Draft Circular for comments DOR.ACC.REC.No.##/21.02.067/2023-24 January 2, 2024 Madam/ Dear Sir, Declaration of dividend by banks and remittance of profits to Head Office by foreign bank branches in India The Reserve Bank has granted general permission to all scheduled commercial banks [excluding regional rural banks (RRBs)] to declare dividends vide circular reference DBOD.NO.BP.BC.88/21.02.067/2004-05 dated May 4, 2005 on ‘Declaration of dividends by banks’. Similarly, foreign banks operating in India in the branch mode are permitted to remit profits to their head office without prior approval from the Reserve Bank pursuant to circular reference DBOD.No.IBS.BC.46/16.13.100/2003-04 dated November 6, 2003.

Framework for Dealing with Domestic Systemically Important Banks (D-SIBs) (Revised upto December 28, 2023[1]) Introduction Some banks, due to their size, cross-jurisdictional activities, complexity, lack of substitutability and interconnectedness, become systemically important. The disorderly failure of these banks has the potential to cause significant disruption to the essential services they provide to the banking system, and in turn, to the overall economic activity. Therefore, the continued functioning of Systemically Important Banks (SIBs) is critical for the uninterrupted availability of essential banking services to the real economy.

Draft Master Direction for Comments  All Commercial Banks (including Local Area Banks, Regional Rural Banks, Payments Banks, and Small Finance Banks) All-India Financial Institutions (viz. Exim Bank, NABARD, NHB, SIDBI, and NaBFID) All Non-Banking Financial Companies including Housing Finance Companies (HFCs) All Urban Co-operative Banks, State Co-operative Banks, and Central Co-operative Banks All Credit Information Companies

DoR.SIG.FIN.REC.xx/20.16.003/2023-24

September 21, 2023

Reserve Bank of India
(Treatment of Wilful Defaulters and Large Defaulters) Directions, 2023

In exercise of the powers conferred under Chapter III-A of the Reserve Bank of India Act, 1934, Section 21, Section 35-A read with Section 56 of the Banking Regulation Act, 1949 and Section 11 of the Credit Information Companies (Regulation) Act, 2005, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest to do so, hereby, issues the Directions hereinafter specified:

Objective

The primary objective of these Directions is to provide for a non-discriminatory and transparent procedure, while complying with the principles of natural justice for classifying a borrower as a wilful defaulter by the lenders. The directions also aim to put in place a system to disseminate credit information about wilful defaulters for cautioning lenders to ensure that further institutional finance is not made available to them.

CHAPTER I
PRELIMINARY

1. Short Title and Commencement

(1) These Directions shall be called the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, 2023.

(2) These Directions shall come into force after 90 days from placing it on the website of the Reserve Bank.

2. Applicability

(1) The provisions regarding wilful defaulters contained in these Directions shall apply to the ‘lenders’ as defined in these Directions.

(2) Asset Reconstruction Companies (ARCs), and Credit Information Companies (CICs) shall be bound by these Directions only with regard to the reporting requirements contained in Chapter III.

(3) The restrictions on further financial accommodation to wilful defaulters shall apply to all entities regulated by the Reserve Bank, irrespective of whether they fall within the definition of ‘lender’ as provided in these Directions or not.

(4) The provisions regarding large defaulters contained in these Directions shall apply to all entities regulated by the Reserve Bank, irrespective of whether they fall within the definition of ‘lender’ as provided in these Directions or not.

3. Definitions

(1) In these Directions, unless the context or subject otherwise requires, -

(a) “All India Financial Institution (AIFI)”1 means -

1. Export Import Bank of India (EXIM Bank);

2. National Bank for Agriculture and Rural Development (NABARD);

3. National Housing Bank (NHB);

4. Small Industries Development Bank of India (SIDBI); and

5. National Bank for Financing Infrastructure and Development (NaBFID).

(b) “bank” means -

The contents of these Guidelines shall be read along with Reserve Bank of India (Acquisition and Holding of Shares or Voting Rights in Banking Companies) Directions, 2023, and applicable provisions of the Banking Regulation Act, 1949. Prior approval for acquisition of shares or voting rights in a banking company 2. In terms of sub-section (1) of Section 12B of Banking Regulation Act, 1949, every person, who intends to acquire shares or voting rights and intends to be

As part of convergence of the Reserve Bank’s regulations for banks with Basel III standards, the Reserve Bank of India has today placed on its website ‘Draft Master Direction on Minimum Capital Requirements for Operational Risk’ for comments of stakeholders and members of the public. These directions shall be applicable to all Commercial Banks (excluding Local Area Banks, Payments Banks, Regional Rural Banks, and Small Finance Banks).