BANK PROMOTION EXAM-Summary of RBI Directions for 1 year

Regulated entities (REs) make investments in units of AIFs as part of their regular investment operations. Some of These transactions entail substitution of direct loan exposure of REs to borrowers, with indirect exposure through investments in units of AIFs.
In this matter, on 19.12.23, RBI advised RE that:
(i) REs shall not make investments in any scheme of AIFs which has downstream investments either directly or indirectly in a debtor company of the RE.
(ii) If an AIF scheme, in which RE is already an investor, makes a downstream investment in any such debtor company, the RE shall liquidate its investment in the scheme within 30 days from the date of such downstream investment by the AIF. If REs have already invested into such schemes having downstream investment in their debtor companies, the 30-day period for liquidation shall be counted from date of RBI circular.
(iii) In case REs are not able to liquidate their investments within the above-prescribed time limit, they shall make 100 percent provision on such investments.
In addition, investment by REs in the subordinated units of any AIF scheme with a ‘priority distribution model’ shall be subject to full deduction from RE’s capital funds.

On 20.12.23 RBI issued following directions.
1. Generation of CoF Tokens for a card, through the card issuer, can be enabled through mobile banking and internet banking channels.
2. CoFT generation shall be done only on explicit customer consent, and with AFA validation. If the cardholder selects multiple merchants for which to tokenise his/her card, AFA validation may be combined for all these merchants.
3. The generated tokens shall be made available on the merchant’s payment page, in the cardholder’s account with the merchant.
4. The cardholder may tokenise the card at any time of his convenience, either on receipt of the new card or later.
5. The card issuer shall provide a complete list of merchants for whom it can provide tokenisation services.
6. The card token so issued may be either by the card network or the issuer or both.

In June 2023 RBI launched CIMS platform (URL: https://sankalan.rbi.org.in) that replaced the previous  eXtensible Business Reporting Language (XBRL). CIMS is a new dataware house for data collection. The new system will disseminate more data for public use and will also support on-line statistical analysis by external users at their end. Regulated entities will also have access to their past data and their assessment on quality parameters in the new system.
From Dec 26, 2023, a no. of statements/reports shall be submitted by banks on the new platform. Prominent among these are:
(1) Statement on half yearly basis (end March/end September) showing the quantity and value of gold imported by the nominated banks/ agencies/ EOUs/ SEZs in Gem & Jewellery sector, mode of payment-wise,
(2) Statement on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUs/ SEZs in Gem & Jewellery sector during the month under report as well as the cumulative position as at the end of the said month beginning from the 1st month of the Financial Year.
(3) Liberalised Remittance Scheme (LRS) for Resident Individuals : a) AD-I banks shall upload the LRS monthly return on or before 5th of the succeeding month commencing from the reporting month of December 2023, and b) LRS daily return from Dec 26, 2023 onwards on the next working day on CIMS portal. In case no data is to be furnished, AD Category-I banks shall upload a ‘NIL’ report.
(4) Statement E on total remittances received every quarter under Rupee Drawing arrangement has been assigned return code - ‘R129’ on CIMS portal. In case no data is to be furnished, AD Category – I banks shall upload a ‘NIL’ report.
(5) Trade Credit for imports into India – Submission of return on issuance of bank guarantees for Trade Credits. The statement has been assigned return code- ‘R131’ on CIMS.

RBI issued above regulations on 22.12.23.
Manner of receipt and payment.
(1) No person resident in India shall make or receive payment from a person resident outside India. RBI may permit a person resident in India to make or receive payment under FEMA 1999.
(2) The receipt and payment between a person resident in India and a person resident outside India shall be made through an AD Bank or Authorised Person in the manner as specified below:
(I) Trade transactions - (a) receipt/payment for export to or import from the countries given below of eligible goods and services shall be made as under:
(i) Nepal and Bhutan - in Indian Rupees provided that in case of exports from India where the importer in Nepal has been permitted by the Nepal Rashtra Bank to make payment in foreign currency, such receipts towards the amount of the export may be in foreign currency;
(ii) Member countries of ACU, other than Nepal and Bhutan - through ACU mechanism or as per the directions issued by RBI to authorised dealer from time to time:
Provided that in case of imports where the goods are shipped to India from a member country of the ACU (other than Nepal and Bhutan) but the supplier is resident of a country other than a member country of the ACU, the payment may be made in a manner as specified at (iii) below.
(iii) Other countries - In Indian Rupees or in any foreign currency.
(II) Transactions other than trade transactions - receipt and payment shall be made as under:
(i) Nepal and Bhutan - In Indian Rupees provided that in case of overseas investment in Bhutan, payment may also be made in foreign currency;
(ii) Other Countries – In Indian Rupees or any foreign currency.
(3) Payment and receipt in India for any current account transaction, other than a trade transaction, between any person resident in India and a person resident outside India, who is on a visit to India, may be made only in Indian Rupees.
Provided that any payment or receipt under regulation 3 may also be made by debit/ credit to a bank account maintained in terms of the rules, regulations or directions issued under the Act.

On 27.12.23, RBI circulated the Directions to come into immediate effect.
Government Securities Lending (GSL) transaction
It refers to dealing in Government securities involving lending of eligible Government securities, for a fee (govt. security lending fee – GSL fee), by the owner of those securities  (the lender) to a borrower, on the collateral of other Government securities, for a specified period of time, with an agreement that the borrower shall return to the lender the security borrowed and the latter shall return the security received as collateral to the former at the end of the agreed period.
Eligible securities
(1) For lending and borrowing - Securities issued by Central Government excluding Treasury Bills.
(2) For collateral under a GSL transaction - Securities issued by Central Government (including Treasury Bills) and the State Governments
Eligible participants: (a) An entity eligible to undertake repo transactions in Government securities.
(B) Entities eligible to undertake short sale transactions.
Tenor : The minimum tenor shall be one day and the maximum equal to the maximum period prescribed to cover short sales.
Settlement of trades
(1) It will be on a Delivery versus Delivery basis (i.e. a settlement mechanism which stipulates that transfer of securities from the borrower of securities is made simultaneously with the transfer of securities by the lender of securities).
(2) The first leg shall be settled either on a T+0 or T+1 basis.
(3) All transactions shall be settled through Clearing Corporation of India Ltd. (CCIL).
Use of security borrowed and substitution of collateral
(1) Securities borrowed under a GSL transaction may be:
a. Sold either through an outright or a repo transaction or used for meeting a delivery obligation in a short sale; or
b. Used for availing Reserve Bank’s Liquidity Adjustment Facility; or
c. Lent under another GSL transaction; or
d. Placed as collateral under another GSL transaction.
(2) Securities placed as collateral may be substituted by the borrower with other eligible securities in terms of the rules of the central counterparty.
Reporting of trades
All GSL transactions shall be reported to the CCIL within 15 minutes of execution, by both counterparties to the transaction or by the ETP operator concerned.
Computation of Statutory Liquidity Ratio (SLR)
(1) SLR eligible securities borrowed under a GSL transaction shall be eligible to be reckoned for SLR by the borrower. The securities lent under a GSL transaction shall not be eligible to be reckoned for SLR by the lender.

RBI issued the above directions on 28.12.23.
As per the directions, ‘Benchmarks’ mean prices, rates, indices, values or a combination thereof related to financial instruments that are calculated periodically and used as a reference for pricing, valuation or settlement of financial instruments or any other financial contract.
No person other than permitted entities, under these direction, shall administer a benchmark.
Eligibility criteria for FBAs
‘Financial Benchmark Administrator’ (FBA) means a person who controls the creation, operation and administration of benchmark(s). It can be a company incorporated in India.
An FBA administering a ‘significant benchmark’ shall maintain a minimum net-worth of ₹5 crore at all times. An FBA administering a ‘non-significant benchmark’ shall maintain a minimum net-worth of ₹1 crore at all times.
Authorization: FBA shall obtain authorization from RBI. An FBA already administering a benchmark shall seek authorization within 3 months from the date of issuance of these Directions.  If an FBA is not desirous of seeking authorisation under these Directions, it shall cease to administer the benchmark within 3 months from the date of issuance of the Directions.
If the RBI notifies a ‘non-significant benchmark’ as a significant benchmark, the FBA shall seek authorization to continue to administer the benchmark as a ‘significant benchmark’ within 3 months from the date of notification.
Directions for administering ‘significant benchmarks’
Overall Responsibility of Authorised FBAs
FBAs, in respect of the ‘significant benchmarks’ administered by them, shall be responsible for, formulation of the benchmark calculation methodology; determination of the benchmark values; dissemination of the benchmark values; ensuring transparency in the benchmark administration; periodic review of the benchmark; and, putting in place necessary organizational and process controls for effectively carrying out the above responsibilities.
Any amendment to the methodology that FBAs decide to make shall be announced on their official websites at least 15 days prior to such amendments coming into effect.
Internal Control
FBAs shall ensure effective controls over data collection, storage, processing and dissemination to maintain data security, confidentiality and integrity.
Audit Trail and Data Preservation
a. FBAs shall retain all written records relating to the benchmarks for a period of 5 years, which shall be made readily available to RBI.
b. FBAs shall preserve all data in their possession in connection with ‘significant benchmarks’ for a period of 10 years from the date of receipt/creation of data. Data related to any litigation/ dispute / arbitration / adjudication shall be preserved for a period of 2 years after final disposal of the case / litigation / dispute / arbitration / adjudication.
Benchmark Publication
FBAs shall make public the ‘significant benchmarks’, either on the day of their release or with a lag not exceeding 15 days from the release.

To develop secondary market operations of receivables acquired as part of ‘factoring business’ on 28.12.23, RBI decided that transfer of such receivables by eligible transferors will be exempted from MHP requirement, subject to fulfilment of the following conditions:
i. The residual maturity of such receivables, at the time of transfer, should not be more than 90 days, and
ii. The transferee conducts proper credit appraisal of the drawee of the bill, before acquiring such receivables.

Govt. Notification is dated 26.06.2020. It was circulated by RBI on 24.7.20 and updated till 29.7.22. 

1) All MSMEs required to get registered and obtain Udyam registration certificate
Changes made on 28.12.23 : All MSMEs required to get registered and obtain Udyam Registration Certificate. For PSL purposes banks shall be guided by the classification recorded in the Udyam Registration Certificate (URC).
2) For classification other clarifications are :
1. Composite criteria of investment and turnover
2. Calculation of investment in P & M or equipment
3. Calculation of turnover
4. Classification in case of upward or downward migration.
Changes made on 28.12.23 : These guidelines (2 (1) to (4) have been deleted in RBI Master directions

PIDF is to subsidise deployment of payment acceptance infrastructure. It is operational for 5 years (01.01.21 to 30.12.25).
Target: Increase payment acceptance infrastructure by adding 30 lakh touch points (10 lakh physical and 20 lakh digital devices every year).
Governance Structure of PIDF : By an ex-officio Advisory Council (AC).
Target Geographies:  The primary focus on Tier-3 to Tier-6 centres and eligible street vendors covered under PM Street Vendor’s AtmaNirbhar Nidhi and PM Vishwakarma Scheme in Tier-1 and Tier-2 centres. North Eastern states, J&K, Ladakh shall be given special focus.
Tentative distribution of share (%): Tier-1 to Tier-4 centres : 30%, Tier-5 and Tier-6 centres : 60%, North Eastern States: 10%
Market Segments and Merchant Categories: Merchants providing essential services (transport, hospitality, etc.), government payments, fuel pumps, PDS shops, healthcare, kirana shops, street vendors, etc., may be covered, especially in the targeted geographies.
Types of Acceptance Devices Covered: Physical PoS, mPoS (mobile PoS), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), QR code-based payments (and contemporary devices, viz., (i) Soundbox devices and (ii) Aadhaar-enabled biometric devices installed from October 01, 2023 onwards).
Subsidy : 60% to 75% of cost of physical PoS and 75% to 90% for Digital PoS. Payment methods that are not inter-operable shall not be considered under PIDF.
Initial Corpus: Contributions shall be mandatory for banks and card networks. RBI shall contribute ₹250 crore and authorised card networks shall contribute in all ₹100 crore.
The card issuing banks shall also contribute based on the card issuance volume (debit cards and credit cards) at the rate of ₹1 and ₹3 per debit and credit card issued by them.
Recurring Contribution: PIDF shall receive annual contribution from card networks and card issuing banks as under:
a) Card networks – Turnover based – 1 basis point (bps) i.e., 0.01 paisa per Rupee of transaction;
b) Card issuing banks – Turnover based – 1 bps and 2 bps i.e., 0.01 paisa and 0.02 paisa per Rupee of transaction for debit and credit cards respectively; also at the rate of ₹1 and ₹3 for every new debit and credit card issued by them respectively during the year.
RBI shall contribute to yearly shortfalls, if any.
Subsidy: The minimum usage shall be termed as 50 transactions over a period of 90 days and active status shall be minimum usage for 10 days over the 90-day period.
The subsidy claims shall be processed on quarterly basis and 75 percent of the subsidy amount shall be released. The balance 25 percent shall be released later based on active device in 3 out of the 4 quarters of the ensuing year.
Maximum cost of physical acceptance device eligible for subsidy : ₹10,000 (including one-time operating cost up to a maximum of ₹500).
Maximum cost of digital acceptance device eligible for subsidy : ₹300 (including one-time operating cost up to a maximum of ₹200).
Maximum cost of contemporary device eligible for subsidy : ₹2000 (including one-time operating cost up to a maximum of ₹300).
Subsidised amount based on location of deployment shall be as under:
Tier-1 to Tier-4 centres : Physical payment acceptance devices – 60% and digital payment acceptance payment device and contemporary devices – 75%, Tier-5 and Tier-6 centres : 75% and 90%, North Eastern States, J&K, Ladakh (special focus areas) 90%

The Internal Ombudsman mechanism was set up to strengthen the Internal Grievance Redress system of the regulated entities. The Directions (dated 29.12.23), integrate and update the erstwhile Internal Ombudsman Schemes issued by RBI for banks, NBFCs, Non-bank System Participants (NBSPs) and Credit Information Companies (CICs) and come into effect from December 29, 2023 and shall apply to the whole of India.
As per these directions, the Internal Ombudsman should be positioned as an independent, apex level authority on consumer grievance redress within the regulated entities.
Applicability
(1) The Directions shall apply to (a) Banks, (b) NBFCs (Deposit-taking NBFCs with 10 or more branches and Non-Deposit taking NBFCs with asset size of Rs.5,000 crore and above and having public customer interface; (c) All NBSPs with more than one crore Pre-paid Payment Instruments outstanding as on March 31, 2023, or thereafter. (d) All Credit Information Companies.
Appointment of Internal Ombudsman
(1) RE shall appoint IO (one or more) after satisfying themselves that the following prerequisites are fulfilled for the appointment of IO:
IO shall be a retired or serving officer, in the rank equivalent to a General Manager of another bank / Financial Sector Regulatory Body / NBSP / NBFC / CIC, having necessary skills and experience of minimum 7 years of working in areas such as banking, non-banking finance, regulation, supervision, payment and settlement systems, credit information or consumer protection;
IO shall previously not have been employed, nor presently be employed, by the regulated entity or the regulated entity’s related parties.
IO shall not be over 70 years of age before the completion of the tenure.
Appointment of Deputy Internal Ombudsman (DIO)
(1) Regulated entity may appoint one or more DIO depending on the volume of complaints received by them, who would assist IO in the quality disposal of the complaints.
(2) The DIO shall either be a retired or serving officer, not below the rank of Deputy General Manager of another bank / Financial Sector Regulatory Body / NBSP / NBFC / CIC, having necessary skills and experience of minimum 5 years of working in areas such as banking, non-banking finance, regulation, supervision, payment and settlement systems, credit information or consumer protection.
(3) DIO shall not be over 70 years of age before the completion of the tenure.
In the temporary absence of IO, not exceeding a period of 15 working days, DIO may function as the IO for the limited purpose of reviewing the rejected complaints. Such temporary absence should not exceed 30 days.
Tenure of Internal Ombudsman / Deputy Internal Ombudsman
(1) The tenure shall be a fixed term of not less than three years, but not exceeding five years.
(2) They shall not be eligible for reappointment or for extension of term in the same regulated entity.
(3) IO/DIO cannot be removed before the completion of his / her contracted term without the explicit approval of RBI.
In case the vacancy arises on account of reasons such as death, resignation, incapacitation, terminal illness, etc. RE shall appoint a new IO/DIO within 3 months from the date of vacancy and submit a report within 5 working days from the date of appointment of the new IO/DIO to RBI.
RE shall ensure that the post of IO does not remain vacant at any point of time. RE shall undertake the process of fresh appointment at least three months before the expiry of the term of incumbent IO.
Administrative Oversight
IO shall report to the Competent Authority, and to the Board of regulated entity functionally.
Internal Audit
(1) RE shall conduct an internal audit of the implementation of these Directions on a yearly basis. The internal audit shall cover the implementation auto-escalation of the partly or wholly rejected complaints to the Internal Ombudsman within 20 days and adherence with various timelines indicated in these Directions;
Role and Responsibilities of Internal Ombudsman
(1) IO shall not handle complaints received directly from the complainants or members of the public but deal with the complaints that have already been examined by the regulated entity but have been partly or wholly rejected by the regulated entity.
(2) Complaints that are outside the purview of these Directions shall be immediately referred back to the regulated entity by the Internal Ombudsman.
(3) IO shall, on a quarterly basis, analyse the pattern of all complaints received against the regulated entity, such as entity-wise (for CICs), product-wise, category-wise, consumer group-wise, geographical location-wise, etc., and may provide inputs to the regulated entity for policy intervention, if so warranted.
Board Oversight
(1) IO shall furnish periodic reports (including the analysis of complaints) on his / her activities to the Committee of the Board handling customer service and protection, preferably at quarterly intervals, but not less than half yearly intervals.
Procedure for Complaint Redress by Internal Ombudsman
(1) RE establish a fully automated Complaints Management Software wherein all complaints that are partly or wholly rejected by the regulated entity’s internal grievance redress mechanism are auto-escalated to the Internal Ombudsman within 20 days of receipt, for a final decision.
(2) IO and regulated entity shall ensure that the final decision is communicated to the complainant within a period of 30 days from the date of receipt of complaint by the regulated entity.
(3) The decision of IO shall be binding on the regulated entity
Reporting to Reserve Bank
(1) RE shall put in place a system of periodic reporting of information to Consumer Education and Protection Department (CEPD), Central Office, RBI, on a quarterly and annual basis on or before the 10th day of the month following the quarter/year for which they are due.
(2) RE shall, within five working days of appointment of IO/DIO, furnish the details of the official so appointed to CEPD , RBI.

PAs-CB are entities that facilitate cross-border payment transactions for import and export of permissible goods and services in online mode.
Requirement of authorisation
1. AD Category-I banks do not require separate approval from the RBI for undertaking PA-CB activity.
2. Non-banks which already provide PA-CB services shall obtain authorisation by April 30, 2024. Authorisation for PA-CB activity may be sought for any one of the following categories:
i. Export only PA-CB (PA-CB-E)
ii. Import only PA-CB (PA-CB-I)
iii. Export and Import PA-CB (PA-CB- E&I)
In future, any authorised PA which wants to commence PA-CB activity shall seek approval from RBI.
As a pre-requisite for seeking authorisation from the RBI, all non-bank PA-CBs (existing as on the date of this circular) shall register themselves with the Financial Intelligence Unit-India (FIU-IND).
Networth criterion
1. Non-banks already providing PA-CB services, shall have a minimum networth of ₹15 crore and of ₹25 crore by March 31, 2026.
2. New non-bank PA-CBs shall have a minimum networth of ₹15 crore and of ₹25 crore by end of the third financial year of grant of authorisation.
3. All existing non-bank PA-CBs which are not able to comply with the networth requirement, shall wind-up PA-CB activity by July 31, 2024.
4. Banks shall close accounts (used for PA-CB activity) of non-bank PA-CBs (existing as on the date of this circular) by July 31, 2024 unless the PA-CBs produce evidence regarding application for authorisation submitted to the RBI.
Import only PA-CBs
1. Import only PA-CB shall maintain an Import Collection Account (ICA) with an AD Category-I scheduled commercial bank.
2. In case per unit goods / services imported is more than ₹2,50,000, then the concerned PA-CB shall undertake due diligence of buyer also.
Export only PA-CBs
1. Export only PA-CB shall maintain Export Collection Account (ECA) – denominated in Indian Rupees (INR) and / or foreign currency (i.e. non-INR) – with an AD Category-I scheduled commercial bank. An ECA for each non-INR currency shall be maintained separately.
2. All export proceeds shall be credited to the relevant currency ECA of the PA-CB.
Misc.
1. AD Category-I banks undertaking PA-CB activity shall ensure compliance with the requirements for PA-CBs by April 30, 2024.
2. In respect of import and export transactions processed by PA-CBs, the maximum value per unit of goods / services sold / purchased shall be ₹25,00,000.

RBI issued the directions on 07.11.23, under Section 35A of the Banking Regulation Act, 1949; Section 45L of the Reserve Bank of India Act, 1934 and Section 11 of the Credit Information Companies (Regulation) Act, 2005 that shall come into effect from April 1, 2024.
The Directions shall be applicable to the following regulated entities or ’REs’ commercial banks, NBFCs, CICs, EXIM Bank, NABARD, NaBFID, NHB and SIDBI.
Detailed guidelines are available at:
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12562&Mode=0

As per circular dated 25.05.22, AD Category-I banks were allowed to remit advance payments on behalf of Qualified Jewellers as notified by International Financial Services Centres Authority (IFSCA) for 11 days for import of gold through India International Bullion Exchange IFSC Ltd (IIBX).
Further as per DGFT notification dated October 11, 2023 Qualified Jewellers as notified by IFSCA were permitted to import silver under specific ITC(HS) Codes through IIBX.
On 10.11.23, RBI decided that AD Category-I banks may allow Qualified Jewellers to remit advance payment for 11 days for import of silver through IIBX subject to the conditions mentioned in circular dated 25.05.22 (above).

On 26.09.23, RBI had issued calendar for Sovereign Green Bonds for the fiscal year 2023-24. On 08.11.23, RBI decided to designate all Sovereign Green Bonds issued by the Government in the fiscal year 2023-24 as ‘specified securities’ under the fully accessible route.

On 16.11.23, RBI issued the following measures:
A. Consumer credit exposure
(a) Risk weight for Consumer credit exposure of commercial banks
Outstanding as well as new exposure, including personal loans, (but excluding housing loans, education loans, vehicle loans and loans secured by gold and gold jewellery), shall risk weight of 125% (existing 100%)
(b) Risk weight for Consumer credit exposure of NBFCs
Outstanding as well as new exposure categorised as retail loans, excluding housing loans, educational loans, vehicle loans, loans against gold jewellery and microfinance/SHG loans, shall attract a risk weight of 125% (existing 100%)
(c) Credit card receivables
RBI decided to increase the risk weights on such exposures by 25 percentage points to 150% and 125% for SCBs and NBFCs respectively.
B. Bank credit to NBFCs
RBI decided to increase the risk weights on such exposures of SCBs by 25 percentage points (over and above the risk weight associated with the given external rating) in all cases where the extant risk weight as per external rating of NBFCs is below 100% (except for loans to HFCs, and loans to NBFCs eligible as priority sector).

As per FEMA (Deposit) Regulations, 2016,  for settlement of trade transactions with any country in INR, AD banks can open Special Rupee Vostro Accounts (SRV A/c) of correspondent bank/s of the partner trading country.
a) Indian importers importing through INR mechanism can pay in INR by crediting the amount to SRV A/c of the correspondent bank of the partner country.
b) Indian exporters, undertaking exports through the same mechanism, shall be paid the export proceeds in INR from the balances in the designated SRV A/c  of the correspondent bank of the partner country.
What is the change as per circular 17.11.23
RBI allowed AD Category-I banks maintaining SRV A/c as per circular dated 11.07.22, can open an additional special current account for its exporters, exclusively for settlement of their export transactions.