Monetary and Credit Information Review - ஆர்பிஐ - Reserve Bank of India
Monetary and Credit Information Review
Discussion Paper on Revised Regulatory Framework for NBFCs The Reserve Bank on January 21, 2021 released the Discussion Paper on Revised Regulatory Framework for NBFCs- A Scale-Based Approach on its website (www.rbi.org.in) for comments from NBFCs, market participants and other stakeholders within one month from the released date. The highlights of the discussion paper are as follows : The regulatory and supervisory framework of NBFCs shall be based on a four-layered structure– Base Layer, Middle Layer, Upper Layer and a possible Top Layer. NBFCs in lower layer will be known as NBFC-Base Layer (NBFC-BL). NBFCs in middle layer will be known as NBFC-Middle Layer (NBFC-ML) and NBFC in the Upper Layer will be known as NBFC-Upper Layer (NBFC-UL) and will invite a new regulatory superstructure. In order to identify NBFCs in the Upper Layer, a range of parameters can be considered; viz., size, leverage, interconnectedness, substitutability, complexity, nature of activity of the NBFC, among other things. Base Layer
Middle Layer
Upper Layer
Top Layer
To read more, please click here. Working Group on Digital Lending The Reserve Bank on January 13, 2021 set up a Working Group (WG) to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place. The terms of reference for the WG would be as follows:
The group has been advised to submit its report within three months. To read more, please click here. II. Consumer Education and Protection Grievance Redress Mechanism in Banks The Reserve Bank on January 27, 2021 released a comprehensive framework with a view to strengthen and improve the efficacy of the grievance redress mechanism of banks. The framework comprises of i) enhanced disclosures on complaints to be made by the banks; ii) recovery of the cost of redress of maintainable complaints from the banks against whom the number of complaints received in the Offices of Banking Ombudsman (OBOs) are in excess of their peer group averages; and iii) intensive review by RBI of the grievance redress mechanism of banks having persisting issues in their redress mechanism. The framework intends to, inter-alia, provide greater insight into the volume and nature of complaints received by the banks as also the quality and turnaround time of redressal, promote satisfactory customer outcomes and improved customer confidence, and identify remedial steps to be taken by the banks having persisting issues in grievance redress mechanism. To read more, please click here. RBIA – Strengthening Governance In order to bring uniformity in approach followed by the banks, as also to align the expectations on internal audit function with the best practices, the Reserve Bank on January 07, 2021 advised banks as under:
The internal audit function shall not be outsourced. However, where required, experts, including former employees, could be hired on contractual basis subject to the ACB being assured that such expertise does not exist within the audit function of the bank. To read more, please click here. College of Supervisors The Reserve Bank on January 06, 2021 announced that the College of Supervisors (CoS) which was functioning in a limited way in virtual mode since May 2020, is now being fully operationalised. As part of the measures to further strengthen supervision over regulated entities, the Reserve Bank had set up a College of Supervisors (CoS) to augment and reinforce supervisory skills among its regulatory and supervisory staff both at entry level and on a continuous basis. CoS would be headed by former Deputy Governor of the Reserve Bank , Shri N.S. Viswanathan. The CoS will have a full-time Director supported by an Academic Advisory Council (AAC). Dr. Rabi Narayan Mishra, former Executive Director, Reserve Bank has been appointed as the Director of CoS. The AAC will identify areas where skill building/up-skilling are required, plan and develop curricula of all programmes, benchmark the programmes with international standards best practices, develop appropriate teaching methods, etc. To read more, please click here. IV. Payment and Settlement Systems RBI-Digital Payments Index The Reserve Bank has constructed a composite Digital Payments Index (DPI) to capture the extent of digitisation of payments across the country. The RBI-DPI comprises of five broad parameters that enable measurement of deepening and penetration of digital payments in the country over different time periods. These parameters are – i) Payment Enablers (weight 25 per cent), ii) Payment Infrastructure – Demand-side factors (10 per cent), iii) Payment Infrastructure – Supply-side factors (15 per cent), iv) Payment Performance (45 per cent) and v) Consumer Centricity (5 per cent). Each of these parameters have sub-parameters which, in turn, consist of various measurable indicators. Major sub-parameters under each parameter are available here. To read more, please click here. Operationalisation of PIDF Scheme The Reserve Bank has constituted an Advisory Council (AC) under the Chairmanship of the Deputy Governor, Reserve Bank of India, for managing the Payments Infrastructure Development Fund (PIDF). PIDF will be operational for a period of three years from January 01, 2021 and may be extended for two more years depending upon the progress. PIDF is intended to subsidise deployment of payment acceptance infrastructure in Tier-3 to Tier-6 centres with special focus on North-Eastern States of the country. It envisages creating 30 lakh new touch points every year for digital payments. All stakeholders were requested to co-operate in this endeavour by – a) making their contributions to PIDF within the timelines, and b) deploying acceptance infrastructure and seeking reimbursement from PIDF. To read more, please click here. Introduction of LEI The Reserve Bank on January 05, 2021 decided to introduce the Legal Entity Identifier (LEI) system for all payment transactions of value ₹50 crore and above undertaken by entities (non-individuals) using Reserve Bank-run Centralised Payment Systems, viz., Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT). In preparation for the wider introduction of LEI across all payment transactions, member banks should:
Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF), the body tasked to support the implementation and use of LEI. To read more, please click here. Booklet on Payment Systems in India The Reserve Bank on January 25, 2021 released the Booklet on Payment Systems covering the journey of Payment and Settlement Systems in India during the second decade of the millennium, viz., from the beginning of 2010 till the end of 2020. The Booklet captures the transformation of India in the sphere of payment and settlement systems and describes, inter-alia, the legal and regulatory environment underpinning the digital payments systems, various enablers, payment options available to consumers, extent of adoption, etc. during 2010 to 2020. The digital version of the Booklet can be accessed by clicking here. Withdrawal of Circulars The Reserve Bank on January 21, 2021 withdrew the following circulars related to recovery of excess pension paid by agency banks, issued by Department of Government and Bank Accounts, Reserve Bank of India:
Though the above-mentioned circulars issued under the signature of RBI stand withdrawn, agency banks are requested to seek guidance from respective Pension Sanctioning Authorities regarding the process to be followed for recovery of excess pension paid to the pensioners, if any. Agency banks are advised that, where excess pension payment has arisen on account of mistakes committed by the bank, the amount paid in excess should be refunded to the Government in lumpsum immediately after detection of the same and without waiting for recovery of any amount from the pensioners. To read more, please click here. FSDC Sub-Committee meeting Shri Shaktikanta Das, Governor, Reserve Bank of India, chaired the 26th meeting of the Sub-Committee of the Financial Stability and Development Council (FSDC) held on January 13, 2021 in Mumbai through video conference. The Sub-Committee reviewed the major developments in the global and domestic economy as well as financial markets that impact financial stability. The Sub-Committee, inter-alia, discussed scope for improvements in insolvency resolution under IBC, utilisation of data with the Central KYC Records Registry and changes in the regulatory framework relating to Alternative Investment Funds (AIFs) set up in the International Financial Services Centre (IFSC), among others. The Sub-Committee also reviewed the activities of various technical groups under its purview and the functioning of State Level Coordination Committees (SLCCs) in various states / UTs. The regulators reaffirmed their resolve to be alert and watchful of emerging challenges to financial stability. To read more, please click here. Financial Stability Report The Reserve Bank on January 11, 2021 released the 22nd issue of the Financial Stability Report (FSR), which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the financial system in the context of contemporaneous issues relating to development and regulation of the financial sector. Highlights of FSR:
To read the full report, please click here. RBI Working Papers The Reserve Bank published three publications under its working paper series in the month of January 2021.
Important Data Releases by the Reserve Bank in the month of January 2021: Edited and published by Yogesh Dayal for Reserve Bank of India, Department of Communication, Central Office, Shahid Bhagat Singh Marg, Mumbai - 400 001. MCIR can be also accessed at https://mcir.rbi.org.in. |