Page 13 - Banking Finance July 2023

RBI CORNER

"Coins we have a peculiar situation credit-risk sharing agreement, a cer- through a multi-stakeholder approach,
where the supply is very high, it's tak- tain percentage of the default loan it added.
ing up a lot of storage space and it's portfolio of banks and NBFCs (regis-
To measure the extent of financial in-
not getting properly distributed, but at tered entities) are guaranteed by a
clusion, the RBI had constructed the
the same time there is demand in third party, a fintech or lending service
Financial Inclusion (FI) Index in 2021,
pockets. So, one way of increasing ab- provider (LSP).
based on three dimensions of financial
sorption of coins into the system is to
According to the new guidelines, the inclusion - 'access', 'usage' and 'qual-
make coins available in places where
entities may enter into default loss ity'.
there is demand," said Deputy Gover-
guarantee arrangements only with a
nor T Rabi Sankar.
lending service provider or other enti- RBI clears SBI Funds's 10%
ties with which it has entered into an
RBI norms on guarantee buy in HDFC Bank
outsourcing arrangement.
The RBI has given its approval to SBI
may hit unsecured loans: Further, the LSP providing default loss
Funds Management (SBIFML) to ac-
Crisil guarantee must be incorporated as a quire up to 9.99% stake in HDFC Bank,
company under the Companies Act,
The RBI's norms on first loss default the private sector lender said. It fur-
2013. It indicates that entities can ac-
guarantee (FLDG) cover are likely to ther said SBIFML has been advised by
cept default loss guarantee in forms
curb lending volumes in unsecured per- RBI to acquire the major shareholding
like cash deposited with the entities,
sonal and business loans, according to in six months (by November 15, 2023).
fixed deposits maintained with a sched-
rating agency Crisil. FLDG is a guaran- SBIFML has to ensure the aggregate
uled commercial bank with a lien
tee extended to lenders by corporate holding in the bank remains below 10%
marked in favour of the entities and
entities for loans. of the paid-up share capital or voting
bank guarantee in favour of the regis- rights of HDFC Bank at all times.
Availability of FLDG cover has enabled
tered entities. The registered entities
fintechs scale up digital lending as it
will ensure that a default cover could
emboldened traditional lenders like Das presented Governor
be provided for up to 5 per cent of the
banks and non-banking finance compa- of the Year Award in Lon-
loan portfolio.
nies to take on their books unsecured
don
loans extended without human inter-
RBI launches financial in-
vention using analytics. RBI Governor Shaktikanta Das, who
was chosen for the prestigious Gover-
The RBI limited the FLDG to 5% of the clusion dashboard
nor of the Year Award 2023 earlier this
loan portfolio and disallowed corporate RBI, launched a Financial Inclusion
year, has said that central banks at the
guarantees as a form of FLDG. Dashboard called Antardrishti. This will
core of monetary and financial systems
provide the central bank the required
have been called to do "heavy lifting"
RBI allows default loss insight to assess and monitor the
well beyond their traditional mandate.
progress of financial inclusion by cap-
guarantee to fintechs Das was conferred the award by 'Cen-
turing relevant parameters.
RBI came out with a regulatory frame- tral Banking' which definitively covers
This facility, which was launched by
work to permit default loss guarantee and analyses issues around the world's
Governor Shaktikanta Das, will also
arrangements in digital lending. central banks and financial regulators
enable the RBI to gauge the extent of following the summer meetings of the
This is considered as a major relief to
financial exclusion at granular levels organisation in London.
financial technology (fintech) compa-
across the country so that such areas
nies that were seeking clarity on their
can be addressed, said the central
lending arrangements with banks and RBI looks to ease KYC
bank in a statement.
non-banking financial companies. The
pain, deter mis-selling by
RBI had barred the first loss default The dashboard, intended for internal
guarantee arrangement under the use in the RBI at present, will further banks
digital lending norms. Under this facilitate greater financial inclusion An RBI panel has suggested several
12 | 2023 | JULY | BANKING FINANCE