Page 10 - Banking Finance December 2021

RBI CORNER

While it did not explicitly say that the Reserve Bank withdraws suggestions of the Advisory Group, the
proposal for industrial houses to own RRA has recommended withdrawal of
banks that faced criticism from former over 100 redundant 150 circulars in the first tranche of rec-
central bankers to politicians, have circulars ommendations," the RBI said.
been rejected, it said the other 12 pro- The Reserve Bank withdrew more
posals were under consideration. It than 100 redundant circulars following Reserve Bank of India may
doubled minimum capital to Rs. 1,000 recommendations made by the Regu-
crores and permitted promoters to lations Review Authority. The redun- launch digital currency pi-
own as much as 26 percent by the dant circulars withdrawn relate to cer- lot next year
promoters comforting billionaire tain norms concerning Foreign Invest- The Reserve Bank of India's digital cur-
Uday Kotak to retain control over his ment in India by Foreign Portfolio In- rency may see its pilot launch in the
bank. vestors, RTGS, Know Your Customer first quarter of the next fiscal year, a
Industrial houses such as Tatas and (KYC), and Anti-Money Laundering senior central bank officer said at the
Birlas which run large Non-Banking Fi- (AML)/Combating of Financing of Ter- State Bank of India's Banking and Eco-
nance Companies face a double rorism (CFT) - Standards. nomic Conclave.
whammy as the central bank has de- The Regulations Review Authority "I think somewhere it was said that at
clared it would tighten the rules gov- (RRA 2.0) was set up by the Reserve least by the first quarter of next year
erning big NBFCs to be as stringent as Bank of India (RBI) in April this year. a pilot could be launched. So we are
it is for banks. It junked the proposal
The objective of the RRA 2.0 is to re- bullish on that," the Business Standard
that recommended allowing conver-
view the regulatory instructions, re- newspaper quoted P. Vasudevan, chief
sion of payment banks to small finance
move redundant and duplicate instruc- general manager at the Department
banks in 3 years, delaying Paytm's en-
tions, reduce the compliance burden of Payment & Settlement of the RBI as
try into lending and other banking ac- on regulated entities by streamlining having said.
tivities.
reporting structure, revoking obsolete Central bank digital currencies, or
"After examining the comments and instructions and wherever possible ob- (CBDCs) are digital or virtual currencies
suggestions received from the stake- viating paper-based submission of re- are basically the digital version of fiat
holders and members of the public, it turns. currencies, for India that would be its
has been decided to accept 21 recom- It was also envisaged that the RRA will domestic currency rupee.
mendations, the remaining recommen- engage internally as well as externally
dations are under examination," the with all regulated entities and other Previously, the central bank governor
RBI said in a statement. "The cap on stakeholders to facilitate this process, had said a soft launch of the CBDC
promoters' stake in long run of 15 years the RBI said. could be expected by December but
may be raised from the current levels there has been no official timeline
The RRA has also constituted an Advi- committed to by the RBI.
of 15 per cent to 26 per cent of the sory Group representing the regulated
paid-up voting equity share capital of "We are on the job and we are looking
entities under the chairmanship of
the bank," the RBI said. into the various issues and nuances
Swaminathan J, Managing Director of related to CBDC. It's not a simple thing
Though, promoters who have already State Bank of India.
diluted their holdings to below 26 per to just say that CBDC can be a habit
"The RRA has been engaging in exten- from tomorrow on," Vasudevan said,
cent, will not be permitted to raise it sive consultations with both - internal
to 26 per cent of the paid-up voting adding that a CBDC could have a use-
as well as external stakeholders, on ful role depending on how it is imple-
equity share capital of the bank. The
review of the regulatory and supervi- mented and there should be no hurry
regulator added that the promoters, sory instructions for their simplification
can choose to bring down holding to to launch it.
and ease of implementation.
below 26 per cent, any time after the Vasudevan said the RBI was examining
initial lock- in period of five years. "Based on these consultations and the various issues related to which seg-

10 | 2021 | DECEMBER | BANKING FINANCE