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Digital Rupee (e₹) – FAQs
Ans: For ease of use, e₹ is available in the same denominations as physical currency. This provides the users with the same familiarity and convenience as with usage of physical currency notes.
In case of the funded facility created on account of invocation of BG/ devolvement of LC, the bank may charge an appropriate rate of interest on the devolved amount taking into account the associated credit risk premium as per the bank’s credit underwriting policy. However, penalty, if any, on that funded facility on account of non-repayment by the borrower within the due date may only be levied in the form of penal charges and not penal interest.
Ans. Yes. In terms of paragraphs 15, 18 and 27 of Master Direction- Reserve Bank of India (Interest Rate on Deposits) Directions, 2025, banks can levy penalty for premature withdrawal as per the comprehensive policy approved by their Board of Directors. The components of penalty should be clearly brought to the notice of the depositors at the time of acceptance of deposits.
Ans: DLG arrangements are not permitted on the loans which are covered by the credit guarantee schemes administered by trust funds as specified under para 2 of Review of Prudential Norms – Risk Weights for Exposures guaranteed by Credit Guarantee Schemes (CGS) dated September 07, 2022, as amended from time to time.
Note: Illustrations are provided for ease of understanding and are merely indicative and not exhaustive.
Illustration 1
Assume that as on April 1, 2024 the RE earmarks a portfolio of ₹40 crore (out of the total sanctioned loans) under a DLG arrangement (DLG set). This portfolio shall remain "frozen" for the purpose of the specific DLG arrangement - meaning that no loan assets can be added or removed from it, except through loan repayment/ write-off. The RE can have such multiple DLG sets.
The ceiling for DLG cover on such portfolio shall be fixed at ₹2 crore (5% of ₹40 crore), which shall get activated proportionately as and when the loans are disbursed.
Illustration 2
Assume that out of the above DLG set, loans amounting to ₹10 crore are disbursed immediately. Then as on April 1, 2024, the DLG cover available for the portfolio shall be ₹0.5 crore (5% of disbursed).
Subsequently, if loans of ₹10 crore are further disbursed on April 15, 2024, the DLG cover shall proportionately increase to ₹1 crore effective April 15, 2024.
(Refer table below also for summary of each case)
Case 1: As on June 30, 2024, loans worth ₹5 crore mature without any default. In this case, the outstanding portfolio in the books of the RE would be ₹15 crore and the DLG cover shall remain at ₹1 crore.
Case 2: Subsequently, there is a default of ₹2 crore during Q2-2024 and consequently the RE invokes the entire DLG (₹1 crore 1). In this case, as of Sept 30, 2024 the outstanding portfolio in the books of the RE shall be ₹15 crore (₹20 crore original portfolio less ₹5 crore loans matured without default) but no headroom for DLG will be available as the maximum permissible DLG cover of ₹1 crore (5% of disbursed) has been exhausted.
Case 3: Going further, let’s assume that recovery worth ₹1 crore is made by the RE during October 2024 on the defaulted loans of ₹2 crore. In such a case, the amount of the outstanding portfolio in the books of the RE as on October 31, 2024 shall come down to ₹14 crore (₹20 crore original portfolio less ₹5 crore loans matured without any default less ₹1 crore loans which were in default and recovered). However, the recovery amount of ₹1 crore cannot be added to reinstate the DLG cover.
(figures in ₹ crore)
| Period |
Disbursed |
Loan maturing without default |
Default Amount |
DLG Invoked |
Recovery/ Write-off |
Outstanding Portfolio |
Available DLG Cover |
|
Initial Position |
10 |
- |
- |
- |
- |
10 |
0.5 |
|
Further disbursement |
10 |
- |
- |
- |
- |
20 |
1 |
|
Case 1 |
20 |
5 |
- |
- |
- |
15 |
1 |
|
Case 2 |
20 |
5 |
2 |
1 |
- |
15 |
0 |
|
Case 3 |
20 |
5 |
2 |
1 |
1 |
14 |
0 |
1 It has been assumed that till date zero principal/interest have been received towards these loans.
Ans.: Total invoice value must be in Indian Rupees (INR) in actuals (which should also include billing to subsidiary(s)/associate(s) abroad) during the reference period.
Answer: The exchange rate for most currencies are determined in the Forex markets, typically against global currencies like the USD, EUR, JPY etc. In the transition phase, when there is no market with direct exchange rates between two currencies (say INR and Sri Lankan Rupee), the exchange rate between the currencies of two trading partner countries, each of which has markets against global currencies, would be derived as a cross currency rate.
Ans. Yes, documents as mentioned in reply to Q 5 above shall be submitted by all account holders of a joint account to the RE.
Response: Yes, unless the potential depositor is already a bank’s KYC compliant customer.
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