to mandatorily provide internet banking services to their clients within the next six months. IBUs are directed to benchmark their services against global standards and submit implementation plans within 45 days. IFSCA has also asked IBUs to ensure secure, user-centric platforms with minimal downtime. **NPCI IMPLEMENTS MAXIMUM UPI INWARD CREDIT LIMITS FOR P2PM MERCHANTS: A** new category "P2PM" catering to small merchants and unorganized retail sector was introduced to bring small merchants with low ticket size into digital framework. Considering the constantly expanding merchant ecosystem NPCI has recently increased maximum UPI inward credit limits for P2PM merchants with effective from 30th April 2024 as follows **Particulars** **Maximum UPI inward credits to P2PM merchant VPA in Rs.** -------------------------------- ------------------------------------------------------------ Per transaction Rs.10000/- Cumulative per day (24 hours) Rs.25555/- Cumulative per month (30 days) Rs.100000/- Merchants with UPI payment inward credit of **Rs.100000/- per month or more consecutively for 3 months** must be formally acquired by the payee PSP under P2M category, with applicable Merchant Category Codes (MCC). **EASE REFORMS INDEX ANNOUNCED BY IBA FOR Q3FY24:** IBA has announced the results of EASE 6.0 reforms index for Q3, FY 2023-24. - In Q3FY24 of EASE 6.0 significant progress across all four themes over baseline was observed. Overall improvement over baseline is 32% with the index score moving from 46.8 to 61.8 on account of the relative scoring amongst PSBs. - The availability of tablets/laptops in branches has facilitated a reduction in the turnaround time (TAT) for account opening, with 70% of PSB branches equipped with tablets/laptops in Q3 compared to 39% in Q1. - Banks are focusing towards establishing a digital co-lending model, with 11 out of 12 banks having already developed this capability. Furthermore, there\'s a concerted effort among banks to enable digital account openings, achieved by 11 out of 12 banks. - In EASE 6.0, there is an emphasis on mitigating cyber fraud incidents, with 11 out of 12 banks having established all suggested communication channels for reporting cyber fraud, and on average, sending 2.13 communications to customers per quarter. - Cross-Functional Team (CFT) plays a pivotal role in product deployment, with 11 out of 12 banks having such a setup for project monitoring. Moreover, 6 out of 12 banks have attained the highest level of maturity in their stress testing models, a notable improvement compared to 3 out of 12 banks in Q1/Q2FY24. - Bank wise **top performers were SBI with score of 82.6** followed by PNB and UBI with a score of 81.2 and and 80.7 respectively. - **SBI** came out as top performer in Theme 1 and Theme 4, whereas **PNB** is the top performer in Theme 2 and Theme 3. [MARCH 2024] ------------------------ **CARD ISSUERS SHALL PROVIDE AN OPTION TO THEIR CUSTOMERS TO CHOOSE FROM MULTIPLE CARD NETWORKS:** RBI vide its notification dated 6^th^ March 2024 has directed that; - ***Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.*** - ***Card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option may be provided at the time of the next renewal. (Shall not be applicable to credit card issuers with number of active cards issued by them being 10 lakh or less in number.)*** ***CUT-OFF TIME FOR UPLOADING OF GST, ICEGATE AND TIN 2.0 LUGGAGE FILES: Agency banks authorised to collect GST, Custom and Central Excise Duties (ICEGATE) and Direct Taxes under TIN 2.0 channel shall upload their luggage files in RBI's QPX/e-Kuber on all days except the Global holidays, which are January 26, August 15, October 2, all non-working Saturdays, all Sundays and any other day declared holiday by RBI for Government Transactions due to exigencies. It is to be ensured that these luggage files are uploaded in RBI's QPX/e-Kuber on or before 1800 hours prescribed by O/o Principal Chief Controller of Accounts, Central Board of Indirect Taxes & Customs and O/o Principal Chief Controller of Accounts, Central Board of Direct Taxes.*** ***OMNIBUS FRAMEWORK FOR RECOGNISING SELF-REGULATORY ORGANISATIONS (SROS) FOR REGULATED ENTITIES (RES) OF THE RESERVE BANK OF INDIA: Self-Regulatory Organisations (SROs) enhance the effectiveness of regulations by drawing upon the technical expertise of practitioners and also aid in framing/ fine-tuning regulatory policies and also help in fostering innovation, transparency, fair competition, and consumer protection and shall complement the extant regulatory/ statutory framework for better compliance. RBI has issued an omnibus framework for recognizing SROs for the REs of the Reserve Bank.Existing SROs already recognized by the Reserve Bank shall continue to be governed by the terms and conditions under which they were recognized, unless this framework is specifically extended to such SROs.*** ***CHARACTERISTICS OF AN SRO: An SRO is expected to operate under the oversight of the regulator, and should have the following characteristics:*** - ***Sufficient authority which is derived from membership agreements to set ethical, professional and governance standards and enforce these standards on the members.*** - ***Objective, well-defined and consultative processes to make rules relating to conduct of its members.*** - ***Develop standards for improving compliance culture and adherence to the rules and regulations framed by the Reserve Bank.*** - ***Devise and implement standardized procedures for handling disputes among members.*** - ***Suitable surveillance methods for effective monitoring of the sector.*** ***OBJECTIVES OF THE SRO: An SRO is expected to achieve the following objectives::*** - ***Promote a culture of compliance among its members by encouraging progressive practices and conventions.*** - ***Special attention must be given on extending guidance and support, particularly to smaller entities within the sector, and sharing best practices aligned with statutory and regulatory policies.*** - ***Act as the collective voice of its members in engagements with the Reserve Bank, government authorities or other regulatory and statutory bodies, in India.*** - ***Collect and share relevant sectoral information to the Reserve Bank to aid in policymaking.*** - ***Encourage a culture of research and development within the sector to encourage innovation while ensuring highest standards of compliance and self-governance.*** ***RESPONSIBILITIES OF THE SRO TOWARDS MEMBERS: The primary responsibility of the SRO towards its members would be to promote best business practices and in particular should discharge the following responsibilities towards its members:*** - ***Frame a code of conduct to be followed by its members and monitor adherence to the code.*** - ***Develop a uniform, reasonable and non-discriminatory membership fee structure.*** - ***Disseminate sector-specific information through periodicals, bulletins, pamphlets, magazines, etc.*** - ***Establish a grievance redressal and dispute resolution/ arbitration framework for its members and offer counselling on restrictive, unhealthy and such other practices which may be detrimental to growth of the sector.*** - ***Promote knowledge of statutory/ regulatory provisions and provide necessary resources for exchange of expertise and experience among members. It may also arrange for training programmes for skill development and awareness programs on contemporary issues for its members.*** - ***Educate public about operations of REs, grievance redress mechanisms available to them and spread awareness in general about the sector.*** ***RESPONSIBILITIES OF THE SRO TOWARDS THE REGULATOR: The SRO shall discharge the following responsibilities towards the Regulator:*** - ***Keep the Reserve Bank regularly informed of the developments in the sector. It shall also promptly inform the Reserve Bank about any violation by its member of the provision of the guidelines issued by RBI.*** - ***Carry out any work assigned to it by the Reserve Bank and examine the proposal or suggestion referred to it.*** - ***Submit an Annual Report to the Reserve Bank, within three months of completion of the accounting year. The SRO shall also submit the periodic/ adhoc returns as may be prescribed by the Reserve Bank.*** - ***Engage in periodic interactions with the Reserve Bank.*** - ***Reserve Bank may, if it deems necessary, inspect the books of the SRO or arrange to have the books inspected by an audit firm.*** ***ELIGIBILITY CRITERIA FOR THE APPLICANT: The entities intending to function as an SRO shall, therefore, fulfil the following eligibility criteria:*** - ***The applicant shall be set up as a not-for-profit company registered under Section 8 of the Companies Act, 2013. The applicant must have adequate net-worth as specified, wherever necessary, at the time of inviting applications and should possess or have the ability to create infrastructure to enable it to discharge responsibilities of an SRO on a continuing basis. No entity shall hold 10% or more of its paid-up share capital, either singly or acting in concert.*** - ***The applicant must represent the sector and have the specified membership or should have submitted roadmap for attaining specified membership within a reasonable timeline.*** - ***The applicant and its directors must have professional competence and have general reputation of fairness and integrity to be established to the satisfaction of the Reserve Bank.*** - ***The applicant must be fit and proper for the grant of recognition as an SRO, in all other respects*** ***The minimum membership that may be prescribed by the Reserve Bank shall be attained ideally at the time of making an application or within a maximum period of two years, from the date of grant of recognition. The membership of SRO shall be voluntary for the members.*** ***GOVERNANCE FRAMEWORK OF THE SRO: The SRO shall abide by the following guidelines:*** - ***The SRO shall be professionally managed and have a suitable provision in their Articles of Association (AoA)/ bye-laws to ensure this.*** - ***The Directors shall fulfil the \'fit and proper\' criteria as framed by the Board of the SRO on an ongoing basis and have relevant expertise/ experience and be persons of high integrity. At least one-third of members in the Board of Directors including the chairperson shall be independent and without any active association with the category/ class of REs for which the SRO is established.*** ***RBI TAKES ACTION AGAINST JM FINANCIAL PRODUCTS LIMITED: RBI, in exercise of its powers under section 45L(1)(b) of the Reserve Bank of India Act, 1934, directed JM Financial Products Limited (JMFPL) to cease and desist, with immediate effect, from doing any form of financing against shares and debentures, including loans against IPO of shares as well as against subscription to debentures. The Company shall, however, continue to service its existing loan accounts through the usual collection and recovery process. This action is necessitated due to certain serious deficiencies observed in respect of loans sanctioned by the company for IPO financing as well as NCD subscriptions. During the limited review it was observed, inter alia, that the company repeatedly helped a group of its customers to bid for various IPO and NCD offerings by using loaned funds.*** ***RBI APPROVES AMALGAMATION OF FINCARE SMALL FINANCE BANK LTD. AND AU SMALL FINANCE BANK LTD: The Reserve Bank of India has sanctioned the Scheme of Amalgamation of Fincare Small Finance Bank Ltd. (Transferor Bank) with AU Small Finance Bank Ltd. (Transferee Bank), in exercise of the powers contained in sub-section (4) of Section 44A of the Banking Regulation Act, 1949. ll the branches of Fincare Small Finance Bank Ltd. will function as branches of AU Small Finance Bank Ltd. with effect from April 01, 2024.*** ***RBI TAKES ACTION AGAINST IIFL FINANCE LIMITED: The Reserve Bank of India in exercise of its powers under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, directed IIFL Finance Ltd. to cease and desist, with immediate effect, from sanctioning or disbursing gold loans or assigning/ securitising/ selling any of its gold loans. The company can, however, continue to service its existing gold loan portfolio through usual collection and recovery processes. During an inspection of the company, certain material supervisory concerns were observed in the gold loan portfolio of the company, including serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans and at the time of auction upon default; breaches in Loan-to-Value ratio; significant disbursal and collection of loan amount in cash far in excess of the statutory limit; non-adherence to the standard auction process; and lack of transparency in charges being levied to customer accounts, etc.*** ***NEFT SYSTEM HAS ACHIEVED A MILESTONE ON FEBRUARY 29, 2024, BY PROCESSING MORE THAN 4 CRORE TRANSACTIONS: NEFT system has achieved a milestone on February 29, 2024, by processing 4,10,61,337 transactions, the highest number of transactions processed in a day so far.*** ***During the previous ten years (2014-23), NEFT and RTGS systems have registered growth of 700 per cent and 200 per cent respectively in terms of volume and 670 per cent and 104 per cent respectively in terms of value. RTGS system had processed its highest ever volume of 16.25 lakh transactions in a day on March 31, 2023.*** **GOVT. LAUNCHES NUCFDC, SETS TARGET TO ESTABLISH ONE URBAN COOPERATIVE BANK IN EACH TOWN:** Cooperation Minister Amit Shah launched the National Urban Cooperative Finance and Development Corporation (NUCFDC) in **New Delhi** and asked the umbrella body to set up one urban cooperative bank in each town. He also said urban cooperative banks should upgrade themselves to provide ATM facility, credit/debit cards, clearing system, and maintain SLR (statutory liquidity ratio) limit and refinancing. NUCFDC has received the RBI approval to function as a non-banking finance company and a self-regulatory organisation for the urban cooperative banking sector. **FARMERS' ENROLMENT IN FASAL BIMA SCHEME RISES 27% IN 2023-24:** The government said there was a 27 per cent increase in farmers enrolled under the flagship crop insurance scheme PMFBY and the share of non-loanee farmers was 42 per cent in the total enrollment during 2023-24. However, the increase this year has been attributed by Maharashtra and Odisha's decision to completely bear the farmers' share of premium. "During the past eight years of implementation of the Pradhan Mantri Fasal Bima Yojana (PMFBY), 56.80 crore farmer applications have been enrolled and over 23.22 crore farmer applicants received claims," the agriculture ministry said in a statement. **MCA RAISES EXEMPTION LIMIT FOR M&A WITHOUT PRIOR CCI APPROVAL:** The government on March 8 announced to raise the threshold for smaller business deals, including mergers and acquisitions, to happen without prior approval of the Competition Commission Of India (CCI). When one company buys another or merges, if the deal for **assets is up to Rs 450 crore** in India or if the **businesses\' turnover is Rs 1,250 crore**, they will be **exempted from prior approval under the Competition Act.** The earlier threshold stood at Rs 350 crore for value of assets and Rs 1,000 crore for turnover. The increased asset and revenue thresholds described above are applicable for a period of 2 years, with effect from 7 March, 2024. **CGTMSE LAUNCHES ODISHA CREDIT GUARANTEE SCHEME (OCGS)/ SWATANTRA YUVA UDYAMI (SWAYAM):** CGTMSE in collaboration with the State Government of Odisha has launched a Special Credit Guarantee Scheme \"Odisha Credit Guarantee Scheme (OCGS)/ Swatantra Yuva Udyami (SWAYAM)\" for the MSEs situated in the State of Odisha. Under the scheme 85% of the guarantee coverage will be provided by CGTMSE as being done hitherto and balance 15% coverage shall be provided by Government of Odisha for loans upto \'95,000/- extended by MLIs, taking the overall guarantee coverage to 100%. The enhanced guarantee coverage will be available upto NPA level of 15% of crystallised portfolio (portfolio will be crystallised as on 31st March every year). In case the NPA level exceeds the above limit of 15% of crystallised portfolio, the claims will be settled as per the terms of normal Credit Guarantee Scheme of CGTMSE. The cost of annual guarantee fee shall be borne by the State Government under the Scheme. All the existing MLIs (excluding NBFCs and Small Finance Banks) shall be eligible under OCGS / SWAYAM. **SEBI ISSUES CIRCULAR TO EXEMPT CERTAIN FPIs FROM ADDITIONAL DISCLOSURE FRAMEWORK:** The market regulator had issued directions to exempt a section of foreign portfolio investors (FPIs) who hold concentrated holdings in one corporate group from the additional disclosure framework issued last August. In a circular dated March 20, SEBI stated that an FPI having more than 50 percent of its Indian equity AUM (assets under management) in a corporate group shall not be required to make the additional disclosures as in the circular dated August 24, 2023, subject to compliance with all required conditions. **SEBI DIRECTS AMFI TO STOP INFLOWS INTO OVERSEAS SCHEMES OF MFs FROM APRIL 1:** Capital market regulator SEBI has directed the Association of Mutual Funds to stop inflows into overseas exchange traded funds from April 1 as it is approaching the **overall limit of \$1 billion** set by the RBI. In January 2022, SEBI stopped mutual fund houses from taking fresh subscriptions in schemes investing in overseas stocks. **IRDAI ISSUES SERIES OF REGULATIONS, TWEAKS REGULATION ON SURRENDER CHARGES:** IRDAI (Insurance Products) Regulations, 2024 merge six regulations into a unified framework aimed at enabling insurers to swiftly respond to evolving market demands, enhancing the ease of conducting business, and boosting insurance penetration. These regulations, which will be effective April 1, 2024 are as follows in a nutshell. - The surrender value is expected to remain the same or even lower if policies are surrendered within three years of the purchase. For policies that have been surrendered from the fourth to the seventh year, the surrender value may see a minor increase. - Compliance and measurement of these statutory obligations have been revised where the unit of measurement under the rural obligations will now be **Gram Panchayat**. T

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