Page 56 - Banking Finance January 2025

FEATURES

classified as inoperative, recognising the difficulty in crediting approach, recognising that many accounts are frozen due
government benefits to such accounts when marked as to pending KYC updates.
inactive.
To minimise customer inconvenience, StateLevel Bankers'
In accordance with the new norms, funds from reactivated Committees (SLBCs) are tasked with monitoring the situation
inoperative accounts should undergo concurrent audits, and closely. Additionally, the RBI has mandated that the
transactions in these accounts should be closely monitored Customer Service Committees (CSCs) of bank boards monitor
for at least six months to prevent fraudulent activity. progress in reducing inoperative or frozen accounts. From
the quarter ending December 31, 2024, banks must submit
More Nominations quarterly updates on their efforts and achievements in this
The Banking Laws (Amendment) Bill, 2024, allows the area to their Senior Supervisory Managers (SSMs) through
appointment of up to four nominees for deposits, items in a the DAKSH portal.
bank's custody, or rented lockers. Nominees can be
appointed either simultaneously or successively, with In response to the RBI's directive on inoperative and frozen
simultaneous nominations distributed in the proportions accounts, SBI has requested a regulatory change, proposing
specified by the accountholder. that nonfinancial transactions, such as checking balances,
should be sufficient to keep accounts active. SBI's chairman
For successive nominations, priority will be given based on noted that accounts primarily used for receiving government
the order of nomination, with the nominee listed first cash transfers often have minimal financial activity.
receiving precedence. However, for items left in custody or Therefore, since nonfinancial activities signal account
lockers, nominations can only be made in successive order. engagement, these accounts should not be classified as
inoperative.
RBI's Directives to Banks
The RBI has issued further instructions to banks to reduce The RBI's approach to resolving the issue of unclaimed
the number of inoperative or frozen accounts and simplify deposits is commendable, with various initiatives in place to
the reactivation process. Banks are encouraged to facilitate facilitate the identification and settlement of such deposits.
easy Know Your Customer (KYC) updates through mobile While challenges persist, particularly with governmentlinked
banking, internet banking, and videobased verification accounts and the need for systemic adjustments, the
methods. For accounts linked to beneficiaries of government ongoing efforts reflect a strong commitment to protecting
schemes, banks are urged to adopt a more empathetic depositors' interests. (Source: BusinessLine)

Kotak Mutual Fund laun-ches Nifty Smallcap 250 Index Fund
Kotak Mutual Fund has announced the launch of Kotak Nifty Smallcap 250 Index Fund, an open-ended scheme rep-
licating/tracking the Nifty Smallcap 250 Index. The new fund offer or NFO of the scheme will open for subscription
on January 6 and close on January 20. The scheme will reopen for continuous sale and repurchase on January 30.
The investment objective is to provide returns that, before expenses, correspond to the total returns of the securi-
ties as represented by the underlying index, subject to tracking errors. The scheme will be benchmarked against
Nifty Smallcap 250 Index (Total Return Index (TRI)) and will be managed by Devender Singhal, Satish Dondapati, and
Abhishek Bisen.
The minimum amount for lumpsum and SIP application in the NFO of scheme is Rs 100 and any amount thereafter.
The scheme will offer regular and direct plans both with growth and IDCW options. The exit load is nil.
The scheme will allocate 95-100% in equity and equity -related securities covered by NIFTY Smallcap 250 Index and
0-5% in debt/money market instruments. The investment strategy would revolve around reducing the tracking er-
ror through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the Index as
well as the incremental collections/redemptions in the scheme. Such rebalancing shall be done in accordance with
timelines prescribed by Sebi from time to time.

50 | 2025 | JANAURY | BANKING FINANCE