Banking & Economy Oct -23

Sberbank becomes first Russian bank to register with Sebi as FPI: NSDL

Sberbank of Russia has become the first Russian bank to register with the Securities and Exchange Board of India as a foreign portfolio investor (FPI). FPIs with category I licence have to follow less lenient beneficial ownership disclosures, can subscribe to overseas derivative instruments which have Indian stocks as underlying and also enjoy certain taxation benefits. Category I FPI registration is only granted to government or government related foreign investors or regulated entities such as banks, sovereign wealth funds, investment trusts, pension funds, asset management companies. Sberbank’s registration takes the total number of Russia-based FPIs in India to five, with all others being non-banks. Till now, Alfa Capital Management, First Asset Management, Igor Noskov, and Vesvolod Rozanov have been granted FPI registrations.

ADB approves $ 400 mn loan to support govt’s urban reform agenda

The Asian Development Bank (ADB) has approved a $ 400 million loan to support the Indian government’s urban reform agenda for creating high-quality urban infrastructure and efficient governance systems. The programme also envisages integrated urban planning reforms to control urban sprawls and foster systemic and planned urbanisation through enhancing the entire ecosystem of legal, regulatory, and institutional reforms along with capacity building of ULBs and community awareness. The ADB has approved a $ 400 million policy-based loan to India for Subprogramme 2 of the Sustainable Urban Development and Service Delivery Programme. While Subprogramme 1, approved in 2021, established national-level policies and guidelines to improve urban services, Subprogramme 2 is supporting investment planning and reform actions at the state and urban local body (ULB) levels.

Asian Development Bank (ADB):

• Formation: 19 December 1969
• Headquarters: Philippines
• Membership: 68 countries
• President: Masatsugu Asakawa

RBI slaps Rs 12 cr fine on ICICI Bank, Rs 3. 85 crpenalty on Kotak Mahindra Bank

The Reserve Bank of India (RBI) has imposed a penalty of Rs 12. 19 crore on ICICI Bank for noncompliance of certain rules and regulations of the central bank. In a separate order, the RBI also imposed a penalty of Rs 3. 95 crore on Kotak Mahindra Bank for various violations of rules. 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.

RBI imposes Rs 2. 50-cr penalty on L&T Financefor non-compliance of norms

The Reserve Bank of India (RBI) has charged the Non-Banking Finance Company (NBFC) L&T Finance with Rs 2. 50 crore for failing to adhere to certain regulatory provisions regarding interest rates. The statutory inspection of the company was conducted by the RBI with reference to its financial position as of March 31, 2021, and March 31, 2022. As per the examination of the Risk Assessment Reports, Inspection Reports, Supervisory Letters, and all related correspondence, the RBI found that the NBFC had not disclosed to its retail borrowers the gradation of risk and rationale for charging different interest rates to different categories of borrowers in the loan application form or sanction letter.

Reserve Bank of India:

• Headquarters: Mumbai, Maharashtra, India
• Established: 1 April 1935
• Governor: Shaktikanta Das

RBI imposes Rs.1 crore penalty on Union Bank

The RBI has imposed a penalty of Rs.1 crore on Union Bank of India for non-compliance with directions on ‘Loans and Advances – Statutory and Other Restrictions’. It also fined RBL Bank for an amount of Rs.64 lakh for violation of norms on regulatory approval for acquisition of shares or voting rights in private sector banks. Pune-based Bajaj Finance has also been levied a penalty of Rs.8. 50 lakh for breach of regulatorynorms on the extent of not reporting and delay in reporting of certain frauds to RBI.

Union Bank of India:

• Founded: 11 November 1919
• Founder: Seth Sitaram Poddar
• Headquarters: Mumbai, Maharashtra, India
• Non-Exe Chairman: Srinivasan Varadarajan
• MD & CEO: A. Manimekhalai

RBI imposes Rs 5.39 cr penalty on Paytm Payments Bank for KYC norms violation

The Reserve Bank of India (RBI) imposed a monetary penalty of Rs 5. 39 crore on Paytm Payments Bank for violating KYC norms. This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. RBI added that this action is based on 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.

Paytm Payments Bank:

• Founded: 28 November 2017
• Founder: Vijay Shekhar Sharma
• Headquarters: Noida, India
• Interim CEO: Deependra Singh Rathore

IMF raises India FY24 GDP growth forecast by 20 basis points to 6. 3%

The International Monetary Fund (IMF) raised its FY24 growth projection for India by 20 basis points to 6. 3 per cent, citing stronger-than-expected consumption between April and June. The IMF’s latest World Economic Outlook (WEO) kept its global growth forecast unchanged at 3 per cent for 2023 while paring down the 2024 projection by 10 basis points to 2. 9 per cent. Growth in India is projected to remain strong, at 6. 3 per cent in both 2023 (FY24) and 2024 (FY25), with an upward revision of 0. 2 percentage point for 2023 (FY24), reflecting strongerthan- expected consumption during April-June. In its July WEO, the IMF had projected a growth rate of 6. 1 per cent for India in FY24, a 0. 2 percentage point upward revision compared with the April projection driven by strong domestic investment. Earlier this month, the World Bank too said its economic growth forecast for India remains at 6. 3 per cent, underpinned by strong investment growth. Both thefinance ministry and Reserve Bank of India (RBI) have retained their 6. 5 per cent GDP growth estimate for FY24.

International Monetary Fund:

• Formation: 27 December 1945
• Headquarters: Washington, D. C. , U. S.
• Membership: 190 countries
• Managing Director: Kristalina Georgieva
• Chief Economist: Pierre-Olivier Gourinchas

RBI forms external working group on expected credit loss framework

The Reserve Bank of India (RBI) has taken a significant step by forming an external working group (WG) to address the expected credit loss (ECL) framework for loan loss provisioning. The aim is to gather independent insights into the intricacies of this substantial shift in the banking sector. It will be led by R. Narayanaswamy and consists of eight experts, with representation from six banks and one member each from KPMG and the Indian School of Business, Hyderabad. RBI will include recommendations of the working group while framing the draft guidelines, which will be put in the public domain for comments before issue of final guidelines

RBI:

• Headquarters: Mumbai, Maharashtra, India
• Established: 1 April 1935
• Governor: Shaktikanta Das
• Bank rate: 6. 75%

RBI retains repo rate; GDP growth at 6. 5%

Reserve Bank of India’s Governor Shaktikanta Das announced the monetary policy committee’s decision to keep the repo rate unchanged at 6 50%. It’s the fourth time in a row that the RBI has kept the policy repo rate unchanged at 6. 50%. The repo rate is the rate at which RBI lends money to banks.

Highlights of bi-monthly monetary policy announced by RBI Governor Shaktikanta Das:

• All 6 RBI MPC members unanimously voted to keep repo rate unchangedat 6. 5%.
• This is the fourth meeting on the trot that the MPC decided to maintain the status quo on the repo rate.
• The MPC last raised this rate from 6. 25% to 6. 50% at its meeting in February 2023
• RBI remains focused on withdrawal of accommodation support growth, tame inflation
• Cumulative repo rate hike of 250 bps still working its way through economy
• Real GDP growth forecast retained at 6. 5% for FY24
• Inflation forecast too retained at 5. 4% for FY24.S

RBI slaps fines on 3 banks in Gujarat for breach of rules

The Reserve Bank of India (RBI) has imposed monetary penalties on three cooperative banks in Gujarat for breach of rules after carrying out statutory inspections of their records. a monetary penalty of Rs 6. 50 lakh has been imposed on Dhanera Mercantile Co-operative Bank Ltd. , Dhanera, Gujarat for noncompliance with the directions issued by RBI on loans and advances to directors, relatives and firms/concerns in which they are interested. The RBI has also imposed a monetary penalty of Rs3. 50 lakh on The Janata Co-operative Bank Ltd. , Godhra, Panchmahal district, Gujarat for non-compliance with the directions issued by RBI on Donations to trusts and institutions where Directors, their relatives hold position or are interested and loans and advances to directors, relatives and firms /concerns in which they are interested. The RBI has also imposed a monetary penalty of Rs 1 lakh on Maninagar Co-operative Bank Ltd. , Ahmedabad, for non-compliance with the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Co-operative Banks – Interest Rate on Deposits’.

Current Policy rates of RBI:

• Repo Rate: 6. 50%
• Bank Rate: 5. 15%
• Reverse Repo Rate: 3. 35%
• Marginal Standing Facility Rate: 6. 75%

India’s GDP to grow at 6. 3% for FY23-24, forecasts World Bank

India’s GDP growth is likely to be at 6. 3% for financial year 2023-24, according to World Bank’slatest India Development Update. The expected moderation is mainly due to challenging external conditions and waning pent-up demand. Global headwinds will continue to persist and intensify due to high interest rates, geopolitical tensions, and sluggish demand. However, service sector activity is expected to remain strong with growth of 7. 4%, and investment growth is also projected to remain robust at 8. 9%,” the World Bank’s latest India Development Update stated.

World Bank:

• Established: July 7
• Headquarters: Washington, D. C. , U. S.
• President: Ajay Banga
• MD: Axel van Trotsenburg
• MD and CFO: Anshula Kant
• Chief Economist: Indermit Gill

RBI imposes monetary penalty on SBI, Indian Bank and Punjab & Sind Bank

The Reserve Bank of India (RBI) has imposed monetary penalties on three banks viz. , State Bank of India, Indian Bank and Punjab & Sind Bank, and Fedbank Financial Services for rule violations. The central bank imposed Rs 1. 30 crore on State Bank of India, Rs 1. 62 crore penalty on Indian Bank, Rs 1 crore on Punjab & Sind Bank, and Rs 8. 80 lakh on Fedbank Financial Services. State Bank of India failed to adhere to the intra-group exposure limit, as it did not consider the intra-day limit sanctioned to its group entity for the purpose of computing intra-group exposure limit. Further, Indian Bank allowed operations and did not close several accounts opened using OTP-based e-KYC in non-face-to-face mode, even after the expiry of one year without conducting customer due diligence procedure, and opened several savings accounts in the names of customers not eligible to maintain savings deposit account.