India – AKP Banking & Finance Digest- February 27, 2023.

Weekly Round-Up | Updates

1. India

1.1 RBI updates the Reserve Bank of India (Financial Statements – Presentation and Disclosures) Directions, 2021 – Disclosures for State Co-operative Banks and Central Co-operative Banks

The Reserve Bank of India (Financial Statements-Presentation and Disclosures) Directions, 2021 (‘Master Direction’) are applicable to Commercial Banks and Primary Urban Co-operative Banks (UCBs). They harmonize the regulatory instructions on presentation and disclosure in financial statements across the banking sector. In consultation with the National Bank for Agriculture and Rural Development (NABARD), it has now been decided to make this Master Direction also applicable to State Cooperative Banks and Central Cooperative Banks (also referred to as ‘District Central Co-operative Banks’).[1]

1.2 Implementation of Indian Accounting Standards (Ind AS) by ARCs

RBI refers to circular DOR (NBFC).CC.PD.No.109/22.10.106/2019-20 dated March 13, 2020, on the captioned subject read with paragraph 13 (iii) of Master Circular DOR.SIG.FIN.REC 1/26.03.001/2022-23 dated April 1, 2022, on Asset Reconstruction Companies. RBI has observed that consequent to the implementation of Ind AS, some Asset Reconstruction Companies (ARCs) have been recognising management fees even though the said fee had not been realised for more than 180 days. To address the prudential concerns arising from continued recognition of unrealised income, RBI has issued certain directions to be adhered to by such Asset Reconstruction Companies (ARCs).[2]

1.3 RBI releases Volume 43, No.1, 2022 of its Occasional Papers

RBI releases Volume 43, No.1, 2022 of its Occasional Papers, a research journal containing contributions from its staff. This volume issued by RBI contains four articles and three book reviews. Given below is the list of Articles and Book reviews:

• Article on ‘Carbon Dioxide Emissions from India’s Manufacturing Sector: A Decomposition Analysis’
• Article on ‘Sensitivity of Pension Liabilities of Banks to Various Actuarial Assumptions’
• Article on ‘Do Bank Mergers Improve Efficiency? The Indian Experience’
• Article on ‘Behaviour of Credit, Investment and Business Cycles: The Indian Experience’
• Book review on “In Defense of Public Debt”
• Book review on “Geopolitics, Supply Chains, and International Relations in East Asia”
• Book review on “Chain Reaction: How Blockchain Will Transform the Developing World”[3]

1.4 RBI imposes monetary penalties on several banks

RBI has imposed monetary on several banks due to contravention of/ non-compliance with the directions issued by RBI. Given below is the list of banks on whom RBI has imposed monetary penalties in the last few days:

1. Shree Samarth Sahakari Bank Ltd., Nashik: Penalty of INR 50,000/- (Rupees Fifty Thousand only) imposed for contravention of/ non-compliance with the directions issued by the RBI to Urban Co-operative Banks on Exposure Norms & Statutory/ Other Restrictions-UCBs and Board of Directors-UCBs.[4]
2. Vaijapur Merchants Co-operative Bank Ltd., Vaijapur (Maharashtra): Penalty of INR 4,00,000/- (Rupees Four lakh only) imposed for contravention of/ nonadherence with the directions issued by RBI to Urban Co-operative Banks on Income Recognition and Asset Classification (IRAC) norms.[5]
3. Osmanabad Janata Sahakari Bank Ltd., Osmanabad (Maharashtra): Penalty of INR 1,50,000/- (Rupees One lakh fifty thousand only) imposed for contravention of/non-compliance with the provisions of the Banking Regulation Act, 1949 (the Act) and the Depositor Education and Awareness Fund Scheme, 2014 (the Scheme).[6]
4. Jila Sahakari Kendriya Bank Maryadit, Tikamgarh (Madhya Pradesh): Penalty of INR 50,000/- (Rupees Fifty Thousand only) imposed for contravention of/ noncompliance with the directions issued by the RBI on Know Your Customer (KYC).[7]
5. Jila Sahakari Kendriya Bank Maryadit, Bhind (Madhya Pradesh): Penalty of INR 50,000/- (Rupees Fifty Thousand only) imposed for contravention of/ non-compliance with the provisions of the Banking Regulation Act, 1949 (the Act) and directions issued by NABARD on submission of returns by banks.[8]
6. Jalgaon District Central Co-operative Bank Ltd., Jalgaon (Maharashtra): Penalty of INR 1,50,000/- (Rupees One lakh fifty thousand only) imposed for contravention of/ non-compliance with the directions issued by the RBI on Know Your Customer (KYC).[9]
7. Youth Development Co-operative Bank Limited, Kolhapur: Penalty of INR 1,00,000/- (Rupees One Lakh only) imposed for non-adherence / violation of All Inclusive Directions imposed on the bank by RBI.[10]
8. Pune People’s Co-operative Bank Limited, Pune: Penalty of INR 1,00,000/- (Rupees One Lakh only) imposed for contravention of the directions issued by the Reserve Bank of India (RBI) on Interest Rate on Deposits.[11]
9. Satara Sahakari Bank Ltd., Mumbai: Penalty of INR 4,00,000/- (Rupees Four lakh only) imposed for non-compliance with the directions issued by RBI on ‘Management of Advances and Exposure Norms and Statutory/Other Restrictions-UCBs’.[12]
10. Sudha Co-operative Urban Bank Ltd., Regd No.599/TH, Suryapet, Telangana: Penalty of INR 2,00,000/- (Rupees Two lakh only) imposed for non-compliance with directions issued by RBI on Board of Directors, Exposure Norms and Statutory / Other Restrictions and Income Recognition, Asset Classification, Provisioning and Other related Matters as applicable to Urban Co-operative Banks.[13]

1.5 RBI cancels the licence of Garha Co-operative Bank Ltd., Guna, Madhya Pradesh

RBI, vide order dated February 16, 2023, has cancelled the licence of “Garha Co-operative Bank Ltd., Guna, Madhya Pradesh”. Consequently, the bank ceases to carry on banking business, with effect from the close of business on February 20, 2023. The Commissioner of Co-operation and Registrar of Cooperative Societies, Madhya Pradesh has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank. RBI cancelled the license of the bank for several reasons including the bank not having adequate capital and earning prospects.[14]

1.6 Hon’ble Prime Ministers of India and Singapore launch real-time Payment Systems Linkage between the two countries

Hon’ble Prime Minister of India, Shri Narendra Modi and Hon’ble Prime Minister of Singapore, Mr Lee Hsien Loong launched the cross-border linkage between India and Singapore using their respective Fast Payment Systems, viz. Unified Payments Interface (UPI) and PayNow. The facility was launched through token transactions by Reserve Bank Governor, Shri Shaktikanta Das and Managing Director of the Monetary Authority of Singapore, Mr Ravi Menon using the UPI-PayNow linkage.[15]

1.7 RBI extends UPI for inbound travellers to India

RBI had announced in the Statement on Developmental and Regulatory Policies dated February 08, 2023, a facility to enable all inbound travellers visiting India to make local payments using Unified Payments Interface (UPI) while they are in India. This facility is made available from February 21, 2023.[16]

2. Bangladesh

2.1 Bangladesh Bank announces enhancement of limit for declaration on Form-C against inward remittances

To facilitate inward remittances, Bangladesh Bank has decided that the service providers will no longer be required to make a declaration to repatriate their income of up to $20,000. Earlier this amount was $10,000 or its equivalent in other currencies. The facility to repatriate income up to $20,000 without declaration in C-Form will enable service exporters to repatriate their money quickly.[17]

2.2 Bangladesh Bank issues notification on the inclusion of a banking diploma as a mandatory requirement in the promotion policy for a senior officer of NBFIs

On February 8th, the Bangladesh Bank issued a notification stating that in order to enhance the skills, competence and capability of bank officers, a two-phase banking diploma has been made mandatory in the eligibility list for promotion to a senior officer or equivalent posts. Bangladesh Bank (BB) has upheld its decision to make a banking diploma mandatory for bankers to get promoted to senior officers or equivalent posts on February 22nd,2023.[18]

3. Sri Lanka

3.1. Issuance of treasury bill in furtherance of treasury bill auction held on February 22nd,2023

Further to the T-bill auction held on February 22nd, 2023, Rs. 2,932 million was raised in phase II, from the treasury bills bearing the International Securities Identification Numbers (ISINs) LKA09123E266 and LKA18223H258 at the Weighted Average Yield Rates of 29.72% and 28.67% respectively determined at the auction. The date of settlement is February 24th,2023.[19]

[1] Notification: RBI/2022-23/181, February 20, 2023, Reserve Bank of India [2] Notification: RBI/2022-23/182, February 20, 2023, Reserve Bank of India [3] Press Release: 2022-2023/1748, February 20, 2023, Reserve Bank of India [4] Press Release: 2022-2023/1754, February 20, 2023, Reserve Bank of India [5] Press Release: 2022-2023/1753, February 20, 2023, Reserve Bank of India [6] Press Release: 2022-2023/1752, February 20, 2023, Reserve Bank of India [7] Press Release: 2022-2023/1751, February 20, 2023, Reserve Bank of India [8] Press Release: 2022-2023/1750, February 20, 2023, Reserve Bank of India [9] Press Release: 2022-2023/1749, February 20, 2023, Reserve Bank of India [10] Press Release: 2022-2023/1756, February 20, 2023, Reserve Bank of India [11] Press Release: 2022-2023/1755, February 20, 2023, Reserve Bank of India [12] Press Release: 2022-2023/1758, February 20, 2023, Reserve Bank of India [13] Press Release: 2022-2023/1760, February 20, 2023, Reserve Bank of India [14] Press Release: 2022-2023/1757, February 20, 2023, Reserve Bank of India [15] Press Release: 2022-2023/1762, February 21, 2023, Reserve Bank of India [16] Press Release: 2022-2023/1765, February 21, 2023, Reserve Bank of India [17] FE Circular No. 03 – February 22, 2023, Bangladesh Bank [18] DFIM Circular No. 01: February 22nd, 2023, Bangladesh Bank [19] Public Debt Department, February 24, 2023, Central Bank of Sri Lanka

Disclaimer The note is prepared for knowledge dissemination and does not constitute legal, financial or commercial advice. AK & Partners or its associates are not responsible for any action taken based on its contents.