Page 53 - Banking Finance July 2020

RBI CIRCULAR

name of individuals/entities appearing in the lists of Implementation of Indian Accounting
individuals and entities, suspected of having terrorist
links, which are approved by and periodically circulated Standards
by the United Nations Security Council (UNSC).” RBI/2020-21/15
2. In this regard, Ministry of External Affairs (MEA) has July 24, 2020
now forwarded the following Press Release issued by
the United Nations Security Council (UNSC) Committee 1. Please refer to paragraph 3 of the Annex to our circular
established pursuant to Resolutions 1267 (1999), 1989 DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated
(2011) and 2253 (2015) concerning ISIL (Da’esh), Al- March 13, 2020, on the captioned subject, in terms of
Qaida, and associated individuals, groups, undertakings which any net unrealised gains arising on fair valuation
and entities regarding changes in the list of individuals of financial instruments, should not be included in
and entities subject to the assets freeze, travel ban and owned funds whereas all such net losses should be
arms embargo set out in paragraph 1 of UNSC considered.
resolution 2368 (2017), and adopted under Chapter VII 2. On a review, it has been decided that the unrealised
of the Charter of the United Nations. gain/loss on a derivative transaction undertaken for
The UNSC press release concerning the amendment to hedging may be offset against the unrealised loss/gain
the list is also available at URL: https://www.un.org/ recognized in the capital (either through Profit or Loss
press/en/2020/sc14256.doc.htm or through Other Comprehensive Income) on the
corresponding underlying hedged instrument. If after
Notification: Note SC/14256 regarding addition of a
Pakistani individual [QDi.427 Name: 1: Noor 2: Wali 3: such offset and netting with unrealised gains/losses on
Mehsud 4: na] in UNSC’s 1267/ 1989 ISIL (Da'esh) & Al- other financial instruments, there are still net
Qaida Sanctions List. unrealised gains, the same should be excluded from
regulatory capital as required by paragraph 3 of the
3. Updated list of individuals and entities linked to ISIL annex to the said circular.
(Da'esh), Al-Qaida and Taliban are available at:
3. It is also clarified that unrealized gains/losses shall be
https://www.un.org/securitycouncil/sanctions/1267/ considered net of the effect of taxation. All other
aq_sanctions_list instructions remain unchanged.
https://www.un.org/securitycouncil/sanctions/1988/
materials (Manoranjan Mishra)
Chief General Manager
4. As per the instructions from the Ministry of Home
Affairs (MHA), any request for delisting received by any
RE is to be forwarded electronically to Joint Secretary Loans Sourced by Banks and NBFCs over
(CTCR), MHA for consideration. Individuals, groups, Digital Lending Platforms: Adherence to
undertakings or entities seeking to be removed from
the Security Council’s ISIL (Da'esh) and Al-Qaida Fair Practices Code and Outsourcing
Sanctions List can submit their request for delisting Guidelines
to an independent and impartial Ombudsperson who
has been appointed by the United Nations Secretary- RBI/2019-20/258
General. More details are available at the June 24, 2020
following URL: https://www.un.org/securitycouncil/
ombudsperson/application 1. It has been observed that many digital platforms have
emerged in the financial sector claiming to offer hassle
5. In view of the above, REs are advised to take note of free loans to retail individuals, small traders, and other
the aforementioned UNSC communication and ensure borrowers. Banks and NBFCs are also seen to be
meticulous compliance. engaging digital platforms to provide loans to their
customers. In addition, some NBFCs have been
(Dr. S. K. Kar) registered with Reserve Bank as ‘digital-only’ lending
Chief General Manager entities while some NBFCs are registered to work both
on digital and brick-mortar channels of credit delivery.

BANKING FINANCE | JULY | 2020 | 53