Page 8 - Banking Finance June 2019

RBI CORNER

R. Gandhi appointed on RBI reluctant to share annual inspection reports
The RBI's reluctance to share reports of annual inspection emerges from its fear
board of Yes Bank
of disclosing the information disclose data that may
Former deputy governor Rama
reveal commercially-sensitive information on banks
Subramaniam
and their clients. Meanwhile, a section in the regu-
Gandhi has
latory agency is of the opinion that a review peti-
been appointed
tion should be filed in the Supreme Court.
by RBI as an
While minute deviations from the prescribed
additional di-
norms are reported by inspection - that are generally rectified by banks after it
rector on the
board of Yes is brought to their attention by the regulator - RBI fears that depositors and
Bank for two shareholders can be panicked in case of making these reports public since mi-
years, from 14 May 2019 to 13 May nor violations may create the possibility of a run on a bank.
2021, the bank said in a notice to the
The case in which the Supreme Court has asked RBI to share inspection reports
stock exchanges.
dates back to 2015, during the term of Raghuram Rajan. Responding to the
Under sub-section (1) of Section 36 directive of Supreme Court, a disclosure policy has been put in place that was
AB of the Banking Regulation Act, seen to be at variance with the apex court's order. While doing so, RBI did not
1949, the appointment has been file a review petition in the highest court, which should have been the right
made. According to this section, the course of action, as observed by many.
RBI can appoint additional directors
"if the Reserve Bank is of opinion RTGS timing extended from 4:30 pm to 6 pm
that in the interest of banking policy
RBI has extended timings for customer transactions in the Real Time Gross
or in the public interest or in the in-
Settlement (RTGS) from 4:30 pm to 6 pm effec-
terests of the banking company or its
tive from June 1. Supported by the RBI, the RTGS
depositors it is necessary so to do, it
is an online fund transfer system that enables
may, from time to time by order in
transmission on a real-time basis. Rs 2 Lakh is the
writing, appoint, with effect from
minimum amount for the transaction to be eligible
such date as may be specified in the
as an RTGS transfer.
order, one or more persons to hold
office as additional directors of the In April 2019, transactions worth Rs 112 Lakh
banking company." crore were processed using RTGS, as per the data of RBI. The customer is re-
quired to pay a 'time-varying charge' on each outward transaction along with
Yes Bank's reporting a loss of Rs
the flat processing charge. In case of transfer between 8 am to 11 am, the fee
1,507 crore for the March quarter,
is nil, Rs 2 is charged from 11 am to 1 pm and from 1 pm to 6 pm the charge is
driven by a 9-fold increase in provi-
Rs 5. The fee is Rs 10 for transfers made after the initial cut off of 6 pm.
sions is seen as the backdrop against
which Gandhi's appointment has The initial cut off for customer transactions will be 6 pm and the final cut off for
come. The long-term ratings of the inter-bank transactions will be 7:45 pm. The IDL reversal will take place between
bank have been downgraded by the 7:45 pm and 8 pm.
rating agencies Icra and India.
RBI to create a cadre for supervision, regulation
The decision of appointing Gandhi to
the board of Yes Bank is observed as RBI is planning to set up a new institute, to be known as the College of Super-
a precautionary measure by RBI for visors, in Mumbai to train and build up a cadre for supervisory roles in the finan-
the governance issues under the pre- cial system. The institute will provide a one-year specialised training programme
vious managing director and CEO for the RBI officials, according to a plan discussed in the RBI’s meeting of
Rana Kapoor. The new chief execu- the central board, chaired by Governor Shakti-kanta Das, in Chennai. The offi-
tive officer (CEO), Ravneet Gill, has cials undergoing training at the institute will be required to go for re-certifica-
stated that the banks' balance sheet tion every five years in a bid to adapt to any change in technology and circum-
will be cleaned up soon. stances.

8 | 2019 | JUNE | BANKING FINANCE