10 January, 2022
Read this week in our update- RBI releases framework for facilitating small value digital payments in offline mode and adds Airtel Payments Bank Limited as a scheduled commercial bank
Highlights of the Week:
Framework for facilitating small value digital payments in offline mode
Airtel Payments Bank Limited added as a scheduled bank by RBI
RBI announces the criteria for entities wanting to become eligible as a specified user of the credit information companies
RBI increases threshold limit for maintenance of Liquidity Coverage Ratio
1.1 Framework for facilitating small value digital payments in offline mode
The Reserve Bank of India (RBI) has released ‘Framework for facilitating small value digital payments in offline mode’ (Framework). The Framework shall be applicable on authorized payment system operators (PSOs) and payment system participants (PSPs) – acquirers and issuers (banks and non-banks). The following requirements shall have to be complied with by the above-mentioned entities who desire to provide/enable payment solutions that facilitate small value digital payments in offline mode:[1]
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Offline payments:
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shall be done through any channel or instrument, such as credit cards, wallets, and mobile devices;
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shall be made in proximity (face to face) mode only.
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Offline payment transactions with no additional factor of authentication (AFA) shall be made available;
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On the basis of customer's explicit authorization, payment instruments shall be enabled for offline transactions;
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In accordance with the terms of Circular on Enhancing Security of Card Transactions, offline card transactions shall be permitted without the need to activate the contactless transaction channel;
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The upper limit for an offline payment transaction shall be INR 200 (Indian Rupees Two Hundred Only). At any one time, the overall limit for offline transactions on a payment instrument shall be INR 2,000 (Indian Rupees Two Thousand Only). Only online replenishment of the used limit with AFA shall be permitted;
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As soon as transaction details are received, the issuer shall send transaction alerts to users;
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All obligations stemming from technical or transaction security issues at the merchant's end shall be borne by the acquirer;
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Offline payments shall be covered under the provisions of RBI’s limited customer liability circulars;
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The customers shall have recourse to the Reserve Bank – Integrated Ombudsman Scheme, as applicable, for grievance redressal; and
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RBI shall have the right to halt or change the operations of any payment system that allows small-value digital payments to be made offline.
1.2 Updates to UNSC’s 1267/ 1989 ISIL (Da'esh) & Al-Qaida Sanctions List: Addition of entries
RBI has notified that United Nations Security Council (UNSC) has added two new entrants to UNSC’s 1267/ 1989 ISIL (Da'esh) and Al-Qaida Sanctions List. The entrants are:[2]
· Ashraf Al-Qizani; and
· Jund Al-Khilafah.
1.3 Airtel Payments Bank Limited added as a scheduled bank by RBI
RBI has included Airtel Payments Bank Limited in the second schedule to the RBI Act, 1934 making it a scheduled commercial bank. This information was also published in the Gazette of India (Part III – Section 4) dated January 01 – January 07, 2022.[3]
RBI has announced the requirements for the entities to become eligible as specified user of the credit information companies (CICs). The requirements are as follows:[4]
- the entity shall be an Indian company or a statutory corporation;
- the governing statute of the statutory corporation or the company's memorandum of
- association (MOA), as the case may be, shall permit the processing of information for the assistance or benefit of credit institutions;
- in the case of a company:
o it shall have a minimum net worth of INR 2 crores (Indian Rupees Two Crores Only) as of the most recent audited balance sheet, and it has to meet the above requirement on an ongoing basis;
o it shall be owned and controlled by resident Indian citizens/an Indian company owned and controlled by resident Indian citizens;
o the ownership of the company shall be well diversified;
o it shall have at least 3 (three) years of experience in the business/activity of processing information for the assistance or benefit of credit institutions, as well as a clean track record;
o the company, its promoters, or any of its directors should not have been convicted of a crime involving moral turpitude or a financial crime at any time in the past; and
o it shall have a Certified Information Systems Auditor (CISA) certified auditor certify that it has a reliable and secure information technology (IT) system in place for preserving and protecting credit information data.
1.5 Master Circular – Bank Finance to Non-Banking Financial Companies
RBI has issued a master circular consolidating all the existing instructions applicable to scheduled commercial banks excluding regional rural banks on bank finance to non-banking financial companies (NBFCs).[5]
1.6 RBI increases threshold limit for maintenance of Liquidity Coverage Ratio
RBI has increased the threshold limit for deposits and other extensions of funds made by non-financial small business customers from INR 5 crores (Indian Rupees Five Crores Only) to INR 7.5 crores (Indian Rupees Seven Crores Fifty Lakhs Only) for the purpose of maintenance of liquidity coverage ratio (LCR). This circular is applicable to all commercial banks (excluding regional rural banks, local area banks and payments banks). These instructions shall come into effect from January 06, 2022.[6]
RBI has notified that United Nations Security Council (UNSC) has deleted 5 (five) entrants to UNSC’s 1267/ 1989 ISIL (Da'esh) and Al-Qaida Sanctions List. The deleted entrants are:[7]
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Mevlüt;
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Denis Mamadou Gerhard Cuspert;
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Nayef Salam Muhammad Ujaym Al-Hababi;
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Turki Mubarak Abdullah Ahmad Al-Binali; and
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Tuah Febriwansyah.
1.8 RBI cancels CoA of Payment System Operators
RBI has canceled the certificate of authorization (CoA) of the below-mentioned PSOs. These companies shall not transact the business of issuance and operation of prepaid payment instruments (PPIs). [8]
1.9 RBI appoints Shri Ajay Kumar Choudhary as new Executive Director
RBI has notified the appointment of Shri Ajay Kumar Choudhary as Executive Director (ED) with effect from January 03, 2022. Shri Ajay Kumar Choudhary, ED, RBI, shall be responsible for Fintech Department, Risk Monitoring Department, and Inspection Department of RBI.[9]
RBI has notified the appointment of Dr. Deepak Kumar as ED with effect from January 03, 2022. Dr. Deepak Kumar, ED, RBI, shall be responsible for Foreign Exchange Department, Department of Communication, and Deposit Insurance and Credit Guarantee Corporation, which is a wholly-owned subsidiary of the RBI.[10]
1.11 RBI extends directions to Mudhol Co-operative Bank Limited
RBI has extended the directions from January 08, 2022 to April 07, 2022 [11]
For further information, please contact:
Kritika Krishnamurthy, Partner, AK & Partners
kritika@akandpartners.in
[1] RBI/2021-22/146CO.DPSS.POLC.No. S1264/02-14-003/2021-2022, Reserve Bank of India, January 03, 2022
[2] RBI/2021-22/145DOR.AML.REC.75/14.06.001/2021-22, Reserve Bank of India, January 03, 2022
[3] RBI/2021-22/148DOR.RET.REC.76/12.07.160/2021-22, Reserve Bank of India, January 04, 2022
[4] Press Release: 2021-2022/1500, Reserve Bank of India, January 05, 2022
[5] RBI/2021-22/149DOR.CRE.REC. No.77/21.04.172/2021-22, Reserve Bank of India, January 05, 2022
[6] RBI/2021-22/151DOR.No.PRD.LRG.79/21.04.098/2021-22, Reserve Bank of India, January 06, 2022
[7] RBI/2021-22/150DOR.AML.REC.78/14.06.001/2021-22, Reserve Bank of India, January 06, 2022
[8] Press Release: 2021-2022/1493, Reserve Bank of India, January 04, 2022
[9] Press Release: 2021-2022/1494, Reserve Bank of India, January 04, 2022
[10] Press Release: 2021-2022/1495, Reserve Bank of India, January 04, 2022
[11] Press Release: 2021-2022/1514, Reserve Bank of India, January 08, 2022
