Page 8 - Banking Finance January 2020

RBI CORNER

RESERVE BANK

NEWS
NEWS
NEWS
NEWS
NEWS

RBI appoints J&K Bank RBI likely to give fintech, insurance cos access to NEFT

as lead banker for J&K, and RTGS clearing systems
SBI for Ladakh The RBI is taking under consideration the possibility of giving fintech and insur-
ance companies, direct access to processing RTGS and
The RBI appointed Jammu & Kash-
NEFT transactions in line with global best practices.
mir Bank as While citing the examples of the banking regulators of
the lead England and Switzerland, the RBI said in its Financial
banker for Stability Report that an easing of access to Centralised
the newly Payments Systems (CPS) to nonbanks in India will re-
carved out
duce costs and make market access to funds easier.
union territory of Jammu and Kash-
mir. State Bank of India (SBI) will be “The Reserve Bank will examine the case for increased participation of non-banks
the lead convenor bank for union in CPS,” the RBI said in the biannual report. “Internationally, central banks are
territory of Ladakh. expanding access to payment systems by enabling various types of non-banks to
become members.” Currently only standalone primary dealers, clearing corpo-
The government through a gazette rations, central counterparties, retail payment system organizations, select fi-
notification on August 9, 2019 had
nancial institutions such as NABARD, Export-Import Bank of India (EXIM Bank)
reorganised the erstwhile Jammu
and Deposit Insurance and Credit Guarantee Corporation (DICGC) can access
and Kashmir state under the Jammu these systems.
and Kashmir Reorganisation Act,
2019, into union territories of Jammu
and Kashmir and Ladakh with effect RBI directs banks to reduce stake in insurers at 30%
from October 31, 2019. The RBI has directed banks to reduce their stakes in insurers to 30%, since the
central bank attempts to shield banks from risks
"In view of the above, it has been
decided to assign the UTLBC (Union arising out of their non-banking businesses. The
Territory Lead Bank Convenor) RBI also tries to focus on boosting credit growth
Convenorship of the Union Territory in a slowing economy, according to the inside
of Jammu and Kashmir to Jammu & source.
Kashmir Bank Ltd and the Union Ter- In a meeting, RBI informed the bankers that it
ritory of Ladakh to State Bank of In- will soon introduce norms to cap their holdings
dia," the RBI said. “There is no in an insurance company to 30%, the sources further informed. The holding limit
change in the SLBC/ UTLBC will be 50% for non-banking financial companies such as Housing Development
convenorship of other states and Finance Corp. that have insurance units, they said. Banks have been told to await
UTs,” it added. RBI’s official communication on the new rules.

8 | 2020 | JANUARY | BANKING FINANCE