Page 5 - Banking Finance September 2025

BANK UPDATE

ratio raises concerns about long-term
credit discipline and borrower account-
ability in India's banking system.

IBA urges banks to expe-
dite ISO 20022 migration
Ò»©­ to avoid payment disrup-

tions
The Indian Banks' Association (IBA) has
issued a directive urging all banks to
fast-track the migration to SWIFT's ISO
20022 messaging standard by August
2025, warning of potential cross-bor-
RBI: Re-KYC completed for 3.5 million accounts un- der payment issues if deadlines are
missed.
der inclusion push
In a communication to bank heads, IBA
The Reserve Bank of India (RBI) announced that banks have completed re- CEO Atul Kumar Goel stressed the
KYC for over 3.5 million accounts under the ongoing financial inclusion drive. need to initiate migration early to al-
From July 1 to September 30, 2025, a nationwide campaign is underway at
low for monitoring and buffer time
the Gram Panchayat level to ensure saturation of financial inclusion (FI)
before the global deadline of Novem-
schemes and KYC compliance.
ber 2025. ISO 20022 aims to enhance
As of August 11, over 1.41 lakh outreach camps have been conducted. Re- cross-border payments through better
KYC is mandated at intervals depending on customer risk profiles-every 2 data quality, cost efficiency, faster pro-
years for high-risk, 8 years for medium, and 10 years for low-risk customers. cessing, and improved reconciliation.
RBI Governor Sanjay Malhotra visited a camp in Gozaria, Mehsana
(Gujarat), where he interacted with local stakeholders and emphasized col- While three Indian banks have
laborative efforts between banks, RBI, and communities to expand access achieved migration rates exceeding
to financial services. 85%, most are still lagging. ISO 20022
adoption by SWIFT marks a significant
The campaign also aims to improve uptake of government FI schemes. RBI
shift toward harmonized financial mes-
is closely monitoring progress to ensure full KYC compliance across the bank- saging globally. The IBA's advisory
ing ecosystem.
aligns with the industry's goal of mod-
ernizing payment infrastructure to
PSBs write off Rs. 5.82 tril- crore, amounting to just 28% of total meet evolving compliance and effi-
write-offs.
lion in 5 years, recover ciency standards in global banking.
The minister clarified that such write-
just 28% offs do not waive the liabilities of bor-
Public sector banks (PSBs) have written rowers; rather, they follow RBI norms Union Bank of India
off Rs. 5.82 lakh crore in bad loans and are based on bank board-approved waives minimum balance
over the past five financial years, Min- policies. Write-offs typically occur after charges for savings ac-
ister of State for Finance Pankaj four years of provisioning. Banks con-
Chaudhary told Parliament. In FY25 tinue pursuing recovery through legal counts
alone, Rs. 91,260 crore was written and other channels. Union Bank of India has announced the
off, while the highest annual write- The disclosures come amid scrutiny complete waiver of charges for non-
off occurred in FY21 at Rs. 1.33 lakh over NPA resolution and efforts to clean maintenance of minimum balance in
crore. Recoveries during this five- up balance sheets. While write-offs of- general savings deposit accounts, ef-
year period stood at Rs. 1.65 lakh fer accounting relief, the low recovery fective from the quarter ending Sep-

BANKING FINANCE | SEPTEMBER | 2025 | 5