Monetary and Credit Information Review - আরবিআই - Reserve Bank of India
Monetary and Credit Information Review
Volume XII MONETARY AND CREDIT INFORMATION REVIEW Banking Regulation RBI amends Basel III Capital Regulations On a review of the existing capital adequacy guidelines, the Reserve Bank on March 1, 2016 made some amendments to the treatment of certain balance sheet items for the purposes of determining banks’ regulatory capital. The review was carried out with a view to further aligning the definition of regulatory capital with the internationally adopted Basel III capital standards, issued by the Basel Committee on Banking Supervision (BCBS). The salient features of the amendments were: Treatment of Revaluation Reserves Revaluation reserves arising from change in the carrying amount of a bank’s property consequent upon its revaluation would be considered as common equity tier 1 capital (CET1) at a discount of 55 per cent instead of Tier 2 capital as earlier, subject to following conditions:
Treatment of Foreign Currency Translation Reserves Foreign Currency Translation Reserves (FCTR) arising due to translation of financial statements of a bank’s foreign operations to the reporting currency may be considered as CET1 capital at a discount of 25 per cent subject to meeting the following conditions:
Treatment of Deferred Tax Assets
These amendments are applicable with immediate effect. (/en/web/rbi/-/notifications/master-circular-basel-iii-capital-regulations-revision-10294) Interest Rates on Deposits and Advances The Reserve Bank on March 3, 2016 issued the Master Directions (MD) on Interest Rates on Deposits and Advances. While the Master Directions on Interest Rates on Deposits is applicable to all scheduled commercial banks (including RRBs) accepting deposits in rupee and foreign currency, the Master Directions on Interest Rates on Advances are applicable to all scheduled commercial banks (excluding RRBs), granting rupee and foreign currency advances to their customers. (i) Master Direction on Interest Rates on Advances (ii) Master Direction on Interest Rate on Deposits Background The Reserve Bank has started issuing Master Directions on all regulatory matters beginning January 2016 to streamline compliance in pursuance of the decision announced in the Fourth Bi-monthly Monetary Policy Statement, 2015-16 on September 29, 2015. The Master Directions consolidate instructions on rules and regulations framed by the Reserve Bank under various Acts including banking issues and foreign exchange transactions. The process of issuing Master Directions involves issuing one Master Direction for each subject matter covering all instructions on that subject. Any change in the rules, regulation or policy is communicated during the year by way of circulars/press releases. The Master Directions will be updated suitably and simultaneously whenever there is a change in the rules/regulations or there is a change in the policy. Explanations of rules and regulations will be issued by way of Frequently Asked Questions (FAQs) after issue of the Master Directions in easy to understand language wherever necessary. With the issue of this Master Direction, the instructions/guidelines contained in the circulars listed therein stand repealed. Instructions on Liquidity Risk Management revised The Reserve Bank on March 23, 2016 revised certain instructions on measuring Liquidity Risk Management for Basel III norms, in view of recent developments, feedback received from the stakeholders and experience gained. Some of the revised norms included:
Foreign Exchange Management Grant of EDF Waiver for Export of Goods Free of Cost The Reserve Bank on March 3, 2016 advised Authorised Dealer (AD) Category – I banks to consider requests from status holder exporters for grant of Export Declaration Form (EDF) waiver, for export of goods free of cost based on the revised norm. Government of India, had earlier revised the norm and notified that the status holders would be entitled to freely export exportable items on free of cost basis for export promotion subject to an annual limit of ₹ 10 lakh or 2 per cent of average annual export realisation during preceding three licensing years whichever is lower. (/en/web/rbi/-/notifications/grant-of-edf-waiver-for-export-of-goods-free-of-cost-10297) Payment and Settlement Systems Data on NEFT Transactions of Walk-in Customers From the quarter ending March 31, 2016, members banks do not need to submit data pertaining to National Electronic Funds Transfer (NEFT) transactions by walk-in customers (those not having an account with the bank). The Reserve Bank may, however, call for adhoc reports regarding the data for NEFT transactions by walkin customers as and when required. Hence, banks may continue to maintain such data at their end. (/en/web/rbi/-/notifications/neft-customer-service-and-charges-adherence-to-procedural-guidelines-and-circulars-10302) Concept Paper on Card Acceptance Infrastructure The Reserve Bank on March 8, 2016 placed on its website the Concept Paper on Card Acceptance Infrastructure. Comments may be emailed or sent by post to the Chief General Manager, Department of Payment and Settlement Systems, Reserve Bank of India, Central Office, 14th Floor, Shahid Bhagat Singh Marg, Mumbai - 400001 on or before April 15, 2016. This concept paper has been prepared taking into account the inputs gathered during various interactions with the stakeholders. The paper outlines strategic options for addressing the issue of both expansion of card acceptance infrastructure as well as rationalisation of merchant discount rate (MDR). The objective is to examine holistically the relevant issues that come in the way of acceptance of card payments and deployment of infrastructure for the same so as to ensure continued and accelerated growth in card acceptance. (/en/web/rbi/-/press-releases/rbi-seeks-feedback-on-concept-paper-on-card-acceptance-infrastructure-36427) Designated Trade Repository under the PSS Act, 2007 The amendments to the Payment and Settlement Systems Act, 2007 (PSS Act) notified in May 2015 have brought the Trade Repository under the ambit of this Act. Accordingly, the Clearing Corporation of India Limited (CCIL) shall be the designated trade repository under Section 34 (2) of the PSS Act for the Over-the-Counter (OTC) interest rate and foreign exchange contracts as mandated by the Reserve Bank from time to time. The provisions of the PSS Act shall apply to the designated trade repository as they apply to, or in relation to, payment systems to the extent applicable. The trade repository being a Financial Market Infrastructure (FMI) shall be regulated and supervised as per the policy framework for “Regulation and Supervision of Financial Market Infrastructures regulated by RBI”. Background The G-20 Declaration of the Pittsburgh Summit of September 24-25, 2009 has outlined several reform measures for improving the Over-the-counter (OTC) Derivative markets including reporting of OTC Derivative contracts to Trade Repository. The Reserve Bank, being the regulator of OTC interest rate and foreign exchange derivatives in India, is committed to take appropriate steps to ensure compliance with the G-20 commitments. The Reserve Bank had issued a Press Release dated 15th January 2014 on “The Reserve Bank Compliance with the G-20 Commitment on Reporting of OTC Derivative Trades to Trade Repository”. (/en/web/rbi/-/press-releases/designated-trade-repository-under-the-payment-and-settlement-systems-act-2007-36567) Financial Inclusion and Development Framework for Revival and Rehabilitation of MSMEs The Reserve Bank in consultation with the Ministry of Micro, Small and Medium Enterprises, Government of India, on March 17, 2016 has formulated a “Revised Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs)” along with operating instructions. The objective is to make the Framework and the operating instructions, compatible with the existing regulatory guidelines on ‘Income Recognition, Asset Classification and provisioning pertaining to Advances’ issued by the Reserve Bank. The Reserve Bank further advised banks to put in place the Board approved policy to operationalise the Framework not later than June 30, 2016. While the prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances will continue to be as per the instructions consolidated in the Master Circular on IRAC Norms dated July 1, 2015 and as updated from time to time, the revival and rehabilitation of MSMEs having loan limits up to ₹ 25 crore will be in terms of these operating instructions. Restructuring of loan accounts with exposure of above ₹ 25 crore will continue to be governed by the extant guidelines on Corporate Debt Restructuring (CDR) / Joint Lenders’ Forum (JLF) mechanism. (/en/web/rbi/-/notifications/framework-for-revival-and-rehabilitation-of-micro-small-and-medium-enterprises-msmes-10304) Pradhan Mantri Fasal Bima Yojana The Reserve Bank has conveyed the Pradhan Mantri Fasal Bima Yojana to the commercial banks on March 17, 2016. The scheme aims at providing insurance cover to farmers. (/en/web/rbi/-/notifications/pradhan-mantri-fasal-bima-yojana-10305) Non-Banking Regulation Risk Weights assigned to Sovereign Debt revised The Reserve Bank on March 10, 2016, advised all deposit accepting NBFCs, systemically important non-deposit taking NBFCs, all NBFCMFIs and all NBFC-IFCs regarding the revised risk weights assigned to exposures to domestic sovereigns, as under: a) Exposures to Central Government
b) Exposures to State Government
Earlier, all deposit accepting NBFCs, systemically important non-deposit taking NBFCs, all NBFC-MFIs and all NBFC-IFCs had to maintain a minimum capital ratio consisting of Tier I and Tier II capital which shall not be less than 15 per cent of its aggregate risk weighted assets on-balance sheet and of risk adjusted value of offbalance sheet items. (/en/web/rbi/-/notifications/review-of-risk-weights-assigned-to-sovereign-debt-10301) Co-operative Banking Minimum Capital Adequacy Norms for StCBs/DCCBs The Reserve Bank on March 10, 2016 permitted State and Central Cooperative Banks (StCBs/DCCBs) to include the following items under Tier I capital:
Financial Market Regulation Participation of Standalone PDs in Currency Futures Market The Reserve Bank on March 17, 2016 permitted stand-alone Primary Dealers (PDs) to deal in currency futures contracts traded on recognised exchanges subject to the following conditions: Eligibility:
Membership:
Position Limits:
Risk Management:
In case of failure to meet the obligations of Primary Dealership business in the Government securities market or any other violations leading to supervisory concern, the Reserve Bank reserves the right to impose restrictions or withdraw permission to deal in currency futures contracts. (/en/web/rbi/-/notifications/participation-of-standalone-primary-dealers-in-currency-futures-market-10306) Government Banking Recovery of Excess Pension Payments The Reserve Bank, on March 17, 2016 in consultation with the Controller General of Accounts and various noncivil Ministries for recovery, reiterated the uniform procedure for recovery of excess/wrong pension payments, as under:
Reports Recommendations on Incentives in Distribution of FPs The Reserve Bank on March 4, 2016, placed the recommendations of the Committee to Recommend Measures for Curbing Mis-selling and Rationalising Distribution Incentives in Financial Products(FPs) on the RBI website. The Committee set up under the Chairmanship of Shri Sumit Bose, Former Union Finance Secretary, submitted its report on August 10, 2015 and had made a number of recommendations on the incentive structure in distribution of financial products. The report is available on the website of the Ministry of Finance (http://finmin.nic.in/suggestion_ comments/Inviting_Comments_Committee_Incentive_Structure.asp) Statement about ownership and other particulars concerning MONETARY AND CREDIT INFORMATION REVIEW Form IV
I, Alpana Killawala, hereby declare that the particulars given above are true to the best of my knowledge and belief. Alpana Killawala Date: March 1, 2016 Edited and published by Alpana Killawala for the Reserve Bank of India, Department of Communication, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001. MCIR can be accessed at /en/web/rbi/publications/articles?category=24928098 |