Read in this week’s update, a regulatory framework for microfinance loans issued by RBI. RBI amends Payment and Settlement Systems Regulations, 2008.
Highlights of the Week:
RBI issues Master Direction – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022
RBI amends Payment and Settlement Systems Regulations, 2008
Financial Action Task Force High risk and other monitored jurisdictions
The Reserve Bank of India (RBI) has issued master directions on microfinance loans (Guidelines) after reviewing the regulatory framework for non-banking financial companies – microfinance institutions (NBFC-MFIs). The Guidelines shall be applicable on the following entities from April 01, 2022:[1]
- all commercial banks (including small finance banks, local area banks and regional rural banks) excluding payments banks;
- all primary (urban) co-operative banks/ state co-operative banks/ district central co-operative banks; and
- all non-banking financial companies (including microfinance institutions and housing finance companies).
2. Financial Action Task Force High risk and other monitored jurisdictions
RBI has issued a press release notifying the report on ‘High-Risk Jurisdictions subject to a Call for Action’ (Report) published by Financial Action Task Force (FATF). This Report contains the list of jurisdictions that have strategic anti-money laundering (AML)/combating of financing of terrorism (CFT) deficiencies. FATF has added United Arab Emirates and removed Zimbabwe from the list.[2]
3. RBI amends Payment and Settlement Systems Regulations, 2008
RBI has introduced amendments in Payment and Settlement Systems Regulations, 2008 (PSS Regulations). The amendments have been made with the goal of decreasing the compliance burden on regulated entities (REs) by rationalizing returns under the PSS Regulations and include amendments to Regulation 5, Regulation 6 (2) and the ‘Schedule’ to Regulation 5 of the PSS Regulations.[3]
4. RBI penalizes banks
RBI has imposed monetary penalty on:
| Name of the Bank | Penalty Imposed (in INR) | Reason |
| Navnirman Co-operative Bank Ltd., Ahmedabad (Gujarat)[4] | 1 (one) lakh | Contravention of / non-compliance with directions issued by RBI on ‘Loans and advances to directors, relatives and firms / concerns in which they are interested’ and ‘Loans and advances to directors, etc- directors as surety/guarantors- Clarification-UCBs’. |
| Baghat Urban Co-operative Bank Limited, Solan, HP[5] | 3 (three) lakhs | Contravention of / non-compliance with section 36 (1) read with section 56 of the Banking Regulation Act, 1949 as the bank failed to adhere to specific directions issued to it by RBI under Supervisory Action Framework (SAF). |
| United India Co-operative Bank Limited, Nagina, UP[6] | 1 (one) lakh | Contravention of / non-compliance with section 20 and 35A read with section 56 of the Banking Regulation Act, 1949. |
| Manipur Women’s Cooperative Bank Limited, Paona Bazar, Imphal, Manipur[7] | 2 (two) lakhs | Contravention of / non-compliance with directions issued under ‘Exposure Norms and Statutory/Other Restrictions – UCBs’. |
| Nabapalli Cooperative Bank Limited, Barasat, 24 Paraganas (N), West Bengal[8] | 4 (four) lakhs | Contravention of / non-compliance with directions issued under ‘Exposure Norms and Statutory/Other Restrictions – UCBs’. |
| Faiz Mercantile Co-operative Bank Ltd., Nasik (M.H)[9] | 25,000 (Indian Rupees Twenty-Five Thousand Only) | Contravention of / non-compliance with the Directions issued by RBI to Urban Co-operative Banks on Board of Directors and Exposure Norms & Statutory/ Other Restrictions-UCBs. |
| Amravati Merchants’ Co-operative Bank Ltd., Amravati (M.H.)[10] | 50,000 (Indian Rupees Fifty Thousand Only) | Contravention of / non-compliance with the directions issued by RBI to Urban Cooperative Banks on Frauds – Classification and Reporting. |
| Jila Sahakari Kendriya Bank Maryadit, Narsinghpur (M.P.)[11] | 1 (one) lakh | 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). |
