Page 10 - Banking Finance February 2023

RBI CORNER

Reserve Bank

News

RBI fiat to SBM Bank on It further directed banks to unfreeze 17.74 lakh crore on November 4, 2016,
operations in lockers that were frozen to Rs 32.42 lakh crore on December
remittance scheme
due to non-execution of agreement by 23, 2022.
The Reserve Bank of India ordered January.
However, soon after demonetisation,
SBM Bank (India) Ltd to stop all trans-
In August 2021, the RBI had issued the CIC fell precipitously to a low of
actions under the liberalised remit-
revised instructions with respect to about Rs 9 lakh crore on January 6,
tance scheme until further orders af-
safe deposit locker/safe custody article 2017, nearly 50 per cent of Rs 17.74
ter the regulator found "material su-
facility that required banks to enter lakh crore on November 4, 2016.
pervisory concerns" in the bank.
into revised agreements with the ex-
This was the lowest in the past six years
The scheme allowed Indian residents isting locker holders by January 1, 2023.
following the scrapping of old 500/
to freely remit funds abroad up to
1,000 bank notes that accounted for
$250,000 per financial year. Cash circulation up 83%
around 86 per cent of the total notes
since Nov 4, 2016, RBI data at that time.
RBI extends deadline to
shows
renew agreement for safe Material drop in NPAs of
Demonetisation of the high value cur-
deposit lockers rency notes of Rs 500 and Rs 1,000 did the banking system: RBI
The Reserve Bank of India extended not have any discernible impact on The Reserve Bank of India has told the
the deadline for banks to complete the currency in circulation (CIC) in the Supreme Court that its "resolute ef-
process of renewal of agreements for country, which has soared by almost 83 forts have resulted in material decline
the existing safe deposit lockers. per cent since its announcement on in the Non Performing Assets (NPAs) of
November 8, 2016. the banking system".
The deadline for renewal of agree-
ment has been extended in a phased The Supreme Court upheld the decision The central bank said this in response
manner by December 31, 2023, with of the government on demonetisation. to a PIL by the Centre for Public Inter-
intermediate milestones of 50 per cent On November 8, 2016 Prime Minister est Litigations (CPIL) which sought di-
by June 30, 2023, and 75 per cent by Narendra Modi had announced rections to prevent NPAs, bank frauds,
September 30, 2023, the RBI said in a demonetisation of old Rs 1,000 and Rs and to prosecute wilful defaulters.
press release. 500 banknotes and one of the key ob-
Hearing the PIL, a bench of Justice S K
jectives of the unprecedented decision
The RBI also advised banks to make Kaul and A S Oka asked the CBI to in-
was to promote digital payments and
necessary arrangements to facilitate form as to what can be done to imple-
curb black money flows.
execution of the revised agreements ment the January 2017 recommenda-
by ensuring the availability of stamp According to the Reserve Bank data, tions made by a committee appointed
papers. the CIC in value terms soared from Rs following its directions in the case.

BANKING FINANCE | FEBRUARY | 2023 | 9