Page 11 - Banking Finance May 2024

RBI CORNER

the AIF scheme in the debtor company be auctioned using multiple price auc- made with the complainant towards
and not the entire investment. tion method," the RBI said in a state- recovery of loan amount," the pro-
Industry experts said that this would ment, following a review of market posal stated, adding the remaining Rs
lower the burden on the NBFCs which conditions. 1.8 lakh loss has to be borne by the
had done 100 per cent provisioning for "This was a demand from market par- complainant. The bank has to submit
the total investments in AIFs after the ticipants, and this step is good for over- compliance to the decision by April 5.
lapse of the 30-day period given by RBI all market development," said Vijay
to liquidate such assets. As some of the Sharma, senior executive vice presi- RBI to roll out cash deposit
entities have already made provision, dent at PNB Gilts. facility via UPI
there could be write back of provision The Reserve Bank of India (RBI) has
in the current quarter. RBI waives Rs. 14L loan proposed allowing cash deposit facility
"The circular helps to address the issue taken in techie's name by at Cash Deposit Machines (CDMs)
that the provisioning that these enti- through UPI, which is currently avail-
ties need to make will be applicable cybercrooks able only through the use of debit
only where the AIF has a debt exposure The RBI has directed a private bank to cards.
(since equity has been carved out) to waive the repayment of a Rs 14-lakh
a portfolio company where the REs loan that cybercrooks took in the name The initiative has been taken given the
have a direct exposure by the way of of a 27-year-old engineer, whom they popularity and acceptance of UPI, as
debt," said Siddharth Shah, Partner, had tricked into downloading an APK also the benefits seen from the avail-
Khaitan & Co. file. Also, Rs 2.5 lakh was siphoned off ability of UPI for cardless cash with-
drawal at ATMs, RBI said, adding that
the youth's account, leaving him with
RBI reverts to multiple Rs 600. operational instructions will be issued
shortly.
price auctions The youth, an employee of an MNC, "Currently, to access the cash deposit
The Reserve Bank of India (RBI) will sent a legal notice to the private bank facility, the user must insert his/her
conduct auctions for all central govern- from which the loan was taken as well debit card, enter the PIN and select
ment securities through multiple price- as the RBI, following which the apex 'deposit' to complete the cash deposi-
based method from this financial year, bank directed the bank to "extinguish tion process at the ATM or CDM. "Go-
nearly three years after it changed its a loan liability" of Rs 14 lakh. ing ahead, this will be a cardless pro-
methodology, the central bank said. The private bank had started asking cess, all that the user will need, is UPI
Barring the ultra-long duration which the youth for EMI payments and even enabled on that bank account. This will
consists of bonds maturing in 30 years recovery agents had started hounding make the banking transaction CDM as
and above, the RBI conducted auctions him. The youth's lawyer, Bivas easy as making payments via UPI," said
for bonds through uniform-based pric- Chatterjee, called the waiver "a his- Mandar Agashe, Founder and MD,
ing since July 2021. toric decision" as "all RBI mandated Sarvatra Technologies.
rules were violated when the pre-ap-
Under the multiple price auctions, buy- proved loan was assigned to him".
ers are allotted bonds at the price RBI imposes penalty on
they bid at, while uniform pricing According to the proposal by the RBI IDFC First Bank, LIC HFC
means bonds are sold at the cutoff Ombudsman, "Facts are indicative of Reserve Bank of India has imposed
level. deficiencies on the part of the banks in monetary penalty of Rs 1 crore on pri-
compliance with various instructions
India aims to borrow Rs. 7.50 lakh vate sector lender IDFC First Bank for
issued by RBI. However, negligence is
crore ($90 billion) via bonds in April- observed on the part of the complain- non-compliance with certain directions
September, 53% of its annual borrow- issued by regulator on Loans and Ad-
ant, too." "The bank has been advised
ing target of Rs. 14.13 lakh crore. to extinguish loan liability of the com- vances.
"All securities under the market bor- plainant and take steps to rectify the The bank had sanctioned term loans to
rowing programme shall, henceforth, CIBIL records. ...no follow-up has to be a public sector undertaking for infra-

10 | 2024 | MAY | BANKING FINANCE