Page 60 - Banking Finance July 2023

RBI CIRCULAR

pertaining to collection of indirect taxes through 3. The guidelines shall come into effect from the date of
ICEGATE payment gateway reported to Mumbai this Circular.
Regional Office, RBI will be settled at Mumbai Regional
4. These directions are issued under sections 21, 35A and
Office of Reserve Bank of India only and accordingly all
56 of the Banking Regulation Act, 1949, sections 45JA,
agency banks, authorized to collect GST, direct tax
45L and 45M of the Reserve Bank of India Act, 1934,
collection under TIN 2.0 and indirect taxes through
section 30A of the National Housing Bank Act, 1987 and
ICEGATE payment gateway, are advised to submit their
section 6 of the Factoring Regulation Act.
agency commission claims pertaining to the respective
receipt transactions at Mumbai Regional Office only.
Framework for Compromise Settlements
The agency commission claim for Central Government
transactions reported to CAS, Nagpur, RBI will be and Technical Write-offs
continued to be settled at CAS, Nagpur, RBI. The
June 08, 2023
formats for claiming agency commission for all agency
banks and separate and distinctive set of certificates
1. The Reserve Bank of India has issued various
to be signed by the branch officials and Chartered
instructions to regulated entities (REs) regarding
Accountants or Cost Accountants are given in Annex 2,
compromise settlements in respect of stressed accounts
Annex 2A and Annex 2B respectively. These certificates
from time to time, including the Prudential Framework
would be in addition to the usual Certificate from ED /
for Resolution of Stressed Assets dated June 7, 2019
CGM (in charge of government business) to the effect
(“Prudential Framework”), which recognises
that there are no pension arrears to be credited / delays
compromise settlements as a valid resolution plan. With
in crediting regular pension / arrears thereof.”
a view to provide further impetus to resolution of
3. All other instructions of the said Master Circular remain stressed assets in the system as well as to rationalise
unchanged. and harmonise the instructions across all REs, as
announced in the Statement on Developmental and
Guidelines on Default Loss Guarantee Regulatory Policies released on June 8, 2023, it has
been decided to issue a comprehensive regulatory
(DLG) in Digital Lending
framework governing compromise settlements and
June 08, 2023 technical write-offs covering all the REs, as detailed in
the Annex.
1. A reference is invited to Para (3.4.3.1) of Section C of
2. The provisions of this framework shall be applicable to
Annex-II to the RBI Press Release “Recommendations
all REs to which this circular is addressed and shall be
of the Working group on Digital Lending –
without prejudice to the provisions of the Prudential
Implementation” dated August 10, 2022 in terms of
Framework, or any other guidelines applicable to the
which it was stated that the recommendation
REs on resolution of stressed assets.
pertaining to First Loss Default Guarantee (FLDG) was
under examination with the Reserve Bank. 3. These instructions on operationalising the framework
have been issued in exercise of the powers conferred
2. Arrangements between Regulated Entities (REs) and
by the Sections 21 and 35A of the Banking Regulation
Lending Service Providers (LSPs) or between two REs
Act, 1949 read with Section 56 of the Banking
involving default loss guarantee (DLG), commonly
Regulation Act, 1949; Chapter IIIB of the Reserve Bank
known as FLDG, has since been examined by the Bank
of India Act, 1934 and Sections 30A, 32 and 33 of the
and it has been decided to permit such arrangements
National Housing Bank Act, 1987. They shall come into
subject to the guidelines laid down in the Annex to this
circular. DLG arrangements conforming to these force with immediate effect and REs shall take
guidelines shall not be treated as ‘synthetic necessary steps to ensure compliance with these
securitisation’1 and/or shall also not attract the instructions.
provisions of ‘loan participation’2.

54 | 2023 | JULY | BANKING FINANCE