Page 12 - Banking Finance May 2024

RBI CORNER

structure projects without due dili- policy announcement, and closed at unauthorised for the purpose of law
gence on the viability and bankability the same level, its highest closing level enforcement, sources said, adding that
of the projects to ensure revenue since 31 January. this will serve as a pivotal checkpoint
streams from the projects were suffi- The policy was on expected lines, show- in the fight against financial crimes in
cient for repaying debt. the digital realm.
ing how the thinking of market partici-
The repayment / servicing of the said pants, analysts, media, and others was DIGITA, once in place, would be en-
term loans was made out of budget- well-aligned, RBI governor Shaktikanta trusted with the responsibility of
ary resources, RBI said in a statement. Das said at the beginning of the post- vetting digital lending apps, they
In Another regulatory action, RBI im- policy press conference. The rate-set- noted.
posed a monetary penalty of Rs 49.70 ting committee also retained the
lakh on LIC Housing Finance Ltd for stance of "withdrawal of accommoda- RBI issues draft framework
non-compliance with certain provisions tion". for electronic trading plat-
of Fair Practices Code.
Das pointed out five aspects of the lat- forms
est MPC decision. First, inflation is
RBI may issue guidance on moderating and gross domestic prod- The Reserve Bank of India proposed a
SFB upgradation to univer- uct (GDP) growth is robust. Second, revised regulatory framework for Elec-
tronic Trading Platforms (ETPs) in the
sal banks the MPC remains focused on aligning wake of increased integration of the
inflation to its target on a durable ba-
The Reserve Bank of India is expected sis and is satisfied by the progress onshore forex market with offshore
to issue guidelines or a circular that made under disinflation, although the markets. Market makers too have
could pave the way for small finance task is not yet finished. Third, the finan- been requesting the Reserve Bank to
banks to become universal banks. This cial sector continues to be stable. allow access to offshore ETPs offering
circular is expected to outline the nec- Fourth, the external sector continues Indian Rupee (INR) products.
essary requirements for SFBs seeking ETP refers to any electronic system,
to be resilient. Lastly, as RBI moves
to convert into universal banks, includ- other than a recognised stock ex-
towards a century of its existence -
ing details of the application process currently at 90 years - the central bank change, on which transactions in eli-
for this upgrade. gible instruments are contracted. Eli-
will continue to focus on preserving fi-
At present, SFBs can seek to become nancial stability and promoting the fi- gible instruments mean securities,
universal banks upon completion of five nancial sector and a payments system money market instruments, foreign
years of operations as a small finance that is robust, resilient and future- exchange instruments, derivatives, or
bank. The current licensing norms for ready. other instruments of like nature.
SFBs do not have any additional re- The 'Draft Master Direction - Reserve
quirements or conditions to be met to Bank of India (Electronic Trading Plat-
convert to a universal bank. RBI to set up DIGITA to forms) Directions, 2024' said that an
curb cyber fraud entity seeking authorisation as an ETP
RBI keeps finger on pause As part of its efforts to curb growing operator should maintain a minimum
net-worth of Rs 5 crore and continue
button, eyes on inflation cyber fraud, the Reserve Bank is con- to maintain the minimum net-worth
sidering establishing a Digital India
The monetary policy committee of the prescribed all times.
Reserve Bank of India (RBI) continued Trust Agency (DIGITA) to stop the
mushrooming of illegal lending apps. Also, the entity should be a company
its prolonged pause in the key repo incorporated in India. Further,
rate at 6.5%, pursuing durable signs of The proposed agency will enable veri- shareholding by non-residents, if any,
easing inflation amid volatile food fication of digital lending apps and in the entity seeking authorisation as
prices. maintain a public register of verified an ETP operator should conform to all
Although the policy was unsurprising, apps, sources said. applicable laws and regulations, includ-
the 10-year benchmark sovereign Apps not carrying the 'verified' signa- ing the Foreign Exchange Manage-
bond yield rose to 7.12% during the ture of DIGITA should be considered ment Act, 1999.

BANKING FINANCE | MAY | 2024 | 11