Page 10 - BANKING FINANCE NOVEMBER 2023

RBI CORNER

dure, while complying with the prin- majority stake in the lender, two gov- (ECL) based framework for provisioning
ciples of natural justice for classifica- ernment sources said. by banks.
tion of a borrower as a wilful defaulter The federal government, which owns In January this year, the RBI had re-
by the lender. 45.48% of IDBI Bank, and the state leased a discussion paper for adoption
"Any account included in the list of wil- owned Life Insurance Corp of India, of an expected loss-based approach for
ful defaulters, where the lender has which holds 49.24%, together plan to loan loss provision by banks. The RBI
entered into a compromise settlement sell 60.7% of the lender. had sought comments on the paper till
with the borrower, shall be removed RBI began the vetting process known February 28.
from the list only when the borrower as 'fit and proper criteria' in April, af- Currently, banks are required to make
has fully paid the compromise ter Kotak Mahindra Bank, the Prem loan loss provisions based on an in-
amount," it stated. Watsa backed CSB Bank and Emirates curred loss approach which needs
NBD submitted their initial bid to ac- banks to provide for losses that have
RBI to extend PCA norms quire a majority stake in IDBI Bank. occurred or incurred
to govt-owned NBFCs In a press release issued, the RBI said
RBI names Muneesh several comments have been received
The Reserve Bank said the strict super-
visory norms under the Prompt Correc- Kapur as Executive Direc- from various stakeholders on the issues
tive Action (PCA) Framework will apply flagged in the discussion paper, which
to government-owned non-banking fi- tor are being examined by it.
nancial companies from October 2024. RBI has appointed Muneesh Kapur as "While the regulatory stance to be
Executive Director (ED) with effect
Being put under the PCA framework from October 3, 2023. taken in respect of each of the issues
means restrictions on dividend distribu- shall be examined by the Reserve Bank,
tion/ remittance of profits; promoters/ Prior to being promoted as ED, Kapur it has been decided to constitute a
shareholders to infuse equity and re- was Adviser-in-Charge, Monetary Working Group in order to get inde-
duction in leverage; and restrictions on Policy Department and Secretary to pendent inputs on some of the techni-
the issue of guarantees or taking on the Monetary Policy Committee cal aspects having a bearing on the sig-
other contingent liabilities on behalf of (MPC). In his new role, he will look af- nificant transition involved," the re-
group companies. ter the Department of Economic and lease said.
Policy Research.
The Reserve Bank introduced the PCA
Framework for NBFCs on December Over a span of nearly three decades in Card-on-file tokenisation
14, 2021. the Reserve Bank, Kapur has worked in facility at issuer bank-level
the areas of macroeconomic policy and
"The Framework has since been re- research and monetary policy in Depart- The RBI will introduce the facility for
viewed and it has been decided to ex- creation of card-on-file tokenisation at
ment of Economic Policy and Research
tend the same to Government NBFCs and Monetary Policy Department in the issuer bank level to enhance con-
(except those in Base Layer) with ef- venience for cardholders in getting to-
RBI, per a central bank statement.
fect from October 1, 2024, based on kens created and linking them to their
the audited financials of the NBFC as He also served as Adviser to Executive existing accounts with e-commerce ap-
on March 31, 2024, or thereafter," the Director, International Monetary Fund plications.
central bank said in a circular. during 2012-15. "Given the growing acceptance and

RBI forms an external benefits of tokenisation of card data,
RBI to vet IDBI bidders it is now proposed to introduce Card-
working group for ECL- on-File Tokenisation (CoFT) creation fa-
soon
based framework cilities directly at the issuer bank level,"
RBI is expected to accelerate a key Governor Shaktikanta Das said.
process of vetting IDBI Bank's poten- RBI has constituted a nine-member ex-
tial buyers and complete it by October ternal working group to get indepen- Currently, CoF tokens can only be cre-
end, helping speed up the sale of a dent views on Expected Credit Loss ated through merchant applications or

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