Tot - Finance and Banking Current Affairs Jan To August 2019 PDF

Finance and Banking current Affairs
RBI | NABARD | SEBI

January to August 2019
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One-time restructuring of MSME loans allowed:
• The Reserve Bank of India (RBI) has introduced a one-time restructuring scheme for micro, small and
medium enterprises (MSMEs) having GST registration with a maximum exposure of Rs. 25 crores.
• The restructuring has to be implemented by March 31, 2020 and banks will incur an additional
provision of 5% for the restructured accounts.
• To be eligible, the MSME account should remain a ‘Standard Asset’ as of January 1.
• Accounts in default can be restructured only if their asset classification has not been downgraded.
• A restructured MSME account will be downgraded to NPA, and will slip into progressively lower asset
classification and higher provisioning requirements. After a year, such an account shall be considered
for upgrade to ‘standard’, only if its debt servicing does not remain due for more than 30 days.
• Banks and NBFCs should have board-approved policies on restructuring and should disclose the
restructured accounts.
RBI relief for e-wallet users in fraud cases:

• RBI has absolved customers using prepaid payment instruments (PPIs) viz. mobile wallets, prepaid
payments cards, and paper vouchers such as Sodexo, of liabilities arising out of a fraud, if the
incident is reported within three days.
• If it is a third-party breach, where the transgression is neither by the PPI issuer nor the customer but
elsewhere in the system, the customer will have no liability if they report it within three days.
• If the fraud is reported within four to seven days, the liability will be the transaction value or ₹10,000
per transaction, whichever is lower.
RBI's panel to boost digitization of payments: In order to encourage digitization of payments and
enhance financial inclusion through digitization, the RBI is setting up a high level Committee on
deepening of digital payments. The Committee will be chaired by former UIDAI Chairman Mr. Nandan
Nilekani, and shall also include, former RBI Deputy Governor Mr. H.R. Khan, Mr. Kishore Sansi (former
Head of Vijaya Bank) Ms. Aruna Sharma (former Secretary, Ministry of Information Technology and
Steel), and Mr. Sanjay Jain (Chief Innovation Officer, Centre for Innovation, Incubation &
Entrepreneurship (CIIE), IIM Ahmedabad).
The committee shall review the existing status of digitization of payments in India, identify the gaps in
the ecosystem, suggest ways of bridging those gaps, and assess the current levels of digital payments
in financial inclusion. It will also undertake cross-country analyses to identify what best practices can be
adopted to accelerate digitization of the economy and financial inclusion through digital payments. It
will suggest measures to strengthen the safety and security of digital payments; and, is also expected to
provide a roadmap for increasing customer confidence while accessing financial services through digital
modes.
RBI makes changes in Gold Monetisation Scheme: Resident Indians [Individuals, HUFs, Proprietorship &
Partnership firms, Trusts including Mutual Funds/Exchange Traded Funds registered under SEBI (Mutual
Fund) Regulations, Companies, charitable institutions, Central Government, State Government or any
other entity owned by Central Government or State Government] can make deposits under the scheme.
Joint deposits of two or more eligible depositors are also allowed under the scheme and the deposit in
such case shall be credited to the joint deposit account opened in the name of such depositors.
RBI eases ECB norms: To further improve the ease of doing business in India, RBI has drawn up a new external
commercial borrowing (ECB) framework allowing all eligible borrowers to raise up to $750 million per financial year
under the automatic route, replacing the existing sector-wise limits.
To curb volatility in the forex market arising out of dollar demand for crude oil purchases, the framework provides
special dispensation to public sector oil marketing companies. They can raise ECB, with an overall ceiling of $10 billion,
for working capital purposes with a minimum average maturity period (MAMP) of three years under the automatic
route without mandatory hedging and individual limit requirements.
Additionally, port trusts, units in SEZs, SIDBI, Exim Bank and registered MicroFin entities can also borrow under this
framework. All entities eligible to receive foreign direct investment can borrow under the ECB framework.
Manufacturing companies can raise up to $50 million per financial year with a maturity period of one year.
Further, if the ECB is raised from a foreign equity holder and utilized for working capital, general corporate purposes or
repayment of rupee loans, the maturity period will be five years.
The minimum average maturity period (MAMP) has been kept at 3 years for all ECBs, irrespective of the amount of
borrowing in lieu of various layers of MAMPs as at present, except the borrowers specifically permitted in the circular
to borrow for a shorter period.
Any entity who is a resident of a country which is FATF or IOSCO compliant will be treated as a recognised lender. This
change increases the lending options and allows various new lenders in ECB space while strengthening the AML/CFT
framework.
RBI permits card networks to offer tokenization services:
Tokenisation involves a process in which a unique token masks sensitive card details. Thereafter, in lieu
of actual card details, this token is used to perform card transactions in contactless mode at Point Of
Sale(POS) terminals, Quick Response(QR) code payments, etc.
RBI has permitted authorized card payment networks to offer card tokenization services to any token
requestor, or third-party app providers. Presently, this facility shall be offered through mobile
phones/tablets only.
All existing instructions of the RBI on safety and security of card transactions, including the mandate for
additional factor of authentication (AFA) and PIN entry, shall be applicable for these transactions. The
networks shall hold ultimate responsibility for the services.
They will not be allowed to recover any charges from customers for availing this services. Before
providing card tokenization services, the networks will have to set up a mechanism for periodic system
audit of all entities involved in providing the services.
This system audit shall be undertaken by empaneled auditors of the Indian Computer Emergency
Response Team (CERT-In), who shall send a copy of the audit report with their comments, to the RBI.
Details of the number of cards registered for the services, and, transaction data shall be submitted at
monthly intervals to RBI's Department of Payment and Settlement Systems.
RBI constitutes Expert Committee on Micro, Small & Medium Enterprises (MSMEs):Considering the importance of the
MSMEs in the Indian economy, it is essential to understand the structural bottlenecks and factors affecting the
performance of the MSMEs. It has, therefore, been considered necessary that a comprehensive review is undertaken
to identify causes and propose long term solutions, for the economic and financial sustainability of the MSME sector.
RBI has constituted an Expert Committee eight-member expert committee headed by former SEBI chairman U.K.
Sinha to propose long term solutions for the economic and financial sustainability of the Micro, Small and Medium
Enterprises. The Expert Committee will submit its report by the end of June, 2019.
Prompt Corrective Action Framework: Bank of India and Bank of Maharashtra which meet the regulatory norms
including Capital Conservation Buffer (CCB) and have Net NPAs of less than 6% as per third quarter results, are taken
out of the PCA framework subject to certain conditions and continuous monitoring. In the case of Oriental Bank of
Commerce, though the net NPA was 7.15%, as per the published results of third quarter, the Government has since
infused sufficient capital and bank has brought the Net NPA to less than 6%. Hence, it has been decided to remove the
restrictions placed on Oriental Bank of Commerce under PCA framework subject to certain conditions and close
monitoring. RBI will continuously monitor the performance of these banks under various parameters.
Tech scheme for MSMEs gets three-year extension: The Government has approved a three–year extension of the
Credit Linked Capital Subsidy and Technology Up-gradation Scheme for MSMEs with a total outlay of Rs. 2,900
crores. The scheme has been approved for continuation beyond the 12th five-year plan for three years from 2017-18 to
2019-20. It will facilitate technology up-gradation to MSMEs, improvement in product quality, enhancement in
productivity, reduction in waste, and will promote a culture of continuous improvement. The objective of the scheme
is to facilitate technology up-gradation in MSMEs by providing an upfront capital subsidy of 15% (on institutional
finance of up to `1 crore availed by them) for induction of well-established and improved technology in the specified
51 sub-sectors/products approved.
Key highlights of the 6th Bi-monthly Monetary Policy held from February 5-7, 2019:
• Repo rate reduced by 25 basis points from 6.5% to 6.25%
• 20% corporate bond exposure limit for an FPI to a single entity to be withdrawn.
• Bidders to be allowed to raise funds via ECB to repay rupee loans of firms under IBC.
• Collateral-free farm loan limit raised to Rs. 1.6 lakh from Rs. 1 lakh, working group to
review farm credit.
• Task force on offshore rupee markets to be set up to ensure stability in currency.
• Rated exposures of banks to all NBFCs, barring core investment companies, would be
risk-weighted as per ratings.
• Major categories of NBFCs like asset finance companies, loan companies and investment
companies to be considered a single segment.
External Commercial Borrowing (ECB) ECBs are commercial loans raised by eligible resident
entities from recognised non-resident entities and should conform to parameters such as
minimum maturity, permitted and non-permitted end-uses, maximum all-in-cost ceiling, etc.
Forward Margin Forward Margin is called a premium on the currency whose forward rate is
more expensive than the spot rate and a discount where the forward rate is cheaper. It is
expressed in the same currency as the spot rate and the general practice is to quote it at a
discount or premium on that currency.
Interest subsidy hiked for MSMEs: To boost MSME sector exports, RBI has raised the interest subsidy on
post and pre-shipment export credit from 3% to 5%. Exporters get the subsidy under the ‘Interest
Equalization Scheme on Pre and Post Shipment Rupee Export Credit’.
Basel III Capital Regulations- Review of transitional arrangements:

• It has been decided to defer the implementation of the last tranche of 0.625% of Capital
Conservation Buffer (CCB) from March 31, 2019 to March 31, 2020. Accordingly, minimum capital
conservation ratios in ‘Capital Conservation Buffer Framework’ as applicable from March 31, 2018
will also apply from March 31, 2019 till the CCB attains the level of 2.5% on March 31, 2020.
• Further, the pre-specified trigger for loss absorption through conversion / write-down of Additional
Tier 1 instruments (Perpetual Non-Cumulative Preference Shares (PNCPS) and Perpetual Debt
Instruments (PDI) ) shall remain at 5.5% of Risk weighted Assets (RWAs) and will rise to 6.125% of
RWAs on March 31, 2020.
Credit Flow to Agriculture- Collateral free agricultural loans: Keeping in view the overall inflation and
rise in agriculture input cost over the years since 2010, it has been decided to raise the limit for
collateral free agricultural loans from the existing level of ₹1 lakh to ₹1.6 lakh. Accordingly, banks may
waive margin requirements for agricultural loans upto ₹1.6 lakh.
Harmonisation of NBFC Categories: It has been decided to merge the three categories of NBFCs viz.
Asset Finance Companies (AFC), Loan Companies (LCs) and Investment Companies (ICs) into a new
category called NBFC - Investment and Credit Company (NBFC-ICC).
External Commercial Borrowings (ECB) Policy- ECB facility for Resolution Applicants under Corporate
Insolvency Resolution Process:
• ECB proceeds cannot be utilised for repayment of domestic Rupee loans, except when the ECB is
availed from a Foreign Equity Holder.
• On a review it has been decided, in consultation with the Government of India, to relax the end-use
restrictions for resolution applicants under the Corporate Insolvency Resolution Process (CIRP)
under the Insolvency and Bankruptcy Code (IBC) and allow them to raise ECBs from the recognised
lenders, except the branches/ overseas subsidiaries of Indian banks, for repayment of Rupee term
loans of the target company under the approval route. Accordingly the resolution applicants, who
are otherwise eligible borrowers, can forward such proposals to raise ECBs, through their AD bank,
to Foreign Exchange Department, Central Office, Mumbai of the Reserve Bank for approval.
Grant of ‘Certificate of Registration’ by RBI to CRIF High Mark Credit Information Services Private
Limited headquartered at Mumbai for carrying on the business of credit information. Established in
1988 in Bologna (Italy), CRIF (pronounced as “krif”) is a global FinTech company from Continental
Europe specializing in credit bureau and business information, analytics, scoring, outsourcing and
processing services, and credit solutions. Nowadays more than 6,300 banks and financial
institutions, 55,000 business clients and 310,000 consumers use CRIF services in 50 countries across 4
continents on a daily basis.
In India, CRIF has two companies – CRIF High Mark, India’s leading credit bureau supporting millions of
lending decisions every month. CRIF Solutions, offering Analytics & Scoring services, Credit Management
solutions, Decision solutions and Business Information Reports from its center of excellence based in
Pune.
Rated exposure of banks to NBFCs to be risk-weighted To facilitate better credit flow to some well-rated
NBFCs, the RBI has decided to risk-weigh the rated exposure of banks to NBFCs. Thus, higher the risk-weight
of a loan category, more are the chances of an NBFC getting a bank loan. The apex bank (RBI) will risk-
weigh the exposure of banks on rated, as well as, unrated NBFCs, including infrastructure lending, asset
finance, and housing finance companies at 100%. The ratings will be similar to those assigned by rating
agencies for corporates.
Criteria for bulk deposits raised to ` 2 crore To give lenders more operational flexibility, the Reserve Bank of
India (RBI) has doubled the definition of bulk deposits with banks to a minimum of a single rupee deposit
of ` 2 crores for Scheduled commercial Banks (excluding Regional Rural banks) and Small Finance Banks.
The banks shall maintain the bulk deposit interest rate card in their Core banking system to facilitate
supervisory review. Bulk deposits for RRBs is Single Rupee term deposits of Rupees fifteen lakhs And above.
Foreign Exchange Management (Export and import of Currency) (Amendment) Regulations, 2019: An
individual travelling from India to Nepal or Bhutan can carry Reserve Bank of India notes of Mahatma
Gandhi (new) Series of denominations (other than notes of denominations of above Rs.100 in either case)
Rs. 200/- and/or Rs. 500/- up to a total limit of Rs. 25,000.
RBI lifts cap on investments by FPIs in corporate bonds: In order to encourage more foreign investments by
incentivizing foreign portfolio investors (FPIs) to maintain a portfolio of assets, the RBI has withdrawn the
20% limit on investments by FPIs in corporate bonds of an entity. The withdrawal is hoped to encourage a
wider spectrum of investors to access the Indian corporate debt market.
Interest Subvention Scheme for MSMEs:
Eligibility for Coverage:
All MSMEs who meet the following criteria shall be eligible as beneficiaries under the Scheme:
a. Valid Udyog Aadhar Number [UAN]
b. Valid GSTN Number
Both the facilities working capital and term loan are extended to a MSME by an eligible institution,
interest subvention would be made available for a maximum financial assistance of ₹100 lakh.
The interest relief will be calculated at two percentage points per annum (2% p.a.), on outstanding
balance from time to time from the date of disbursal or the date of notification of this scheme,
whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or
new term loan disbursed by eligible institutions.
SIDBI shall act as a Nodal Agency for the purpose of channelizing of interest subvention to the various
lending institutions through their Nodal office.
Interest subvention amount shall be released by SIDBI subject to availability of funds from GOI. Also,
Ministry of MSME, GOI will be the final authority for all interest subvention related matters and their
decision would be final and binding. Receipt of funds by the eligible institutions would be treated as
Utilization Certificate of the Fund.
Kisan Credit Card (KCC) Scheme: Working Capital for Animal Husbandry and Fisheries:
Eligibility:
• Fishery
• Poultry and small ruminant
• Dairy
The scale of finance will be fixed by the District Level Technical Committee (DLTC) based on local cost
worked out on the basis of per acre/per unit/per animal/per bird etc.
The Kisan Credit Card (KCC) scheme was introduced in 1998 for issue of Kisan Credit Cards to farmers on
the basis of their holdings for uniform adoption by the banks so that farmers may use them to readily
purchase agriculture inputs such as seeds, fertilizers, pesticides etc. and draw cash for their production
needs. The scheme was further extended for the investment credit requirement of farmers viz. allied
and non-farm activities in the year 2004. The scheme was further revisited in 2012 by a working Group
under the Chairmanship of Shri T. M. Bhasin, CMD, Indian Bank with a view to simplify the scheme and
facilitate issue of Electronic Kisan Credit Cards.
It was first proposed in the Budget 1998-99 by then Finance Minister Yashwant Sinha. Consequent to
this, NABARD had prepared a Model Kisan Credit Card Scheme in consultation with the Major Banks on
the basis of R V Gupta Committee.
Guidelines for KCC scheme:
Eligibility:
• Farmers - individual/joint borrowers who are owner cultivators;
• Tenant farmers, oral lessees & share croppers;
• Self Help Groups (SHGs) or Joint Liability Groups (JLGs) of farmers including tenant farmers, share croppers etc.
Fixation of credit limit / Loan amount: The credit limit under the Kisan Credit Card may be fixed as under:
All farmers other than marginal farmers:

• The short term limit to be arrived for the first year (For cultivating single crop in a year): Scale of finance for the
crop (as decided by District Level Technical Committee) x Extent of area cultivated + 10% of limit towards post-
harvest/household/ consumption requirements + 20% of limit towards repairs and maintenance expenses of farm
assets + crop insurance and/or accident insurance including PAIS, health insurance & asset insurance.
• Limit for second & subsequent year: First year limit for crop cultivation purpose arrived at as above plus 10% of
the limit towards cost escalation / increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year)
and estimated term loan component for the tenure of Kisan Credit Card, i.e., five years.
• For cultivating more than one crop in a year: The limit is to be fixed as above depending upon the crops cultivated
as per proposed cropping pattern for the first year plus an additional 10% of the limit towards cost escalation /
increase in scale of finance for every successive year (2nd, 3rd, 4th and 5th year). It is assumed that the farmer
adopts the same cropping pattern for the succeeding four years. In case the cropping pattern adopted by the
farmer is changed in the subsequent year, the limit may be reworked.
Maximum Permissible Limit: The short term loan limit arrived for the 5th year plus the estimated long term loan
requirement will be the Maximum Permissible Limit (MPL) and is to be treated as the Kisan Credit Card limit. Short term
loans and term loans are governed by different interest rates. At present, short term crop loans upto ₹ 3 lakh are
covered under Interest Subvention Scheme/Prompt Repayment Incentive scheme of the Government of India.
Term loan for investment: The term loan for investment is to be made towards land development, minor irrigation,
purchase of farm equipment and allied agricultural activities. The banks may fix the quantum of credit for term and
working capital limit for agricultural and allied activities, etc., based on the unit cost of the asset/s proposed to be
acquired by the farmer, the allied activities already being undertaken on the farm, the bank's judgment on repayment
capacity vis-a-vis total loan burden devolving on the farmer, including existing loan obligations. The long term loan limit
should be based on the proposed investment(s) during the five year period and the bank's perception on the repaying
capacity of the farmer.
For Marginal Farmers: A flexible limit of ₹ 10,000 to ₹ 50,000 may be provided (as Flexi KCC) based on the land holding
and crops grown including post-harvest warehouse storage related credit needs and other farm expenses, consumption
needs, etc., plus small term loan investment(s) like purchase of farm equipment(s), establishing mini dairy/backyard
poultry as per assessment of the Branch Manager without relating it to the value of land. The composite KCC limit is to
be fixed for a period of five years on this basis.
Repayment Period :
• The repayment period may be fixed by banks as per the anticipated harvesting and marketing period for the crops
for which the loan has been granted.
• The term loan component will be normally repayable within a period of 5 years depending on the type of
activity/investment as per the existing guidelines applicable for investment credit.
• Financing banks may, at their discretion, provide longer repayment period for term loan depending on the type of
investment.
Issue of Electronic Kisan Credit Cards: All new KCC must be issued as smart card cum debit card. Further,
at the time of renewal of existing KCC; farmers must be issued smart card cum debit card.
Security requirement may be as under:

• Hypothecation of crops: For KCC limit upto ₹ 1.00 lakh banks are to waive margin/security
requirements.
• With tie-up for recovery: Banks may consider sanctioning loans on hypothecation of crops up to card
limit of ₹ 3.00 lakh without insisting on collateral security.
• In states where banks have the facility of on-line creation of charge on the land records, the same
shall be ensured.
Other requirements:
• Besides the mandatory crop insurance, the KCC holder should have the option to avail the benefit of
any type of asset insurance, accident insurance (including PAIS), health insurance (wherever product
is available) and have premium paid through his/her KCC account. Premium has to be borne by the
farmer/bank according to the terms of the scheme.
• A one-time documentation at the first time of availing of KCC loan and thereafter simple declaration
(about crops grown/proposed) by farmer from the second year onwards.
• In case the farmer applies for loan against the warehouse receipt of his produce, the banks would
consider such requests as per the established procedure and guidelines.
• The National Payments Corporation of India (NPCI) will design the KCC card to be adopted by all the
banks with their branding.
Ombudsman Scheme for Digital Transactions, 2019:
1. It is an expeditious and cost-free apex level mechanism for resolution of complaints regarding digital transactions
undertaken by customers of the System Participants as defined in the Scheme. The Scheme is being introduced
under Section 18 Payment and Settlement Systems Act, 2007, with effect from January 31, 2019.
2. The Reserve Bank may appoint one or more of its officers in the rank of Chief General Manager or General
Manager to be known as Ombudsman for Digital Transactions to carry out the functions entrusted to them by or
under the Scheme. The appointment of Ombudsman for Digital Transactions under the above Clause may be
made for a period not exceeding three years at a time.
3. In order to expedite disposal of complaints, the Ombudsman for Digital Transactions may hold sittings at such
places within his/her area of jurisdiction as may be considered necessary and proper by him/her in respect of a
complaint or reference before him/her.
4. The Reserve Bank shall depute such number of its officers or other staff to the office of the Ombudsman for Digital
Transactions as is considered necessary to function as the secretariat of the Ombudsman for Digital Transactions.
The cost of the Secretariat shall be borne by the Reserve Bank. The Consumer Education and Protection
Department of RBI is administering the Scheme and shall act as and discharge the functions of Secretariat of the
Appellate Authority.
5. The scheme is applicable to all system participants. System Participant’ means any person other than a bank
participating in a payment system as defined under Section 2 of the Payment and Settlement Systems Act, 2007
excluding a ‘System Provider.
6. Grounds of complaints:
Prepaid Payment Instruments: Non-adherence to the instructions of Reserve Bank by System Participants about
Prepaid Payment Instruments on any of the following:
• Failure in crediting merchant's account within reasonable time;
• Failure to load funds within reasonable time in wallets / cards;
• Unauthorized electronic fund transfer;
• Non-Transfer / Refusal to transfer/ failure to transfer within reasonable time, the balance in the Prepaid Payment
Instruments to the holder’s ‘own’ bank account or back to source at the time of closure, expiry of validity period
etc., of the Prepaid Payment Instrument;
• Failure to refund within reasonable time / refusal to refund in case of unsuccessful / returned / rejected / cancelled
/ transactions;
• Non-credit / delay in crediting the account of the Prepaid Payment Instrument holder as per the terms and
conditions of the promotions offer(s) from time to time, if any;
• Non-adherence to any other instruction of the Reserve Bank on Prepaid Payment Instruments.
Mobile / Electronic Fund Transfers: Non-adherence to the instructions of the Reserve Bank on Mobile / Electronic fund
transfers by System Participants on any of the following:
• Failure to effect online payment / fund transfer within reasonable time;
• Unauthorized electronic fund transfer;
• Failure to act upon stop-payment instructions within the time frame and under the circumstances notified to the
customers within prescribed timeline;
• Failure to reverse the amount debited from customer account in cases of failed payment transactions within
prescribed timeline;
• Non-adherence to any other instruction of the Reserve Bank on Mobile/Electronic fund transfers.
Grounds of complaints: Non-adherence to instructions of Reserve Bank / respective System Provider to System
Participants, on payment transactions through Unified Payments Interface (UPI) / Bharat Bill Payment System (BBPS)
/ Bharat QR Code / UPI QR Code on the following grounds:
• Failure in crediting funds to the beneficiaries’ account;
• Failure to return within reasonable time the payment to the originating member in case of failure to credit the
funds to the beneficiary’s account;
• Failure to / delay in refund of money back to account in case of transaction failure or declined transactions (i.e.
failed transactions);
• Non-adherence to any other instruction of the Reserve Bank on payment transactions / through Unified Payments
Interface (UPI) / Bharat Bill Payment System (BBPS)/ Bharat QR Code / UPI QR Code.
Non-reversal / failure to reverse within reasonable time, funds wrongly transferred to the beneficiary account due to
lapse at the end of System Participant.
Any other matter relating to the violation of the directives including on fees / charges, if any, issued by the Reserve
Bank in relation to digital transactions.
Note: In respect of digital transactions done on third party platforms, it will be the responsibility of the Payment
Service Provider to resolve customer disputes arising out of such transactions.
7. Filing of Complaint: For redressal of grievance, the complainant must first approach the System Participant
concerned. If the System Participant does not reply within a period of one month after receipt of the complaint, or
rejects the complaint, or if the complainant is not satisfied with the reply given, the complainant can file the
complaint with the Ombudsman for Digital Transactions within whose jurisdiction the branch or office of the System
Participant complained against, is located. For complaints arising out of services with centralized operations, the same
shall be filed before the Ombudsman for Digital Transactions within whose territorial jurisdiction the billing / declared
address of the customer is located.
8. When will one's complaint not be considered by the Ombudsman:
• One's complaint will not be considered under the following circumstances:
• If the System Participant against whom the complaint is registered, is not covered under the Scheme.
• If one has not approached the System Participant concerned in the first instance for redressal of the grievance.
• If the subject matter of the complaint is not pertaining to the grounds of complaint specified above.
• If one has not made the complaint within one year from the date of receipt of reply from the System Participant; or
if no reply is received, and the complaint to the Ombudsman is made after the lapse of more than one year and
one month from the date of complaint to the System Participant. In exceptional circumstances as decided by the
Ombudsman, a complaint made after the period mentioned above may be accepted by the Ombudsman, provided
the complaint is made before the expiry of the period of limitation prescribed under the Indian Limitation Act,
1963 for such claims.
• If the subject matter of the complaint is pending for disposal / has already been dealt with at any other forum like
court of law, consumer court etc.
• If the complaint is for the same subject matter that was settled through the office of the Ombudsman in any
previous proceedings.
• If the complaint is frivolous or vexatious.
• The complaint falls under the disputes covered under Section 24 of the Payment and Settlement Systems Act,
2007.
• The complaint pertains to dispute arising from a transaction between customers.
9. One can file a complaint with the Ombudsman by writing on a plain paper and sending it to the concerned office
of the Ombudsman by post/fax/hand delivery. One can also file it by email to the Ombudsman for Digital
Transactions. There is no charge or any fee for filing / resolving customers’ complaints.
10. The compensation amount, if any, which can be awarded by the Ombudsman, for any loss suffered by the
complainant, is limited to the amount arising directly out of the act or omission or commission of the System
Participant, or two million rupees whichever is lower. The compensation shall be over and above the disputed amount.
11. The Ombudsman may also award compensation not exceeding rupees 0.1 million to the complainant for mental
agony and harassment. The Ombudsman, while giving the compensation, shall take into account the loss of time,
expenses incurred by the complainant, harassment and mental anguish suffered by the complainant.
12. If a complaint is not settled by agreement within a period of one month from the date of receipt of the complaint
or such further period as the Ombudsman for Digital Transactions may allow the parties, he may, after affording the
parties a reasonable opportunity to present their case, pass an Award.
13. One can file appeal against the Award or the decision of the Ombudsman rejecting the complaint, within 30 days
of the date of receipt of communication of Award or rejection of the complaint. The Appellate Authority may, if
satisfied that the applicant had sufficient cause for not making an appeal within prescribed time, may allow a further
period not exceeding 30 days. The Appellate Authority is vested with a Deputy Governor-in-Charge of the department
of the RBI implementing the Scheme. The address of the Appellate Authority.
RBI constitutes the Task Force on Offshore Rupee Markets: RBI has constituted the Task Force on Offshore Rupee
Markets. Usha Thorat, former Deputy Governor, RBI would be the Chairperson. The terms of reference of the task
force include assessing the causes behind the development of the offshore Rupee market, studying the effects of the
offshore markets on the Rupee exchange rate and market liquidity in the domestic market and recommending
measures to address concerns, if any. It is also expected to propose measures to generate incentives for non-residents
to access the domestic market. The Task Force shall submit its report by the end of June 2019.
External Commercial Borrowings:
Forms of ECB: The ECB Framework enables permitted resident entities to borrow from
recognized non-resident entities in the following forms:
FCY (Foreign Currency) denominated ECB-Any freely convertible Foreign Currency:
• Loans including bank loans; floating/ fixed rate notes/ bonds/ debentures (other than
fully and compulsorily convertible instruments);
• Trade credits beyond 3 years;
• Foreign Currency Convertible Bonds (FCCBs);
• Financial Lease; and
• Foreign Currency Exchangeable Bonds (FCEBs)
However, ECB framework is not applicable in respect of the investment in Non-convertible
Debentures (NCDs) in India made by Registered Foreign Portfolio Investors (RFPIs).
Eligible entities:
All entities eligible to receive FDI. Further, the following entities are also eligible to raise ECB:
i. Port Trusts;
ii. Units in SEZ;
iii. SIDBI; and
iv. EXIM Bank of India.
INR denominated ECB -Indian Rupee (INR)
Loans including bank loans; floating/ fixed rate notes/bonds/ debentures/ preference shares (other than
fully and compulsorily convertible instruments);
Trade credits beyond 3 years; and Financial Lease.
Also, plain vanilla Rupee denominated bonds issued overseas, which can be either placed privately or
listed on exchanges as per host country regulations.
Eligible entities:
a) All entities eligible to raise FCY ECB;
b) Registered entities engaged in micro-finance activities, viz., registered Not for Profit companies,
registered societies/trusts/ cooperatives and Non-Government Organisations.
The negative list, for which the ECB proceeds cannot be utilized, would include the following:
a) Real estate activities.
b) Investment in capital market.
c) Equity investment.
d) Working capital purposes except from foreign equity holder.
e) General corporate purposes except from foreign equity holder.
f) Repayment of Rupee loans except from foreign equity holder.
g) On-lending to entities for the above activities
• A foreign currency convertible bond (FCCB) is a type of corporate bond issued by an Indian company
in an overseas market expressed in foreign currency. Investors have the option of redeeming their
investment on maturity or converting the bonds into equity any time during the currency of the
bond. The repayment of the principal is in the currency in which the money is raised. Issue of Foreign
Currency Exchangeable Bonds(FCEB) are regulated by Foreign Currency Exchangeable Bond Scheme
2008 issued by Ministry of Finance, Department of Economic Affairs.
• In case of a foreign currency exchangeable bond (FCEB), investors have the option of converting the
bonds into equity of the offered company. The company issuing FCEB shall be part of the promoter
group of the offered company and shall hold the equity shares being offered at the time of issuance
of FCEB.
The FCEB is used to raise funds from the international markets against the security and exchangeability
of shares of another company. Foreign Currency Exchangeable Bond (FCEB) means –
(i) a bond expressed in foreign currency,
(ii) the principal and the interest in respect of which is payable in foreign currency
(iii) issued by an issuing company, being an Indian company
(iv) subscribed by a person resident outside India
(v) Exchangeable into equity shares of another company, being offered company which is an Indian
company.
RBI Guidelines for External Commercial Borrowings (ECB):
• Companies doing trading business (whether online or otherwise), companies involve in activities like
tourism, beauty parlour / beauty clinics, entertainment business, retail sales, e-commerce
companies, etc., on any other activity not covered within these provisions; are not eligible to raise
ECB.
• Companies who are into designing and engineering consultancy, servicing of third-party software,
providing ancillary IT related services, ITeS, etc., are not considered as software development
companies for ECB purposes.
• All other companies/Institutions except above are entitiled for ECB. Indian banks are not permitted
to raise ECB. They can act as ECB lenders (through their overseas branches / subsidiaries) only.
Recognized Lenders/Investors:
• International banks
• International capital markets.
• Multilateral financial institutions (such as, IFC, ADB, etc.) / regional financial institutions and
Government owned (either wholly or partially) financial institutions.
• Export credit agencies.
• Suppliers of equipment.
• Foreign equity holders.
Overseas long term investors such as:
• Prudentially regulated financial entities;
• Pension funds
• Insurance companies;
• Sovereign Wealth Funds;
• Financial institutions located in International Financial Services Centres in India
• Overseas branches / subsidiaries of Indian banks
Individual Limits: The individual limits refer to the amount of ECB which can be raised in a financial year
under the automatic route: Up to USD 750 million or equivalent for the companies in infrastructure and
manufacturing sectors, Non-Banking Financial Companies -Infrastructure Finance Companies (NBFC-
IFCs), NBFCs-Asset Finance Companies (NBFC-AFCs), Holding Companies and Core Investment
Companies. The overall ceiling for such ECBs shall be USD 10 billion equivalent.
Minimum Average Maturity Period(MAMP):

• 3 years for ECB upto USD 50 million or its equivalent.
• 5 years for ECB beyond USD 50 million or its equivalent.
• 5 years for Foreign Currency Convertible Bonds (FCCBs)/ Foreign Currency Exchangeable Bonds
(FCEBs) irrespective of the amount of borrowing.
• However, manufacturing sector companies may raise ECBs with MAMP of 1 year for ECB up to USD
50 million or its equivalent per financial year.
Issuance of Guarantee, etc. by Indian banks and Financial Institutions: Issuance of guarantee, standby
letter of credit, letter of undertaking or letter of comfort by Indian banks, All India Financial Institutions
and NBFCs relating to ECB is not permitted. Further, financial intermediaries (viz. Indian banks, All India
Financial Institutions, or NBFCs) shall not invest in FCCBs in any manner whatsoever.
An entity which is under Joint Lender Forum (JLF) / Corporate Debt Restructuring (CDR) can raise ECB
only with explicit permission of the JLF / CDR Empowered Committee.
ECB facility for Startups: AD Category-I banks are permitted to allow Govt. recognized Startups to raise
ECB under the automatic route. Minimum average maturity period will be 3 years. The borrowing per
Startup will be limited to USD 3 million or equivalent per financial year either in INR or any convertible
foreign currency or a combination of both.
Cost: Benchmark rate plus 450 bps spread.
ECB borrowers are also allowed to park ECB proceeds in term deposits with AD Category I banks in India
for a maximum period of 12 months.
Guidelines for Rupee denominated bonds overseas:
• Eligible resident entities can only issue plain vanilla Rupee denominated bonds issued overseas in a
Financial Action Task Force (FATF) compliant financial centres. The bonds can be either placed
privately or listed on exchanges as per host country regulations.
• Any proposal of borrowing by eligible Indian entities by issuance of these bonds have to be
forwarded through the AD bank to Foreign Exchange Department, Central Office, Mumbai of the
Reserve Bank for examination under the approval route.
• Minimum original maturity period for Rupee denominated bonds/masala bonds raised up to USD 50
million equivalent in INR per financial year should be 3 years and for bonds raised above USD 50
million equivalent in INR per financial year should be 5 years. The call and put option, if any, shall not
be exercisable prior to completion of minimum maturity.
• Any corporate or body corporate, banks are eligible to issue such bonds. REITs and INVITs coming
under the regulatory framework of the SEBI are also eligible. Other resident entities like Limited
Liability Partnerships and Partnership firms, etc. are also not eligible to issue these bonds.
Masala bonds are bonds issued outside India but denominated in Indian Rupees, rather than
the local currency. Masala is an Indian word and it means spices.
The term was used by IFC to evoke the culture and cuisine of India. Unlike dollar bonds,
where the borrower takes the currency risk, masala bond makes the investors bear the risk.
The first Masala bond was issued by the World Bank backed International Finance
Corporation in November 2014 when it raised 1,000 crore bond to fund infrastructure
projects in India.
Later in August 2015 International Financial Cooperation for the first time issued green
masala bonds and raised for private sector investments that address climate change in India.
In July 2016 HDFC became the first Indian company to issue masala bonds. In the month of
August 2016 public sector unit NTPC issued first corporate green masala bonds.
Important points:
Limited Liability Partnership (LLP) or Partnership firm or Proprietary concern are not eligible to raise ECB.
Foreign currency loans given domestically by Authorised Dealer Category I banks out of the proceeds of
FCNR (B) deposits do not come under the ECB framework.
Interested party may note that borrowings from overseas have to be in compliance with the applicable
ECB guidelines / provisions contained in the Foreign Exchange Management (Borrowing or Lending in
Foreign Exchange) Regulations, 2000.
Only those companies in software sector space who are into development of software are eligible to
raise ECB. Companies who are into designing and engineering consultancy, servicing of third-party
software, providing ancillary IT related services, ITeS, etc., are not considered as software development
companies for ECB purposes.
Change of currency of FCY ECB into INR ECB can be at the exchange rate prevailing on the date of the
agreement between the parties concerned for such change or at an exchange rate, which is less than the
rate prevailing on the date of agreement, if consented to by the ECB lender.
For conversion to Rupee, exchange rate shall be the rate prevailing on the date of settlement.
Important Points:
Foreign Equity Holder: It means (a) direct foreign equity holder with minimum 25% direct equity holding
by the lender in the borrowing entity, (b) indirect equity holder with minimum indirect equity holding of
51%, or (c) group company with common overseas parent.
An entity which is under restructuring scheme/ corporate insolvency resolution process can raise ECB
only if specifically permitted under the resolution plan.
TRADE CREDITS FRAMEWORK: Trade Credits (TC) refer to the credits extended by the overseas supplier,
bank, financial institution and other permitted recognised lenders for maturity, as prescribed in this
framework, for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the
Government of India. Depending on the source of finance, such TCs include suppliers’ credit and buyers’
credit from recognised lenders.
TC for imports into India can be raised in any freely convertible foreign currency (FCY denominated TC) or
Indian Rupee (INR denominated TC).
Forms of TC: Buyers’ Credit and Suppliers’ Credit.
Eligible borrower: Person resident in India acting as an importer.

TRADE CREDITS (TC) FRAMEWORK:
Amount under automatic route: Up to USD 150 million or equivalent per import transaction for oil/gas
refining & marketing, airline and shipping companies. For others, up to USD 50 million or equivalent per
import transaction.
Recognised lenders:
1. For suppliers’ credit: Supplier of goods located outside India.
2. For buyers’ credit: Banks, financial institutions, foreign equity holder(s) located outside India and
financial institutions in IFSCs located in India.
Period: The period of TC, reckoned from the date of shipment, shall be up to three years for import of
capital goods. For non-capital goods, this period shall be up to one year or the operating cycle whichever
is less. For shipyards / shipbuilders, the period of TC for import of non-capital goods can be up to three
years.
Cost: Benchmark rate plus 250 bps spread.

The RBI has amended Trade Credit Policy to allow oil/gas refining and marketing, airline and shipping
companies to raise Trade Credit (TC) of up to $150 million or equivalent per import transaction under the
automatic route. Others can raise TCs up to $50 million or equivalent per import transaction.
All other conditions are similar to conditions of ECB FCY bonds and INR Dominated bonds etc.
Non-resident Participation in Rupee Interest Rate Derivatives Markets (Reserve Bank) Directions, 2019:
These Directions shall be applicable to Rupee interest rate derivative transactions in India, undertaken on
recognized stock exchanges, electronic trading platforms (ETP) and Over-the-Counter (OTC) markets.
Transactions for the purpose of hedging interest rate risk

• A non-resident may undertake Rupee interest rate derivatives in India to hedge its interest rate risk
using any permitted interest rate derivative product transacted on recognized stock exchanges, ETPs
or OTC markets.
• A non-resident shall ensure that its interest rate derivative transactions conform to the provisions of
Section 45(V) of the RBI Act, 1934, as well as applicable provisions of Foreign Exchange Management
Act, 1999 and the rules, regulations and directions issued thereunder.
• Market-makers shall ensure that transactions by a non-resident are being carried out for the purpose
of hedging. For this purpose, market-makers may call for any relevant information from the non-
resident, who, in turn, is obliged to provide such information.
• Non-residents, other than individuals, may undertake Overnight Indexed Swaps (OIS) transactions for
purposes other than hedging interest rate risk with a market-maker in India, or by way of a ‘back-to-
back’ arrangement.
• a ‘back-to-back’ arrangement means that the non-resident undertakes the transaction with a foreign
counterpart of the market-maker and the foreign counterpart, in turn, immediately enters into an
off-setting transaction with the market-maker in India.
Non-resident Participation in Rupee Interest Rate Derivatives Markets (Reserve Bank) Directions, 2019:
These Directions shall be applicable to Rupee interest rate derivative transactions in India, undertaken on
recognized stock exchanges, electronic trading platforms (ETP) and Over-the-Counter (OTC) markets.
Transactions for the purpose of hedging interest rate risk

• The Price Value of a Basis Point (PVBP) of all outstanding OIS positions undertaken by all non-
residents shall not exceed the amount of INR 3.50 billion (PVBP cap).
• Foreign Portfolio Investors (FPIs), collectively, may also transact in interest rate futures (IRF) up to a
limit of net long position of INR 50 billion.
Investment by Foreign Portfolio Investors (FPI) in Government Securities Medium Term Framework:
Revision of investment Limits for 2019-20
• The limit for FPI investment in Central Government securities (G-secs), State Development Loans
(SDLs) and corporate bonds shall be 6%, 2%, and 9% of outstanding stocks of securities, respectively,
in FY 2019-20.
• The allocation of increase in G-sec limit over the two sub-categories – ‘General’ and ‘Long-term’ –
has been set at 50:50 for the year 2019-20. The entire increase in limits for SDLs has been added to
the ‘General’ sub-category of SDLs.
• FPI investment in municipal bonds shall be reckoned within the limits set for FPI investment in State
Development Loans (SDLs).
Foreign Exchange Management (Deposit) Regulations, 2016 - Opening of NRO Accounts by Long Term
Visa (LTV) holders, changes related to Special Non-Resident Rupee (SNRR) Account and Escrow
Account:
• Authorized Dealers may allow a Foreign Portfolio Investor (FPI) and a Foreign Venture Capital
Investor (FVCI), registered with the Securities and Exchange Board of India (SEBI) to open and
maintain a non-interest bearing foreign currency account for the purpose of making investment in
accordance with the Foreign Exchange Management (Transfer or Issue of Security by a Person
Resident Outside India) Regulations, 2017.
• Authorized Dealers may open only one Non-Resident Ordinary (NRO) Account for a citizen of
Bangladesh or Pakistan, belonging to minority communities in those countries, namely Hindus, Sikhs,
Buddhists, Jains, Parsis and Christians, residing in India and who has been granted a Long Term Visa
(LTV) by the Central Government. The account will be converted to a resident account once such a
person becomes a citizen of India within the meaning of the Citizenship Act, 1955.
• SNRR (Special Non-Resident Rupee) accounts opened by persons resident outside India may remain
operative beyond the stipulated period of seven years with RBI approval.
SEBI, IBBI sign MoU for better IBC implementation The Insolvency and Bankruptcy Board of India (IBBI)
has signed a Memorandum of Understanding (MoU) with SEBI, for an effective implementation of the
Insolvency and Bankruptcy Code, 2016.
Reserve Bank of India (Prevention of Market Abuse) Directions, 2019:
These Directions shall apply to transactions of all participants in markets for financial instruments but
shall exclude transactions executed through the recognized stock exchanges under and in accordance
with the regulations of the Securities and Exchange Board of India.
‘Artificial price’ means the price of a financial instrument resulting from a transaction, or any act of
omission or commission, undertaken by a market participant with the sole or dominant purpose of
setting or securing the price of a financial instrument or related instrument at a particular level or
moving it in a particular direction.
‘Market abuse’ includes market manipulation, benchmark manipulation, misuse of information, or any
other similar practice.
‘Market manipulation’ means any transaction or any act of omission or commission by a market
participant, or a group of market participants acting in collusion, that may result in, or seek to convey, a
false or misleading impression as to the price of, or supply of, or demand for, a financial instrument,
carried out with the intention of making an undue financial gain or any other material benefit. It shall
also include any transaction or action that may result in, or is intended to result in, an artificial price of a
financial instrument.
Market participants committing market abuse are liable to be denied access to markets in one or more
instruments for a period that may not exceed one month at a time. No such action shall be taken by the
Bank without providing reasonable opportunity to the market participant to defend its actions.
RBI allows WLATM operators to source cash, generate income from ads In a bid to enhance the
viability of white-label ATMs (WLATMs), the RBI has allowed them to buy wholesale cash from RBI and
currency chests, source cash from any scheduled bank, and display advertisements pertaining even to
non-financial products/services within the WLATM premises. Further, banks can issue cobranded ATM
cards with the authorized WLATMs, and, may extend the benefit of ‘on-us’ transactions where the
customer/cardholder and ATM are of the same bank to their WLATMs.
WLAOs can buy wholesale cash, above a threshold of one lakh pieces (and in multiples thereof) of any
denomination, directly from its issue offices and currency chests, against full payments.
They can offer bill payment and interoperable cash deposit services, subject to technical feasibility and
certification by the National Payments Corporation of India (NPCI).
They can display advertisements pertaining to non-financial products/services anywhere within the
WLATM premises, including the WLATM screen, except the main signboard.
White Label ATMs (WLAs): ATMs set up, owned and operated by non-banks are called WLAs. Non-bank
ATM operators are authorized under the Payment & Settlement Systems Act, 2007 by the Reserve Bank
of India (RBI).
Effective July 1, 2011, the card issuing bank has to pay compensation of Rs. 100/- per day for delay in re-
crediting the customer’s amount beyond 7 working days from the date of receipt of complaint regarding
failed ATM transactions. customer is required to lodge the complaint within 30 days of the transaction.
Branches of Vijaya Bank and Dena Bank to operate as branches of Bank of Baroda from April 1, 2019:
The Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda Scheme, 2019 dated January 2,
2019, issued by the Government of India was published under Extraordinary Part II-Section 3-Sub-section
(i) in the Gazette of India sanctioning the Amalgamation of Vijaya Bank and Dena Bank with Bank of
Baroda in terms of section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act,
1970 (5 of 1970) and section 9 of the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1980 (40 of 1980). The scheme comes into force on the 1st day of April 2019.
Consequently, all branches of Vijaya Bank and Dena Bank will function as branches of Bank of Baroda
from April 1, 2019. Customers, including depositors of Vijaya Bank and Dena Bank will be treated as
customers of Bank of Baroda with effect from April 1, 2019.
RBI defers launch of IndAS RBI has postponed the rollout of the new accounting standards (IndAS). It is
awaiting amendments to the banking laws before adopting the norms.
Digital payments have witnessed 9-fold increase over last 5 years: RBI Governor At the NITI Aayog’s
FinTech Conclave 2019, Mr. Shaktikanta Das, Governor, RBI said, “Over the years, RBI has encouraged
greater use of electronic payments so as to achieve a “less-cash” society. Retail electronic payments have
witnessed about 9-fold increase over the last five year.
RBI guidelines for banks setting up currency chests The Reserve Bank of India (RBI) has issued fresh
guidelines for banks setting up new currency chests. Accordingly, the strong room will have to be
situated in a minimum area of 1,500 sq.ft. and have a processing capacity of 6.6 lakh pieces of bank
notes per day. In hilly/inaccessible places, the minimum area required for new chests would be 600 sq.ft.
with a processing capacity of 2.1 lakh pieces of banknotes per day. The currency chests should have
Chest Balance Limit (CBL) of `1,000 crore, subject to ground realities and reasonable restrictions at the
discretion of RBI.
Committee on development of housing finance securitization market to be set up As part of its
Statement on Developmental and Regulatory Policies, the RBI is setting up a committee to assess the
state of housing finance securitization market in India. It aims to bring in standardization of asset
securitization practices, to enable better management of credit and liquidity risks. The committee will
study the best international practices and lessons learnt from the global financial crisis.
Framework for timely resolution of customer grievances RBI is issuing norms for standardized timelines
to resolve customer complaints and compensation frameworks across all authorized payments systems.
The new framework for turnaround time (TAT) will be put in place by end of June 2019. The move
occurred after RBI’s realization that the time taken for resolving customer complaints varies across
different payment systems.
NBFCs under RBI’s ombudsman scheme RBI has extended the coverage of ombudsman scheme to non-
deposit taking non-banking financial companies (ND-NBFCs) for expeditious redressal of complaints
against deficiency in services concerning loans and other matters. The scheme will be made available to
ND-NBFCs having an asset size above `100 crores.
Disclosure norms for weaker banks relaxed RBI has altered the disclosure norms for banks on material
divergences on provisioning. Accordingly, banks will now have to disclose their provisions if the
divergence is more than 10% of the bank’s profit before provisioning and contingencies. The norms on
divergence on gross NPAs have been retained at a material divergence of 15%, as found by RBI auditors
and reported by the bank.
Revised norms for LCR to boost liquidity to lenders RBI has provided an additional 2% liquidity window
within the mandatory Statutory Liquidity Ratio (SLR) requirement to the lenders, by tweaking Liquidity
Coverage Ratio (LCR) norms. This move will harmonize the liquidity requirements of banks with LCR; will
improve the banks’ cash position; will help release additional liquidity for lending by banks; and will also
hopefully make forex transactions easier by increasing the last-mile touch points of regulated entities to
sell foreign exchange for non-trade current account transactions.
RBI extends deadline for legal entity identification RBI has extended the deadline for Legal Entity
Identification (LEI) codes for participation in non-derivative markets. Now, the deadline to get the code
for entities with net worth between Rs. 200 crore and Rs. 1000 crore, as also, for those with net worth
over ` 1000 crore, is December 31, 2019 against the earlier deadline of April 30 this year. For entities
with net worth less than ` 200 crore, the deadline has been extended to March 31, 2020.
RBI notification on LEF: With regards to large exposures framework (LEF), RBI has mandated that non-
centrally cleared derivatives exposures will be outside the purview of exposure limits till April 2020.
However, banks must compute those exposures separately and report to the Department of Banking
Regulation on quarterly basis.
From July 1, insurers to provide claim-tracking mechanism The Insurance Regulatory and Development
Authority of India (IRDAI) has mandated that w.e.f. July 1, all insurers must provide customers clear
updates - including a tracking mechanism on policies. It has also directed insurers to collect mobile
numbers and e-mail IDs of the policy holders at the point-of-sale and also on an ongoing basis as part of
policy servicing.
RBI Introduces ₹ 20 banknote in Mahatma Gandhi (New) Series: The Reserve Bank of India will shortly
issue ₹ 20 denomination banknotes in the Mahatma Gandhi (New) Series, bearing signature of Shri
Shaktikanta Das, Governor, Reserve Bank of India. The new denomination has motif of Ellora Caves on
the reverse, depicting the country's cultural heritage. The base colour of the note is Greenish Yellow. The
note has other designs, geometric patterns aligning with the overall colour scheme, both at the obverse
and reverse.
• Denominational numeral २० in Devnagari
• Motif of Ellora Caves
• Dimension of the banknote will be 63 mm x 129 mm
• Ashoka Pillar emblem
• Currency is written in 16 (including English+15 on back side) different language.
RBI clarifies on safe custody of its gold reserves: We have come across reports in certain sections of the
print and social media regarding RBI shifting abroad a part of its gold holding in 2014. It is a normal
practice for Central Banks world over, to keep their gold reserves overseas with Central Banks of other
countries like Bank of England for safe custody.
Reserve Bank of India divests its share in NABARD and NHB:The RBI divested its entire stake in NABARD
and NHB amounting to ₹ 20 crore (Rupee twenty crore) and ₹ 1450 crore (Rupees one thousand four
hundred and fifty crore) on February 26, 2019 and March 19, 2019 respectively. With this, the
Government of India now holds 100% stake in both the financial institutions.
Divestment of RBI’s stake in NABARD and NHB has its basis in the recommendation of Narasimham
Committee II and the Discussion Paper prepared by RBI on Harmonizing the Role and Operations of
Development Financials Institutions and Banks. Based on the recommendation, RBI announced the
proposal to transfer ownership of its shares in SBI, NHB and NABARD to the Central Government in the
Monetary and Credit Policy for the year 2001-02.
The current change in the capital structure of both the financial institutions was brought in by the
Government of India through amendments to the NABARD Act, 1981 and the NHB Act, 1987 .
‘Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt: The
requirement to invest at least 25% of the Committed Portfolio Size within one month of allotment has
been removed.
Incentive for improving service to non-chest branches:It has been decided to allow the large modern
Currency Chests to increase the service charges to be levied on cash deposited by non-chest bank
branches from the existing rate of ₹ 5/- per packet of 100 pieces to a higher rate subject to a maximum
of ₹ 8/- per packet.
Risk Management System – Appointment of Chief Risk Officer (CRO) for NBFCs: it has been decided that NBFCs with
asset size of more than Rs.50 billion shall appoint a CRO with clearly specified role and responsibilities. The CRO shall be
a senior official in the hierarchy of an NBFC and shall possess adequate professional qualification/ experience in the
area of risk management.
Merging National Sample Survey Office (NSSO) with the Central Statistics Office (CSO) National Statistical Office
(NSO): The NSO would be headed by Secretary Statistics and Programme Implementation, with various divisions
reporting to the Secretary through Director Generals (DGs).
Payment and Settlement Systems in India: Vision 2019 – 2021:

The Payment Systems Vision 2021 with its core theme of ‘Empowering Exceptional (E)payment Experience’ aims
at empowering every Indian with access to a bouquet of e-payment options that is safe, secure, convenient, quick
and affordable.
It envisages to achieve a ‘highly digital’ and ‘cash-lite’ society through the goal posts of Competition, Cost effectiveness,
Convenience and Confidence (4Cs).
The current Vision document outlines the road map for the three-year period spanning from 2019 to 2021.
The Reserve Bank of India (RBI), under powers from the Payment and Settlement Systems Act, 2007, has endeavored to
ensure that India has ‘state-of-the-art’ payment and settlement systems.
• Quantitatively measured, digital payment transaction turnover vis-à-vis GDP (at market prices-current price)
increased from 7.14 in 2016 to 7.85 in 2017 and further to 8.42 in 2018., The turnover in payment transactions vis-
à-vis GDP (at market prices-current price) increased from 14.41 in FY 2015-16 to and 14.73 in FY 2016-17 and
further to 15 in 2017-18.
• Debit card usage at Point of Sale (PoS) vis-à-vis ATM is 30.1% of total in terms of volume.
Payment and Settlement Systems in India: Vision 2019 – 2021: 36 specific action points over the 36-
month timeframe will have the 12 specific outcomes: Main outcomes are
• it is expected that the volume of cheque-based payments would be less than 2.0% of the retail
electronic transactions by 2021.
• Payment systems like UPI / IMPS are likely to register average annualised growth of over 100% and
NEFT at 40% over the vision period. The number of digital transactions is expected to increase
more than four times from 2069 crore in December 2018 to 8707 crore in December 2021.
• Digital payment transaction turnover vis-à-vis GDP (at market prices-current price) is expected to
further increase to 10.37 in 2019, 12.29 in 2020 and 14.80 in 2021. Payment transaction turnover,
including CCIL transactions and paper, is expected to be 22.30 times the GDP (at market prices-
current price) by December 2021.
• Increase in use of digital modes of payment for purchase of goods and services through increase in
debit card transactions at PoS (35% increase during the vision period) and continued growth in PPI
transactions.
• Usage of debit cards at PoS transactions is expected to be at least 44% of total debit card
transactions (at PoS + ATM). In value terms it is 15.2 per cent in 2018-19 (5.2 per cent in 2014-15)
which is expected to be 22% by end 2021.
• Given the current growth trend it is expected to have 5 mn active PoS by end 2021; digital PoS (QR
code) is also expected to increase substantially; and the total card acceptance infrastructure will be
upscaled to six times present levels by end 2021.
Committee on Deepening of Digital Payments Submits its Report to RBI: The Reserve Bank of India had
constituted a High-Level Committee on Deepening of Digital Payments under the Chairmanship of Shri
Nandan Nilekani, former Chairman, UIDAI, in January 2019.
Foreign Exchange Reserves : US $ 420.0 Billion as on 31st March 2019.
Legal Entity Identifier (LEI) code The Legal Entity Identifier (LEI) code has been conceived of as a key
measure to improve the quality and accuracy of financial data systems for better risk management post
the Global Financial Crisis. The LEI is a 20-character unique identity code assigned to entities who are
parties to a financial transaction. The LEI system has been implemented in a phased manner for
participants (other than individuals) in over-the-counter markets for rupee interest rate derivatives,
foreign currency derivatives, credit derivatives and for large corporate borrowers of banks in India.
RBI tells NBFCs to appoint CRO In view of the increasing role of NBFCs in direct credit intermediation,
RBI has asked NBFCs with asset size of more than ₹5,000 crore to appoint a chief risk officer (CRO) with
clearly specified roles and responsibilities. Emphasizing the need for NBFCs to augment risk-
management practices, the RBI wants the CRO to function independently to ensure highest standards of
risk management.
RBI extends RTGS transfer timings RBI has increased the Real Time Gross Settlement (RTGS) time
window for customer transactions (initial cutoff) from 4.30 pm to 6.00 pm. The RTGS system is primarily
meant for large-value transactions. The minimum amount to be remitted through RTGS is Rs. 2 lakh with
no upper or maximum ceiling.
RBI forms committee to take stock of mortgage securitization: The Reserve Bank of India (RBI) has set
up a committee to look into the current state of mortgage securitisation in the country. It will identify
the issues faced by the securitisation market and give suggestions to develop it going ahead. Bain & Cos
senior advisor Harsh Vardhan has been appointed as the chairperson of the committee on development
of housing finance securitisation market. The committee will submit its report by the end of August
2019. The Committee will examine the existing structure for mortgage-backed securitization
transactions, including legal, tax, valuation and accounting-related issues.
RBI institutes task force on market for corporate loans: The RBI has instituted a task force on the
development of secondary market for corporate loans, to increase the efficiency of debt market in
general and to aid the resolution of stressed assets in particular.The panel on secondary market for
corporate loans, headed by Canara Bank Chairman T N Manoharan .
NHB directs bigger housing finance firms to appoint CRO National Housing Bank (NHB) has directed
bigger housing finance companies (HFCs) to appoint a chief risk officer (CRO) in a bid to improve risk
management practices. HFCs with asset size of more than ₹5000 crore shall appoint a CRO with clearly
specified role and responsibilities. In order to ensure highest standards of risk management, the board of
HFCs shall institute due policies to safeguard the independence of the CRO, who shall report directly to
the Managing Director and Chief Executive Officer.
Housing Finance Companies (HFCs) A Housing Finance Company is a company registered under the
Companies Act, 1956 (1 of 1956) which primarily transacts or has as one of its principal objects, the
transacting of the business of providing finance for housing, whether directly or indirectly
SEBI opens doors to MFs in commodity derivatives market In a step that could significantly deepen the
commodity derivatives segment (CDS), SEBI has issued norms for participation of mutual funds in
commodity derivatives like gold, silver, crude, copper, guar, menthe etc. However, MFs won’t be allowed
to take positions in sensitive commodities like agri products subject to frequent government intervention
and the Essential Commodities Act. Effective May 21, MFs can participate in gold derivatives only
through gold exchange traded funds launched by AMCs and in other commodity derivatives through
hybrid schemes, which currently invest in equity, debt and gold.
RBI tweaks KYC norms for regulated entities The RBI has made some important changes in its master
direction on Know-Your-Customer (KYC) norms for regulated entities (REs). Accordingly, banks can now
carry out Aadhaar authentication/offline verification of an individual who voluntarily uses ones Aadhaar
number for identification purpose. Further, ‘proof of possession of Aadhaar number’ will also be added
to the list of Officially Valid Documents (OVD). For customer identification of individuals desirous of
receiving any benefit or subsidy under any scheme notified under Section 7 of the Aadhaar (Targeted
Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, the bank will have to obtain a
certified copy of any OVD, containing details of his/her identity and address along with one recent
photograph.
Second Bi-monthly Monetary Policy Statement, 2019-20 The 2nd Bi-monthly Monetary policy 2019-20
was held on 6th June 2019. The Monetary Policy Committee (MPC) cut the policy rate by 25 bps and
changed its stance from neutral to accommodative. The policy repo rate has been reduced to 5.75% from
6.00%. The rate cut was to accommodate growth concerns by supporting efforts to boost aggregate
demand and, especially reinvigorate private investment activity, while remaining consistent with the
flexible inflation
RBI issues revised norms to deal with stressed assets After RBI’s revised framework for resolution of
stressed assets was quashed by the Supreme Court in April, the apex bank issued a prudential framework
for resolution of stressed assets. The new framework gives lenders a leeway to review a borrower
account within 30 days of default (as opposed to the earlier 1-day rule).
Lenders shall recognise incipient stress in loan accounts, immediately on default, by classifying such
assets as special mention accounts (SMA) as per the following categories:
Basis for classification – Principal or interest payment or

SMA Sub-categories
any other amount wholly or partly overdue between
SMA-0 1-30 days
SMA-1 31-60 days
SMA-2 61-90 days
Lenders shall report credit information on all borrowers having aggregate exposure of ₹5 crore and
above with them. Lenders shall submit weekly report of instances of default by all borrowers with
aggregate exposure of ₹5 crore and above.
On accounts with aggregate exposure above a threshold with lenders, resolution plan is to be
implemented within 180 days from review period and lenders shall undertake a review of the
borrower account within thirty days from default
RBI committee to review ATM Interchange Fee structure The RBI has set up a six-member committee,
headed by Mr. V.G. Kannan, Chief Executive, IBA, to review the ATM interchange fee structure, so as to
give a fillip to ATM deployment in unbanked areas. The Committee will review the existing structure of
costs, charges and interchange fees for ATM transactions. It will also review the overall patterns of ATM
usage by cardholders, and assess the impact on charges and inter-change fees. The Committee will
assess the entire gamut of costs in the ATM ecosystem and make recommendations on the optimal
charge/interchange fee structures and patterns.
FBAs should have ₹1-cr net worth and be incorporated in India The RBI has mandated that Financial
Benchmark Administrators (FBAs), administering significant benchmarks in the markets for financial
instruments regulated by it, should be companies incorporated in India and maintaining a minimum net-
worth of ₹1 crore at all times. In its Financial Benchmark Administrators (Reserve Bank) Directions, 2019,
RBI said it will notify a benchmark as ‘significant’ after taking into consideration its use, efficiency and
relevance in domestic financial markets. FBA means a person who controls the creation, operation and
administration of significant benchmark(s).
RBI’s customer-complaint processing goes digital The RBI has launched a complaint management
system (CMS), to allow members of the public to lodge their complaints (on its website) against any of
the regulated entities with public interface, such as commercial banks, UCBs, and NBFCs, among others.
The system will be accessible on desktop as well as on mobile devices and provides features such as
acknowledgement through SMS/e-mail notification(s), status tracking through unique registration
number, receipt of closure advises, and filing of appeals, where applicable. It also solicits voluntary
feedback on the customer’s experience.
New UPI category waives MDR for small merchants: The National Payments Corporation of India (NPCI)
has created a new category of Unified Payments Interface (UPI) transactions to enable small offline
merchants to accept such payments without having to pay merchant discount rate (MDR). This is being
done to bring small merchants or vendors with low value ticket size into the digital framework. The new
P2PM (Peer-to-peer & Merchant) category of payments will cater to small merchants and the
unorganized retail sector. Merchants with expected inward UPI transactions worth up to ₹50,000 per
month will be eligible for acquisition under the P2PM category. The acquiring bank or fintech will not
be allowed to charge MDR from these merchants.
RBI relaxes norms for basic account holders The RBI has relaxed several norms for Basic Savings Bank
Deposit (BSBD) accounts aka no-frills accounts. As a result, banks will now provide cheque books and
other facilities to the BSBD account holders, without demanding them to maintain a minimum balance in
lieu of such facilities or levying extra charges. The RBI has stipulated that getting such value-added
services beyond the minimum facilities, will not make it a non-BSBD account, as long as the prescribed
minimum services are provided free of charge. The value-added services may be chargeable in a non-
discriminatory manner, as per the bank’s discretion.
RBI notifies new safety measures for ATMs Announcing a slew of new safety measures for ATMs, the RBI
has said that cash replenishment in ATMs should be done only with digital one-time combination (OTC)
locks. Further, by September 30, all ATMs shall be grouted to a structure (such as walls or pillars), except
for those installed in highly-secured premises. The apex bank also wants banks to consider rolling out an
e-surveillance mechanism to ensure timely alerts and quick response. The new measures are in addition
to the existing instructions, practices and guidance issued by RBI and law enforcement agencies.
ARCs can acquire financial assets of peers In a bid to accelerate timely resolution of stressed
assets, the RBI has allowed asset reconstruction companies (ARCs) to acquire financial assets from
other ARCs, subject to certain conditions. The transaction should be settled on a cash basis. The
selling ARC should use the proceeds for the redemption of underlying security receipts. The date
of redemption of security receipts and the period of realization will not extend beyond eight years
from the date of acquisition of the financial asset by the first ARC.
Basel III Capital Regulations- Implementation of Leverage Ratio: As announced in the Statement
on Developmental and Regulatory Policies issued with the Second Bi-Monthly Monetary Policy
Statement 2019-20 on June 6, 2019, it has been decided that the minimum Leverage Ratio shall
be 4% for Domestic Systemically Important Banks (DSIBs) and 3.5% for other banks. Both the
capital measure and the exposure measure along with Leverage Ratio are to be disclosed on a
quarter-end basis. However, banks must meet the minimum Leverage Ratio requirement at all
times. These guidelines shall be effective from the quarter commencing October 1, 2019.
As reimbursement of merchant discount rate ( MDR) claims will be handled directly by Ministry
of Electronics and Information Technology (MeitY) w.e.f. January 01, 2019. In view of this, the
above mentioned circulars/letters issued by Reserve Bank of India stand withdrawn.
National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) systems – Waiver of
charges: In order to provide an impetus to digital funds movement, it has been decided that with effect
from July 1, 2019, processing charges and time varying charges levied on banks by Reserve Bank of India
(RBI) for outward transactions undertaken using the RTGS system, as also the processing charges levied
by RBI for transactions processed in NEFT system will be waived by the Reserve Bank. The banks are
advised to pass on the benefits to their customers for undertaking transactions using the RTGS and NEFT
systems with effect from July 1, 2019. This directive is issued under Section 10 (2) read with Section 18 of
Payment and Settlement Systems Act 2007
Central Counterparty: Directions on Governance of domestic CCPs authorised to operate in India by the
RBI, the upper age limit for appointment of Managing Director, Director, Nominee Director, Independent
Director and Chairperson was stipulated as 65 years. On review of the directions, the upper age limit for
appointment of Director, Nominee Director, Independent Director and Chairperson has been revised to
70 years. The upper age limit for appointment of Managing Director shall continue to be 65 years.
Central Counterparty” (CCP) means a system provider, who by way of novation interposes between
system participants in the transactions admitted for settlement, thereby becoming the buyer to every
seller and the seller to every buyer, for the purpose of effecting settlement of their transactions.
Annual Return on Foreign Liabilities and Assets Reporting by Indian Companies: The present email-
based reporting system for submission of the FLA return will be replaced by the web-based system
online reporting portal. Foreign Liabilities and Assets Information Reporting (FLAIR) system: Reserve
Bank would provide a web-portal interface https://flair.rbi.org.in to the reporting entities {including the
alternative investment funds (AIF). and Limited liability partnerships (LLPs).
Financial Benchmark Administrators (Reserve Bank) Directions, 2019:
• These directions shall apply to Financial Benchmark Administrators (FBAs) administering ‘Significant
Benchmarks’ in the markets for financial instruments regulated by the Reserve Bank under Section
45 W of the Act.
• Benchmarks administered outside India do not fall under the scope of these directions.
• Benchmarks’ mean prices, rates, indices, values or a combination thereof related to financial
instruments that are calculated periodically and used as a reference for pricing or valuation of
financial instruments or any other financial contract.
• ‘Financial Benchmark Administrator’ (FBA) means a person who controls the creation, operation
and administration of significant benchmark(s).
• FBA shall be a company incorporated in India. FBAs shall maintain a minimum net worth of ₹ 1 crore
at all times.
• FBAs shall make public the ‘significant benchmarks’, either on the day of its release or with a lag not
exceeding 15 days from the release.
• FBAs, in respect of the ‘significant benchmarks’ administered by them, shall be responsible for
formulation of the benchmark calculation methodology;
determination of the benchmark values;
dissemination of the benchmark values;
ensuring transparency in the benchmark administration;
periodic review of the benchmark; and,
putting in place necessary organizational and process controls for effectively carrying out the above
responsibilities.
Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt:
The Reserve Bank, in consultation with the Government of India and Securities and Exchange Board of
India (SEBI), introduces a separate channel, called the ‘Voluntary Retention Route’ (VRR), to enable
FPIs to invest in debt markets in India. Broadly, investments through the Route will be free of the macro-
prudential and other regulatory norms applicable to FPI investments in debt markets, provided FPIs
voluntarily commit to retain a required minimum percentage of their investments in India for a period.
Participation through this Route will be entirely voluntary.
• Any FPI registered with SEBI is eligible to participate through this Route. Participation through this
Route shall be voluntary.
• Investment under this route shall be capped at ₹ 75,000 crore or higher, which amount shall be
allocated among VRR-Govt, VRR-Corp, and VRR-Combined as may be decided by the Reserve Bank
from time to time.
• The minimum retention period shall be three years, or as decided by RBI for each allotment by tap
or auction.
• No FPI (including its related FPIs) shall be allotted an investment limit greater than 50% of the
amount offered for each allotment by tap or auction.
• The minimum investment of an FPI during the retention period shall be 75% of the Committed
Portfolio Size (CPS ).
• Successful allottees shall invest at least 75% of their CPS within three months from the date of
allotment. The retention period will commence from the date of allotment of limit.
• The required investment amount shall be adhered to on an end-of-day basis.
Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors (FPIs) investment in debt:
• FPIs investing through the Route will be eligible to participate in repos for their cash management,
provided that the amount borrowed or lent under repo shall not exceed 10% of their investment under
VRR.
• Utilisation of limits and adherence to other requirements of this Route shall be the responsibility of both
the FPI and its custodian.
• Custodians shall not permit any repatriation from the cash accounts of an FPI, if such transaction leads to
the FPI’s assets falling below the minimum stipulated level of 75% of CPS during the retention period.
• FPIs shall open one or more separate Special Non-Resident Rupee (SNRR) account for investment through
the Route. All fund flows relating to investment through the Route shall reflect in such account(s).
• FPIs may open a separate security account for holding debt securities under this Route.
• FPIs investing under this route shall be eligible to use any currency or interest rate derivative instrument,
OTC or exchange traded, to manage their interest rate risk or currency risk.
• Under VRR-Govt, FPIs will be eligible to invest in any Government Securities i.e., Central Government
dated Securities (G-Secs), Treasury Bills (T-bills) as well as State Development Loans (SDLs). Under VRR-
Corp, FPIs may invest in any instrument listed under Schedule 5 of Foreign Exchange Management
(Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017.
• Under VRR, FPIs will also be eligible to invest in Repo transactions, and reverse repo transactions.
• VRR-Corp’ shall mean Voluntary Retention Route for FPI investment in Corporate Debt Instruments.
• ‘VRR-Govt’ shall mean Voluntary Retention Route for FPI investment in Government Securities.
• ‘VRR-Combined’ shall mean Voluntary Retention Route for FPI investment in instruments eligible under
both VRR-Govt and VRR-Corp.
Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019: These Directions shall be applicable to
Rupee interest rate derivatives transactions undertaken on recognized stock exchanges and Over-the-
Counter (OTC) markets, including on electronic trading platforms (ETPs).
Eligible Participants :
(1) Any person resident in India and any non-resident, to the extent specified in these Directions, is
eligible to participate in IRDs. All regulated entities shall participate in IRDs with the permission of and
subject to the terms and conditions, if any, fixed by their respective regulators.
(2) Indian or non-resident parent company or any group company or centralised treasury can transact in
IRDs on behalf of their wholly owned subsidiaries or group companies provided they meet the criteria
for non-retail users
Interest Rate Derivatives(IRDs)in the OTC Market: IRD transactions in the OTC market shall be subject to
the following directions:
(a) Scheduled Banks, Primary Dealers (PDs) and All-India Financial Institutions (AIFIs) are eligible to act as
market-makers for IRD products in OTC markets.
(b) Market-makers may offer the following products to retail users:
• Forward Rate Agreement (FRA),
• Interest Rate Swap (IRS), and
• European Interest Rate Options (IRO) including caps, floors, collars and reverse collars.
(c) In addition to the products listed in (b) above, market-makers may offer swaptions and structured
derivative products, excluding leveraged derivatives, only to non-retail users.
*Market-makers provide bid and offer prices to users and other market-makers. Market-makers need
not have an underlying risk.
Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019 by RBI:
Any floating interest rate or price or index used in IRDs in the OTC market shall be a benchmark
published by an Financial Benchmark Administrator (FBA) or approved by The Fixed Income Money
Market and Derivatives Association of India (FIMMDA) for this purpose. FIMMDA shall ensure that the
floating rate approved by them is determined transparently, objectively and in arm’s length transactions.
Foreign Portfolio Investors (FPIs), collectively, may also transact in interest rate futures (IRF) up to a limit
of net long position of INR 50 billion.
A non-resident shall ensure that its interest rate derivative transactions conform to the provisions of
Section 45(V) of the RBI Act, 1934, as well as applicable provisions of Foreign Exchange Management Act,
1999.
All payments related to interest rate derivative transactions of a non-resident may be routed through a
Rupee account of the non-resident or, where the non-resident doesn’t have a Rupee account in India,
through a vostro account maintained with an Authorised Dealer bank in India. The market-maker shall
maintain complete details of such transactions.
Market-maker shall ensure that non-resident clients are from an FATF compliant country.
Market-makers in OTC transactions shall report all transactions, including client trades, within 30 minutes
of the transactions, to the Trade Repository of Clearing Corporation of India Ltd. (CCIL), clearly indicating
whether the trade is for hedging or other purposes.
“Currency Distribution & Exchange Scheme (CDES)” for bank branches including currency chests based
on performance in rendering customer service to members of public:
Particulars of Incentives by RBI for Opening of and maintaining currency chests at centers having
population of less than 1 lakh in under banked States:
a. Capital Cost: Reimbursement of 50% of capital expenditure subject to a ceiling of ₹ 50 lakh per
currency chest. In the North Eastern region up to 100% of capital expenditure is eligible for
reimbursement subject to the ceiling of ₹ 50 lakh.
b. Revenue cost: Reimbursement of 50% of revenue expenditure for the first 3 years. In the North
Eastern region 50% of revenue expenditure will be reimbursed for the first 5 years.
Credit Facilities to Minority Communities: Government of India has also forwarded a list of 121 minority
concentration districts having at least 25% minority population, excluding those States / UTs where
minorities are in majority (J & K, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep). Accordingly
all scheduled commercial banks are requested to specially monitor the credit flow to minorities in these
121 districts.
Under priority sector lending, a sub-target of 10 per cent of ANBC or Credit Equivalent amount of OBE,
whichever is higher, as on March 31 of the previous year, has been mandated for lending to weaker
sections which includes, among others, persons from minority communities.
The following communities have been notified as minority communities by the Government of India,
Ministry of Minority Affairs; Sikhs, Muslims, Christians, Zoroastrians (Parsi), Buddhists and Jains.
Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM):
• The Ministry of Rural Development, Government of India launched a new programme known as
National Rural Livelihoods Mission (NRLM) by restructuring and replacing the Swarnjayanti Gram
Swarozgar Yojana (SGSY) scheme with effect from April 01, 2013. NRLM was renamed as Deendayal
Antyodaya Yojana – National Livelihoods Mission (DAY-NRLM) with effect from March 29, 2016.
• DAY-NRLM is the flagship program of Govt. of India for promoting poverty reduction through
building strong institutions of the poor, particularly women, and enabling these institutions to access
a range of financial services and livelihood services.
• DAY-NRLM is designed to be a highly intensive program and focuses on intensive application of

human and material resources in order to mobilize the poor into functionally effective community
owned institutions, promote their financial inclusion and strengthen their livelihoods.
• DAY-NRLM complements these institutional platforms of the poor with services that include financial
and capital services, production and productivity enhancement services, technology, knowledge,
skills and inputs, market linkage, etc. The community institutions also offer a platform for
convergence and partnerships with various stakeholders by building environment for the poor to
access their rights and entitlements and public service.
• A women’s Self-Help Group (SHG), coming together on the basis of mutual affinity is the primary
building block of the DAY-NRLM community institutional design.
• Women SHGs under DAY-NRLM consist of 10-20 persons. In case of special SHGs i.e. groups in the
difficult areas, groups with disabled persons, and groups formed in remote tribal areas, this number
may be a minimum of 5 persons.
• DAY-NRLM promotes affinity-based women Self Help Groups (SHGs).
• Only for groups to be formed with Persons with disabilities, and other special categories like elders,
trans genders, DAY-NRLM will have both men and women in the Self-Help Groups.
Revolving Fund (RF): DAY-NRLM would provide Revolving Fund (RF) support to SHGs in existence for a
minimum period of 3/6 months and follow the norms of good SHGs, i.e. they follow ‘Panchasutra’ –
regular meetings, regular savings, regular internal lending, regular recoveries and maintenance of proper
books of accounts. Only such SHGs that have not received any RF earlier will be provided with RF, as
corpus, with a minimum of ₹10,000 and up to a maximum of ₹15,000 per SHG. The purpose of RF is to
strengthen their institutional and financial management capacity and build a good credit history within
the group.
No Capital Subsidy will be sanctioned to any SHG from the date of implementation of DAY-NRLM.
Community Investment Support Fund (CIF): CIF will be provided to the SHGs in the intensive blocks,
routed through the Village level/ Cluster level Federations, to be maintained in perpetuity by the
Federations. The CIF will be used, by the Federations, to advance loans to the SHGs and/or to undertake
the common/collective socio-economic activities.
Interest subvention:
DAY-NRLM has a provision for interest subvention, to cover the difference between the Lending Rate of
the banks and 7%, on all credit from the banks/ financial institutions availed by women SHGs, for a
maximum of ₹ 300,000/- per SHG. This will be available across the country in two ways:
(i) In 250 identified districts, banks will lend to the women SHGs @7% up to an aggregated loan amount
of ₹ 300,000/-.The SHGs will also get additional interest subvention of 3% on prompt payment,
reducing the effective rate of interest to 4%.
(ii) In the remaining districts, the banks will lend at their respective lending rate applicable to SHGs. All
women SHGs under DAY– NRLM, will be eligible for interest subvention on prompt payment to the
extent of difference between the lending rates and 7% for the loan up to Rs. 300,000/- subject to
maximum of 5.5 % or as prescribed by the MoRD
The eligibility criteria for the SHGs to avail loans:

• SHG should be in active existence at least since the last 6 months as per the books of account of
SHGs and not from the date of opening of S/B account.
• SHG should be practicing ‘Panchasutras’ i.e. Regular meetings; Regular savings; Regular inter-
loaning; Timely repayment; and Up-to-date books of accounts;
• Qualified as per grading norms fixed by NABARD. As and when the federations of the SHGs come to
existence, the grading exercise can be done by the Federations to support the Banks.
• The existing defunct SHGs are also eligible for credit if they are revived and continue to be active for
a minimum period of 3 months.
• SHGs can avail either Term Loan (TL) or a Cash Credit Limit (CCL) loan or both based on the need. In
case of need, additional loan can be sanctioned even though the previous loan is outstanding.
• Cash Credit Limit (CCL): In case of CCL, banks are advised to sanction minimum loan of ₹ 5 lakhs to
each eligible SHGs for a period of 5 years with a yearly drawing power (DP).
• The loan amount will be distributed among members based on the Micro Credit Plan (MCP)
prepared by the SHGs. The loans may be used by members for meeting social needs, high cost debt
swapping, construction or repair of house, construction of toilets and taking up sustainable
livelihoods by the individual members within the SHGs or to finance any viable common activity
started by the SHGs.
• In order to facilitate use of loans for augmenting livelihoods of SHG members, it is advised that at
least 50% of loans above ₹ 2 lakhs and 75% of loans above ₹ 4 lakhs be used primarily for income
generating productive purposes. Micro Credit Plan (MCP) prepared by SHGs would form the basis for
determining the purpose and usage of loans.
• No collateral and no margin will be charged up to ₹ 10.00 lakhs limit to the SHGs. No lien should be
marked against savings bank account of SHGs and no deposits should be insisted upon while
sanctioning loans.
Supervision and monitoring of the Scheme: Banks may set up DAY-NRLM cells at Regional/Zonal
offices. These cells should periodically monitor and review the flow of credit to the SHGs, ensure the
implementation of the guidelines to the scheme, collect data from the branches and make available
consolidated data to the Head office and the DAY-NRLM units at the districts/ blocks. The cell should also
discuss this consolidated data in the SLBC, BLBC and DCC meetings regularly to maintain the effective
communication with the state staff and all banks.
• State Level Bankers’ Committee: SLBCs shall constitute a sub-committee on SHG bank linkage. The
sub-committee should consist of members from all banks operating in the State, RBI, NABARD, CEO
of SRLM, representatives of State Rural Development Department, Secretary-Institutional Finance
and Representatives of Development Departments etc. The sub- committee shall meet once in a
month with a specific agenda of review, implementation and monitoring of the SHG-Bank linkage
and the issues/ constraints in achievement of the credit target. The decisions of SLBCs should be
derived from the analysis of the reports of the sub-committee.
• District Coordination Committee: The DCC (DAY-NRLM sub-committee) shall regularly monitor the
flow of credit to SHGs at the district level and resolve issues that constrain the flow of credit to the
SHGs at district level.
• Block level Bankers Committee: The BLBC shall meet regularly and take up issues of SHG bank
linkage at the block level. In this Committee, the SHGs/ Federations of the SHGs should be included
as members to raise their voice in the forum. Branch wise status of SHG credit shall be monitored at
the BLBC.
Key Features of DAY-NRLM: Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-
NRLM):
• Universal Social Mobilization:DAY-NRLM would ensure adequate coverage of vulnerable sections of
the society such that 50% of the beneficiaries are SC/STs, 15% are minorities and 3% are persons
with disability, while keeping in view the ultimate target of 100% coverage of all households under
the automatically included criteria and households with at least one deprivation criteria as per Socio-
Economic and Caste Census (SECC).
• Participatory Identification of poor (PIP): The households identified with at least one deprivation
criteria as per SECC along with households identified through the P.I.P process will be accepted as
DAY-NRLM target group and will be eligible for all the benefits under the programme. The list
finalized after PIP process will be vetted by the Gram Sabha and approved by the Gram Panchayat.
As already provided in the Framework for implementation of DAY-NRLM, up to 30% of the total
membership of the SHGs may be from among the population marginally above the poverty line,
subject to the approval of other members of the group. This 30% also includes the poor households
whose name does not figure in the SECC list but are as poor as those included in SECC list.
• Promotion of Institutions of the poor: DAY- NRLM would promote specialized institutions like
Livelihoods collectives, producers’ cooperative/companies for livelihoods promotion through
deriving economies of scale, backward and forward linkages, and access to information, credit,
technology, markets etc.
NRLM):
• Strengthening all existing SHGs and federations of the poor. There are existing institutions of the
poor women formed by Government efforts and efforts of NGOs. DAY- NRLM would strengthen all
existing institutions of the poor in a partnership mode.
• Emphasis on Training, Capacity building and skill building: DAY-NRLM would ensure that the poor
are provided with the requisite skills for managing their institutions, linking up with markets,
managing their existing livelihoods, enhancing their credit absorption capacity and credit worthiness,
etc.
• Revolving Fund and Community investment support Fund (C.I.F): A Revolving Fund would be
provided to eligible SHGs as an incentive to inculcate the habit of thrift and accumulate their own
funds towards meeting their credit needs in the long-run and immediate consumption needs in the
short-run. The C.I.F would be a corpus and used for meeting the members’ credit needs directly and
as catalytic capital for leveraging repeat bank finance. The C.I.F would be routed to the SHGs through
the Federations.
• Universal Financial Inclusion: DAY-NRLM would work towards achieving universal financial inclusion,
beyond basic banking services to all the poor households, SHGs and their federations.
• Provision of Interest Subvention: The rural poor need credit at low rate of interest and in multiple
doses to make their ventures economically viable. In order to ensure affordable credit, DAY-NRLM
has a provision for subvention on interest rate above 7% per annum for all eligible SHGs, who have
availed loans from mainstream financial institutions.
NRLM):
Funding Pattern: DAY-NRLM is a Centrally Sponsored Scheme and the financing of the programme would
be shared between the Centre and the States in the ratio of 60:40 (90:10 in case of North Eastern States
including Sikkim; completely from the Centre in case of UTs).
Rural Self Employment Training Institutes (RSETIs). RSETI concept is built on the model pioneered by
Rural Development Self Employment Institute (RUDSETI) – a collaborative partnership between SDME
Trust, Syndicate Bank and Canara Bank.
The model envisages transforming unemployed youth into confident self- employed entrepreneurs
through a short duration experiential learning programme followed by systematic long duration hand
holding support.
The need-based training builds entrepreneurship qualities, improves self-confidence, reduces risk of
failure and develops the trainees into change agents. Banks are fully involved in selection, training and
post training follow up stages. The needs of the poor articulated through the institutions of the poor
would guide RSETIs in preparing the participants/trainees in their pursuits of self- employment and
enterprises.
DAY-NRLM would encourage public sector banks to set up RSETIs in all districts of the country.
Interest subvention scheme for Women SHGs:
1. Interest subvention scheme on Credit to Women SHG for all Commercial Banks (only Public Sector
Banks, Private Sector Banks and Regional Rural Banks) and Co-operative banks in 250 districts.
i. All women SHGs will be eligible for interest subvention on credit up to 3 lakhs at 7% per annum. SHG
availing capital subsidy under SGSY in their existing credit outstanding will not be eligible for benefit
under this scheme.
ii. The Commercial Banks and Cooperative Banks will lend to all the women SHGs at the rate of 7% in the
250 districts.
iii. All Commercial Banks (excluding RRBs) will be subvented to the extent of difference between the
(WAIC)Weighted Average Interest Charged (as specified by Department of Financial Services, Ministry of
Finance) and 7% subject to the maximum limit of 5.5%.This subvention will be available to all the Banks
on the condition that they make SHG credit available at 7% p.a. in the 250 districts.
iv. RRBs and Cooperative Banks will be subvented to the extent of difference between the maximum
lending rates (as specified by NABARD) and 7% subject to the maximum limit of 5.5%. This subvention
will be available to all RRBs and Cooperative Banks on the condition that they make SHG credit available
at 7% p.a. in the 250 districts. RRBs and Cooperative Banks will also get concessional refinance from
NABARD.
v. Further, the SHGs will be provided with an additional 3% subvention on the prompt repayment of
loans. For the purpose of Interest Subvention of additional 3% on prompt repayment, an SHG account
will be considered prompt payee if it satisfies the following criterion.
a. For Cash Credit Limit:
• Outstanding balance shall not have remained in excess of the limit /drawing power continuously for
more than 30 days.
• There should be regular credit and debits in the accounts. In any case there shall be at least one
customer induced credit during a month.
• Customer induced credit should be sufficient to cover the interest debited during the month.
b. For the Term loans: A term loan account where all of the interest payments and/or instalments of
principal were paid within 30 days of the due date during the tenure of the loan, would be considered as
an account having prompt payment.
vi. The Interest Subvention scheme shall be implemented for all commercial banks (excluding RRBs)
through a Nodal Bank selected by the Ministry of Rural Development.
vii. For the RRBs and Cooperative Banks the scheme will be operationalized by NABARD similar to the
short-term crop loan scheme.
viii. All Commercial Banks (including the PSBs, Private Banks and RRBs) who are operating on the Core
Banking Solutions (CBS) can avail the interest subvention under the scheme.
2. Interest subvention scheme for Category II Districts (Other than 250 districts): For category II
districts, comprising of districts other than the above 250 districts, all women SHGs under DAY-NRLM will
continue to be eligible for interest subvention to avail the loan facility at an interest rate of 7%. The
funding for this subvention will be provided to the State Rural Livelihoods Missions (S.R.L.Ms).
• Banks will charge the SHGs as per their respective lending norms and the difference between the
lending rates and 7% subjected to a maximum limit of 5.5% will be subvented in the loan accounts
of the SHGs by the SRLM.
• All banks who are operating on the Core Banking Solution (CBS) are required to furnish the details of
the Credit disbursement and Credit outstanding of the SHGs across all districts in the desired format
as suggested by the MoRD, directly from the CBS platform, to the Ministry of Rural Development and
to the SRLMs.
• All women SHGs, comprising of more than 70% BPL or rural poor members (rural poor as per the
Participatory Identification Process) are regarded as SHGs under DAY-NRLM. Such SHGs, comprising
of rural poor members from the intended DAY-NRLM target group will be eligible for interest
subvention on credit up to ₹ 3 lakhs at the rate of 7% per annum on prompt repayment.
• This scheme will be implemented by the State Rural Livelihood Missions (SRLMs). SRLMs will
provide interest subvention to the eligible SHGs who have accessed loan from Commercial and
Cooperative Banks. The funding for this subvention will be met out of the Central Allocation: State
Contribution in the ratio of 75:25.
• Women SHGs who have availed capital subsidy under SGSY in their existing loans, will not be eligible
for benefit of Interest Subvention for their subsisting loan under this scheme.
Inclusion of “India Post Payments Bank Limited” in the Second Schedule of the Reserve Bank of India
Act, 1934: India Post Payments Bank Limited” has been included in the Second Schedule to the Reserve
Bank of India Act, 1934.
Detection and Impounding of Counterfeit Notes:

• The Counterfeit Notes can be impounded by
– All Banks
– All Treasuries and Sub-Treasuries.
– Issue Offices of Reserve Bank of India.
• In no case, the Counterfeit Notes should be returned to the tenderer or destroyed by the bank
branches / treasuries. Failure of the banks to impound Counterfeit Notes detected at their end will
be construed as wilful involvement of the bank concerned in circulating Counterfeit Notes and
penalty will be imposed.
• For cases of detection of Counterfeit Notes up to 4 pieces, in a single transaction, a consolidated

report in the prescribed format should be sent by the Nodal Bank Officer to the police authorities
or the Nodal Police Station, along with the suspect Counterfeit Notes, at the end of the month.
• For cases of detection of Counterfeit Notes of 5 or more pieces, in a single transaction, the
Counterfeit Notes should be forwarded immediately by the Nodal Bank Officer to the local police
authorities or the Nodal Police Station for investigation by filing FIR in the prescribed format .
Inclusion of “India Post Payments Bank Limited” in the Second Schedule of the Reserve Bank of India
Act, 1934: India Post Payments Bank Limited” has been included in the Second Schedule to the Reserve
Bank of India Act, 1934.
Detection and Impounding of Counterfeit Notes: No credit to customer’s account is to be given for
Counterfeit Notes, if any, detected in the tender received over the counter or at the back-office /
currency chest.
• The Counterfeit Notes can be impounded by
– All Banks
– All Treasuries and Sub-Treasuries.
– Issue Offices of Reserve Bank of India.
• In no case, the Counterfeit Notes should be returned to the tenderer or destroyed by the bank
branches / treasuries. Failure of the banks to impound Counterfeit Notes detected at their end will
be construed as wilful involvement of the bank concerned in circulating Counterfeit Notes and
penalty will be imposed.
• For cases of detection of Counterfeit Notes up to 4 pieces, in a single transaction, a consolidated
report in the prescribed format should be sent by the Nodal Bank Officer to the police authorities
or the Nodal Police Station, along with the suspect Counterfeit Notes, at the end of the month.
• For cases of detection of Counterfeit Notes of 5 or more pieces, in a single transaction, the
Counterfeit Notes should be forwarded immediately by the Nodal Bank Officer to the local police
authorities or the Nodal Police Station for investigation by filing FIR in the prescribed format .
Facility for Exchange of Notes and Coins:
All branches of banks in all parts of the country are mandated to provide the following customer services, more actively and vigorously to
the members of public so that there is no need for them to approach the RBI Regional Offices for this purpose:
(i) Issuing fresh / good quality notes and coins of all denominations on demand,
(ii) Exchanging soiled / mutilated / defective notes,
*Small Finance Banks and Payment Banks may exchange mutilated and defective notes at their option.
(iii) Accepting coins and notes either for transactions or exchange
None of the bank branches should refuse to accept small denomination notes and / or coins tendered at their counters.
A ‘soiled note’ means a note which has become dirty due to normal wear and tear and also includes a two piece note pasted together
wherein both the pieces presented belong to the same note and form the entire note with no essential feature missing. These notes should
be accepted over bank counters in payment of Government dues and for credit to accounts of the public maintained with banks. However,
in no case, these notes should be issued to the public as re-issuable notes and shall be deposited in currency chests for onward
transmission to RBI offices as soiled note remittances for further processing.
A mutilated note is a note of which a portion is missing or which is composed of more than two pieces. Mutilated notes may be presented
at any of the bank branches. The notes so presented shall be accepted, exchanged and adjudicated in accordance with Reserve Bank of
India (Note Refund) Rules.
Extremely brittle, burnt, charred, stuck up Notes: Notes which have turned extremely brittle or are badly burnt, charred or inseparably
stuck up together and, therefore, cannot withstand normal handling, shall not be accepted by the bank branches for exchange. Instead, the
holders may be advised to tender these notes to the Issue Office concerned where they will be adjudicated under a Special Procedure.
Exchange of soiled notes:

• Notes presented in small number: Where the number of notes presented by a person is up to 20 pieces with a maximum value of
Rs.5000 per day, banks should exchange them over the counter, free of charge.
• Notes presented in bulk: Where the number of notes presented by a person exceeds 20 pieces or Rs.5000 in value per day, banks may
accept them, against receipt, for value to be credited later. Banks may levy service charges.
Facility for Exchange of Notes and Coins:
Exchange of mutilated and imperfect notes:
• Notes presented in small number : Where the number of notes presented by a person is up to 5 pieces, non-chest branches should
normally adjudicate the notes as per the procedure laid down and pay the exchange value over the counter.
– If the non-chest branches are not able to adjudicate the mutilated notes, the notes may be received against a receipt and sent
to the linked currency chest branch for adjudication.
– The probable date of payment should be informed to the tenderers on the receipt itself and the same should not exceed 30
days.
– Bank account details should be obtained from the tenderers for crediting the exchange value by electronic means.
• Notes presented in bulk: Where the number of notes presented by a person is more than 5 pieces not exceeding Rs.5000 in value, the
tenderer should be advised to send such notes to nearby currency chest branch by insured post giving his / her bank account details
(a/c no, branch name, IFSC, etc.) or get them exchanged thereat in person.
– All other persons tendering mutilated notes whose value exceeds Rs.5000 should be advised to approach nearby currency chest
branch.
– Currency chest branches receiving mutilated notes through insured post should credit the exchange value to the account of
sender by electronic means within 30 days of receipt of notes.
• Any note with slogans and message of a political nature written across it ceases to be a legal tender and the claim on such a note will
be rejected.
• The notes, which are found to be deliberately cut, torn, altered or tampered with, if presented for payment of exchange value should
be rejected.
• Mutilated / defective notes bearing 'PAY'/'PAID' (or 'REJECT') stamp of any RBI Issue Office or any bank branch, if presented for
payment again at any of the bank branches should be rejected and the tenderer should be advised that the value of such note/s
cannot be paid since the same has already been paid as is evident from the PAY/PAID stamps affixed on it/them.
• The coins of 25 paise and below, issued from time to time, ceased to be legal tender for payments as well as account with effect from
June 30, 2011.
Lead Bank Scheme (LBS): The genesis of the Lead Bank Scheme (LBS) can be traced to the Study Group
headed by Prof. D. R. Gadgil (Gadgil Study Group) on the Organizational Framework for the
Implementation of the Social Objectives, which submitted its report in October 1969.
A Committee of Bankers on Branch Expansion Programme of Public Sector Banks appointed by the
Reserve Bank of India under the Chairmanship of Shri F. K. F. Nariman (Nariman Committee) endorsed
the idea of an ‘Area Approach’ in its report (November 1969), recommending that in order to enable the
Public Sector Banks to discharge their social responsibilities, each bank should concentrate on certain
districts where it should act as a 'Lead Bank'.
Pursuant to the above recommendations, the Lead Bank Scheme was introduced by the Reserve Bank
of India in December 1969.
In view of the several changes that had taken place in the financial sector, the Lead Bank Scheme was last
reviewed by the High Level Committee headed by Smt. Usha Thorat, the then Deputy Governor of the
Reserve Bank of India in 2009.
The Scheme aims at coordinating the activities of banks and other developmental agencies through various fora in
order to achieve the objective of enhancing the flow of bank finance to the priority sector and other sectors and to
promote banks' role in the overall development of the rural sector. For coordinating the activities in the district, a
particular bank is assigned ‘Lead Bank’ responsibility of the district. The Lead Bank is expected to assume a leadership
role for coordinating the efforts of the credit institutions and the Government.
Lead Bank Scheme (LBS):
Block Level Bankers’ Committee (BLBC):
• Block Level Bankers’ Committee (BLBC) is a forum for achieving coordination between credit institutions and field
level development agencies at the block level. The forum prepares and reviews the implementation of the Block
Credit Plan and also resolves operational problems in the implementation of the credit programmes of banks.
• The Lead District Manager (LDM) of the district is the Chairman of the Block Level Bankers’ Committee.
• All the banks operating in the block including the Small Finance Banks, the District Central Co-operative Banks,
RRBs, Block Development Officer, technical officers in the block, such as extension officers for agriculture,
industries and co-operatives are members of the Committee. BLBC meetings are held at quarterly intervals.
• Participation by the District Development Manager (DDM) of NABARD in BLBCs would ensure better and more
meaningful discussions for the development of the Block.
• The Lead District Officer (LDO) of the Reserve Bank of India (RBI) selectively attends the BLBC meetings.
• The representatives of Panchayat Samitis are also invited to attend the meetings at half yearly intervals so as to
share their knowledge and experience on rural development in the credit planning exercise.
• Payments Banks should also be invited to attend the meetings.

District Consultative Committee (DCC)
• The District Consultative Committees were constituted in the early seventies as a common forum at the district
level for bankers as well as Government agencies/departments to facilitate coordination in implementing various
developmental activities under the Lead Bank Scheme.
• The District Collector is the Chairman of the DCC meetings. Reserve Bank of India, NABARD, all the commercial
banks including Small Finance Banks in the district, co-operative banks including the District Central Cooperative
Bank (DCCB), RRBs, Payments Banks various State Government departments and allied agencies are the members
of the DCC.
• The Lead District Officer (LDO) represents the Reserve Bank as a member of the DCC.
• The Lead District Manager (LDM) convenes the DCC meetings.
• The Director of Micro, Small and Medium Enterprises Development Institute (MSME-DI) in the district is an invitee
in districts where MSME clusters are located to discuss issues concerning MSMEs.
District Level Review Committee (DLRC) Meetings: DLRC meetings are Chaired by the District Collector and attended by
members of the District Consultative Committee (DCC). Public Representatives i.e. Local MPs/MLAs/ Zilla Parishad
Chiefs are also invited to these meetings. The DLRC meetings should be convened by the Lead Banks at least once in a
quarter. The DLRC is a forum to review the pace and quality of the implementation of various programmes under the
Lead Bank Scheme in the district.
State Level Bankers’ Committee (SLBC)
• The State Level Bankers’ Committee (SLBC) was constituted in April 1977, as an apex inter-institutional forum to
create adequate coordination machinery in all States, on a uniform basis for development of the State.
• SLBC is chaired by the Chairman/ Managing Director/ Executive Director of the Convenor Bank.
• It comprises representatives of commercial banks including Small Finance Banks, RRBs, Payments Banks, State
Cooperative Banks, RBI, NABARD, heads of Government departments including representatives from National
Commission for Scheduled Castes/Tribes, National Horticulture Board, Khadi & Village Industries Commission etc.
and representatives of financial institutions operating in a State, who come together and sort out coordination
problems at the policy implementation level. Representatives of various organizations from different sectors of the
economy like industry bodies, retail traders, exporters, farmers’ unions, etc. are special invitees in the SLBC
meetings for discussing their specific problems, if any.
• SLBC meetings are held on quarterly basis. The responsibility for convening the SLBC meetings would be of the
SLBC Convenor Bank of the State.
• Recognising that SLBCs, primarily as a committee of bankers at the State level, play an important role in the
development of the State, illustrative guidelines on the conduct of State Level Bankers’ Committee meetings have
been issued.
• The Chief Minister/Finance Minister and senior level officers of the State/RBI (of the rank of Deputy Governor /
Executive Director) may be invited to attend the SLBC meetings. Further, the State Chief Ministers are encouraged
to attend at least one SLBC meeting in a year.
Assignment of Lead Bank Responsibility:
Lead Bank Scheme is administered by the Reserve Bank of India since 1969. The assignment of Lead Bank responsibility to designated banks
in every district is done by the Reserve Bank of India following a detailed procedure formulated for this purpose. As on June 30, 2019, 18
public sector banks and one private sector bank have been assigned Lead Bank responsibility in 717 districts of the country.
Banking Penetration: Over the years, the focus of the Lead Bank Scheme has shifted to inclusive growth and financial inclusion. The use of
Information Technology (IT) and intermediaries has enabled banks to increase the outreach, scale and depth of banking services at
affordable cost.
SLBC Convenor Banks / Lead Banks are advised to focus attention on the need for achieving 100% financial inclusion through penetration of
banking services in the rural areas. SLBC Convenor Banks have been advised that in order to comply with the criteria of opening at least 25
percent of the total banking outlets in unbanked rural centres in Tier 5 & 6 centres, as prescribed vide DBR circular dated May 18, 2017,
banks should give priority to villages without a banking outlet having population more than 5000 (i.e. Tier 5 centres) and ensure that all
such villages under their jurisdiction are covered with a CBS-enabled Banking Outlet on priority basis.
Monitoring the Performance of Credit Plans: The performance of the credit plans is reviewed in the various fora created under the Lead
Bank Scheme as shown below:
At Block Level Block Level Bankers’ Committee (BLBC)
At District Level District Consultative Committee (DCC) & District Level Review Committee (DLRC)
At State Level State Level Bankers’ Committee (SLBC)
Credit Deposit Ratio (CD Ratio): Banks have been advised to achieve a CD Ratio of 60% in respect of their rural and semi-urban branches
separately on an All-India basis.
Direct Benefit Transfer: Direct Benefit Transfer (DBT) was rolled out by the Government of India in selected districts in January 2013. It was
expanded to other districts subsequently. SLBC Convenor Banks were advised to co-ordinate with the Government authorities to implement
DBT. Banks were advised to include the status of the roll-out of DBT as a regular agenda item for discussion in SLBC meetings as part of
Financial Inclusion/Direct Benefit Transfer (DBT) implementation. As a prerequisite to the implementation of the DBT, every eligible
individual should have a bank account.
Service Area Approach (SAA):
The Service Area Approach (SAA), introduced in April 1989 for planned and orderly development of rural and semi-urban areas was
applicable to all scheduled commercial banks including Regional Rural Banks. Under SAA, each bank branch in a rural or semi-urban area
was designated to serve an area of 15 to 25 villages and the branch was responsible for meeting the needs of bank credit of its service area.
The primary objective of SAA was to increase productive lending and forge effective linkages between bank credit, production, productivity
and increase in income levels. The SAA scheme was reviewed from time to time and appropriate changes were made in the scheme to
make it more effective.
The Service Area Approach scheme was reviewed in December 2004 and it was decided to dispense with the restrictive provisions of the
scheme while retaining the positive features of the SAA such as credit planning and monitoring of the credit purveyance. Accordingly, under
SAA, the allocation of villages among the rural and semi-urban branches of banks were made not applicable for lending except under
Government Sponsored Schemes. Thus, while the commercial banks and RRBs are free to lend in any rural and semi-urban area, the
borrowers have the choice of approaching any branch for their credit requirements.
Doubling of Farmers’ Income by 2022: The Government of India, in the Union Budget 2016-17, had announced its resolve to double the
income of farmers by 2022. Several steps have been taken towards attaining this objective including setting up of an inter-ministerial
committee for preparation of a blue print for the same. This agenda has also been reiterated by the government in several fora and has
acquired primacy from the point of view of rural and agricultural development. To achieve the objective of doubling farmer’s income by
2022. Lead Banks are accordingly advised to ensure the following:
• Work closely with NABARD in the preparation of Potential Linked Credit Plans (PLPs) & Annual Credit Plans (ACPs) keeping the above
strategy in consideration
• Include ‘Doubling of Farmer’s Income by 2022’ as a regular agenda under the Lead Bank Scheme in various fora such as SLBC, DCC,
DLRC and BLBC
• For the purpose of monitoring and reviewing the progress, Lead Banks may use the benchmarks as may be provided by NABARD
SHG-Bank Linkage Programme: SHG-Bank Linkage Programme was started on the basis of recommendation of S K Kalia Committee and an
action research project carried out by NABARD, the model of ‘SHG-BLP’ has evolved as a cost-effective mechanism for providing financial
services to the unreached and underserved poor households. Started as a pilot to link around 500 SHGs of poor to the formal financial
institutions during the year 1992-93 has now become the largest microfinance programme in the world, in terms of the client base and
outreach. The SHGs which follow ‘Panchsutras’ viz. conduct of regular group meetings, regular savings within the group, internal lending
based on the demand of members, timely repayment of loan and maintenance of proper books of accounts are considered to be of good
quality and over years have proved themselves to be good customers of Banks.
The NGO sector has played a prominent role of working as a Self Help Group Promoting Institution (SHPI) by organizing, nurturing and
enabling credit linkage of SHGs with banks. NABARD later coopted many others as SHPIs including the rural financial institutions (RRBs,
DCCBs, PACS), Farmers’ Clubs (FCs), SHG Federations, Individual Rural Volunteers (IRVs) etc.
Recognizing the importance of SHG Bank linkage, banks have been advised to meet the entire credit requirements of SHG members, as
envisaged in the Union Budget announcement for the year 2008-09, made by the Honorable Finance Minister, wherein it was stated as
under: "Banks will be encouraged to embrace the concept of Total Financial Inclusion. Government will request all scheduled commercial
banks to follow the example set by some public sector banks and meet the entire credit requirements of SHG members, namely,
(a) income generation activities,
(b) social needs like housing, education, marriage, etc. and
(c) debt swapping". Linking of SHGs with banks has thus been emphasized in the Monetary Policy Statements of Reserve Bank of India and
Union Budget announcements from time to time and various guidelines have been issued to banks in this regard.
Self-help groups are the groups formed by 10-20 commonly women from lower income segment involved in livelihood activities like making
candles, artificial jewellery, pavement vendors, hawkers, tailoring jobs, retail shops, livestock rearing, etc. Once the group is formed, the
members of the group are encouraged to contribute to a common fund of the group from the amount conveniently saved out from their
earnings. The fund so created by the members are used to lend internally for meeting their income generation activities and emergent
credit needs at such rate of interest, period of loan and other terms as the group may decide.
SHG-Bank Linkage Programme Guidelines:
Bank lending to SHGs should be included in branch credit plan, block credit plan, district credit plan and state credit plan of each bank.
Utmost priority should be accorded to the sector in preparation of these plans. It should also form an integral part of the bank’s corporate
credit plan.
The SHGs, registered or unregistered, which are engaged in promoting savings habits among their members are eligible to open savings
bank accounts with banks.
The banks would have the discretion to decide on the interest rates applicable to loans given to Self Help Groups/member beneficiaries.
No loan related and ad hoc service charges/inspection charges should be levied on priority sector loans up to ₹ 25,000. In the case of
eligible priority sector loans to SHGs/ JLGs, this limit will be applicable per member and not to the group as a whole.
Defaults by a few members of SHGs and/or their family members to the financing bank should not ordinarily come in the way of financing
SHGs per se by banks, provided the SHG is not in default. However, the bank loan may not be utilized by the SHG for financing a defaulter
member to the bank.
Priority Sector loans to SHGs are considered under “Weaker Sections” category.
Penal interest for Delayed Reporting / Wrong Reporting / Non-Reporting of Currency Chest Transactions:
Reporting of Currency Chest Transactions: The minimum amount of deposit into / withdrawal from currency chest will be ₹ 1,00,000 and
thereafter, in multiples of ₹ 50,000. The currency chests / Link Offices should invariably report all transactions through CyM – CC portal on
the same day by 6 pm.
In case Soiled note remittances to RBI remittances are wrongly reported as 'withdrawals', a penalty of ₹ 50,000 will be levied irrespective of
the value of remittance and period of such wrong reporting.
A flat penalty of ₹ 50,000 may be levied on the currency chests for delayed reporting irrespective of the value of net deposit of currency
transactions.
Penal interest shall be levied at the rate of 2% over the prevailing Bank Rate for the period of delayed reporting/wrong reporting/non-
reporting /inclusion of ineligible amounts in chest balances.
Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY-NULM): The Government of India, Ministry of Housing and Urban
Poverty Alleviation (MoHUPA), restructured the existing Swarna Jayanti Shahari Rozgar Yojana (SJSRY) and launched the National Urban
Livelihoods Mission (NULM) in 2013. NULM has been under implementation w.e.f. September 24, 2013 in all district headquarters
(irrespective of population) and all the cities with population of 1 lakh or more.
The Self Employment Program (SEP) of NULM focuses on providing financial assistance through provision of interest subsidy on loans to
support establishment of Individual & Group Enterprises and Self-Help Groups (SHGs) of urban poor. The erstwhile provision of capital
subsidy for USEP (Urban Self Employment Program) and UWSP (Urban Women Self-Help Program) under SJSRY has been replaced by
interest subsidy for loans to Individual enterprise (SEP-I), Group enterprise (SEP-G) and Self Help Groups (SEP-SHGs). With a view to
improving the livelihood opportunities for the poor in urban areas, Ministry of Housing and Urban Poverty Alleviation (UPA Division).
The Mission with enhanced scope was renamed as “Deendayal Antyodaya Yojana -National Urban Livelihoods Mission (DAY-NULM)” in
2016.
The operational guidelines of the Self Employment Program (SEP) component of DAY-NULM are as under:
• The SEP provides financial assistance to individuals/groups including street venders/hawkers of urban poor for setting up gainful self-
employment ventures/ micro-enterprises, suited to their skills, training, aptitude and local conditions.
• The programme also supports Self Help Groups (SHGs) of urban poor to access easy credit from bank and avail interest subsidy on SHG
loans.
• The SEP will also focus on technology, marketing and other support services to the above beneficiaries engaged in micro enterprises
for their livelihoods and will also facilitate issuance of credit cards for working capital requirement of the entrepreneurs.
• The underemployed and unemployed urban poor will be encouraged to set up small enterprises relating to manufacturing, service and
small business for which there is considerable local demand.
• Local skills and local crafts should be particularly encouraged.
• Each Urban Local Body (ULB) should develop a compendium of such activities/projects keeping in view skills available, marketability of
products, costs, economic viability etc
• The percentage of women beneficiaries under SEP shall not be less than 30 percent. SCs and STs must be benefited at least to the
extent of the proportion of their strength in the city/town population of poor.
• A special provision of 3 percent reservation should be made for the differently-abled under this program.
• In view of the Prime Minister’s 15-Point Program for the Welfare of Minorities, at least 15 percent of the physical and financial targets
under this component shall be earmarked for the minority communities.
Deendayal Antyodaya Yojana- National Urban Livelihoods Mission (DAY-NULM):
• The Community Organizers (COs) and professionals from Urban Local Body (ULB) will identify the prospective
beneficiaries from among the urban poor. The community structures formed under Social Mobilization &
Institutional Development (SM&ID) component of DAY- NULM viz. Self Help Groups (SHGs) and Area Level
Federations (ALFs) may also refer prospective individual and group entrepreneurs for purpose of financial
assistance under SEP to ULB.
• The beneficiaries may directly approach ULB or its representatives for assistance. Banks may also identify
prospective beneficiaries at their end and forward such cases directly to ULB. The Banks may also use their
empaneled Business Correspondents (BCs) and Business Facilitators (BFs) to increase the outreach.
• The application for individual and group enterprise loans will be sponsored by the Urban Local Body (ULB) which
will be the sponsoring agency for the individual and group enterprise.
• The ULB will create awareness regarding SEP to the prospective beneficiaries through mass media campaigns,
Information Education and Communication (IEC) activities, advertisements in local newspapers, City Livelihoods
Centres (CLCs) etc. The ULB may also disseminate information regarding this component through active
involvement of Resource Organizations and its field staff.
• A Task Force constituted at ULB level will scrutinize the applications based on experience, skills, viability of activity,
scope of the activity etc. Thereafter, the Task Force will shortlist the applications and call for interview of the
applicants before recommending or rejecting the application or call for additional information from the applicant if
required.
The Chief Executive Officer (CEO)/ Municipal Commissioner of ULB will be responsible to constitute the Task Force and will be the Chairman
of the Task force. There could be more than 1 task force at ULB level depending upon the size/population of the ULB.
Sr. No. TASK Force at ULB level Role
1. Chief Executive Officer (CEO) ULB/ Municipal Commissioner of ULB/ or any representative Chairman
authorized by CEO ULB
2. Lead District Manager (LDM) Member
3. City Project Officer (CPO), ULB/ or any authorized representative of ULB Member Convenor
4. Representative from District Industries Centre (DIC) Member
5. Senior Branch Managers (Max-2) of banks Member
6. Representatives(2) of Area Level Federation / City Level Federation Member
The case duly recommended by the task force will be forwarded by the ULB to the concerned banks for further processing. Such cases
recommended by task force have to be processed by concerned banks within a time frame of 15 days.
Banks may also directly accept the loan applications of urban poor beneficiaries on the basis of relevant documents as per the guidelines of
Prime Minister MUDRA Yojana (PMMY) or any other such scheme without the need of having prior sponsoring from ULB. The banks can
send details of such loans sanctioned by them to ULBs for confirmation of their eligibility for interest subsidy under DAY-NULM.
Educational Qualifications and Training Requirement: No minimum educational qualification is required for prospective beneficiaries
under this component. However where the identified activity for micro-enterprise development requires some special skills appropriate
training must be provided to the beneficiaries before extending financial support.
• Employment through Skills Training and Placement (EST&P): Financial assistance should be extended only after the prospective
beneficiary has acquired required skills for running the proposed micro-enterprise.
• Entrepreneurship Development Program (EDP): In addition to skill training of the beneficiaries, the ULB will also arrange to conduct
Entrepreneurship Development Program for 3-7 days for individual and group entrepreneurs.
• Follow-up entrepreneurial support to Individual and Group entrepreneurs: After financing to Individual and Group beneficiaries, the
ULB will also arrange to conduct follow-up Entrepreneurship Development Programme (EDP) as and when required.
Pattern of Financial Assistance:
• The financial assistance available to urban poor in setting up individual and group enterprises will be in the form of Interest subsidy on
the bank loans. Interest subsidy, over and above 7% rate of interest will be available on a bank loan for setting up of individual or
group enterprises.
• An additional 3 percent interest subvention will be provided to all Women Self Help Groups (WSHGs) who repay their loan in time.
• The Interest subsidy will be subject to timely repayment of the loan (as per the loan repayment schedule) and suitable certification
obtained from banks by the ULB. The additional 3% interest subvention amount will be reimbursed to the eligible WSHGs.
All scheduled commercial banks (SCBs) and Small Finance Banks which are on the Core Banking Solution (CBS) platform would be eligible for
getting interest subvention under the scheme.
The prospective beneficiary should have attained the age of 18 Years at the time of applying for loan.
Individual Enterprises (SEP-I)-Loan & Subsidy: The Maximum unit Project Cost for an individual micro-enterprise is ₹ 2,00,000 (₹ Two
Lakhs). Banks are mandated not to accept collateral security in the case of loans up to ₹ 10 lakhs extended to units in the MSE sector. The
banks may approach Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) setup by Small Industries Development Bank
(SIDBI) or any other appropriate guarantee fund for the purpose of availing guarantee cover for SEP loans as per the eligibility of the activity
for guarantee cover. Repayment schedule would range between 5 to 7 Years .
Group Enterprises (SEP-G) -Loan & Subsidy: A Self Help Group (SHG) or members of an SHG constituted under DAY-NULM or a group of
urban poor for self-employment can avail benefit of subsidized loans under this component from any bank. The group enterprises should
have minimum of Three (3) members with a minimum of 70% of the members from urban poor families. More than one person from the
same family should not be included in the same group. The group will be eligible for a maximum loan of Rs. 2 Lakh per member or Rs. 10
Lakh.
SHG-Bank Linkage – General Guidelines: SHGs may be sanctioned Savings Linked Loans (varying from a saving to loan ratio of 1:1 to 1:4)
after due assessment or grading by banks. However, in case of matured SHGs, loans may be given beyond the limit of four times the savings
as per the discretion of the bank.
The State Mission management Unit (SMMU) at the State level and City Mission Management Unit (CMMU) at the ULB level will closely
monitor progress of activities / targets under this component, undertake reporting and evaluation.
RBI opens banks’ liquidity tap for NBFCs, HFCs The RBI has announced an additional liquidity facility worth Rs. 1,34,000 crore for banks to
purchase assets from and on-lending to NBFCs and HFCs. This would be available within the Facility to Avail Liquidity for Liquidity Coverage
Ratio (FALLCR) within the mandatory SLR requirement. With immediate effect, banks will be permitted to reckon an increase in FALLCR of
1% of the banks’ NDTL as level 1 High Quality Liquid Assets (HQLAs) for computing LCR, to the extent of incremental outstanding credit to
NBFCs and HFCs, over and above the amount of credit to NBFCs / HFCs outstanding on their books as on date.
IBBI puts age cap on resolution professionals: Resolution professionals will not be eligible to obtain the ‘Authorization for Assignment’
from the Insolvency Professional Agency (IPA) once they attain 70 years of age. From January 1, 2020, insolvency professionals cannot take
up assignments in absence of this authorization. The age limit has been put in place considering the work pressures of resolution
professionals. However, there is no age bar in being employed as a professional with an Insolvency Professional Entity (IPE). An individual
can seek registration as an insolvency professional even while in employment; but will need to surrender the employment in order to have
an “Authorization for Assignment”. The authorization can be surrendered again, in favour of employment. Also, insolvency professionals
cannot engage or appoint any of their relatives or related parties for or in connection with any work relating to any of the Corporate
Insolvency Resolution Process (CIRP) assignments. This restriction will hold good for a period of 12 months from the date of his cessation
from such process. They cannot get employed even with the creditors (with voting power in excess of 10%) supporting the corporate
debtor.
RBI adopts framework to strengthen citizens trust The RBI’s medium-term strategy framework, named Utkarsh 2022, will guide the bank’s
inner workings through 2022. The framework will be focused around achieving excellence in the RBI’s mandates and strengthening the trust
of citizens and other institutions. The framework stipulates five core purposes of the RBI, as follows: To foster confidence in the internal and
external value of the rupee; to contribute to macro-economic stability to regulate markets and institutions under its ambit to ensure
financial system stability and consumer protection; to promote the integrity, efficiency, inclusiveness and competitiveness of the financial
and payment systems; to ensure efficient management of currency and banking services to the government & banks; and, to support
balanced, equitable and sustainable economic development of the country.
IBBI: Liquidation process must be completed in a year IBBI has changed the process of liquidation to make it finish within one year of its
commencement. Furthermore, a compromise between the stakeholders must happen within 90 days of the liquidation order.
RBI relaxes overseas borrowing norms for Companies, NBFCs. In keeping with revised External Commercial Borrowing (ECB) guidelines, RBI
has permitted corporate borrowers classified as SMA-2 (Special Mention Account 2) to raise foreign currency funds and use the proceeds to
make one-time bad loan settlements with their domestic lenders. Indian banks can also sell these loans to foreign lenders abroad.
Companies have also been allowed to raise ECBs with minimum average maturity period of 7 years for repayment of rupee loans availed
domestically for capital expenditure. For borrowings for purposes other than capital expenditure, and, for on-lending by NBFCs, the
minimum average maturity period of the ECB is required to be 10 years.
Usage of ATMs – Free ATM transactions:

• It is hereby clarified that transactions which fail on account of technical reasons like hardware, software, communication issues; non-
availability of currency notes in the ATM; and other declines ascribable directly / wholly to the bank / service provider; invalid PIN /
validations; etc., shall not be counted as valid ATM transactions for the customer. Consequently, no charges therefor shall be levied.
• Non-cash withdrawal transactions (such as balance enquiry, cheque book request, payment of taxes, funds transfer, etc.), which
constitute ‘on-us’ transactions (i.e., when a card is used at an ATM of the bank which has issued the card) shall also not be part of the
number of free ATM transactions.
The Central Government has nominated Shri Atanu Chakraborty, Secretary, Department of Economic Affairs, Ministry of Finance,
Government of India, New Delhi as a Director on the Central Board of Directors of Reserve Bank of India.
Reserve Bank of India Constitutes Working Group to Review Regulatory and Supervisory Framework for Core Investment Companies. Shri
Tapan Ray, Non-Executive Chairman, Central Bank of India and former Secretary, Ministry of Corporate Affairs, Govt. of India is appointed as
Chairperson.
• To examine the current regulatory framework for CICs in terms of adequacy, efficacy and effectiveness of every component thereof
and suggest changes therein.
• To assess the appropriateness of and suggest changes to the current approach of the Reserve Bank of India towards registration of
CICs including the practice of multiple CICs being allowed within a group.
• To suggest measures to strengthen corporate governance and disclosure requirements for CICs
• To assess the adequacy of supervisory returns submitted by CICs and suggest changes therein
• To suggest appropriate measures to enhance RBI’s off-sight surveillance and on-site supervision over CICs.
The Task Force on Offshore Rupee Markets, set up by the Reserve Bank of India in February 2019 and chaired by Smt. Usha Thorat,
former Deputy Governor, RBI, submitted its report to the Governor:
The key recommendations of the Task Force are:
(a) To extend onshore market hours to improve access of overseas users;
(b) To permit Indian banks to freely offer prices to global clients around the clock;
(c) To enable Rupee derivatives (settled in foreign currency), to be traded in the International Financial Services Centers (IFSC) in India, to
begin with on exchanges in the IFSC.
(d) To allow users to undertake forex transactions up to USD 100 million in OTC (over the counter) currency derivative market without the
need to establish underlying exposure.
(e) To facilitate non-residents to hedge their foreign exchange exposure onshore.
The Reserve Bank of India (RBI) has imposed, by an order dated July 15, 2019, monetary penalty of ₹ 70 million on State Bank of India
(the bank) for non-compliance with the directions issued by RBI on:
(i) Income Recognition and Asset Classification (IRAC) norms
(ii) code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits
(CRILC), and
(iii) fraud risk management and classification and reporting of frauds.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A (1)(c) read with sections 46(4)(i) and
51(1) of the Banking Regulation Act, 1949 (the Act).
India’s External Debt as at the end of March 2019: At end-March 2019, India’s external debt was placed at US$ 543.0 billion, recording an
increase of US$ 13.7 billion over its level at end-March 2018.
At end-March 2019, India’s external debt witnessed an increase of 2.6 per cent over its level at end-March 2018, primarily on account of an
increase in short-term debt, commercial borrowings and non-resident Indian (NRI) deposits. The increase in external debt was partially
offset by valuation gain resulting from the appreciation of the US dollar against Indian rupee and other major currencies. The external debt
to GDP ratio stood at 19.7 per cent at end-March 2019, lower than its level of 20.1 per cent at end-March 2018.
Reserve Bank releases the report of the Expert Committee to Review the Extant Economic Capital Framework of the RBI:
The Reserve Bank of India (RBI) has developed an Economic Capital Framework (ECF) to provide an objective, rule-based, transparent
methodology for determining the appropriate level of risk provisions to be made under Section 47 of the Reserve Bank of India Act, 1934.
The framework was developed in 2014–15, and while it was used to inform the risk provisioning and surplus distribution decisions for that
year, it was formally operationalized in 2015–16.
As decided by the Central Board of the RBI in its meeting held on November 19, 2018, the RBI, in consultation with the Government of India
(Government), constituted an Expert Committee to review the extant ECF of the RBI. Shri Subhash Chandra Garg, the then Secretary,
Department of Economic Affairs, was initially a member of the Committee. Subsequently, with the appointment of Shri Rajiv Kumar, Finance
Secretary, the composition of the Committee is as under:
(i) Dr. Bimal Jalan Chairman
(ii) Dr. Rakesh Mohan Vice-Chairman
(iii) Shri Bharat N. Doshi Member
(iv) Shri Sudhir Mankad Member
(v) Shri Rajiv Kumar Member
(vi) Shri N.S. Vishwanathan Member
The Committee recognized that the RBI’s Contingency Risk Buffer (CRB) is, inter alia, the country’s savings for a ‘rainy day’ (a financial
stability crisis) which has been consciously maintained with RBI in view of its role as Lender of Last Resort (LoLR). Financial stability risks are
those rarest of the rare, fat tail risks whose likelihood can never be ruled out, especially in light of the Global Financial Crisis (GFC) and
whose impact can be potentially devastating. Public policy prudence and extant statutory provisions require the RBI to maintain appropriate
level of risk buffers for this purpose. The Committee recommended that the CRB to be maintained at a range of 5.5 per cent to 6.5 per
cent (This represented 1.2 to 1.4 per cent of the GDP) of the RBI’s balance sheet which is above the available level of 2.4 per cent of
balance sheet as on June 30, 2018 (vis-à-vis a target of 3.7 per cent of balance sheet).
Application of these recommendations to RBI’s 2017-18 balance sheet is seen to result in RBI’s risk equity levels in a range of 25.4 per cent
to 20.8 per cent of balance sheet which will enable the RBI to retain one of the highest levels of financial resilience among central banks
globally.
Reserve Bank releases the report of the Expert Committee to Review the Extant Economic Capital Framework of the RBI:
Committee recommended adopting the Expected Shortfall (ES) methodology (in place of the extant Stressed-Value at Risk) for measuring
market risk on which there was growing consensus among central banks as well as commercial banks over the recent years. While central
banks are seen to be adopting ES at 99 per cent confidence level (CL), the Committee recommended adoption of a target of ES 99.5 per cent
CL and a range defined between the target and downward risk tolerance of 97.5 per cent (both under stress conditions).
RBI board has approved the transfer of Rs 1.76 lakh crore to the government of India. This sum will comprise of Rs 1.23 lakh crore of
surplus for the year 2018-19 and Rs 52,637 crore of excess provisions identified as per the revised Economic Capital Framework (ECF)
adopted at the meeting. Out of this, Rs 28,000 crore has already been paid as interim dividend.
India’s International Investment Position (IIP), March 2019:
• International financial assets of Indian residents increased by US$ 8.4 billion during 2018-19 reached to US$ 436.4 billion.
• The ratio of total overseas financial assets of Indian residents declined to 23.4 per cent of GDP in March 2019, from 24.1 per cent a
year ago.
• The ratio of net IIP of India to GDP remained unchanged from a year ago at (-)15.9 per cent in March 2019.
Real Time Gross Settlement (RTGS) System – Increase in operating hours: At present, the RTGS system is available for customer
transactions from 8:00 am to 6:00 pm and for inter-bank transactions from 8:00 am to 7:45 pm. In order to increase the availability of the
RTGS system, it has been decided to extend the operating hours of RTGS and commence operations for customers and banks from 7:00
am.
Financial Inclusion - Access to Banking Services - Basic Savings Bank Deposit Account (BSBDA):Banks are now advised to offer the
following basic minimum facilities in the BSBD Account, free of charge, without any requirement of minimum balance.
• i) Deposit of cash at bank branch as well as ATMs/CDMs
• (ii) Receipt/ credit of money through any electronic channel or by means of deposit /collection of cheques drawn by Central/State
Government agencies and departments
• (iii) No limit on number and value of deposits that can be made in a month
• (iv) Minimum of four withdrawals in a month, including ATM withdrawal
• (v) ATM Card or ATM-cum-Debit Card
Enabling Framework for Regulatory Sandbox (RS):The Reserve Bank of India (RBI) set up an inter-regulatory Working Group (WG) in July
2016 to look into and report on the granular aspects of FinTech and its implications so as to review the regulatory framework and respond
to the dynamics of the rapidly evolving FinTech scenario under the chairmanship of Shri Sudarshan Sen, Executive Director, RBI.
One of the key recommendations of the WG was to introduce an appropriate framework for a Regulatory Sandbox (RS) within a well-
defined space and duration where the financial sector regulator will provide the requisite regulatory guidance, so as to increase efficiency,
manage risks and create new opportunities for consumers.
The Regulatory Sandbox

• RS usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or
may not) permit certain regulatory relaxations for the limited purpose of the testing.
• The RS allows the regulator, the innovators, the financial service providers (as potential deployers of the technology) and the
customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while
carefully monitoring and containing their risks.
• It can provide a structured avenue for the regulator to engage with the ecosystem and to develop innovation-enabling or innovation-
responsive regulations that facilitate delivery of relevant, low-cost financial products.
• The RS is an important tool which enables more dynamic, evidence-based regulatory environments which learn from, and evolve with,
emerging technologies.
Objectives: The objective of the RS is to foster responsible innovation in financial services, promote efficiency and bring benefit to
consumers.
The target applicants for entry to the RS, are FinTech companies including startups, banks, financial institutions and any other company
partnering with or providing support to financial services businesses.
Every applicant shall satisfy the following conditions:

• It should either be a company incorporated and registered in India or banks licensed to operate in India. Further, financial institutions
constituted under a statute in India would also be eligible.
• The entity shall have a minimum net worth of Rs. 25 lakh as per its latest audited balance sheet.
Enabling Framework for Regulatory :
An indicative negative list of products/services/technology which may not be accepted for testing is given below.
• Credit registry
• Credit information
• Crypto currency/Crypto assets services
• Trading/investing/settling in crypto assets
• Initial Coin Offerings, etc.
• Chain marketing services
• Any product/services which have been banned by the regulators/Government of India.
The RBI may consider relaxing, if warranted, some of the regulatory requirements for applicants for the duration of the RS on a case-to-
case basis. A few of the examples of regulatory relaxation which may be granted are given below:
• Liquidity requirements
• Board composition
• Management experience
• Financial soundness
• Track record
End-to-End Sandbox Process: A detailed end-to-end sandbox process, including the testing of the products/innovations by FinTech entities,
shall be overseen by the FinTech Unit (FTU) under overall guidance of the Inter Departmental Group (IDG) of RBI with participation of
domain experts.
The Sandbox Process: Stages: Each cohort of the RS shall have the following five stages:
1. Preliminary Screening
2. Test Design
3. Application Assessment
4. Testing
5. Evaluation
Enabling Framework for Regulatory :
An indicative list of innovative products/services/technology which could be considered for testing under RS is given
below.
Innovative Products/Services
• Retail payments
• Money transfer services
• Marketplace lending
• Digital KYC
• Financial advisory services
• Wealth management services
• Digital identification services
• Smart contracts
• Financial inclusion products
• Cyber security products
Innovative Technology
• Mobile technology applications (payments, digital identity, etc.)
• Data Analytics
• Application Program Interface (APIs) services
• Applications under block chain technologies
• Artificial Intelligence and Machine Learning applications
Processing of e-mandate on cards for recurring transactions:
• The maximum permissible limit for a transaction under this arrangement shall be ₹ 2,000/- for transactions
performed using all types of cards – debit, credit and Prepaid Payment Instruments (PPIs), including wallets.
• No charges shall be levied or recovered from the cardholder for availing the e-mandate facility on cards for
recurring transactions.
Launch of Utkarsh 2022 – Reserve Bank of India’s Medium-term Strategy Framework:

• Shri Shaktikanta Das, Governor today launched ‘Utkarsh 2022’, the Reserve Bank of India’s Medium-term Strategy
Framework, in line with the evolving macroeconomic environment, to achieve excellence in the performance of
RBI’s mandates and strengthening the trust of citizens and other institutions.
• A formal strategic management framework was launched in April 2015 to rearticulate the core purpose, values and
vision statement of the Reserve Bank so as to delineate its strategic objectives in contemporary terms, to provide a
framework and backdrop within and against which its policies would be formulated. These core purposes
(reflecting the RBI’s commitments to the nation) and values (Public Interest, Integrity and Independence,
Responsiveness and Innovation, Diversity and Inclusiveness, and Introspection and Pursuit of Excellence) still
remain relevant and valid;
The Medium-term Vision Statements set out the following visions:
• Excellence in performance of statutory and other functions;
• Strengthened trust of citizens and other Institutions in the RBI;
• Enhanced relevance and significance in national and global roles;
• Transparent, accountable and ethics-driven internal governance;
• Best-in-class and environment friendly digital as well as physical infrastructure; and
• Innovative, dynamic and skilled human resources
Survey of Professional Forecasters on Macroeconomic Indicators – Results of the 59th Round: The Reserve Bank has
been conducting the Survey of Professional Forecasters (SPF) since September 2007.
• Real gross domestic product (GDP) is likely to grow at 6.9 per cent in 2019-20 and by 7.2 per cent in 2020-21.
• Real private final consumption expenditure (PFCE) growth is expected at 7.6 per cent during 2019-20, improving to
8.0 per cent during 2020-21.
• The growth of real gross fixed capital formation (GFCF) is likely to moderate to 7.6 per cent in 2019-20, but improve
to 9.1 per cent in 2020-21.
• Forecasters have assigned the maximum probability to real GDP growth being in the range of 6.5-6.9 per cent in
2019-20 and 7.0-7.4 per cent in 2020-21
• Real gross value added (GVA) is expected to grow by 6.7 per cent in 2019-20 and to rise by 7.1 per cent in 2020-21,
supported by upticks in industrial and services sector activity.
• Headline consumer price index (CPI) inflation is expected at 3.3 per cent in Q2:2019-20 and at 4.0 per cent by
Q4:2019-20.
• The growth of merchandise exports and merchandise imports during 2019-20 is expected at 4.3 per cent and 4.4
per cent, respectively, and improvement is expected in 2020-21
• The current account deficit (CAD) is expected at 2.0 per cent of GDP in 2019-20 and at 2.1 per cent of GDP 2020-
21.
• The Indian rupee is likely to remain within the range of ₹69.0 - ₹70.0 per US Dollar till Q1:2020-21
Households’ Inflation Expectations Survey: The survey is conducted at bi-monthly intervals by the Reserve Bank of
India. It provides directional information on near-term inflationary pressures as expected by the respondents and may
reflect their own consumption patterns. Hence, they should be treated as households’ sentiments on inflation.
Three months ahead median inflation expectations of households remained unchanged at 7.6 per cent i.e., the same as
in the May 2019 round of the survey; one year ahead median inflation expectations moderated by 20 basis points to 7.9
per cent
Consumer Confidence Survey : The survey was conducted by RBI in 13 major cities – Ahmedabad; Bengaluru; Bhopal;
Chennai; Delhi; Guwahati; Hyderabad; Jaipur; Kolkata; Lucknow; Mumbai; Patna; and Thiruvananthapuram - and
obtained responses on households’ perceptions and expectations on the general economic situation, the employment
scenario, the overall price situation and their own income and spending.
Current situation index (CSI) and the future expectations index (FEI) are compiled on the basis of net responses on the
economic situation, income, spending, employment and the price level for the current period and a year ahead,
respectively.
Industrial Outlook Survey of the Manufacturing Sector: The survey is being released by RBI at the end of each quarter
and encapsulates qualitative assessments of the business climate by companies in India’s manufacturing sector in a
quarter (i.e.Q1) and their expectations for next quarter (i.e.Q2). The nine indicators considered are: (1) overall business
situation; (2) production; (3) order books; (4) inventory of raw material; (5) inventory of finished goods; (6) profit
margins; (7) employment; (8) exports; and (9) capacity utilisation.
OBICUS Survey on the Manufacturing sector: The survey provides a snapshot of demand conditions in India’s
manufacturing sector and is being released by RBI at the end of each quarter.
Standing Liquidity Facility for Primary Dealers: In the Third Bi-monthly Monetary Policy Statement 2019-20 of the
Monetary Policy Committee (MPC) of August 07, 2019, the policy repo rate under the Liquidity Adjustment Facility (LAF)
has been reduced by 35 basis points to 5.40 per cent from 5.75 per cent with immediate effect. Accordingly, the
Standing Liquidity Facility provided to Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank
would be available at the revised repo rate of 5.40 per cent with effect from August 07, 2019.
Change in Bank Rate: As announced in the Third Bi-Monthly Monetary Policy Statement 2019-20 of August 07, 2019,
the Bank Rate is revised downwards by 35 basis points from 6.00 per cent to 5.65 per cent with immediate effect.
Fit and Proper’ Criteria for Elected Directors on the Boards of PSBs: These Directions shall
be applicable to Public Sector Banks.
• All the banks are required to constitute a Nomination and Remuneration Committee
[referred to as the Committee]consisting of a minimum of three non-executive directors
from amongst the Board of Directors [ referred to as Board], out of which not less than
one-half shall be independent directors and should include at least one member from
Risk
• Management Committee of the Board, for undertaking a process of due diligence to
determine the 'fit and proper‘ status of the persons to be elected as directors .
• The non-executive Chairperson of the bank may be appointed as a member of the
Committee but shall not chair such Committee.
• The Board should also nominate one among them as Chairman of the Committee.
• The quorum required for committee meeting is three, including the Chairman. In case
the absence of any nominated member results in want of quorum, the Board may
nominate any other non-executive director in his place for the meeting.
• The candidate’s age should be between 35 to 67 years as on the cut-off date fixed for
submission of nominations for election.
• The candidate should at least be a graduate.
Fit and Proper’ Criteria for Elected Directors on the Boards of PSBs:
Disqualifications: Following candidates can not be appointed as directors:
• The candidate should not be a member of the Board of any bank or the Reserve Bank or a Financial Institution (FI)
or an Insurance Company or a NOFHC holding any other bank.
• A person connected with hire purchase, financing, money lending, investment, leasing and other para banking
activities shall not be considered for appointment as elected director on the board of a PSB. However, investors of
such entities would not be disqualified for appointment as directors if they do not enjoy any managerial control in
them.
• No person may be elected/ re-elected on the Board of a bank if he/she has served as director in the past on the
board of any bank/FI/RBI/Insurance Company under any category for six years, whether continuously or
intermittently.
• The candidate should not be engaging in the business of stock broking.
• The candidate should not be holding the position of a Member of Parliament or State Legislature or Municipal
Corporation or Municipality or other local bodies.
• The candidate should not be acting as a partner of a Chartered Accountant firm which is currently engaged as a
Statutory Central Auditor of any nationalised bank or State Bank of India.
• The candidate should not be acting as a partner of a Chartered Accountant firm which is currently engaged as
Statutory Branch Auditor or Concurrent Auditor of the bank in which nomination for election is filed.
• An elected director shall hold office for three years and shall be eligible for re-election: Provided that no such
director shall hold office for a period exceeding six years, whether served continuously or intermittently.
Marginal Standing Facility: As announced in the Third Bi-monthly Monetary Policy Statement, 2019-20,
today, it has
been decided by the Monetary Policy Committee (MPC) to reduce the policy Repo rate under the
Liquidity Adjustment
Facility (LAF) by 35 basis points from 5.75 per cent to 5.40 per cent with immediate effect.
Consequently, the Marginal Standing Facility (MSF) rate stands adjusted to 5.65 per cent with
immediate effect.
Liquidity Adjustment Facility – Repo and Reverse Repo Rates: As announced in the Third Bi-monthly
Monetary Policy Statement, 2019-20, today, it has been decided by the Monetary Policy Committee
(MPC) to reduce the policy Repo rate under the Liquidity Adjustment Facility (LAF) by 35 basis points
from 5.75 per cent to 5.40 per cent with immediate effect.
Consequently, the Reverse Repo rate under the LAF stands adjusted to 5.15 per cent with immediate
effect.
Cash Withdrawal at Points-of-Sale (PoS) Devices:

• cash withdrawal to ₹ 1000/- per day in Tier I and II centres and ₹ 2,000/- per day in Tier III to VI
centres.
• customer charges, if any, on such cash withdrawals to not more than 1% of the transaction amount.
• TRADE CREDITS FRAMEWORK:
• Trade Credits (TC) refer to the credits extended by the overseas supplier, bank, financial institution
and other permitted recognised lenders for maturity, as prescribed in this framework, for imports of
capital/non-capital goods permissible under the Foreign Trade Policy of the Government of India.
Depending on the source of finance, such TCs include suppliers’ credit and buyers’ credit from
recognised lenders.
•
• TC for imports into India can be raised in any freely convertible foreign currency (FCY denominated
TC) or Indian Rupee (INR denominated TC), as per the framework given in the table below:
•
• Buyers’ Credit and Suppliers’ Credit are two types of TCs.
•
• Person resident in India acting as an importer is elgible borrower.
•
• The period of TC, reckoned from the date of shipment, shall be up to three years for import of capital
goods. For non-capital goods, this period shall be up to one year or the operating cycle whichever is
less. For shipyards / shipbuilders, the period of TC for import of non-capital goods can be up to three
years.
•
•
• For suppliers’ credit: Supplier of goods located outside India.
•
• For buyers’ credit: Banks, financial institutions, foreign equity holder(s) located outside India and
financial institutions in IFSCs located in India.
•
• Change of currency of TC from one freely convertible foreign currency to any other freely convertible
foreign currency as well as to INR is freely permitted. Change of currency from INR to any freely
convertible foreign currency is not permitted.
•
• TC can be raised by a unit or a developer in a SEZ including Free Trade and Warehousing Zones
(FTWZ).
•
• Limit of TCs: Up to USD 150 million or equivalent per import transaction for oil/gas refining &
marketing, airline and shipping companies. For others, up to USD 50 million or equivalent per import
transaction.
•
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Mr. Nilay (NABARD GRADE B 2019)

IRDA 2017: 8 Final Selection

RBI GRADE B STUDY

MOCK TEST FOR RBI GRADE B

RBI relief for e-wallet users in fraud cases:

Basel III Capital Regulations- Review of transitional arrangements:

All farmers other than marginal farmers:

Security requirement may be as under:

Minimum Average Maturity Period(MAMP):

Cost: Benchmark rate plus 450 bps spread.

Forms of TC: Buyers’ Credit and Suppliers’ Credit.

Eligible borrower: Person resident in India acting as an importer.

Cost: Benchmark rate plus 250 bps spread.

Transactions for the purpose of hedging interest rate risk

Transactions for the purpose of hedging interest rate risk

Payment and Settlement Systems in India: Vision 2019 – 2021:

Foreign Exchange Reserves : US $ 420.0 Billion as on 31st March 2019.

Basis for classification – Principal or interest payment or

• DAY-NRLM is designed to be a highly intensive program and focuses on intensive application of

The eligibility criteria for the SHGs to avail loans:

Detection and Impounding of Counterfeit Notes:

• For cases of detection of Counterfeit Notes up to 4 pieces, in a single transaction, a consolidated

Exchange of soiled notes:

• Payments Banks should also be invited to attend the meetings.

• The Lead District Manager (LDM) convenes the DCC meetings.

Usage of ATMs – Free ATM transactions:

The Regulatory Sandbox

Every applicant shall satisfy the following conditions:

Launch of Utkarsh 2022 – Reserve Bank of India’s Medium-term Strategy Framework:

Cash Withdrawal at Points-of-Sale (PoS) Devices:

RBI Grade B 2018: 5 Final Selection

SEBI Grade A 2018: 12 Final Selection

Approx. 80-85% questions asked in these

RBI GRADE B STUDY

MOCK TEST FOR RBI GRADE B

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