Reserve Bank wants stricter rules for e-commerce payments gateways

News:RBI has asked for stricter rules for E-commerce marketplaces acting as payment gateways and payment aggregators to other merchants. Facts: What are payment gateways? Payment gateways and payment aggregators refer to entities which provide technology infrastructure to route and facilitate the processing of an online payment transaction and perform other functions without actually handling the… Continue reading Reserve Bank wants stricter rules for e-commerce payments gateways

RBI panel to firm up mechanism for assessing adequacy of forex reserves

News:The Reserve Bank of India (RBI) has formed an internal group to assess whether foreign exchange reserves are adequate to cover various risks. Facts: According to Bimal Jalan Committee report, the RBI’s foreign exchange reserves in 2008 were higher than the country’s external debt.But this position has reversed in 2019. At present,India’s foreign exchange reserves… Continue reading RBI panel to firm up mechanism for assessing adequacy of forex reserves

External benchmark-based lending must: RBI

News:The Reserve Bank of India (RBI) has made it mandatory for banks to link all new floating rate personal or retail loans and floating rate loans to MSMEs to an external benchmark rate from October 1st,2019. Facts: The RBI has given the options to banks for external benchmark rates which are (a) RBI repo rate… Continue reading External benchmark-based lending must: RBI

Task force recommends online loan sale platform

The Reserve Bank of India(RBI) has set up a task force to submit a report on the development of a secondary market for corporate loans.It was headed by T.N. Manoharan. The task force has recommended setting up of a self-regulatory body of participants who would work on creating a platform for secondary sale of corporate… Continue reading Task force recommends online loan sale platform

Bank frauds rise 74%, says RBI

According to Reserve Bank of India’s annual report,the amount involved in bank frauds has increased by 74% over the last one year. Among the banks,the public sector banks(PSBs) have accounted for the bulk of frauds at around 90% of total fraud amount.It was followed by private sector banks and foreign banks. The report said that… Continue reading Bank frauds rise 74%, says RBI

Jalan panel proposes change in RBI accounting year, transparent accounts

The Reserve Bank of India(RBI) has accepted the Bimal Jalan panel recommendations.It was set up to review the RBI’s economic capital framework. The economic capital framework reflects the capital that an institution requires or needs to hold as a counter against unforeseen risks or events or losses in the future. The panel has recommended a… Continue reading Jalan panel proposes change in RBI accounting year, transparent accounts

Open Market Operations(OMO)

The Reserve Bank of India (RBI)’s surplus for 2018-19 was higher than the surplus in recent years.This was due to the large amount of open market operations(OMOs) conducted by the central bank during the year. Open market operations is the sale and purchase of government securities and treasury bills by RBI or the central bank… Continue reading Open Market Operations(OMO)

Review capital framework every five years, says Jalan Committee

RBI had constituted a panel on economic capital framework to address the issue of RBI reserves.The panel was headed by Bimal Jalan. Economic capital framework refers to the risk capital required by the central bank as a counter against unforeseen risks or events or losses in the future. The committee has recommended a review of… Continue reading Review capital framework every five years, says Jalan Committee

RBI board approves Rs 1.76 lakh crore transfer to govt

The Reserve Bank of India(RBI) has decided to transfer a sum of 1.76 lakh crore rupees to the government.The surplus transfer was finalised in keeping with the recommendations of a committee headed by former RBI governor Bimal Jalan. RBI had constituted a panel on Economic capital framework(ECF) to address the issue of RBI reserves.The panel… Continue reading RBI board approves Rs 1.76 lakh crore transfer to govt

Explained: Reasons, implications of repo rate cut

The Reserve Bank of India’s(RBI) monetary policy committee (MPC) has lowered the repo rate by 35 basis points to 5.4%. Repo stands for ‘Repurchasing Option’.It refers to the rate at which commercial banks borrow money from the RBI. The Monetary Policy Committee(MPC) is a committee of the Reserve Bank of India.The MPC is made up… Continue reading Explained: Reasons, implications of repo rate cut

Exchange rate driven by capital flows, says RBI

According to Reserve Bank of India Deputy Governor,India’s foreign exchange reserves are borrowed reserves and not built out of export surplus.This means that exchange rate dynamics in India is driven by capital flows rather than current account balances. Current account includes export and import of goods and services while Capital account includes inflow and outflow… Continue reading Exchange rate driven by capital flows, says RBI

Economy shows further weakening, needs larger push: Shaktikanta Das at MPC meet

The RBI has released the minutes of the monetary policy committee (MPC) meeting. During the meeting,RBI governor said that RBI had to cut the repo rate by an unconventional 35 basis points to 5.4% in view of weakening of domestic growth and unstable global macroeconomic environment. Further,the governor said that the rate cut was given… Continue reading Economy shows further weakening, needs larger push: Shaktikanta Das at MPC meet

RBI plans to formalise linking of new loans to repo rate

The Reserve Bank of India(RBI) is considering asking banks to link loans to an external benchmark such as the repo rate to improve transmission of policy rates and foster economic growth. Repo stands for ‘Repurchasing Option’.It refers to the rate at which commercial banks borrow money from the RBI. Currently,bank loans are linked to marginal… Continue reading RBI plans to formalise linking of new loans to repo rate

RBI proposes easing of rules for sandbox model

The Reserve Bank of India(RBI) has issued the final framework for regulatory sandbox in order to enable innovations in the financial technology space. Regulatory sandbox(RS) is an infrastructure that helps financial technology (FinTech) players live test their products or solutions before getting the necessary regulatory approvals for a mass launch which saves start-up time and… Continue reading RBI proposes easing of rules for sandbox model

RBI takes over HFC regulation from NHB

The Reserve Bank of India(RBI) has approved a proposal to shift regulation of Housing finance companies(HFCs) from the National Housing Bank(NHB) to the RBI. Hence,HFCs will now be treated as one of the categories of non-banking financial companies(NBFCs) for regulatory purposes. Further,any housing finance institution which is a company desirous of making an application for… Continue reading RBI takes over HFC regulation from NHB

RBI task force against Indian banks dealing in offshore NDF rupee market

The Reserve Bank of India(RBI) had set up an eight member committee on offshore rupee market.The committee was headed by Usha Thorat.It has submitted its report to the RBI Governor. The committee was set up to examine offshore rupee markets in depth and recommend appropriate policy measures that also factor in the requirement of ensuring… Continue reading RBI task force against Indian banks dealing in offshore NDF rupee market

RBI to set up central registry for tracking frauds in payment systems

The Reserve Bank of India has announced the creation of a central payments fraud information registry.The registry would ensure a quick and systemic response in cases of financial frauds. At present,there is a mechanism in place for banks to report all banking frauds to the Central Fraud Monitoring Cell of the Reserve Bank. RBI has… Continue reading RBI to set up central registry for tracking frauds in payment systems

RBI lowers repo rate by 35 basis points to 5.40%

The Reserve Bank of India’s (RBI) monetary policy committee (MPC) has lowered its repo rate by 35 basis points to 5.4%.Repo stands for ‘Repurchasing Option’.It refers to the rate at which commercial banks borrow money from the RBI. RBI has also kept the door open for lowering rates further by retaining an accommodative policy stance.… Continue reading RBI lowers repo rate by 35 basis points to 5.40%

Explained: Why RBI’s monetary policy matters

The Monetary Policy Committee of the RBI has decided to cut the repo rate by 35 basis points to 5.4%. The monetary policy is important as any economic activity which is measured by GDP happens by (a) private individuals and households spend money on consumption (b)the government spends on its agenda (c)private sector investment and… Continue reading Explained: Why RBI’s monetary policy matters

RBI allows round-the-clock fund transfers under NEFT from December

The Reserve Bank of India(RBI) has announced that the National Electronic Funds Transfer(NEFT) systems would be available on a 24×7 basis from December 2019. At present,the NEFT payment system operated by the Reserve Bank of India is available to customers from 8am to 7pm on all working days with the exception of second and fourth… Continue reading RBI allows round-the-clock fund transfers under NEFT from December

Banks’ exposure limits, lending norms eased for stressed NBFCs

The Reserve Bank of India (RBI) has announced several measures to enhance credit flow to the cash-starved non-banking financial companies (NBFC) sector. The RBI has raised any bank’s exposure limit to a single NBFC from the existing 15% to 20% of tier-1 capital.This will ease liquidity pressure in the NBFCs. RBI has also allowed bank… Continue reading Banks’ exposure limits, lending norms eased for stressed NBFCs

Elected directors in PSBs will be appointed by board: RBI

The Reserve Bank of India has come out with the ‘Fit and Proper’ Criteria for Elected Directors on the Boards of PSBs Directions,2019. The directions mandates that banks are required to constitute a Nomination and Remuneration Committee(NRC) consisting of a minimum of three non-executive directors from amongst the board of directors. An elected director shall… Continue reading Elected directors in PSBs will be appointed by board: RBI

RBI eases foreign borrowing norms for NBFCs, defaulters

The Reserve Bank of India(RBI) has decided to relax the end-use restrictions relating to external commercial borrowings(ECB). RBI has allowed ECBs with minimum average maturity period of 10 years for working capital purposes and general corporate purposes.It has also permitted borrowing for on-lending by non-banking financial companies(NBFCs) for the 10 year maturity. Further,RBI has also… Continue reading RBI eases foreign borrowing norms for NBFCs, defaulters

Currency policing should be done by IMF not US:RBI governor Shaktikanta Das

The Reserve Bank of India governor has said that the International Monetary Fund(IMF) should not allow the U.S to bilaterally label countries as currency manipulators. He questioned the US bi-annual report calling out emerging markets for currency manipulation.He said that such labelling should not be a bilateral prerogative when multilateral institutions like the IMF exist.… Continue reading Currency policing should be done by IMF not US:RBI governor Shaktikanta Das

NBFCs with big realty loans must rebalance books: RBI

The Reserve Bank of India(RBI) has asked non-banking finance companies(NBFCs) to bring down their lending to the real estate sector. In the finance sector,the National Housing Bank has also been keeping a watch on lending to real estate sector by finance companies.Banks too have scaled down their lending to this segment. Despite facing a credit… Continue reading NBFCs with big realty loans must rebalance books: RBI

PayPal mulls data localisation for India

American digital payments player PayPal has said that it is working with its partners on data localisation as mandated by the Reserve Bank of India(RBI). Data localisation is the act of storing data on any device physically present within the borders of a country.Localisation mandates that companies collecting critical data about consumers must store and… Continue reading PayPal mulls data localisation for India

Rise in government borrowings might have triggered NBFC crisis

RBI Deputy Governor has expressed the possibility that the rise in government borrowings might have led to the asset-liability mismatch in the non-banking financial companies(NBFC) sector. In the case of NBFCs,the ability to borrow long-term comes down when government borrowing rises increasing the risk of financial stability. This has led to the crisis in finance… Continue reading Rise in government borrowings might have triggered NBFC crisis

Govt. must reduce borrowing by divesting stake in PSEs: Acharya

According to Reserve Bank of India Deputy Governor,an increase in government borrowing runs the risk of flooding the debt market which will make it expensive for companies to borrow. He said that the disinvestment in public sector enterprises(PSEs) would help in alleviating the effects of the government’s borrowing in the country. He also said serious… Continue reading Govt. must reduce borrowing by divesting stake in PSEs: Acharya

RBI Governor, state-run bank CEOs discuss slow rate transmission

The Reserve Bank of India Governor has discussed the issues of banking sector with the officials of Public sector banks(PSBs) and Indian Banks Association(IBA). During the meeting,the issue of less than desired level of transmission of monetary policy rates was discussed with the banks.Even though the RBI has cut the Repo rate by 75 basis… Continue reading RBI Governor, state-run bank CEOs discuss slow rate transmission

Bimal Jalan panel finalises report on RBI capital, surplus transfer

RBI had constituted a panel on Economic capital framework(ECF) to address the issue of RBI reserves.The panel was headed by Bimal Jalan. The panel has decided to recommend the RBI to transfer the excess capital from RBI to the government over 3 to 5 years.It will also recommend that the framework should be reviewed periodically.… Continue reading Bimal Jalan panel finalises report on RBI capital, surplus transfer

Compliance of FDI norms: RBI to unveil report submission mechanism soon

The Reserve Bank of India(RBI) is expected to come up with a mechanism for e-commerce marketplaces to submit their reports proving compliance with the FDI guidelines. According to the FDI norms by the Department for Promotion of Industry and Internal Trade (DPIIT),an e-commerce marketplace entities are required to furnish a certificate along with a report… Continue reading Compliance of FDI norms: RBI to unveil report submission mechanism soon

RBI board finalises ‘Utkarsh 2022’

The Reserve Bank of India (RBI) board has finalised a three year roadmap named as Utkarsh 2022. The objective of the policy is to improve regulation and supervision of the central bank. RBI has said that this strategy is in line with the global central banks decision to strengthen the regulatory and supervisory mechanism by… Continue reading RBI board finalises ‘Utkarsh 2022’

Financial system has surplus liquidity

Finance Minister and RBI Governor has met for the customary post-budget meeting. The RBI Governor has said that the system has sufficient liquidity and the Union Budget has made provisions to ease the NBFC crisis. In the Budget,the Government has announced a one-time six-month partial credit guarantee window to cover up 10% of losses that… Continue reading Financial system has surplus liquidity

Budget Briefs: RBI can supersede NBFC board

The government has decided to strengthen regulatory authority of Reserve Bank of India (RBI) over non-banking financial companies (NBFCs). Finance Minister has said that the RBI will now be the regulator of Housing finance companies(HFC) replacing the National Housing Bank(NHB). According to the Finance Bill,2019,RBI can now remove the director of an NBFC and even… Continue reading Budget Briefs: RBI can supersede NBFC board

RBI sets up panel to review CICs

The Reserve Bank of India(RBI) has set up a working group to review the regulatory and supervisory framework for core investment companies (CIC). The working group will examine (a)regulatory framework (b)enhance onsite and offsite surveillance of these companies (c)suggest changes in registration criteria including the practice of multiple CIC within a group and (d)other such… Continue reading RBI sets up panel to review CICs

Govt may enhance RBI powers for better supervision of NBFCs

The government is considering a proposal from the Reserve Bank of India(RBI) seeking more powers to improve its regulatory and supervisory mechanism for non-banking financial companies(NBFCs). This proposal came after RBI had called for greater surveillance on large entities in India’s Non-banking financial companies(NBFC) as their failure could lead to losses that are similar to… Continue reading Govt may enhance RBI powers for better supervision of NBFCs

Low oil price, food supply kept inflation low:Viral Acharya

The outgoing deputy governor of RBI has credited flexible inflation targeting,low crude prices and efficient food supply management for successful taming of inflation in recent years. The RBI has shifted to a flexible inflation targeting with a headline target of 4 percent(+/- 2 percent) when the Monetary Policy Committee (MPC) was instituted in 2016. He… Continue reading Low oil price, food supply kept inflation low:Viral Acharya

Need to push up savings rate to achieve new growth trajectory: Former RBI deputy governor

Former Reserve Bank of India Deputy Governor has said that there is a need to increase savings and investment rate to move India to a new growth trajectory in the future. He said that Indian growth accelerations since Independence is clearly associated with consistent trends of increasing domestic savings and investment over the decades. But… Continue reading Need to push up savings rate to achieve new growth trajectory: Former RBI deputy governor

RBI allows ARCs to buy financial assets from peers

The Reserve Bank of India(RBI) has allowed asset reconstruction companies (ARCs) to acquire financial assets from other ARCs in a bid to accelerate timely resolution of stressed assets. Earlier,ARCs could acquire financial assets from other ARCs only when they had some exposure to the asset that was being bought. However,the transfer of assets by one… Continue reading RBI allows ARCs to buy financial assets from peers

NPAs down, credit growth picking up: RBI

The Reserve Bank of India has released the Financial Stability Report. The report assessed that India’s financial system remains stable in the backdrop of improving resilience of the banking sector.However,the emerging trends in the global economy and geopolitical environment pose challenges. The report has said that the Gross non-performing assets in the banking system have… Continue reading NPAs down, credit growth picking up: RBI

RBI begins monitoring HFCs

The Reserve Bank of India(RBI) has started monitoring the liquidity position,asset-liability gap and repayment schedules of housing finance companies(HFCs) on a daily basis. The move to monitor HFCs on a daily basis comes after some HFC had gone into liquidity crisis which had resulted in defaults.This crisis had started since the debt default by IL&FS… Continue reading RBI begins monitoring HFCs

Payments data must be saved locally: RBI

The Reserve Bank of India (RBI) has clarified that payment system providers need to store entire payments data in a system only in India. The data should include end-to-end transaction details and information pertaining to payment or settlement transaction that is gathered, transmitted as part of a payment message or instruction. The data could be… Continue reading Payments data must be saved locally: RBI

Sinha-led panel proposes ₹5,000 crore stressed asset fund for MSMEs

A Reserve Bank of India(RBI) expert committee tasked with reviewing the current framework for the micro,small and medium enterprises (MSMEs) has submitted its report. The committee has recommended a ₹5,000 crore distressed asset fund for micro,small and medium enterprises (MSMEs). The fund will assist units in a cluster where there is a change in the… Continue reading Sinha-led panel proposes ₹5,000 crore stressed asset fund for MSMEs

RBI union moots collegium to select governors, deputy governors

The RBI union has proposed a Collegium of experts to appoint governors and deputy governors to ensure central bank autonomy and independence. The collegium should comprise former RBI governors,other prominent central bankers and economists. The recent resignation of the RBI deputy governor at least six months before his term expired is the trigger for mooting… Continue reading RBI union moots collegium to select governors, deputy governors

RBI’s customer-complaint processing goes digital

The Reserve Bank of India(RBI) has launched a Complaint Management System (CMS).It is a software application to facilitate RBI’s grievance redressal processes. Customers can lodge complaints against any entity regulated by RBI with public interface such as commercial banks, urban cooperative banks,Non-Banking Financial Companies(NBFCs). This system will make sure that every complaint is received and… Continue reading RBI’s customer-complaint processing goes digital

RBI to DRI: We can’t ask banks to share customer information

The Reserve Bank of India(RBI) has said that it has no power to ask banks to share information on customers with third parties including investigative agencies of the government even if it is in the interests of the bank. The RBI’s response came on a request by the Directorate of Revenue Intelligence(DRI) which sought RBI’s… Continue reading RBI to DRI: We can’t ask banks to share customer information

RBI panel on MSMEs suggests Rs 20 lakh collateral-free loan under Mudra

A Reserve Bank of India(RBI) expert committee tasked with reviewing the current framework for the micro,small and medium enterprises (MSMEs) has submitted its report. The panel has recommended doubling the cap on collateral-free loans to Rs 20 lakh from the current Rs 10 lakh.This will be extended to borrowers falling under the Mudra scheme,self-help groups… Continue reading RBI panel on MSMEs suggests Rs 20 lakh collateral-free loan under Mudra

‘Financial stability is a key theme for monetary policy’

The Reserve Bank of India(RBI) governor has highlighted the importance of the central bank’s role in maintaining financial stability. Financial stability can be defined as a condition in which the financial system is not unstable.It can also mean a condition in which the three components of the financial system which are financial institutions, financial markets… Continue reading ‘Financial stability is a key theme for monetary policy’

Will take fresh look at framework to supervise NBFCs: RBI Governor Shaktikanta Das

The Reserve Bank of India(RBI) Governor has said that the RBI is giving a fresh look at the regulatory and supervisory framework of the Non-banking Financial Companies(NBFCs). The RBI Governor said that the Reserve Bank will continue to monitor the activity and performance of NBFC sector with a focus on major entities and their inter-linkages… Continue reading Will take fresh look at framework to supervise NBFCs: RBI Governor Shaktikanta Das

Jalan panel report on RBI reserves by June end

RBI had constituted a panel on economic capital framework to address the issue of RBI reserves.It is headed by Bimal Jalan.The panel will meet one more time before finalising its report. The panel was formed after the government has said that the RBI should hand over its surplus reserves amid a shortfall in revenue collections.… Continue reading Jalan panel report on RBI reserves by June end