Page 10 - Banking Finance April 2021

RBI CORNER

"Agency banks are again advised that, equally distributed across securities. By intended to pronounce upon the
where excess pension payment has doing disproportionate buying, RBI is validity of any transaction or
arisen on account of mistakes giving a strong yield signal that it agreement entered into by the bank
committed by the bank, the amount wants to maintain the 10-year at 6 per with its customers.
paid in excess should be refunded to cent," said Debendra Dash, head of
the Government in lumpsum asset-liability management at AU SFB. RuPay increases its market
immediately after detection of the
same and without waiting for recovery RBI fines StanChart India share: RBI
of any amount from the pensioners," RuPay has cornered a significant
it said. Rs. 2 crore for delays in market share in the domestic card
reporting fraud market since its launch. As of
RBI drives down 10-year November 30, 2020, RuPay's market
The Reserve Bank imposed a penalty
bond yields to 6% level of Rs. 2 crore on Standard Chartered share has increased to more than 60
per cent of total cards issued, from
The Reserve Bank of India (RBI) in a Bankfor delays in reporting of frauds to merely 17-per cent market share in
way forced the bond market to accept it.
2017, revealed the data released by
its will by driving down the 10-year The monetary penalty has been the Reserve Bank of India (RBI) in its
bond yields to the 6 per cent mark once imposed on the bank for non- booklet on Payment Systems in India
again by giving a strong rate signal at compliance with certain directions (2010-20).
the open market operations (OMO) contained in the 'Reserve Bank of India
auction. (Frauds - Classification and Reporting As of November 2020, around 603.6-
million RuPay cards have been issued
Out of the Rs. 20,000 crore the central by commercial banks and select FIs)
by nearly 1,158 banks. But a majority
bank wanted to buy from the market Directions 2016'.
through four securities, the RBI bought of these are debit cards and only
"The penalty has been imposed for 970,000 are credit cards. However,
Rs. 14,654 crore in the 10-year delays in reporting of frauds to RBI,
segment alone. While completely experts have cautioned that this
revealed during the statutory statistic must not be looked at in
leaving out a bond maturing in 2028, inspection of the bank with reference
and buying Rs. 2,040 crore and Rs. to its financial position as on March 31, isolation.
3,306 crore in the 2024 maturity and Experts pointed out that one of the
2018 and March 31, 2019," the central
2034 maturity respectively. reasons behind gaining such market
bank said in a statement.
The market offered bonds worth Rs. share could be the fact that a
A notice was issued to the Standard
89,234 crore for the Rs. 20,000 crore significant portion of RuPay cards are
OMO. The RBI will be auctioning Rs. Chartered Bank advising it to show issued to accounts opened under the
cause as to why penalty should not be
22,000 crore of bonds in a special Pradhan Mantri Jan-Dhan Yojana
imposed on it for such non-compliance
auction, and another Rs. 26,000 crore (PMJDY). As of January 13, 2021, more
as part of the regular auction. with the directions. than 306-million RuPay cards have
"After considering the bank's reply to the been issued to 416.5 million accounts
The cut-off of the 10-year bond was at
6.0034, a result of RBI buying the notice and oral submissions made in the opened under PMJDY.
personal hearing, RBI concluded that the
bonds at more than the prevailing "What needs to be checked are the
market rate. The central bank bought charge of non-compliance with aforesaid value and volume of transactions,"
RBI directions was substantiated and
the 10-year bonds at 50 paise above said experts.
the prevailing rate, and brought down warranted imposition of monetary Interestingly, the number of debit
the yields from 6.08 per cent to 6 per penalty," the statement said.
cards issued in the country between
cent mark. The 10-year bond yields The central bank also noted that its 2010-11 and 2019-20 increased from
closed at 6.0096 per cent. action is based on the deficiencies in 227.8 million to 828.6 million, of which
"Generally, OMOs purchases are regulatory compliance and is not around 300 million were RuPay debit

10 | 2021 | APRIL | BANKING FINANCE