Page 60 - Banking Finance May 2024

RBI CIRCULAR

RBI

CIRCULAR

Dealing in Rupee Interest Rate Derivative ful Activities) Act, 2005: Designated List
products - Small Finance Banks (Amendments)

April 23, 2024 April 16, 2024

1. Please refer to paragraph 4 of Statement on Develop- 1. Please refer to Section 52 of our Master Direction on
mental and Regulatory Policies issued as a part of the Know Your Customer dated February 25, 2016 as
Bi-monthly Monetary Policy Statement for 2024-25 amended on January 04, 2024 (MD on KYC), in terms
dated April 05, 2024 read with Paragraph 1.10 of the of which, inter alia, “Regulated Entities (REs) shall en-
'Operating Guidelines for Small Finance Banks' dated sure meticulous compliance with the “Procedure for
October 6, 2016. Implementation of Section 12A of the Weapons of Mass
Destruction (WMD) and their Delivery Systems (Prohi-
2. Extant guidelines permit Small Finance Banks (SFBs) to bition of Unlawful Activities) Act, 2005” laid down in
use only Interest Rate Futures (IRFs) for the purpose of terms of Section 12A of the WMD Act, 2005 vide Or-
proprietary hedging. In order to expand the avenues der dated September 01, 2023, by the Ministry of Fi-
available to the SFBs for hedging interest rate risk in nance, Government of India (Annex III of the Master
their balance sheet and commercial operations more Direction on Know Your Customer).”
effectively as well as with a view to provide them with 2. Further, in terms of Section 53 of our MD on KYC “the
greater flexibility, it has now been decided to allow REs shall verify every day, the ‘UNSCR 1718 Sanctions
them to deal in permissible rupee interest rate deriva- List of Designated Individuals and Entities‘, as available
tive products for hedging interest rate risk in terms of at https://www.mea.gov.in/Implementation-of-UNSC-
the Rupee Interest Rate Derivatives (Reserve Bank) Sanctions-DPRK.htm, to take into account any modifi-
Directions, 2019 dated June 26, 2019, as amended from cations to the list in terms of additions, deletions or
time to time. other changes and also ensure compliance with the
Applicability ‘Implementation of Security Council Resolution on
Democratic People’s Republic of Korea Order, 2017’,
3. This circular is applicable to all Small Finance Banks.
as amended from time to time by the Central Govern-
4. These instructions shall come into force with immedi- ment”
ate effect.
3. A reference is also invited to our circular
DOR.AML.REC.23/14.06.001/2023-24 dated July 04,
Implementation of Section 12A of the 2023, communicating thereby the Consolidated Lists of

Weapons of Mass Destruction and their UNSC Designated / Sanctioned Individuals and Entities
under the UNSC Resolutions relating to non-prolifera-
Delivery Systems (Prohibition of Unlaw- tion. Amendments to the entries in the Lists are car-

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