Page 10 - Banking Finance December 2024

RBI CORNER

RBI plans VRR auction as

liquidity deficit hits Rs. 2.3
trillion
Even as the liquidity deficit in the bank-
ing system widened to Rs 2.27 trillion
- the highest in 2023-24 - the Reserve
Bank of India (RBI) announced a seven-
day variable repo rate (VRR) auction Ò»©­
scheduled recently, intending to inject
up to Rs 1.75 trillion into the banking
system. This decision follows a review
of current and evolving liquidity condi-
tions, the central bank said in a re-
lease.
RBI asks banks to form standard protocol for vehicle
The liquidity deficit in the banking sys-
tem had widened to more than Rs 2 seizure in case of loan default
trillion, owing to advance tax outflows; The Reserve Bank of India has asked banks to look at formulating a stan-
it further widened to Rs 2.3 trillion due dard protocol for vehicle seizures in loan default cases. This follows repre-
to goods and services tax (GST) out- sentations highlighting issues faced by transporters, including forceful sei-
flows, as market participants re- zure of vehicles along with on-board cargo.
ported.
"Banks, internally, have advised their recovery teams to strictly follow all
Liquidity has remained largely in defi- existing guidelines by the RBI on recovery procedures," said a bank execu-
cit mode in the current quarter.
tive aware of the matter, adding that the issue was also discussed last month
The market speculated a total of in a meeting of key banks.
around Rs 4 trillion worth of outflows "It has been decided that through Indian Banks' Association (IBA), we will
because of advanced tax and GST pay- seek comments from all lenders and then examine the feasibility of formu-
ments in December.
lating a standard protocol for seizure of vehicles in case of default in repay-
"There was a request from all the ment by the borrower," he said.
banks to conduct more VRR auctions
because the liquidity condition is very entities (REs) will have to apply the Amendments have also been made
tight," a dealer at a state-owned bank
customer due diligence (CDD) proce- regarding CDD Procedure and sharing
said.
dure at the unique customer identifi- KYC information with the Central KYC
cation code (UCIC) level. Records Registry (CKYCR).
Reserve Bank amends
"Thus, if an existing KYC-compliant cus- "Whenever the RE obtains additional
master direction on KYC tomer of a RE desires to open another or updated information from any

The Reserve Bank made changes to account or avail any other product or customer...the RE shall within seven
the Know Your Customer (KYC) norms service from the same RE, there shall days or within such period as may be
to align them with recent amendments be no need for a fresh CDD exercise as notified by the Central Government,
carried out in the Prevention of Money far as identification of the customer is furnish the updated information to
Laundering (Maintenance of Records) concerned," it said. CKYCR, which shall update the KYC
Rules and revised certain existing in- The amended provisions in the Master records of the existing customer in
structions. CKYCR," the RBI said.
Direction have come into force with
According to the Amendment to the immediate effect, said the circular is- CKYCR is an entity which receives,
Master Direction - Know Your Cus- sued by the Reserve Bank of India (RBI) stores, safeguards and retrieves KYC
tomer (KYC) Direction, 2016, regulated in this regard. records in the digital form of a customer.

BANKING FINANCE | DECEMBER | 2024 | 9