Page 9 - Banking Finance July 2022
P. 9

RBI CORNER


          returns filed by the regulated entities  est and had resorted to undue harass-  home loans extended on a floating in-
          at least once in three years to ascer-  ment of customers for loan recovery  terest rate basis. Housing loans issued
          tain their relevance and periodicity.  purposes," RBI said.          by UCBs should be repayable within a
                                                                               maximum period of 20 years, the cir-
          It has also been recommended to shift  As such, the above companies shall not
                                                                               cular said.
          from the current prescription of sub-  transact the business of a Non-Banking
          mitting data on a fortnight reporting  Financial Institution (NBFI), as defined
          basis to a system of reporting data on  in clause (a) of Section 45-I of the RBI RBI asks SFBs to focus on
          the 15th and last working day of every  Act,  1934,  according to the Central
                                                                               sustainable growth
          month.                            bank.
                                                                               RBI  has  asked  small  finance  banks
          The RRA submitted its report recently                                (SFBs) to focus on sustainable growth
                                            RBI  doubles  home  loan
          containing a set of recommendations
                                                                               and  accord  importance to business
          that will supposedly reduce the burden  ceiling for co-op banks      model and governance.
          on regulated entities (REs) by stream-
                                            RBI  has doubled  the  limit  on home  RBI Deputy Governors M. K. Jain and
          lining the regulatory instructions and
                                            loans  issued  by  urban  cooperative  M.  Rajeshwar  Rao  held discussions
          rationalizing reporting requirements.
                                            banks (UCB). With this, tier-I UCBs can  with managing directors  (MDs) and
          RRA 2.0 was set up by RBI in April last
                                            issue individual housing loans of up to  chief executive officers (CEOs) of SFBs.
          year with an aim to reduce the com-
                                            Rs. 60 lakh while tier-II UCBs are al-  Executive directors of supervision and
          pliance burden on REs by streamlining
                                            lowed to offer loans of up to Rs. 1.4  regulation and other senior officials of
          the regulatory instructions and ratio-
                                            crore, the central bank said in a mas-  the RBI  also attended the meeting,
          nalizing reporting requirements.
                                            ter  circular.  The  RBI  had  made  the  the central bank said in a statement.
                                            announcement  in its June monetary
                                                                               "In the meeting, the emphasis on ac-
          Reserve Bank cancels reg-         policy. The revision in lending limits for
                                                                               cording  due  importance  to  these
          istrations of 5 NBFCs             UCBs was last done in 2011.        themes for sustainable growth of SFBs,
          The Reserve  Bank has cancelled the  "Taking into account  the increase in  particularly their business model and
          certificate of registration issued to five  housing prices since the limits were last  governance, was reiterated after tak-
          Non-Banking  Financial  Companies  revised and considering the customer  ing stock of the developments in the
          (NBFCs) - UMB Securities and Anashri  needs, it has been decided to increase  sector," the statement said.
          Finvest  (both  Bengaluru-based),  the existing limits on individual housing
                                                                               SFBs  were  advised  to  continue  to
          Chadha Finance (New Delhi), Alexcy  loans by cooperative banks," the RBI
                                                                               evolve in tune with the differentiated
          Tracon (Kolkata) and Jhuria Financial  had said.
                                                                               banking  licence  given  to  them with
          Services (Guwahati) - due to irregular
                                            The central bank has also revised the  proportionate growth in their capital
          lending practices.                prudential lending norms  for these  base.
          The  certificates  of  the above men-  banks.  According  to the circular, the
          tioned NBFCs have been cancelled on  RBI has reduced the exposure limits of
                                                                               Govt clears 4  names for
          account of violation of RBI's guidelines  UCBs to a group of connected borrow-
                                            ers to 25% of its total tier-I capital from RBI Board
          on outsourcing and Fair Practices Code
          in their digital lending operations un-  40% earlier. The exposure limit for a  The government has nominated Anand
          dertaken through third party apps; this  single borrower for UCBs remains at  Mahindra,  Venu  Srinivasan,  Pankaj
          was considered detrimental to public  15% of the tier-I capital. The exposure  Ramanbhai  Patel  and  Ravindra  H
          interest, said the Central bank's state-  of UCBs to housing, real estate and  Dholakia as part-time non-official Di-
          ment.                             commercial real estate loans is limited  rectors on the Central  Board of  Re-
                                            to 10% of their total assets.      serve Bank of India (RBI).
          "These companies were also not com-
          plying with the extant regulations per-  UCBs  cannot  charge  foreclosure  As per an official statement, the Ap-
          taining to charging of excessive inter-  charges or pre-payment penalties on  pointments Committee of the Cabinet


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