STATEMENT ON DEVELOPMENTAL AND REGULATORY POLICIES

STATEMENT ON DEVELOPMENTAL AND REGULATORY POLICIES - OCTOBER 4, 2017- BANKING FACILITY FOR SENIOR CITIZENS AND DIFFERENTLY ABLED PERSON

WHY THIS NOTIFICATION? 

It has been observed that there are occasions when banks discourage or turn away senior citizens and differently abled persons from availing banking facilities in branches. Notwithstanding the need to push digital transactions and use of ATMs, it is imperative to be sensitive to the requirements of senior citizens and differently abled persons. 

WHAT WAS THE NOTIFICATION? 

In view of the above, banks are required to put in place appropriate mechanism with the following specific provisions for meeting the needs of such customers so that they are able to avail of the bank’s services without difficulty. 

 Dedicated Counters/Preference to Senior Citizens, Differently abled persons Banks are advised to provide a clearly identifiable dedicated counter or a counter which provides priority to senior citizens and people who are differently abled including visually impaired persons. 

 Ease of submitting Life Certificate As per extant guidelines issued by Department of Government and Bank Accounts, in addition to the facility of Digital Life Certificate under “Jeevan Praman” Scheme (refer circular DGBA.GAD.H2529/45.01.001/2014-15 dated December 9, 2014), pensioners can submit physical Life Certificate form at any branch of the pension paying bank. However, it is observed that often the same is not updated promptly by the receiving branch in the Core Banking Solution (CBS) system of the bank, resulting in avoidable hardship to the pensioners. It is, therefore, advised that banks shall ensure that when a Life Certificate is submitted in any branch, including a non-home branch, of the pension paying bank, the same is updated/ uploaded promptly in CBS by the receiving branch itself, to avoid any delay in credit of pension.

COMMONWEALTH BANK OF AUSTRALIA

EXCLUSION OF “COMMONWEALTH BANK OF AUSTRALIA” FROM THE SECOND SCHEDULE OF THE RESERVE BANK OF INDIA ACT, 1934

WHAT WAS THE NOTIFICATION?

 The “Commonwealth Bank of Australia” has been excluded from the Second Schedule of the Reserve Bank of India Act, 1934 

 With this announcement, Commonwealth Bank of Australia is not a scheduled bank.

INCLUSION OF “AU SMALL FINANCE BANK LIMITED” IN THE SECOND SCHEDULE OF THE RESERVE BANK OF INDIA ACT, 1934 

WHAT WAS THE NOTIFICATION? 

 The “Au Small Finance Bank Limited” has been included in the Second Schedule to the Reserve Bank of India Act, 1934

  With this announcement, Au Small Finance Bank Limited is a scheduled bank.

DIRECTIONS ON MANAGING RISKS AND CODE OF CONDUCT IN OUTSOURCING OF FINANCIAL SERVICES BY NBFCS 

WHAT WAS THE NOTIFICATION? 

 In the notification, the RBI on has asked non-banking finance companies (NBFCs) to put in place necessary safeguards for activities outsourced by them. 

 Among others, the safeguards relate to evaluation of the service provider’s capability, customer confidentiality and security, responsibilities of agents, and monitoring and control of outsourced activities.

  NBFCs are advised to conduct a self-assessment of their existing outsourcing arrangements and bring these in line with the aforesaid Directions within two months from the date of this circular.

FOREIGN EXCHANGE MANAGEMENT

PARTICULARS OF THE NOTIFICATION 

Any investment made by a person resident outside India shall be subject to the entry routes, sectoral caps or the investment limits, as the case may be, and the attendant conditionalities for such investment as laid down in these Regulations. A person resident outside India may make investment as under: 

 A person resident outside India may subscribe, purchase or sell capital instruments of an Indian company. Provided that a person who is a citizen of Bangladesh or Pakistan or is an entity incorporated in Bangladesh or Pakistan cannot purchase capital instruments without the prior Government approval. Provided further, a person who is a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/ activities other than defence, space, atomic energy and sectors/ activities prohibited for foreign investment. 

 A Foreign Portfolio Investor (FPI) may purchase or sell capital instruments of a listed Indian company on a recognised stock exchange in India 

 A Non- Resident Indian or an Overseas Citizen of India may on repatriation basis purchase or sell capital instruments of a listed Indian company on a recognised stock exchange in India 

 A Non- Resident Indian or an Overseas Citizen of India may, on non-repatriation basis, purchase or sell capital instruments of an Indian company or purchase or sell units or contribute to the capital of a LLP or a firm or proprietary concern 

 Person resident outside India, permitted for the purpose by the Reserve Bank in consultation with Central Government, may purchase or sell securities other than capital instruments

  A person resident outside India, other than a citizen of Bangladesh or Pakistan or an entity incorporated in Bangladesh or Pakistan, may invest, either by way of capital contribution or by way of acquisition/ transfer of profit shares of an LLP 

DATED GOVERNMENT SECURITIES

WHAT ARE DATED GOVERNMENT SECURITIES? 

 Dated Government Securities are longer term securities and carry a fixed or floating coupon (interest rate) paid on the face value, payable at fixed time periods (usually half-yearly). 

 The Public Debt Office (PDO) of the RBI acts as the registry/depository of Government securities and deals with the issue, interest payment and repayment of principal at maturity. 

 Most of the dated securities are fixed coupon securities. 

 The nomenclature of a typical dated fixed coupon Government security has the following features- coupon, name of the issuer, maturity and face value.

DIFFERENT TYPES OF GOVERNMENT DATED SECURITIES 

 Zero Coupon Bonds 

 Floating Rate Bond 

 Tap Stock 

 Partly Paid Stock 

 Capital Indexed Bonds 

 Inflation linked Bonds 

 Fixed Rate Bonds

CONVERSION OF DEBT INTO EQUITY- REVIEW

WHAT WAS THE NOTIFICATION? 

 On a review of the limit imposed on shareholding of the post converted equity of the borrower company under reconstruction by Asset Reconstruction Companies (ARCs), it has been decided to exempt ARCs from the cap of 26% subject to compliance with the provisions of the SARFAESI Act, 2002, Guidelines/ Instructions issued by Reserve Bank of India from time to time as applicable to ARCs as well as Foreign Exchange Management Act, 1999, Reserve Bank of India Act, 1934, Companies Act, 2013, SEBI Regulations and other relevant Statutes. 

 The extent of shareholding post conversion of debt into equity shall be in accordance with permissible Foreign Direct Investment (FDI) limit for that specific sector. 

PARTICULARS OF THE E-KUBER SYSTEM OF THE RBI

 e-Kuber is the Core Banking Solution of Reserve Bank of India. E-Kuber provides the provision of a single current account for each bank across the country, with decentralised access to this account from anywhere-anytime using portal based services in a safe manner. 

 e-Kuber enables ease of operations. The system also benefits state /central Governments as users. Some of the facilities offered include the provision of portal based access which allows Government departments to access on anywhere-anytime basis and view their balances – of all types including the Ways and Means Advances, drawings, funds positions and the like – all in a consolidated manner so as to help them in better funds management. The capability of consolidating revenue collections by banks through the e-Kuber offers the potential for better flexibility for the Government in managing its finances apart from moving over towards higher levels of electronic banking. 

 The e-kuber system can be accessed either through INFINET or Internet. The INFINET is a Closed User Group Network for the exclusive use of member banks and financial institutions and is the communication backbone for the National Payments System, which caters mainly to inter-bank applications like Real Time Gross Settlement (RTGS), Delivery Vs Payment, Government Transactions, Automatic Clearing House, etc. 

 The e-kuber system, implemented in 2012, is reported to be one of the foremost central bank oriented Core Banking Systems in the world. 

 Auction of Government securities is done through e-kuber system. Sovereign Gold Bonds are available for subscription at the branches of scheduled commercial banks and designated post offices through RBI’s e-kuber system. Goods and Service Tax (GST) settlements are also proposed to be done through e-kuber. On 7 April 2016, RBI launched a platform to enable trading in the priority sector lending certificates (PSLC) through its Core Banking Solution (CBS) portal (e-Kuber)