Page 10 - Banking Finance May 2023

RBI CORNER

Tibrewal for second term was ap- Currently, UPI payments can be done tion mechanism for delayed updation
proved by the shareholders via postal between deposit accounts, sometimes and rectification of credit information."
ballot on 9 March 2022 for four years intermediated by pre-paid instruments
The regulator said there will also be a
from 19th April 2022 till 18 April, 2026, including wallets. Last June, the RBI
provision for SMS and email alerts to
per the bank's annual report. also approved the use of Rupay credit
customers when their credit informa-
cards on UPI, stoking hopes that it
tion is accessed from CICs. The RBI said
Can't use penal charges to would eventually allow delivery of it will also bring in a time frame for
credit products through the payments ingestion of data received by CICs from
up revenue: RBI to lenders
mechanism.
Credit Institutions and disclosures re-
Borrowers can expect more reason-
RBI permitted transfer of funds to and lating to the number and nature of
able and transparent lending practices
from pre-sanctioned credit lines. "In customer complaints received on the
as the Reserve Bank of India (RBI) has
other words, UPI network will facili- website of CICs.
issued new guidelines for lenders on
tate payments financed by credit from
penal interest charges. The regulator said these rules are be-
banks. This can reduce the cost of such
ing put in place after the increase in
Penal interest charges are additional offerings and help in development of
the number of customer complaints
fees levied on borrowers who default unique products for Indian markets,"
regarding credit information reporting
or fail to comply with the terms and RBI said in a statement. Pre-sanc-
and the functioning of CICs.
conditions of their loan agreement. tioned credit lines or pre-approved
Under the new guidelines, banks and credit refers to credit that banks ap-
Nod to Rupees non-deliv-
non-banking and housing finance com- prove for customers after analyzing
panies (NBFCs & HFCs) will not be al- internal data. erable derivatives to resi-
lowed to introduce any additional com- UPI currently accounts for 75% of re- dents
ponents to the interest rate, and pe- tail digital payments volume in India.
The regulator's decision to allow banks
nal charges for default or non-compli- In March alone, it recorded 8.7 billion
to offer Indian residents rupee non-
ance will be treated separately from transactions worth Rs. 14.1 trillion,
deliverable foreign exchange deriva-
the rate of interest charged on the showed data from the National Pay-
tive contracts (NDDCs) will help elimi-
loan. ments Corp. of India (NPCI).
nate arbitrage between domestic and
The penal charges will be proportional overseas markets, said experts.
to the defaults or non-compliance of Credit bureaus to be
Indian banks, which operate Interna-
material terms and conditions of the
brought under RBI's Om- tional Financial Services Centre (IFSC)
loan contract, and the charges will be
budsman Banking Units (IBUs), can offer rupee
clearly disclosed in the loan agreement
NDDCs in the onshore market, said the
and displayed on the lender's website. The Reserve Bank of India said it will
Reserve Bank of India in a statement.
bring Credit Information Companies
RBI allows pre-approved (CICs) under the aegis of the RBI Inte- The derivative contracts will be settled
grated Ombudsman Scheme. Doing so in rupees and the central bank will is-
credit lines for payments
could penalise such firms for delays in sue directions about them separately,
over UPI updating credit information while lim- said the statement on developmental
iting the indiscriminate use of cus- and regulatory policies issued along
Individuals with pre-approved credit
tomer data by lenders. with monetary policy.
lines from banks will soon be able to
use it to make payments over the Uni- "The CICs have been brought under the RBI said the step intended to develop
fied Payments Interface (UPI), the Re- aegis of the Reserve Bank Integrated the onshore Indian rupee (INR) NDDC
serve Bank of India (RBI) said, setting Ombudsman Scheme (RB-IOS)," the and provide residents with the flexibil-
the stage for new credit products over regulator said in a statement. "It is also ity to efficiently design their hedging
the homegrown payments platform. proposed to put in place a compensa- programmes.

10 | 2023 | MAY | BANKING FINANCE