Page 9 - Banking Finance October 2023

RBI CORNER

holder has passed away, their nominee be "reasonable" and "commensurate ing with directors and not just the
will be required to submit documents. with the non-compliance of loan con- management.
tract" without being discriminatory RBI has started engaging with the di-
RBI raises offline payment within a particular loan/ product cat- rectors of its regulated entities func-
egory, the RBI said in its guidelines on
transaction cap to Rs. 500 Penal Charges in Loan Accounts under tioning in different segments of the fi-
RBI raised the upper limit of an offline the Fair Lending Practice. nancial system. Two conferences were
payment transaction to Rs 500 from held with directors on boards of public
the existing Rs 200 to promote the use The norms were released after the sector banks and private sector banks
of UPI-Lite wallet in areas where RBI found that many regulated entities in May 2023.
internet connectivity is weak or not (REs) - lending institutions regulated by RBI governor Shaktikanta Das pointed
available. the central bank - were levying penal out that although UCBs as a group
rates of interest, over and above the
The total limit for offline transactions applicable interest rates, in case of de- have shown better financial perfor-
on a payment instrument, however, faults or non-compliance by the bor- mance lately, there are worries about
remains Rs. 2,000. rower with the terms on which credit specific banks. He stressed that UCBs
In a circular titled "Enhancing transac- facilities were sanctioned. need to make their financial and opera-
tional strength stronger to help keep
tion limits for Small Value Digital Pay- the overall banking system stable.
ments in Offline Mode", the central RBI likely to start digital
bank said, "The upper limit of an offline rupee pilot in call money Das asked the directors to focus on
payment transaction is increased to Rs managing risks, and checking internal
500." market by October processes.
"Replenishment of used limit shall be The Reserve Bank is likely to launch
allowed only in online mode with AFA," the pilot of Central Bank Digital Cur- Bandhan Bank gets civil
it added. AFA stands for Additional Fac- rency (CBDC) for transactions for inter- pension nod
tor of Authentication. bank borrowing or call money market The Reserve Bank of India appointed
by October, central bank Executive Di-
It also said that offline payments should Bandhan Bank for disbursement of civil
rector Ajay Kumar Choudhary said.
only be made face-to-face. Moreover, pension. The bank will soon be inte-
these transactions may be offered The pilot of the wholesale CBDC, grated with the Central Pension Ac-
without AFA. known as the Digital Rupee-Wholesale counting Office (CPAO) for the disburse-
(e-W), was launched on November 1,
The RBI also launched a device wallet ment procedure.
called UPI Lite in September last year 2022, with the use case being limited The bank will disburse pension to the
to increase the speed of small-value to the settlement of secondary market Central government staff in civil minis-
transactions on UPI, optimise process- transactions in government securities. tries or departments other than rail-
ing resources for banks and reduce "The RBI will introduce the wholesale ways, posts and defence, National Capi-
transaction failures. CBDC in the call market either this tal Territory of Delhi, Union Territory
month or next month," Choudhary said administrations without legislatures,
RBI bars lenders from levy- on the sidelines of the G20 Leaders' retired judges of the high courts and
Summit here. the Supreme Court. This scheme cov-
ing penal interest on de-
ers payment of pension to former MPs
fault by borrowers Das asks co-op bank direc- and former presidents/vice presidents
RBI has directed lenders to levy pen- tors to manage risks of India.
alty for default by borrowers as 'penal The RBI held a conference for direc- Debraj Saha, head (government busi-
charges' and not as 'penal interest' tors of tier 3 and 4 urban co-operative ness), Bandhan Bank, said, "We are
which is added to the rate of interest banks (UCBs) in the Mumbai zone. This now better equipped to serve retirees
charged on the advances. is part of the regulator's initiative to in a more streamlined, secure and
The quantum of penal charges should improve governance in banks by engag- prompt manner."

BANKING FINANCE | OCTOBER | 2023 | 9