Tag: RBI

RBI Governor said that efforts were being made to leverage technology to achieve greater efficiency while also meeting the objectives of market reforms…reports Asian Lite News

RBI Governor Shaktikanta Das on Monday emphasised the need to give retail customers a fair deal in foreign exchange markets that is at par with large customers.

“There is a need for effective market-making and finer pricing for smaller deals on NDS-OM. Divergence in pricing in Foreign Exchange (FX) markets for the small and large customers are wider than what can be justified by operational considerations,” the RBI Governor said in his address at an international financial conference in Barcelona.

“Banks may need to do more to facilitate the use of the FX Retail platform. We continue to see banking channels being used by certain persons or entities to fund activities on unauthorised FX trading platforms. This warrants enhanced vigilance by the banks,” he pointed out.

He said that efforts were being made to leverage technology to achieve greater efficiency while also meeting the objectives of market reforms.

“For example, we are exploring the use of technological platforms to expand the reach of financial markets, in particular the reach of the RBI Retail Direct and FX Retail. In the derivative markets, efforts are underway to introduce electronic trading platforms for a larger number of derivative products and to expand the central clearing of products,” he explained.

Das also said that to foster greater efficiency, Application Programming Interfaces (APIs) for reporting trades to NDS-OM and accessing the RFQ dealing mode are being contemplated.

The introduction of bond forwards is being considered to enable long-term investors to manage their interest rate risks efficiently – draft guidelines in this regard were issued in December 2023.

The Reserve Bank also remains engaged with stakeholders to assess the need for the introduction of new products and infrastructure based on evolving market developments, he added.

India’s foreign exchange reserves rose for a sixth consecutive week to hit a historic high of $645.58 billion for the week ended March 29, according to RBI data released on Friday.

The forex kitty increased by $2.95 billion during the week, after notching a cumulative $26.5 billion rise in the previous five weeks.

RBI Governor Shaktikanta Das on Friday referred to the record foreign exchange reserves as a reflection of the strength of the Indian economy.

“It is our prime focus to build a strong umbrella, a strong buffer in the form of a substantial quantum of forex reserves, which will help us when the cycle turns or when it rains heavily,” Das said while unveiling the first monetary policy review of the current financial year on Friday.

Rising foreign exchange reserves are a positive sign for the economy as they reflect an ample supply of dollars that help strengthen the rupee. An increase in foreign exchange reserves gives the RBI more headroom to stabilise the rupee when it turns volatile.

This is because the RBI intervenes in the spot and forward currency markets by releasing more dollars to prevent the rupee from heading for a free fall.

Conversely, a declining forex kitty leaves the RBI less space to intervene in the market to prop up the rupee.

India’s forex reserves, including the central bank’s forward holdings, can now cover more than 11 months of imports, which is close to a two-year high.

The RBI Governor also said that the rupee has remained largely range-bound, as compared to both its emerging market peers and a few advanced economies during 2023-24, and was the most stable among major currencies during this period.

“The depreciation of rupee at 1.4 per cent against the US dollar in 2023-24 was lower as compared to the emerging market peers like Chinese yuan, Thai baht, Indonesian rupiah, Vietnamese dong and Malaysian ringgit and a few advanced economy currencies like the Japanese yen, Korean won and New Zealand dollar,” Das said.

On the outlook for the rupee, the monetary policy report said the nominal exchange rate of the Indian currency saw two-way movements in the range of Rs 82.8-83.4 per US dollar.

ALSO READ: Forbes Ranking : PNC Menon becomes richest Omani Citizen

RBI said this action is based on the deficiencies in regulatory compliance of the two banks…reports Asian Lite News

The Reserve Bank of India (RBI) announced on Monday that it has imposed penalties on the State Bank of India (SBI) and Canara Bank for non-compliance with banking regulations and RBI directions.

The RBI in an order dated February 26 slapped a penalty of Rs 2 crore on State Bank of India for contravention of provisions of the Banking Regulation Act and not complying with the Depositor Education Awareness Fund Scheme.

The RBI said that an examination of the Risk Assessment Report/Inspection Report revealed, inter alia, that SBI held shares as pledgee of an amount exceeding 30 per cent of paid-up share capital of certain companies and also failed to credit eligible amount to the Depositor Education and Awareness Fund within the period prescribed in the BR Act.

Similarly, the RBI has imposed a penalty of Rs 32.30 lakh on Canara Bank for non-compliance with certain directions issued by the central bank on ‘Data Format for Furnishing of Credit Information to Credit Information Companies and other Regulatory Measures’.

The RBI said that an examination of the Risk Assessment Report/Inspection Report and all related correspondences in the case of Canara Bank revealed, inter alia, non-compliance with the aforesaid directions by the bank, to the extent it (i) failed to rectify the rejected data and upload the same with the Credit Information Companies (CICs) within seven days of receipt of such rejection report from the CICs, and (ii) restructured certain accounts which were not standard assets as on March 31, 2021 under the extant directions.

However, RBI also said this action is based on the deficiencies in regulatory compliance of the two banks and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

ALSO READ: Bank of Baroda Forecasts India’s Q3 FY24 GDP Growth at 6.4%

Paytm offers acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships….reports Asian Lite News

Paytm merchants need not worry following Reserve Bank of India’s (RBI) direction to its associate bank as Paytm Soundbox, QR, EDC machines will keep working as usual, and merchants will still be able to accept payments.

Paytm offers acquiring services to merchants in partnership with several leading banks in the country and will continue to expand third-party bank partnerships.

“Paytm’s offline merchants network offering and device business like Paytm Soundbox, EDC, QR will remain unimpacted by the Reserve Bank of India’s (RBI) direction to its associate bank,” said the fintech company, adding that it will also continue onboarding merchants to its platform.

During a conference call on RBI directives to Paytm’s associate bank, Bhavesh Gupta, President and COO, said, “We will ensure the least amount of disturbance to merchants. We will do whatever is the right approach in this matter.”

The company also noted that its Paytm Payment Gateway business (online merchants) will continue to offer payment solutions to its existing merchants.

“There will be no disruption in PG business and it will operate like earlier, now we offer merchants several other options, which is a very quick process,” Gupta added.

Paytm’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine will continue as usual, where it can onboard new offline merchants as well. For its existing online merchants, Paytm Payment Gateway business will continue to offer payment solutions.

Meanwhile, Paytm clarified that PPBL is run independently by its management and board.

“We would take this opportunity to clarify that as per banking regulations, Paytm Payments Bank Limited is run independently by its management and board. While OCL is allowed to have two board seats on the board of Paytm Payments Bank Limited, as a part of its shareholder agreement, OCL exerts no influence on the operations of Paytm Payments Bank Limited, other than as a minority board member, and minority shareholder,” Paytm said in an exchange filing.

‘App to Remain Functional’

Paytm’s associate Bank recently received the Reserve Bank of India’s (RBI) directions in response to which Paytm’s Founder and CEO Vijay Shekhar Sharma assured users that Paytm app will continue to work beyond February 29.

In a tweet, Vijay Shekhar Sharma said: “To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual. I, with every Paytm team member, salute you for your relentless support.

In his tweet, he also added, “For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services – with PaytmKaro as the biggest champion of it.”

Following the RBI’s directive, Paytm customers need not to worry as it has said that the app is up and running.

Paytm and its services continue to remain operational beyond 29th Feb, as most of the services offered by Paytm are in partnership with various banks (not just associate Bank).

Paytm has been informed that this does not impact user deposits in their savings accounts, Wallets, FASTags, and NCMC accounts, where they can continue to use the existing balances.

The recent RBI directives on Paytm’s associate bank won’t affect Paytm Money Ltd’s (PML) operations or customers’ investments in Equity, Mutual Funds, or NPS.

Paytm’s other financial services such as loan distribution, and insurance distribution are not in any way related to its associate Bank and will continue to work as usual.

Paytm’s offline merchant payment network offerings like Paytm QR, Paytm Soundbox, Paytm Card Machine, will continue as usual, where it can onboard new offline merchants as well.

Mobile recharges, subscriptions and other recurring payments on the Paytm app will continue to operate smoothly.

ALSO READ: Lulu Signs MoU With UAE Military Veterans

The action has been taken after a Comprehensive System Audit report and subsequent compliance validation report…reports Asian Lite News

The RBI has barred Paytm Payments Bank Ltd (PPBL) from further deposits or credit transactions or top ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc., after February 29, 2024, other than any interest, cashbacks, or refunds which may be credited anytime.

The action has been taken after a Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action, the RBI said in a statement on Wednesday.

“Withdrawal or utilisation of balances by PPBL customers from their accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance, the RBI order states.

Apart from this, no other banking services like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024, the order states.

The Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd. are to be terminated at the earliest, in any case not later than February 29, according to the order.

Settlement of all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) shall be completed by March 15, 2024 and no further transactions shall be permitted thereafter, the order further states.

Meanwhile, Paytm shares plunged 20 per cent at the lower circuit on Thursday after RBI imposed severe restrictions on Paytm Payments Bank.

Paytm is trading at Rs 608.80 down 20.00 per cent on BSE.

Motilal Oswal Financial Services said in a report that the business outlook is highly uncertain and downgraded the stock to neutral.

Paytm Payments Bank Ltd (PPBL) is an associate company of PAYTM and has over 100m KYC customers. It also has 300m wallet users, 30m bank account holders and 17 per cent market share in FASTag by value.

Earlier, RBI in its previous press release dated 11th March directed PPBL to stop onboarding new customers. The regulator has now adopted a stricter stance, citing continued non-compliance and persistent material supervisory concerns.

Accordingly, the RBI on January 31, 2024 imposed stricter measures, thereby significantly limiting the scope of business activities for PPBL.

ALSO READ: Zooom Airline Back in Indian skies

The MPC, in its policy review meeting, had retained the key repo rate at 6.5 percent, reiterating willingness to act against inflation….reports Asian Lite News

A majority of the members of the RBI’s Monetary Policy Committee (MPC) are of the view that the central bank’s policy needs to remain actively disinflationary as headline inflation is ruling above the tolerance band and its alignment with the target is getting interrupted, the minutes of the last meeting released on Friday showed.

The MPC, in its policy review meeting, had retained the key repo rate at 6.5 percent, reiterating willingness to act against inflation.

“Going forward, inflation outlook continues to be beset with uncertainties, especially from adverse weather events, the playout of El Nino conditions, uncertainties in global food and energy prices and volatility in global financial markets,” RBI Governor Shaktikanta Das was quoted as saying in the minutes of the October meeting ahead of the monetary policy announcement.

“Inflation prints for September and October will need to be monitored carefully to look out for the moderation that our projections anticipate,” RBI Deputy Governor Michael Debabrata Patra said.

In September, India’s headline retail inflation rate fell to 5.02 per cent in September, mainly because of the sharp fall in vegetable prices.

But clearly the MPC members are of the view that situation needs to kept under close watch.

The RBI Governor said on Friday at a conclave in Delhi that “We remain extra vigilant on inflation dynamics as the outlook on food inflation is beset with uncertainties”.

The central bank faces the challenge of maintaining a delicate balance between promoting growth and controlling inflation with the potential for conflicts between the two objectives.

ALSO READ: A Bumpy Ride: Musk’s First Year as X Owner