Page 10 - Banking Finance January 2025

RBI CORNER

FDI Rises Amid Weak Ex- currency. The rupee's continued decline Based on the account number and IFSC
reflects broader concerns over slowing code, the customer will be able to
ternal Indicators in Octo- growth and external vulnerabilities. fetch the beneficiary's account name
ber from the bank's core banking solution
Foreign direct investment (FDI) was a Bank Frauds Surge to Rs. (CBS). The facility will also be available
bright spot in India's external sector in 21,367 Crore in H1FY25 to remitters visiting branches for mak-
October, growing by 14% to $6.8 bil- ing transactions.
Bank frauds saw a sharp increase in the
lion, according to RBI data. However, first half of FY25, with over 18,000 in-
other indicators, including NRI depos- cidents involving Rs. 21,367 crore, ac- Capital levels at Banks,
its and portfolio investments, showed cording to RBI data. Most cases oc- NBFCs healthy even under
declines. Net portfolio investments curred in the advances segment. This
faced outflows exceeding $10 billion, marks a significant rise compared to duress
reflecting weaker external sector per- H1FY24, which reported frauds total- The recent round of stress tests con-
formance overall. ducted by the Reserve Bank of India
ing Rs. 2,623 crore. The increase un-
derscores the need for enhanced moni- (RBI) reveals that the capital levels of the
RBI Imposes Rs. 27.3 Lakh toring and preventive measures in the banking system and the non-banking fi-
Fine on IndusInd Bank financial sector. nancial companies (NBFCs) will remain
well above the regulatory minimum,
The RBI has levied a penalty of Rs. 27.3 even under adverse stress scenarios.
lakh on IndusInd Bank for non-compli- Roll out 'beneficiary look-
ance with norms related to deposit up' for RTGS & NEFT by A stress test is an analysis to determine
whether an institution has enough capi-
interest rates. The fine follows an in- tal to withstand a negative economic
spection revealing irregularities, in- Apr 1: RBI shock. Looks at the results of these
cluding the opening of savings accounts India's banking regulator asked banks tests conducted on banks, NBFCs, mu-
for ineligible entities. IndusInd Bank enabling RTGS & NEFT transfers to fa- tual funds and insurance companies.
has acknowledged the findings and is cilitate the 'beneficiary account name
addressing the compliance issues high- look-up facility' before April 1. With this, Credit growth below Asia
lighted by the central bank. customers will be able to verify the
name of the beneficiary through their & EMEs, banks have room
Rupee Hits Record Low of bank's internet banking and mobile to expand: RBI
banking services.
85.395 Amid Strong Dollar Mumbai: India has, theoretically, head-
"To ensure that remitters using RTGS room for credit growth to support eco-
Demand and NEFT systems can verify the name nomic expansion, a central bank report
The Indian rupee fell to an all-time low of the bank account to which money is said, which compared the country's
of 85.395 against the dollar due to being transferred before initiating the total debt to gross domestic product
strong non-deliverable forward (NDF) transfer and thereby avoid mistakes and (GDP) metric with the ratios for both
demand and a widening trade deficit. prevent frauds, a solution for fetching advanced and emerging markets to
Despite pressure, the RBI intervened the beneficiary's name is being imple- arrive at what it described as an 'opti-
through state-run banks to stabilize the mented," the Reserve Bank of I said. mal' threshold.

"India's total credit-to-GDP ratio (in-
RBI Sets Up Panel for Ethical AI in Finance cluding credit extended by banks as
well as NBFCs) at 90.1% in 2022 was
The RBI has formed an eight-member committee, led by IIT Bombay pro-
below that of AEs and emerging mar-
fessor Pushpak Bhattacharyya, to develop a framework for responsible and
ket economies (EMEs) as well as the
ethical use of artificial intelligence (AI) in the financial sector. The panel will
estimated threshold (of 113.1%)," said
assess AI adoption globally and in India, identify risks, and recommend gov- a note published Thursday in the lat-
ernance structures to ensure ethical deployment of AI technologies in banks, est report on Trends and Progress in
NBFCs, and fintech firms. Banking.

BANKING FINANCE | JANUARY | 2025 | 9