Page 11 - Banking Finance December 2021

RBI CORNER

ment the CBDC should target - whole- will help it discharge its duties effec- on the reporting date were for less
sale or retail, the validation mechanism tively by bringing governments and citi- than 90 days," the agency said.
and also other issues including distribu- zens closer to each other, it said.
Going forward, movement to standard
tion channels.
"Since its launch six years ago, Bandhan category for NBFCs NPAs would be
"The central bank is also checking if Bank has been dedicated towards impacted as their target borrowers
intermediaries can be bypassed alto- bringing millions of Indians into the fold generally have limited abilities to clear
gether, and most importantly, check- of formal financial services and all dues, it held.
ing if the technology should be decen- catalysing the creation of sustainable
tralized or should be semi-centralised," livelihoods," Ghosh said. RBI Committee Recom-
the RBI CGM said.
RBI's recent norms may mends Separate Laws On
Bandhan Bank gets spike NPAs for NBFCs, says Digital Lending

empanelled as agency ICRA A working group of the Reserve Bank
of India (RBI) has recommended set-
bank of Reserve Bank of The central bank had said that classifi- ting up a self-regulatory organisation
India cation of special mention accounts and covering participants in digital lending.
non-performing accounts should be
Bandhan Bank said that it has been The recommendation came as part of its
done on a day-end position basis and
empanelled by the Reserve Bank of report on digital lending through online
upgraded from an NPA to standard
India (RBI) to act as an agency bank to category only after clearance of all platforms and mobiles applications.
facilitate transactions related to gov-
outstanding overdues. The RBI report said separate legisla-
ernment businesses. tion must be made to prevent illegal
These new norms will impact on earn-
The RBI's decision will help Bandhan digital lending activities and that all
ings performance of such entities which
Bank in contributing to nation-building, data must be stored in servers in India.
would be visible over the next few
its MD and CEO Chandra Sekhar Ghosh
quarters, if the forward flows into the The committee recommended that
said.
NPA category are not contained, the data collection should happen only
The announcement comes months af- ratings agency said. with prior and explicit consent of the
ter a RBI guideline that authorised borrowers.
"Stricter NPA upgradation require-
scheduled private sector banks as ment is likely to push-up the NBFC and "The thrust of the report has been on
agency banks of the regulator for the
HFC (housing finance companies) NPAs enhancing customer protection and
conduct of government business.
of March 2022 by about 160-180 basis making the digital lending ecosystem
With this, Bandhan Bank joins ranks points and 60-80 basis points, respec- safe and sound while encouraging in-
with a few other scheduled private tively, over March 2021 levels," ICRA's novation," it said.
sector banks to be empanelled as Vice President, Financial Sector Rat- The digital lending app industry had
agency banks of the RBI, the bank said ings, A.M. Karthik said. attracted the scrutiny of the RBI and
in a statement. Regarding upgradation of NPAs to the police after several complaints re-

As an agency bank, Bandhan Bank will standard category, it is to be done only lating to violation of privacy and ha-
be able to handle transactions related after the entire arrears are cleared. rassment by recovery agents.
to collection of state taxes, and rev-
"While banks will not be impacted by To address those issues, the RBI set up
enue receipts such as GST and VAT, this as they have been following this the six-member working group in Janu-
collection of stamp duty, and pension
norm, NBFCs normally have been up- ary to evaluate digital loans and iden-
payments on behalf of central and
grading an NPA account even with tify risks posed by unregulated digital
state governments, it added.
partial payments of the outstanding lending to financial stability, regulated
The bank's extensive branch network overdues, as long as the total overdues entities, and consumers. T

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