Page 9 - Banking Finance June 2024

RBI CORNER

Reserve Bank

RBI updates guidance note "The Central Government has re-ap- sonal loans, which are mainly unse-
pointed Shri T Rabi Sankar as Deputy cured loans.
for banks, NBFCs Governor, Reserve Bank of India, for a

The Reserve Bank of India (RBI) has period of one year with effect from RBI to buy back G-Secs
updated its "guidance note" on opera- May 03, 2024, or until further orders,
tional risk management for the finan- whichever is earlier," it said. Sankar worth Rs. 40000 crore
cial sector, and also extended it to the was appointed as the RBI Deputy Gov- RBI will buy back Rs 40,000 crore ($4.8
non-banking financial companies ernor in May 2021 for a period of three billion) worth of securities, it said. The
(NBFCs), including housing finance years. securities offered for buyback are G-
companies. Secs 6.18% 2024, 9.15% 2024 and
The 2005 'Guidance Note on Manage- Bank credit growth to 6.89% 2025, RBI said in a statement.
ment of Operational Risk' covered only NBFCs, personal loans "The choice of securities suggests this
commercial banks. buyback is a liquidity redistribution ex-
moderate: RBI
The RBI said all regulated entities (REs) ercise by govt as they have clear vis-
in India should implement a robust in- Bank credit growth to non-banking fi- ibility on their shorter-term funds,"
formation and communication technol- nancial companies (NBFCs) slowed to said Vivek Kumar, economist at
ogy (ICT) risk management programme 15.3 per cent year on year in March QuantEco Research.
in alignment with their operational risk 2024, against 29.9 per cent a year ago,
management framework. according to data released by the Re- "One could construe this as a yield
serve Bank of India (RBI). management exercise, too. However,
"REs should manage their dependen- RBI has alternate options with direct
cies on relationships, including those of, In November last year, the regulator and indirect signalling potential," he
but not limited to, third parties (which increased the risk weight of unsecured added. There is no notified amount for
include intragroup entities), for the loans to 125 per cent from 100 per individual securities, RBI said.
delivery of critical operations," the cent to address build-up of risks. Risk
Reserve Bank said in its guidance note. weights for bank exposure to NBFCs
were also raised by 25 bps in cases FDI reform 2.0: Banking,
where the risk weight is below 100 per
RBI Deputy Governor Rabi cent. defence, insurance reforms

Sankar gets 1-yr extension Retail loans growth also moderated to on table
The government has extended the 17.7 per cent year-on-year in March The government is examining if foreign
term of RBI Deputy Governor T Rabi 2024, down from 21.0 per cent a year direct investment norms (FDI) for bank-
Sankar for a period of one year, the earlier, primarily due to decelerated ing, insurance and defence can be fur-
central bank said in a statement. growth in vehicle loans and other per- ther liberalised, after rules were re-

8 | 2024 | JUNE | BANKING FINANCE