Page 9 - Banking Finance May 2025

RBI CORNER

RBI Slaps Penalties on

Citibank and IDBI Bank for
Regulatory Lapses
The Reserve Bank of India (RBI) has
imposed a penalty of Rs 36.28 lakh on
Citibank N.A. for violating norms re-
lated to reporting transactions under
the Liberalised Remittance Scheme. Ò»©­
In a separate action, IDBI Bank has
been fined Rs 36.30 lakh for failing to
undertake due diligence while process-
ing inward remittances from a foreign
currency account opened by a con-
stituent. Poonam Gupta Appointed as New RBI Deputy Gov-
The RBI clarified that these penalties ernor
are based on deficiencies in regulatory
The Reserve Bank of India (RBI) is set to have a woman Deputy Governor
compliance and are "not intended to
after nearly 14 years, with the Centre appointing Poonam Gupta to the po-
pronounce upon the validity of any
transaction or agreement entered into sition. The post had been vacant since Michael Patra's exit in January 2025.
by the banks with their customers." Gupta is currently the Director General of the National Council of Applied
Economic Research (NCAER) and is also a member of the Economic Advi-
These actions underline the central
bank's ongoing emphasis on strict com- sory Council to the Prime Minister as well as the Convener of the Advisory
pliance and risk management proto- Council to the 16th Finance Commission.
cols in the banking sector. Her appointment comes just ahead of the RBI's upcoming Monetary Policy
Committee (MPC) meeting, where a 25-basis-point cut in the repo rate is
RBI Issues Draft Rules to widely anticipated. Gupta's addition to the central bank's leadership is ex-
pected to bolster economic policymaking, particularly at a time when glo-
Strengthen Non-Fund- bal uncertainties persist.
Based Credit Facilities This marks an important step in increasing women's representation at the
The Reserve Bank of India (RBI) has highest levels of the financial regulatory framework in India.
released revised draft guidelines to
regulate non-fund-based (NFB) credit The RBI has emphasized that REs granted the National Payments Corpo-
facilities such as letters of credit and should avoid undue concentration of ration of India (NPCI) the authority to
guarantees across regulated entities unsecured guarantees and should revise the transaction limit for UPI
(REs). The norms also cover partial implement appropriate internal ceil- person-to-merchant (P2M) payments,
credit enhancement (PCE) offered by ings for such exposures. currently capped at Rs 2 lakh.
REs to support infrastructure financing. Stakeholders have been invited to pro- "NPCI, in consultation with banks and
According to the draft, REs should is- vide feedback on the draft norms before stakeholders, to get freedom to revise
sue NFB facilities only to customers final regulations are implemented, re- transaction limit for UPI in person to
with an existing business relationship flecting RBI's continued focus on enhanc- merchant transactions from Rs 2 lakh,"
involving funded credit or deposit fa- ing the resilience of credit markets. RBI Governor Sanjay Malhotra said
cilities. Further, guarantees and while announcing the Monetary Policy
counter-guarantees must be irrevo- NPCI Gets Freedom to Re- Committee (MPC) decisions.
cable, with no unilateral cancellation vise UPI Transaction Limits In a related announcement, the MPC
clause by the guarantor. The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis

8 | 2025 | MAY | BANKING FINANCE