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         Before being promoted to the new   On the other hand, Cosmea Financial  linked compensation as an expense in
         post, Ajay Kumar was heading New   Holdings Pvt Ltd is a Mumbai-based  their books of account concurrently.
         Delhi regional office of RBI as regional  entity, which is involved in activities,
         director.                          which are auxiliary to financial inter-  RBI revamps loan transfer
         Choudhary was the chief general    mediation. It has four directors   and securitisation rules
                                            namely, Soumen Ghosh, Lav Ramji
         manager-in-charge of department of                                    The Reserve Bank of India (RBI) has
         supervision in Mumbai and Deepak   Chaturvedi, Mihir Kanak Sundhani,
         Kumar was the chief general man-   and Amit Agarwal. Ghosh was previ-  revamped loan transfer and
         ager in charge of department of infor-  ously associated with Reliance Capital  securitisation rules that are expected
         mation technology at RBI.          as its executive director and chief ex-  to boost liquidity in the system further
                                            ecutive officer for nine years.    and improve transparency and corpo-
         Among the three, Ajay Kumar has the                                   rate governance.
         longest residual service of 8 years be-  RBI issues norms on in-
         fore he attains 60 years, followed by                                 RBI allowed lenders to transfer their
         Deepak Kumar who has 3 residual centives of private banks'            loan exposures classified as fraud to
         years and Choudhary of 2 years                                        asset reconstruction companies
                                            top officials                      (ARCs). It stressed on disclosures and
         Currently, RBI as 12 executive direc-  The RBI said the fair value of the  told lenders to include the financial
         tors and 30 chief general managers,  share-linked incentives paid to chief  impact of any transfer into their profit
         who come under 4 deputy governors.  executive officers, whole-time direc-  and loss account for the period when
         RBI governor Shaktikanta Das' three-  tors and other key functionaries by  the transfer is completed. It has also
         year term is coming to an end in De-  the private banks should be     allowed lenders to securitise single
         cember this year. Das had succeeded  recognised as an expense during the  loans and loans with bullet payments
         former RBI governor Urijit Patel who  relevant accounting period.     allowing more flexibility to them.
         quit abruptly 3 years ago.         The RBI has also asked all banks, in-  "These measures are far more re-
                                            cluding local area banks, small finance
         Reserve Bank gets 2 more           banks and foreign banks to comply  laxed than the previous guidelines and
                                                                               offer more bandwidth to lenders in
         applications for SFB li-           with its directions for all share-linked  their liquidity management. But we
                                            instruments granted after the ac-
         cence                                                                 are a little surprised about the timing
                                            counting period ending March 31,
         The Reserve Bank of India (RBI) said  2021.                           of it since most lenders, especially the
         it has received applications from two                                 large ones, are flush with liquidity at
         more entities under the "on-tap"   The central bank had issued guide-  present," a senior official with a rat-
         small finance bank licensing guidelines  lines on the compensation of whole-  ing firm said.
         of 2019, taking the total number of  time directors/ chief executive offic-  The regulator has also offered relief to
         applicants to six.                 ers/ material risk takers and control  lenders by allowing them to shift the
                                            function staff in November 2019.
         Cosmea Financial Holdings Pvt Ltd and                                 responsibility of reporting, monitoring,
         Tally Solutions Pvt Ltd have applied to  Issuing a clarification in this regard,  filing of complaints with law enforce-
         the RBI for a small finance bank li-  the RBI said, "the fair value (of share-  ment agencies and proceedings re-
                                            linked incentives) ...should be
         cence, RBI informed in a statement.                                   lated to fraudulent loans to the ARCs.
                                            recognised as expense beginning with
         Bengaluru-based Tally Solutions Pvt  the accounting period for which ap-  These are part of the sweeping
         Ltd is a technology and innovation  proval has been granted".         changes RBI announced in the loan
         company, which, according to its                                      transfer and securitisation rules. The
         website, delivers business software for  In terms of the extant guidelines,  regulator has mandated banks to fol-
         small and medium businesses (SMBs).  share-linked instruments are required  low a board approved policy on this
         Established in 1986, Tally Solutions is  to be fairly valued on the date of  subject. It has directed banks to en-
         headed by Tejas Goenka, with Sheela  grant using the Black-Scholes model.  sure that arm's length distance is
         Goenka as the chairperson, and     The RBI issued the clarification saying  maintained between personnel in-
         Bharat Goenka as the vice chairper-  "it has been observed" that banks do  volved in transfer/ acquisition of loans
         son of the company.                not recognise grants of the share-  and the originator of the loan. T

            BANKING FINANCE |                                                              OCTOBER | 2021 | 9
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