Page 35 - Banking Finance May 2023

ARTICLE

(e) Inclusion of revaluation reserves in Tier-I capital subject
to applicable discount on the lines of scheduled
commercial banks.

Appointment of Internal Ombudsman by the
Credit Information Companies: With a view to
strengthening and improving the efficiency of the internal
grievance redressal mechanism of credit information
companies (CICs), it has been decided to bring the CICs under
the Internal Ombudsman (IO) framework. Under the
mechanism, all complaints that are partly or wholly rejected
by CICs will be reviewed by the IO before the final decision
of the CIC is conveyed to the complainant.

Guidelines on Digital Lending: Based on the Dealer (AD) banks in India are permitted to open Special
recommendations made by the Working Group on Digital Rupee Vostro Accounts of correspondent bank/s of the
Lending, the Reserve Bank issued guidelines on digital partner trading country for settlement of trade
lending applicable to all commercial banks, primary (urban) transactions, and Indian exporters may receive advance
co-operative banks, state co-operative banks, district central payment in INR against exports from overseas importers
co-operative banks and non-banking financial companies, through this channel.
including housing finance companies (collectively referred to
as REs). The guidelines seek to achieve transparency and Master Directions on Transfer of Loan Exposures
fairness inter alia by (a) mandating flow of funds between and Securitisation of Standard Assets
lenders and borrowers only through their bank accounts
(Amendments): Master Direction on Transfer of Loan
without any pass-through account/ pool account of any third
Exposure was amended to inter alia permit overseas
party; (b) ensuring loan service providers do not collect any
branches of specified lenders to (a) acquire only 'not in
fee/charges directly from the customer; (c) transparent
default' loan exposures from a financial entity operating and
disclosure of the key facts of the borrowing arrangement
regulated as a bank in the host jurisdiction; (b) transfer
including the all-inclusive cost to a borrower; (d) ensuring
exposures 'in default' as well as 'not in default' pertaining
need based collection of data with audit trails backed by
to resident entities to a financial entity operating and
explicit customer consent; and (e) putting in place an
regulated as a bank in the host jurisdiction; and (c) transfer
appropriate privacy policy with regard to customer data.
exposures 'in default' as well as 'not in default' pertaining
to non-residents, to any entity regulated by a financial sector
International Trade Settlement in Indian Rupees: regulator in the host jurisdiction. Amendments have also
In order to promote trade with emphasis on exports from been made in certain provisions related to minimum holding
India and to support the increasing interest of the global period (MHP), valuation of security receipts (SRs), transfer
trading community in INR, an additional arrangement has of stressed loans to ARCs, and credit/ investment exposure
been put in place for invoicing, payment and settlement of of lenders. Additionally, the term 'Economic Interest' has
exports/ imports in INR. Under the Foreign Exchange now been explicitly defined as 'the risks and rewards that
Management Act, (FEMA), 1999 the broad framework for may arise out of loan exposure through the life of the loan
cross border trade transactions in INR is: (a) all exports and exposure'. In December 2022, the Reserve Bank, disallowed
imports under this arrangement may be denominated and securitisation of loans with residual maturity of less than 365
invoiced in INR; (b) the exchange rate between the days. Furthermore, it was clarified that the minimum holding
currencies of two trading partner countries may be market period (MHP) for commercial or residential real estate
determined; and (c) settlement of trade transactions under mortgages shall be counted from the date of full
this arrangement shall take place in INR. Accordingly, disbursement of the loan, or registration of security interest
subject to prior approval from the Reserve Bank, Authorised with the Central Registry of Securitisation Asset

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