Page 11 - Banking Finance September 2021

RBI CORNER

clarification in a notification to the The central bank has set a deadline of tion Act, 1949, RBI Master Direction
exchanges. The 36.56 per cent holding March 31, 2022 for PSOs to ensure on Prior approval for the acquisition of
of IDFC is valued at Rs 11,618 crore at that all their outsourcing arrange- shares or voting rights in private sec-
the current market price. ments, including the existing ones, tor banks, Master Direction on Own-

IDFC Bank received the licence from are in compliance with the frame- ership in Private Sector Banks, among
the RBI in 2014, and was floated in work. others, it added.
2015. So, the five-year period came The framework has said PSOs will not As of June end 2021, the Government
to an end in October 2020. The bank outsource core management func- of Jammu and Kashmir was the major-
merged with Capital FIRST in 2018 to tions, including risk management and ity shareholder, owning 68.18 per
become IDFC FIRST Bank. internal audit; compliance and deci- cent stake in the bank.
sion-making functions such as deter-
The initial licensing condition to IDFC The bank, which declared its financial
mining compliance with KYC norms.
was that the promoters must have a results on July 14, reported a net
minimum of 40 per cent stake locked Core management functions would in- profit of Rs. 317 crore in the fourth
in for five years. clude management of payment sys- quarter ended March 31, 2021,
tem operations such as netting and against a net loss of Rs. 294 crore in
Recently, two small finance banks -
settlement, transaction management the year-ago quarter and a net profit
Ujjivan SFB and Equitas SFB - said
they would try to reverse merge their like reconciliation, reporting and item of Rs. 66 crore in the December 2020
processing, according sanction to mer- quarter.
respective holding companies with
chants for acquiring, managing cus-
themselves as the five-year lock-in pe-
riod expired for the promoter holding tomer data, risk management, infor- RBI openscentralised pay-
companies. mation technology and information ments systems for non-
security management.
However, IDFC said in its notification banks
that it received permission to exit the RBI approves Ladakh to
bank altogether. Issuers of prepaid cards and digital
pick stake in J&K Bank wallets can now access the National
RBI announces framework The Reserve Bank of India has ac- Electronic Fund Transfer (NEFT) and
corded its approval to the Govern- Real-Time Gross Settlement (RTGS)
for outsourcing payment ment of the Union Territory (UT) of systems. Opening up the centralised
The Reserve Bank of India announced Ladakh to acquire 8.23 per cent of payment systems for non-banks, the
the framework for outsourcing pay- the paid-up equity capital of Jammu RBI said that white-label ATM opera-
ment and settlement-related activities and Kashmir Bank Ltd as on the date tors and card networks can also ac-
by payment system operators (PSO). of enforcement of Jammu and Kash- cess the RTGS.
The objective is to put in place mini- mir Reorganisation Act, 2019 ( Octo- What this means is that these entities
mum standards to manage risks in ber 31, 2019). will now get separate Indian Financial
outsourcing of payment and settle- This move follows the Government of System Codes (IFSC) and will get to
ment related activities including tasks Jammu and Kashmir's October 30, open a current account with the cen-
such as on boarding customers and IT- 2020, Order regarding the transfer of tral bank.
based services. 8.23 per cent shareholding (about The move will bring down the cost of
"This framework is applicable to non- 4.58 crore equity shares) in Jammu routing payments for non-banks. It
bank PSOs insofar as it relates to their and Kashmir Bank as of October 31, will also reduce the risk of failure or
payment and settlement-related ac- 2019, to the UT of Ladakh, the bank delay in the execution of fund trans-
tivities," the RBI said, adding that it is said in a statement. fers as they no longer have to rely on
applicable to all service providers, This is subject to compliance with the banks.
whether located in India or abroad. relevant provisions of Banking Regula- The RBI said that direct access was

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