BFSI and Capital Market
CA Rohit Patoria, CA Manoj Alimchandani,
CA Vijay Mullaji
Delay in Digital India Act will have far reaching implication across sectors
The proposed Digital India Act (DIA) seeks to regulate fair trade practices, regulate tech-giants, safeguard innovation, promote digital governance, prioritize open internet, online safety, accountability and expedited cyber offense adjudication, amongst other things.
Given the vastness and intricacies of the Act, delay in its implementation would only delay in addressing these issues.
RBI calls for stronger bank balance sheets
RBI, in a report released, said Indian banks and non-bank lenders need to further fortify their balance sheets by following stronger governance and risk-management practices.
The Report on Trends and Progress of Banking in India said that these measures would help cater to growing aspirations of the Indian economy.
RBI reshuffles classification of domestic systemically important banks; SBI, HDFC Bank move to higher buckets
RBI in its statement said that SBI and HDFC Bank move to higher buckets – SBI shifts from bucket 3 to bucket 4 and HDFC Bank shifts from bucket 1 to bucket 2.
The Reserve Bank of India (RBI) issued its list of Domestic Systemically Important Banks (D-SIBs), in which it moved State Bank of India (SBI) and HDFC Bank to higher buckets, while ICICI Bank continues to be continues to be in the same bucketing structure as last year.
What is RBI’s ‘Connected Lending’ and purpose behind its framework
At the fifth Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), the Governor Shaktikanta Das on Friday made an important announcement on the ‘Connected Lending’.
The connected lending can involve moral hazard issues leading to compromise in pricing and credit management.
DGM Rajeshwar Rao has clarified not to mix the interconnectedness and connected lending while understanding the purpose of bringing the framework.
Banks face stiff challenge in implementing RBI directive to cut AIF investments
There are concerns over the practicality of the Reserve Bank of India (RBI) move to prevent the disguised evergreening of loan exposures through investments in alternative investment funds (AIFs).
Regulated entities, including banks and non-banking financial companies (NBFCs), are required to assess the portfolios of their investee AIFs within 30 days and liquidate investments to mitigate provisioning risks.
The circular discourages regulated entities from investing in AIFs, even for legitimate reasons such as risk diversification.
Absence of an active secondary market in India for AIF units poses a big challenge. The challenge lies in selling AIF units, given that they are not listed, and there is no readily available market for offloading such investments.
RBI warns banks, NBFCs against reliance on model-based lending practices
The Reserve Bank of India (RBI) has cautioned banks and non-banking financial companies (NBFCs) against reliance on risk models based on pre-set algorithms emerging from collaborations with fintech companies, saying such models should be robust and their resilience tested periodically.
The central bank has advised these regulated entities to be careful of any undue risk building up in the system owing to information gaps which may lead to dilution of underwriting standards.
Banks see a four-fold jump in card, internet frauds: RBI data
Card and internet-related frauds surged from 2,545 (Rs 119 crore) in 2020-21 to a staggering 12,069 (Rs 630 crore) in April-September 2023-24.
Soon, know real time if NEFT, internet banking, UPI, mobile banking are working or down with new banking dashboard
RBI intends to provide customers with real-time updates on outages, enabling them to conduct transactions through alternative payment methods.
This will also encourage banks to promptly address the issue through an incident response plan and improve system capacity management.
RBI releases draft rules on bond forwards in government securities
The Reserve Bank of India (RBI) released the draft directions on bond forwards in government securities with an aim to expand interest rate derivative products in the market.
The draft directions on contracts to deliver government securities on a forward basis seek to enable market participants, especially long-term investors, to manage their cash flows and interest rate risk.
A resident and non-resident, who is eligible to invest in Government Securities under the Foreign Exchange Management (Debt Instruments) Regulations is eligible to undertake transactions in bond forwards.
RBI introduces card tokenisation facility at bank level
The RBI introduced a Card-on-File (CoF) token facility at the level of banks and other institutions to provide convenience for cardholders to get to get tokens created and linked to their existing accounts with various e-commerce applications.
At present, a CoF token can only be created through the merchant’s application or webpage.
For a CoF, a token is a 16-digit number unique for a combination of card, token requestor and merchant. Through tokenisation, the actual card details are replaced with token credentials that can be used only with the intended merchant .
Generation of CoF tokens for a card, through the card issuer, can be enabled through mobile banking and internet banking channels.
RBI Proposes to Introduce New Category of Money Changers
The RBI proposes to allow businesses to deal in foreign exchange through an agency model by becoming forex correspondents of authorised dealer banks
In a move aimed at enhancing the ease of doing business and adapting to the evolving economic landscape, the Reserve Bank of India (RBI) has proposed the introduction of a new category of money changers.
This new category, known as Forex Correspondents (FxCs), would operate through an agency model, conducting money-changing business on behalf of Category-I and Category-II Authorised Dealers.
https://www.regulationasia.com/rbi-proposes-to-introduce-new-category-of-money-changers/
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Banks brace for auditor shuffle in New Year as per RBI’s three year tenure mandate
Banks are required to shortlist potential auditors by the end of the March 2024 quarter, followed by obtaining board approval.
Banks are gearing up to change their auditors for the fiscal year 2024-25, following the Reserve Bank of India’s (RBI) mandate to rotate auditors every three years, implemented in the financial year 2020-21.
This process, aimed at enhancing transparency and accountability, has been met with challenges for both financial institutions and auditing firms.
ONDC partners with Google, Meta to reach small businesses
Ministry of commerce-backed e-commerce protocol Open Network for Digital Commerce (ONDC) announced two separate partnerships with Google and Meta, to expand its outreach to small businesses through Google Maps and WhatsApp.
This, in turn, will help the service scale up its net transactions per month among consumers and large enterprises alike.
IRDAI’s proposal on surrender value, SSV & GSV; life insurers’ plight
IRDAI has proposed to increase the surrender value for life insurance policies, specifically Non-Linked or traditional insurance plans.
This is expected to benefit policyholders but negatively impact life insurers.
Sebi resolves over 3,700 complaints through SCORES in November
Sebi has disposed of 3,754 complaints against companies and market intermediaries through its online grievance redressal system SCORES in November, according to the data released by the capital markets regulator.
SCORES is a grievance redressal system that was launched in June 2011.
Sebi may let AIFs pledge shares in investee firms
The Securities and Exchange Board of India (Sebi) is considering a plan to to allow alternative investment funds (AIFs) to pledge their shares in investee companies, a move that would allow these investment vehicles to engage in leverage.
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