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A savings or current account is treated as inoperative, if there are no ‘customer induced transactions’ in the account for a period of over 2 years. A customer induced transaction can be a financial transaction initiated by or done at the Behest of the account holder by the bank or third party, or A non-financial transaction, or A KYC (know your customer) updation done in face-to-face physical mode or through digital channels such as internet banking or mobile banking application of the bank.
05 January, 2024
RBI
RBI’s move to consolidate the scattered laws on connected lending is welcome. CL refers to persons who are in the position to control the decision of the lender. CL is the extension of credit to individuals or firms connected through ownership or the ability to exert control, whether direct or indirect. CL refers to cases where the director of a bank borrows from the same bank and can have some influence. Examples of connected parties include a firm’s parent, major shareholders, subsidiaries, affiliated companies, directors, and executive officers. Firms are also connected where they are controlled by the same family…
31 December, 2023
RBI
The Reserve Bank of India (RBI) recently enhanced the UPI payment limits for healthcare and education from Rs.1 lakh to Rs.5 lakh. The limit on recurring e-payment mandates for credit card and insurance premia payments as well as mutual fund investments to Rs.1 lakh from the current limit of Rs.15,000.
09 December, 2023
RBI
Reserve Bank of India (RBI) has increased the risk weight of commercial banks and non-banking financial companies’ (NBFC) unsecured loans from 100% to 125% as a preventive measure against possible NPAs. Risk Weights – It is the risk associated with every rupee lent by the bank on its capital position. Risk Asset Ratio System – It was introduced by RBI in 1992 for banks including foreign banks as a capital adequacy measure in line with the Capital Adequacy Norms prescribed by Basel Committee Capital Adequacy Ratio, known as Capital to Risk (Weighted) Assets Ratio (CRAR) is the proportion of a bank’s capital to its…
22 November, 2023
RBI
More than 97% of the Rs. 2,000 bank notes have returned on the deadline (October 31, 2023) of circulation withdrawn of Rs. 2,000 bank notes by RBI. However, the window for deposit and/or exchange the Rs. 2,000 banknotes continues to be available at the 19 Issue Offices of RBI. The RBI reiterated that Rs. 2000 bank notes continue to be legal tender.
06 November, 2023
RBI
Recently, the Reserve Bank of India (RBI) announced that it would directly regulate entities facilitating cross border payment transactions. Payment Aggregators – Entities that enable e-commerce sites and merchants to accept various instruments from customers to complete their payment obligations without the need for the merchants to create their own systems. Payment Aggregator-Cross Border (PA-CB) – Entities that facilitate cross-border online payments for import and export of permissible goods and services. Categories of PA-CB Export-only PA-CB Import-only PA-CB Export and import PA-CB New RBI regulation Authorised Dealer (AD) Category-I banks – They do not require separate approval for PA-CB activity. Existing Non-banks providing…
04 November, 2023
RBI
Consumer Confidence Survey- RBIs policy statement Introduction The RBI’s latest policy statement underscores the diminishing options available to it to address the economic fallout from the COVID-19 pandemic. Accommodative monetary policy The bank’s Monetary Policy Committee left benchmark interest rates and reiterated that it would keep its policy stance accommodative ‘as long as necessary to revive and sustain growth on a durable basis’. Since its May 2020 decision to cut interest rates by 40 basis points, taking the cumulative reduction in borrowing costs in the wake of the pandemic’s onset to 115 basis points, the MPC has found itself in…
07 June, 2021
RBI
RBI gives Rs. 99,122 crore surplus to the Government The Reserve Bank of India’s board approved a significantly higher-than-expected surplus transfer to the government on Friday but it may not be enough to cushion the damage from a crippling second wave of the novel coronavirus. The surplus distribution policy of the RBI is determined in accordance with Section 47 of the RBI Act, 1934. The RBI announced a surplus transfer of ?99,122 crore for the 9-month period from July 2020 to March 2021, the central bank said in a statement. The bank will move to an April to March accounting…
22 May, 2021
RBI
RBI measures against COVID-19 The RBI Governor Shri Shaktikanta Das today announced a series of measures to support the nation’s fight against the second wave of COVID-19 infections. 1. Term Liquidity Facility of 50,000 crore to Ease Access to Emergency Health Services Term Liquidity Facility of Rs. 50,000 crores with tenure of up to 3 years, at repo rate, to ease access to emergency health services, for ramping up COVID-related health infrastructure & services. Banks can give fresh lending support to variety of stakeholders under this facility. This lending facility will be available up to March 31, 2022. Banks will…
07 May, 2021
RBI
RBI announced measures to protect Small businesses, and MSMEs to get relief RBI announced measures to protect small and medium businesses and individual borrowers from the adverse impact of the intense second wave of COVID-19 buffeting the country. In an unscheduled address, RBI Governor Shaktikanta Das unveiled a Resolution Framework 2.0 for COVID-related stressed assets of individuals, small businesses and MSMEs and also expressed the central bank’s resolve to do everything at its command to ‘save human lives and restore livelihoods through all means possible’. Eligibility criteria Considering that the resurgence of the pandemic had made these categories of borrowers…
06 May, 2021
RBI
IDBI Bank out of Prompt Corrective Action Framework Reserve Bank of India(RBI) has taken out IDBI Bank from the prompt corrective action(PCA) framework subject to certain conditions. Prompt corrective action Framework: Banks with weak financial metrics are put under the PCA framework by the Reserve Bank of India It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector. When was the PCA framework introduced? The RBI introduced the PCA framework in 2002. It is a structured early-intervention mechanism for banks that become undercapitalised due to poor asset quality, or vulnerable due to loss of profitability.…
12 March, 2021
RBI
RBI on prioritising economic growth Present Stance of RBI The RBI’s Monetary Policy Committee (MPC) has expectedly yet again left benchmark interest rates unchanged and reiterated that it will continue with its accommodative stance (cheap money policy), at least into the next fiscal year, in order to secure a sustained economic recovery. The central bank’s rate setting panel has reasoned that while there are promising signs in the welter of data that it has looked at, the ongoing recovery is “still to gather firm traction” making it crucial to provide continued policy support for restoring growth. Retail inflation in India…
08 February, 2021
RBI
RBI and Financial Stability Report On Monday, the Reserve Bank of India (RBI) released the 22nd issue of its biannual Financial Stability Report outlining the risks to financial stability as well as the resilience of the financial system in the contemporary context. In his foreword, RBI Governor Shaktikanta Das flagged the many risks ahead, including the recent, accentuating “disconnect between certain segments of financial markets and the real economy”. Mr. Das warned, “Stretched valuations of financial assets pose risks to financial stability,” adding, “banks and financial intermediaries need to be cognisant of these risks and spillovers in an interconnected financial…
17 January, 2021
RBI
Current challenges faced by RBI in COVID Pandemic Duvvuri Subbarao is a former Governor of the Reserve Bank of India The Reserve Bank of India (RBI) embarked on an extraordinary expansionary policy to manage the financial pressures unleashed by COVID-19. It slashed policy interest rates aggressively, flooded the market with an unprecedented amount of liquidity and instituted a slew of measures for targeted assistance to especially distressed sectors. Must be a deliberative process As we sight springshoots in the economy, the RBI must be planning for a non-disruptive exit out of the easy money regime. Crisis management is a percentage…
11 January, 2021
RBI
Reinforcing RBI’s accountability Context: The article analyzes the inflation targeting role played by the Reserve Bank of India. Inflation targeting in India: Inflation targeting is a monetary policy strategy used by central banks for maintaining inflation at a certain level or within a specific range. With many central banks adopting it, inflation targeting has emerged as an important monetary policy framework. This approach was in contrast with the multiple indicator approach that predated this inflation targeting framework where the central bank focused on both growth and price stability. Monetary Policy Committee: In 2016, the Reserve Bank of India (RBI) signed…
04 November, 2020
RBI
RBI to tighten rules for home finance firms The Reserve Bank of India (RBI) has proposed stringent norms for housing finance companies by mandating 75% of their home loans to individual borrowers by 2024. Housing finance company A housing finance company is considered a non-banking financial company (NBFC) under the RBI’s regulations. A company is treated as an NBFC if its financial assets are more than 50% of its total assets and income from financial assets is more than 50% of the gross income. The RBI proposed the definition of qualifying assets for housing finance companies (HFCs). It said…
18 June, 2020
RBI
What RBI discontinuing 7.75% saving bonds means to investors Introduction After the cut in deposit rates by the banks and a cut in small savings rate by the government over the last couple of months, the Reserve Bank of India on Wednesday said the Government of India has discontinued 7.75 per cent savings (taxable) bonds, 2018 for subscription with effect from the close of banking business on Thursday. The move will deprive investors of another saving instrument that yielded relatively higher post tax returns for investors. What are 7.75 per cent RBI bonds? The 7.75 bonds 2018 were issued with…
30 May, 2020
RBI
RBI slashes the lending rates Part of: GS-III- RBI-INFLATION (PT-MAINS-PERSONALITY TEST) The RBI Governor Shaktikanta Das said that the six-member Monetary Policy Committee voted 5:1 in favour of 40 bps cut in interest rate. The RBI Governor said, measures announced can be divided into four categories-to improve functioning of markets, to support exports and imports, to ease financial stress by giving relief on debt servicing and better access to working capital and to ease financial constraints faced by State Governments. Important Points Speaking about impact of COVID-19, RBI GOVERNOR said , the GDP growth in 2020-21 goes in negative territory.…
23 May, 2020
RBI
RBI gold reserves up 40.4 tonnes in 2019-20, more than half of total holdings held overseas Context The RBI’s total gold reserves were 612.56 tonnes in the preceding fiscal ended March 2019. With the addition of more stocks, the value of gold reserves rose to $30.57 billion (around Rs 2,32,000 crore) by March 2020 from $23.07 billion in March 2019. News The Reserve Bank of India (RBI) bought 40.45 tonnes of gold in financial year 2019-20, taking its total holdings of the yellow metal to 653.01 tonnes. The RBI’s total gold reserves were 612.56 tonnes in the preceding fiscal ended…
11 May, 2020
RBI
Forex reserves fall $113 mn to $479.45 bn In the previous week, the reserves had increased by $3.09 billion to $479.57 billion. After rising for the past few weeks, the country’s foreign exchange reserves declined $113 million to $479.45 billion in the week to April 24, due to a fall in foreign currency assets, according to the latest data from the Reserve Bank of India. In the previous week, the reserves had increased by $3.09 billion to $479.57 billion. The reserves had touched a lifetime high of $487.23 billion in the week to March 6, after it rose by $5.69…
03 May, 2020
RBI
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