Page 13 - Banking Finance August 2024

RBI CORNER

According to the IADI's surveys, 60 per justment facility and marginal standing Shaktikanta Das recently spoke on host
cent of deposit insurers have facility, RBI said in draft guidelines on of issues related to relationship be-
formalised Environmental, Social, and Basel-III Framework on Liquidity Stan- tween central bank and the govern-
Governance (ESG) policies, and some dards. ment, giving banking license to business
are members of the Network for Banks can also use a portion of the houses, interest rates, action on regu-
Greening the Financial System (NGFS). deposits, which have been pledged to lated entities due to non compliance of
norms and rise in rural consumption.
get loans by customers, to compute
RBI tightens norms for liquidity coverage ratio. RBI has In an interaction the Governor said the
cash pay-outs sought comments from all stakehold- RBI is currently not contemplating giv-
ers by 31 August. ing banking license to corporate
The RBI tightened norms related to houses.
cash pay-out service at banks, making
it mandatory for lenders to keep a Outward remittances fell "Experience world over has shown that
record of recipients. 16% in May due to in- when real sector companies enter into
the banking space, there are potential
Cash pay-out refers to arrangements crease in TCS conflicts of interest. The problem
for amounts being transferred out of
Outward remittances under the Re- around related- party transactions is
bank accounts to beneficiaries not hav-
serve Bank of India's (RBI's) Liberalised also a major issue," Das said when
ing a bank account.
Remittance Scheme (LRS) declined by asked if the RBI will shed its hesitations
The Reserve Bank of India (RBI) has over 16 per cent in May 2024 from the over allowing business houses, private
revised its October 2011 framework year-ago period due to the base effect. equity and venture capital funds to
related to 'Domestic Money Transfer'. The LRS scheme was introduced in have larger stakes in banking entities.
The new norms will come into effect 2004, allowing all resident individuals It will be very difficult to monitor or to
from November 1, 2024. regulate or prevent the related- party
to remit up to $250,000 per financial
For cash pay-out service, the revised year for any permissible current or transactions and so, the risks involved
framework said, "The remitting bank capital account transaction, or a com- are very high, he added.
shall obtain and keep a record of the bination of both, free of charge. In the Related- party transaction refers to
name and address of the beneficiary". initial phase, the scheme was intro- any transaction, or relationship, in
In case of cash pay-in service, the RBI duced with a limit of $25,000, which which the company or any of its sub-
said remitting banks/ business corre- was revised gradually. sidiaries is or will be a participant, and
spondents (BCs) will register the remit- According to the latest RBI bulletin, any related party has or will have a
ter based on a verified cell phone remittances under the scheme stood at direct or indirect interest.
number and a self-certified 'officially $2.42 billion in May 2024, 16.18 per When asked if RBI, at present, was
valid document (OVD)' as per the know cent lower than the year-ago period. ruling out entry of corporate houses
your customer direction. into the banking sector, Das said, "at
During the Union Budget for FY23, the this point, there is no thinking in that
government proposed to raise tax col-
RBI proposes new rules for lection at source (TCS) to 20 per cent direction."
bank assets from 5 per cent on amounts exceed- Join
ing ~7 lakh for all purposes, except for
The Reserve Bank of India has pro-
posed that banks should value their education and medical treatment. Online Certificate
high quality liquid assets, kept in the
form of government securities, at no Not thinking of giving Course on

greater than their current market banking license to busi-
rate. Reinsurance
ness houses at present:
This value should be adjusted for appli- For details please visit
cable haircuts in line with the margin Das
requirements under the liquidity ad- Reserve Bank of India Governor www.smartonlinecourse.co.in

12 | 2024 | AUGUST | BANKING FINANCE