Page 10 - Banking Finance December 2023

RBI CORNER

identify accounts, which are operated cordingly, banks are only able to offer licensed to offer forex products, expe-
as Money Mules and take appropriate variable rates on deposits totaling rienced massive volatility, which may
action, including reporting of suspicious more than Rs 1 crore. have contributed to the Indian rupee's
transactions to FIU-IND," according to historic low of Rs. 83.33 against the US
the revised Master Direction. The defi- Private banks must have 2 dollar.
nition of customer due diligence (also Refinitiv is a division of London Stock
known as CDD) is expanded. whole-time directors: RBI Exchange Group, or LSEG. It belongs to
In addition to the MD and CEO, private
The Reserve Bank announced that the sector banks are required by the RBI the group of five non-bank organiza-
updated Master Direction provisions tions that the RBI has given permission
will take effect right away. to have at least two full-time directors. to run electronic trading platforms for
According to the RBI, banks without the spot foreign exchange market.
two executives on their board of direc-
RBI mandates that banks tors must submit proposals for the Well-placed sources claim that the plat-
permit early closure of FDs same within four months. form experienced an outage for
roughly ten minutes at noon. The RBI
up to Rs. 1 crore. The central bank claims that because is looking into the matter because it is
the banking industry is becoming more
According to the RBI, banks are re- said that the short outage caused dis-
quired to permit early withdrawals on complex, having two WTDs is now es- ruptions in the currency market.
all term deposits up to a maximum of sential.
Rs 1 crore. The minimum amount for "Creating such a group could help with RBI orders Bajaj Finance to
"non-callable" fixed deposits has been succession planning as well, particu-
increased by the central bank from Rs larly considering the regulatory re- terminate all eCOM and
15 lakhs to Rs 1 crore. quirements regarding the length of Instant EMI loans.
service and maximum age for MD and
Prior to this, the banking regulator had Due to noncompliance with certain
CEO roles," the RBI stated.
permitted lenders to charge higher regulations, the Reserve Bank of India
interest rates on unbreakable fixed The CEO and MD are considered full- has instructed Bajaj Finance Limited to
deposits, which were non-refundable time directors under the WTD require- immediately cease the approval and
upon maturity. ment. This implies that senior bankers disbursement of loans under two of its
would need to be appointed or pro- lending products, the "Insta EMI Card"
In a rising interest rate environment,
banks are motivated to provide higher moted to the position of WTD by banks and "eCOM."
without an executive director.
deposit rates without an early with- The Reserve Bank of India stated that
drawal option. Customers who have The RBI has delegated the task of de- the company's failure to comply with
non-callable deposits are unable to termining the number of WTDs to the the current provisions of its guidelines
take their money out in the middle of bank boards, who will consider perti- for digital lending, specifically the fail-
an interest rate increase. Customers nent factors like the scale of operations ure to provide Key Fact Statements to
are encouraged to invest in non-call- and business complexity. borrowers under these two lending
able, illiquid deposit schemes because According to the central bank, banks products and the inadequacies in the
they offer a marginally higher rate. that do not currently have the enabling Key Fact Statements provided for
Bankers believe that protecting small provisions regarding the appointment other digital loans the company had
investors is the reason behind raising of WTDs in their Articles of Association been approved for, made this action
the minimum deposit amount on non- must apply to RBI right away for the necessary.
callable deposits. For non-callable FDs, required approvals. The central bank stated that once
banks offer a return that is 25-30 basis Bajaj Finance has satisfied the RBI with
points higher. Higher value deposits RBI is looking into the corrections made, the action taken
yield a higher return. will be reviewed.
Refinitiv's foreign ex-
The RBI increased the bulk deposit cap The RBI has taken action against cer-
for rural banks from Rs 1 lakh to Rs 1 change outage. tain banking and financial services in-
crore in a separate notification. Ac- Refinitiv, an electronic trading platform dustry players in the last few years for

BANKING FINANCE | DECEMBER | 2023 | 9