New FAQ Page 2 - RBI - Reserve Bank of India
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FAQs on Master Direction - Reserve Bank of India (Interest Rate on Deposits) Directions, 2025
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.
Ans. RBI has mandated minimum number of free transactions at ATMs. Banks may offer more number of free transactions to their customers.
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.
The credit rating by external rating agencies is not compulsory from regulatory capital perspective, if the maximum aggregate exposure to one counterparty does not exceed the threshold limit of ₹7.5 crore, subject to meeting certain other conditions. (Refer Circular on Regulatory Retail Portfolio – Revised Limit for Risk Weight dated October 12, 2020)
Response: Yes, unless the potential depositor is already a bank’s KYC compliant customer.
Ans. Both types of Small PPIs are reloadable and shall be used only for purchase of goods and services. Their salient features are as follows:
PPIs upto ₹10,000/- (with cash loading facility):
-
The amount loaded during any month shall not exceed ₹10,000/-;
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The total amount loaded during the financial year shall not exceed ₹1,20,000/-;
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The amount outstanding at any point of time shall not exceed ₹10,000/-;
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The total amount debited during any given month shall not exceed ₹10,000/-;
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These PPIs shall be converted into full-KYC PPIs within 24 months; and
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Loading / Reloading can be by cash or electronic means.
PPIs upto ₹10,000/- (with no cash loading facility):
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The amount loaded during any month shall not exceed ₹10,000/-;
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The total amount loaded during the financial year shall not exceed ₹1,20,000/-;
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The amount outstanding at any point of time shall not exceed ₹10,000/-;
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Loading / Reloading shall be from a bank account / credit card / full-KYC PPI; and
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The Small PPIs (with cash loading facility) existing as on December 24, 2019 can be converted to this PPI, if desired by the PPI holder.
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Page Last Updated on: December 11, 2022
