Banking & Economy Dec-23

RBI slaps fines of Rs 10.34 crore on Citibank, BoB,IOB for breach of norms

The RBI slapped penalties totalling Rs 10.34 crore on Citibank, Bank of Baroda, and Indian Overseas Bank for the breach of banking norms. A fine of Rs 5 crore has been imposed on Citibank NA for non-compliance of norms related to the depositor education and awareness fund scheme, and code of conduct on outsourcing of financial services and KYC norms.A penalty of Rs 4.34 crore has been imposed on public sector Bank of Baroda for violation of certain directions related to the creation of a central repository of large common exposures, and others.Another Rs 1 crore penalty was levied on government-owned Indian Overseas Bank for contravention of directions concerning loans and advances.

• CEO of Citibank: Sunil Garg
• CEO of BoB: Devdutt Chand
• CEO of IOB: Ajay Kumar Srivastava

RBI asks private banks to have at least two wholetime directors, including MD and CEO

Reserve Bank of India has asked private banks and wholly owned subsidiaries of foreign banks to ensure at least two Whole Time Directors (WTDs), including the MD and CEO, on their boards to facilitate succession planning. As per RBI, the number of Whole Time Directors should be decided by the Board of the bank by taking into account factors such as the size of operations, business complexity, and other relevant aspects. The RBI directed banks that currently do not meet this requirement to submit their proposals for the appointment of WTDs under the Banking Regulation Act, 1949, within a period of four months from the date of issuance of the circular.

RBI imposes penalty on Axis Bank, Manappuram Finance for violating norms

The Reserve Bank of India (RBI) levied monetary penalties on Axis Bank and Manappuram Finance, citing non-compliance with certain regulations of the central bank. Axis Bank was fined Rs 90. 92 lakh as the RBI found from its Inspection for Supervisory Evaluation (ISE) for its financial position as of March 31, 2022, that the lender failed to comply with Know Your Customer (KYC) regulations. The central bank imposed a monetary penalty of Rs 42. 78 lakh on Manappuram Finance on account of failing to adhere to certain regulations. The decision comes on the back of an inspection conducted by the RBI based on the Non-Banking Financial Company (NBFC)’s financial position as of March 31, 2022. The company was found not to have transferred surplus amounts to the borrowers from the auction of gold articles pledged by the borrowers during April 01, 2021, to September 30, 2022.

Axis Bank:

• Founded: 3 December 1993
• Headquarters: Mumbai, Maharashtra, India
• MD & CEO: Amitabh Chaudhry
• Chairperson: Shri Rakesh Makhija

RBI bars Bajaj Finance from giving loans

The Reserve Bank of India (RBI) has barred Bajaj Finance from lending under two products — Insta EMI and eCOM — citing violations of certain provisions of the digital lending guidelines. This includes the non-issuance of key fact statements (KFS) to borrowers for these two lending products and deficiencies in KFS issued for other digital loans sanctioned by the company.

Insta EMI and eCOM:

The Insta EMI card, a virtual card, enables customers to shop for 1 million products offered by the company at ‘no-cost EMI’. A pre-approved loan of Rs 2 lakh is also available with this card, featuring a repayment tenure of up to 60 months. eCOM lending by Bajaj Finance on e-commerce platforms, such as Amazon, Flipkart, Yatra, MakeMyTrip, etc. , will be discontinued with immediate effect. The NBFC finances its existing EMI card customers for their purchases through ecommerce platforms.

ICICI Bank gets RBI nod for making ICICI Securities its wholly-owned subsidiary

ICICI Bank received the Reserve Bank of India (RBI) approval for making ICICI Securities its whollyowned subsidiary. ICICI Bank on June 26 announced that it will be considering a proposal for the delisting of ICICI Securities, a subsidiary of the bank. ICICI Securities is a low capital consuming business and the internal accruals are more than adequate to fund business growth. ICICI Bank is not expected to be required to make additional capital infusion into the company. Following this, ICICI Securities had on June 29 announced that it will delist and become a wholly owned subsidiary of its parent company ICICI Bank. The decision to delist comes five years after the broking firm made its debut on the bourses.

Flying Wedge is first company to secure DGCA certification for UAVs

Flying Wedge Defence and Aerospace has become India’s first-ever private firm to secure a Directorate General of Civil Aviation (DGCA) type certification for indigenous unmanned aerial vehicle (UAV) technology. Under the DGCA’s regulatory framework, no drone, aircraft, or aeroplane can operate in India without DGCA-type certification. This stringent certification process is regarded as a vital step in ensuring the safety and reliability of unmanned aircraft within the country.

RBI imposes penalties on Punjab National Bank, Federal Bank

The Reserve Bank of India imposed penalties on Punjab National Bank (PNB) and Federal Bank. While the private sector lender, Federal Bank, was slapped with a fine of Rs 30 lakh, the fine on state-run lender PNB was to the tune of Rs 72 lakh. The monetary penalty imposed on Federal Bank was for the lender’s failure to comply with the RBI’s know your customer (KYC) guidelines. This penalty (on Federal Bank) has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949. This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. The monetary penalty imposed on PNB was over certain provisions of the RBI’s directions on the interest rates applicable to deposits and advances, and its master circular on customer service in banks. “This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 51(1) of the Banking Regulation Act, 1949.

RBI:

• Founded: 1 April 1935, Kolkata
• Founder: British Raj
• Governor: Shaktikanta Das

Zurich Insurance to acquire 51% stake in Kotak General Insurance

Zurich Insurance will acquire 51% stake in Kotak General Insurance for 74,051 crore via a combination of fresh growth capital and share purchase. It Will acquire additional stake of 19% within a period of three years.

Zurich Insurance Group:

• Founded: 1872
• Headquarters: Zürich, Switzerland
• Chairman: Michel Liès
• CEO: Mario Greco

Fincare SFB to merge with AU Small Finance Bank in all-share deal

Fincare Small Finance Bank is set to merge with AU Small Finance Bank (AU SFB) in an all-share deal. Fincare shareholders will receive 579 shares of AU for every 2,000 shares held. At present, AU’s market capitalisation is Rs 46,000 crore, the highest among small finance banks. The market capitalisation of the merged entity will be slightly over Rs 50,000 crore. The deal values Fincare at around Rs 4,416 crore. In September this year, Bengaluru-based Fincare received Securities and Exchange Board of India (Sebi) approval for an initial public offering, in which the bank planned to raise Rs 625 crore.

HDFC Bank launches digital banking platform ‘XpressWay’

HDFC Bank has launched a self-service digital banking platform ‘XpressWay’ to deliver fast, paperless banking for its customers. XpressWay offers services like personal loans, business loans, car loans, home loans, loan on cards, credit card, savings accounts, service journeys etc. XpressWay is a part of HDFC Bank ‘NOW’, an umbrella brand for the Bank’s digital products and services.