RESERVE BANK
RBI directs banks to provide all information to borrower on classifying them as wilful defaulter
The Reserve Bank of India (RBI) has instructed banks to issue show-cause notices to borrowers identified as wilful defaulters. The banks must provide these borrowers with a personal hearing and allow at least 21 days for a response.
RBI issues guidelines for non-bank payment service providers to prevent cyber security risks
The large non-bank PSOs need to abide by the directions by April 1, 2025. These include Clearing Corporation of India Limited (CCIL), National Payments Corporation of India (NPCI), Bharat Bill Payment Operating Units (BBPOUs), and Payment Aggregators (PAs), Non-bank ATM Networks, White Label ATM Operators (WLAOs), Large PPI Issuers, and Trade Receivables Discounting System (TReDS), among others.
Indian Bank eyes recovery of Rs 7,000 crore this financial year : MD & CEO Shanti Lal Jain
Indian Bank has set a target to recover around Rs 7,000 crore during the current financial year, with approval from the Reserve Bank of India and shareholders to raise Rs 5,000 crore. The bank reported a 41% increase in net profit to Rs 2,403 crore for the April-June 2024 quarter due to a decline in bad loans. The recovery is expected to be more than the slippages during the current financial year.
Banks face seven-year backlog in debt recovery cases
Banks struggled with a backlog in debt recovery, expected to take seven years to clear at the current pace. Over 2 lakh cases pending at Debt Recovery Tribunals prompted government plans to boost DRT and NCLT capacity, strengthening the Insolvency and Bankruptcy Code. Initiatives aim to enhance debt recovery efficiency and reduce the burden on existing tribunals.
RBI issues draft liquidity coverage ratio norms
LCR is a liquidity requirement for banks to maintain at all times a certain proportion of high-quality liquid assets (HQLA), including cash, reserves with central banks, and federal government bonds, which can easily be converted into cash.
IDBI Bank privatisation: Security clearances in place, RBI's nod expected soon
The Indian government and LIC are selling a nearly 61% stake in IDBI Bank, including a 30.48% stake of the Government of India and 30.24% of LIC. Potential investors have received security clearance from the Home Ministry and a nod from the Reserve Bank is expected soon. The RBI has been examining details submitted by potential investors for over 1.5 years, missing the deadline for privatisation.
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SC stays Madras HC order asking RBI to evaluate assets of LVB & Indian arm of DBS Singapore
A bench comprising Chief Justice D Y Chandrachud and Justices JB Pardiwala and Manoj Misra stayed the high court order and issued notices to Aum Capital, representing the investors, and others on separate appeals of the RBI and the DBS Bank against the HC judgement.
LVB-DBS merger: SC stays Madras HC order asking RBI to conduct fresh valuations of assets and shares of banks
The Supreme Court stayed a Madras High Court order directing the Reserve Bank of India to conduct a fresh valuation of Lakshmi Vilas Bank (LVB) and DBS Bank India (DBIL) in their 2020 merger. The High Court's order included reconsideration of tier-2 bond write-offs and addressing shareholders' and bondholders' grievances.
Indian banks' short-term debt rises to 12-year high on loan demand
Indian banks are increasingly resorting to short-term borrowing, utilizing certificates of deposit, to bridge a funding gap driven by strong loan growth and slower deposit accumulation. As a result, the outstanding amount of these certificates surged to 4.3 trillion rupees ($51.4 billion) in the fortnight through July 12. This marks the highest level since June 2012.
Microsoft outage: RBI assessment shows 10 banks, NBFCs experienced 'minor' disruptions
The Reserve Bank of India (RBI) has assessed the impact of a Microsoft Services outage on its regulated entities, particularly in the Indian financial sector. The bank found that around 10 banks and non-banking financial companies experienced minor disruptions, which have either been resolved or are currently being addressed.
ESAF SFB gets RBI nod for re-appointment of K Paul Thomas as MD & CEO
The bank will seek approval of the shareholders for the said re-appointment within the prescribed period, it said. Additionally, Paul Thomas is the Chairman of the Board of Sa-Dhan, the association of microfinance and impact finance institutions, it added.
Fraud tag on loans only after hearing borrowers: RBI to banks
The RBI has mandated banks to give borrowers three weeks to respond before labeling accounts as fraudulent, aligning with a Supreme Court ruling on natural justice. Banks must issue detailed notices and consider responses before final classification, ensuring transparency. Boards must review fraud risk policies every three years, with a committee overseeing cases chaired by an independent director. Auditors are to investigate flagged accounts promptly, aiding in fraud detection. These measures aim to strengthen banking integrity and safeguard against financial misconduct.
SBI launches 444-day deposit scheme with 7.25% interest
State Bank of India (SBI) has introduced a new 444-day deposit scheme with 7.25% interest, 15 basis points higher than the prevailing rate. The bank's higher rate comes after raising the benchmark marginal cost of fund-based lending rate by 5 to 10 basis points. The Reserve Bank of India warns banks of possible systemic risk due to persistent credit growth outpacing deposit growth.
Central spending gives a boost to liquidity, brings overnight rate 10 bps below repo
Following recent elections, increased government spending has injected liquidity into India's banking system, resulting in lower overnight borrowing rates, Treasury Bill yields, and short-term financing costs for Indian companies. Despite these developments, the Reserve Bank of India (RBI) appears cautious about reducing policy rates. The overnight weighted average call rate (WACR), which hovered above the RBI's repo rate of 6.50% in May and June, has averaged 6.39% in July, indicating a surplus liquidity situation.
RBI permits banks to use ratings of Brickwork Ratings subject to conditions
The Reserve Bank of India (RBI) has lifted restrictions on banks using ratings from Brickwork Ratings India Private Limited, two years after forbidding fresh ratings due to regulatory concerns. Banks can now utilize Brickwork Ratings' assessments for calculating risk weights for capital adequacy purposes, subject to certain conditions. These include limitations on new rating mandates for bank loans not exceeding Rs 250 crore, and surveillance requirements for existing ratings, especially for larger facilities. The RBI's decision marks a reevaluation of Brickwork Ratings' status and its role in the banking sector's risk assessment framework.
Yes Bank stake sale report is factually incorrect, got no approval from RBI: Bank clarifies
Yes Bank clarified that it has not received any in-principle approval from the Reserve Bank of India for a stake sale, countering a speculative media report. The bank emphasized the report's inaccuracies and confirmed no such approval from RBI. Yes Bank's shares rose 1.25% amidst this news report and the eventual clarification.
EXIM Bank enters into $2.5 million Line of Credit agreement with Guyana
EXIM Bank of India signed a $2.5 million credit line with Guyana for a solar plant at Cheddi Jagan International Airport, effective June 24, 2024. 75% Indian goods, works, and services; 25% can be external. Signed February 29, 2024. Disbursement is within 48 months of project completion, the Reserve Bank of India noted.
RBI penalizes PNB, four other banks for regulatory non-compliance in first week of July
The Reserve Bank of India (RBI) has penalized five banks, including Punjab National Bank (PNB), for non-compliance with RBI directions. PNB became the fifth bank to be penalized, with a penalty of Rs 1.31 crore. The penalty was imposed for non-compliance with RBI directions regarding 'Loans and Advances: Statutory and Other Restrictions' and the 'Reserve Bank of India (Know Your Customer (KYC) Direction, 2016'.
View: Indian banks know climate is their biggest threat
RBI’s financial stability report warns of climate change risks despite declining loan defaults. Concerns exist over exposure to energy and construction sectors. A 2023 framework mandates climate strategies by March 2028. Regulatory delays persist, with a 2021 task force and low foreign interest in green bonds. Efforts to attract global investors continue. Public sector banks are particularly vulnerable.
Bank of Maharashtra, Uco report low deposit growth, while advances rose much faster
A day after the Reserve Bank of India (RBI) urged banks to bridge the gap between deposit and credit growth, two public sector banks, Bank of Maharashtra and Uco Bank, reported subdued deposit mobilisation. Both banks reported sub-10% deposit growth, while advances grew at high teen percentages year-on-year at the end of the first quarter, June 30.
Banks in a bind over Trai mandate on digital consent
Banks are grappling with new regulations from the Telecom Regulatory Authority of India (Trai) requiring digital consent for commercial communication. This has prompted lenders to seek government clarity on whether consent is needed for sharing transaction details, as per Reserve Bank of India guidelines. The move aims to combat cyber fraud, with banks also requesting special prefixes for customer calls following last month's finance ministry directive.
Tight liquidity forces banks to tap debt markets, shell out more
"To a certain extent, the year-on-year rise in the bank borrowing numbers is a reflection of the merger between HDFC and HDFC Bank. But apart from that, it is clearly a reflection of the tightness in the liquidity and that was, to a certain extent, exacerbated in the month of May because government spending was restricted during the Union election," said Soumyajit Niyogi, director at India Ratings & Research.
Retail loans moderate for the 10th straight month
The Reserve Bank of India reported that bank lending to the retail sector moderated for the tenth consecutive month in May, reaching 17.8% from 19.1% a year ago. Corporate loans grew faster at 8.9% compared to 6% in May 2023. Non-food bank credit saw a 16.2% growth in May 2024 compared to 15.5% a year ago.
RBI imposes Rs 29.6 lakh penalty on HSBC
The Reserve Bank of India (RBI) has imposed a Rs 29.6 lakh penalty on The Hongkong and Shanghai Banking Corporation Limited (HSBC) for non-compliance with certain directions related to cards. The bank failed to ensure no negative amortisation while computing Minimum Payment Due in certain credit card accounts. The RBI found that the charge against the bank was sustained, warranting the imposition of monetary penalty.
Banks seek clarity from RBI on credit card network norms
Several banks have sought clarity from the Reserve Bank of India (RBI) regarding guidelines that mandate offering existing credit card customers a choice of networks like Rupay, Visa, and MasterCard. As per RBI's guidelines issued in March, card issuers must provide this choice both during initial issuance and at the time of renewals. A senior bank executive informed ET that banks have sought clarification on whether this choice of networks should be extended to all existing customers or only implemented during renewal processes.
Banks in a GST fix over RBI's directive to levy penal charges
The Reserve Bank of India's directive to levy penalties only in the form of 'penal charges' is posing a tax dilemma for banks. Banks fear that the indirect tax on such levies would attract the goods and services tax (GST). The new rule, which came into force from April 1, 2024, was brought in by the central bank to ensure "reasonableness and transparency" in disclosure of penal interest. However, banks have asked the tax authorities to spell out their stand on the issue.
RBI urges banks to address credit gaps for underserved sectors
Despite India's progress in banking access, micro and small business units, marginal farmers, and self-help group members still lack institutional credit and comprehensive financial services, as highlighted by the Reserve Bank of India.
BoB aims to double tech team headcount to 3,000 by FY26-end
State-owned Bank of Baroda plans to double its in-house technology team to 3,000 employees in the next two years, according to a top official. Currently, the team comprises 1,500 employees. The expansion will involve both regular hiring processes and lateral hires of specialist talent, as stated by Debadatta Chand, the managing director and chief executive officer.
Banks ask RBI to ease liquidity rule to keep credit taps open
Indian banks are urging the industry regulator to relax the current liquidity coverage requirements. They believe easing these mandates will free up more funds for lending.
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