Banking - General Knowledge Questions

The Reserve Bank of India (RBI) has, by an order dated August 05, 2022, imposed a monetary penalty of ₹2.33 crore (Rupees Two Crore Thirty-Three lakh only) on Spandana Sphoorty Financial Limited, Hyderabad (the company) for non-compliance with certain provisions of the 'Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016”. 

 

This penalty has been imposed in exercise of powers vested in RBI under the provisions of clause (b) of sub-section (1) of section 58 G read with clause (aa) of sub-section (5) of section 58 B of the Reserve Bank of India Act, 1934.

 

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the company with its customers.

 

Background : The statutory inspections of the company, a NBFC- MFI, conducted by RBI with reference to its financial position as on March 31, 2019 and March 31, 2020 and examination of the Risk Assessment Report, Inspection Reports, supervisory letters and all related correspondence pertaining to the same revealed, inter alia, the company’s failure to adhere to pricing of credit guidelines for Non-Banking Financial Company- Micro Finance Institutions. 

 

In furtherance to the same, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for failure to comply with the RBI directions, as stated therein.

 

After considering the company’s reply to the notice, examination of additional submissions made by it and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.

Source : RBI

Unity Small Finance Bank Limited (Unity Bank) on Friday(5th Aug 2022) announced the appointment of "Inderjit Camotra" as the managing director and chief executive officer. A senior banker with over 25 years of experience across India, Camotra held various leadership positons at Standard Chartered Bank, ANZ and Citibank.

 

Unity Small Finance Bank is a new age, digital first bank which was recently elevated to a ‘Scheduled Bank’ and was included in the Second Schedule of the RBI Act. The bank is promoted by Centrum Financial Services Ltd and Resilient Innovations Pvt Ltd as a joint investor. The bank commenced its operation in November 2021.

 

An IIT-Delhi graduate, Camotra pursued his MBA from Clarkson University in New York. Camotra was earlier an executive director with Centrum Financial Services Ltd, and has played a crucial role in the transitioning of the company into a bank.

 

"Starting a bank from scratch is an exciting and challenging task. I look forward to working closely with Unity’s highly experienced board, strong management team and employees to scale it to greater heights," said the MD..

Source : Business Standard

The Reserve Bank had announced construction of a composite Reserve Bank of India – Digital Payments Index (RBI-DPI) with March 2018 as base to capture the extent of digitisation of payments across the country. The index for March 2022 stands at 349.30 as against 304.06 for September 2021, which was announced on January 19, 2022.

 

The RBI-DPI index has demonstrated significant growth representing the rapid adoption and deepening of digital payments across the country in recent years.

 

The index series since its inception is as under :

Union Bank of India has launched first ever, men-focused Committee 'EmpowerHim' as part of its flagship HR initiative 'Prerna'.

Aim : To promote the employees' career trajectory and improve diversity in the Bank by picking out and resolving individual as well as common existing challenges.

This Committee will complement the women focused; EmpowerHer Committee launched by the bank earlier in July 2022.

IndusInd Bank on Monday(1st August 2022) announced a strategic partnership with Rupyy – a new age digital lending platform offering 100% paperless loan processing. Rupyy is the fintech arm of the Jaipur-based Girnarsoft Pvt. Ltd. which houses brands like CarDekho, BikeDekho, Zigwheels, Powerdrift, among others.

 

This partnership will enable users of ‘Rupyy’ to avail simplified documentation and instant processing of vehicle loans from IndusInd Bank. Customers of the bank can now opt for flexible repayment options while transacting on ‘Rupyy’.

 

“We are delighted to partner with Rupyy to provide the whole gamut of used-car loan offers…We believe this partnership will add an extra layer of convenience for customers in order to on-board a seamless auto loan journey," said A.G. Sriram, Head – Consumer Finance Division, IndusInd Bank..

Source : Mint

The Asian Development Bank (ADB) has approved a USD 96.3 million (about Rs 770 crore) loan to fund safe drinking water and sanitation project in Himachal Pradesh.

 

The loan has been provided under the Himachal Pradesh Rural Drinking Water Improvement and Livelihood Project, ADB said in a release on Saturday(23rd July 2022).

 

It said more than 90 per cent of the state’s rural population have access to drinking water, but the water supply infrastructure is old and deteriorated, resulting in inefficient and poor service quality.

 

The ADB project will connect 75,800 households to the service, providing uninterrupted water supply to about 370,000 residents across 10 districts.

 

“The project meets the objectives of the Jal Jeevan Mission, a national flagship programme of Government of India, which aims to provide piped water to all rural households by 2024,” said Jude Kohlhase, ADB Unit Head of Project Administration on Urban Development and Water for South Asia..

Source : Financial Express

Private sector lender YES Bank on Saturday(23rd July 2022) announced the appointment of Rama Subramaniam Gandhi as an additional independent director of the bank for a period of five years.

 

“We are pleased to inform that the Board of Directors of the Bank at their meeting held  July 23, 2022 has approved the appointment of Rama Subramaniam Gandhi as an Additional Independent Director of the Bank for a period of five years effective from July 23, 2022, subject to the approval of shareholders,” YES Bank said in a regulatory filing to the stock exchanges.

 

“Further, please note that R Gandhi is not related to any other Directors or Key Managerial Personnel of the Bank and he is not debarred from holding the office of a director, by virtue of any SEBI order or any other such authority/regulator,” it said.

 

Gandhi is currently a financial sector policy expert and adviser. Currently, he advises banks, finance companies, fintech entities, payment system entities, investors and funds on subjects ranging from financial regulations and Indian economy..

Source : The Print

Canara Bank launched a mobile banking app - Canara ai1 - on Friday(22nd July 2022). “E-transactions for Everyone, Everywhere, Everytime,” is the core vision, said L V Prabhakar, MD and CEO of the bank. The app is available in 11 languages to cater to multiple sections of the society in their preferred language.

 

The app has advanced features such as intuitive UI and UX with multiple themes and customised menus which can be personalised as per the user’s choice. It also has security features like device binding, malware detection, detection of remote administration tools and a dynamic keyboard to provide safe and secure banking. The users not having accounts with the bank can also use the shopping facility available on Canara ai1. The app enables customers to use traditional, modern and financial services through digital mode with features for all age groups..

Source : New indian Express

The Reserve Bank of India (RBI) has approved products of four entities after they tested acceptable under the second cohort of the regulatory sandbox for cross border payments.

 

In December 2020, the RBI had announced the opening of the second cohort, and had received 27 applications from 26 entities, of which eight entities were selected for the ‘Test Phase’.

 

Of those eight, four entities – payment solution providers, Cashfree Payments and Fairex Solutions; financial services provider Nearby Technologies,which operates PayNearby, and neo-banking unicorn, Open Financial Technologies - have been found viable within the boundary conditions defined during testing under the regulatory sandbox.

 

“The aforesaid entities have now exited the second cohort of the regulatory sandbox on ‘Cross-Border Payments’. The products found acceptable under this cohort may be considered for adoption by regulated entities subject to compliance with applicable regulatory requirements,” the RBI said in a statement..

Source : Economic Times

The Reserve Bank of India (RBI) has signed its renewed Statement of Commitment (SoC) to the FX Global Code (“Code”). The Code, which was initially launched on May 25, 2017, was subsequently reviewed holistically and the updated Code was published by Global FX Committee on July 15, 2021. The Code is a compilation of best market practices, formulated by Central Banks and market participants, developed under the auspices of Bank for International Settlements (BIS), Basel. 

 

The Code is applicable to the Wholesale FX market participants covering sell-side, buy-side and financial intermediaries, and is voluntary in nature. The Code does not impose any legal or regulatory obligation and is intended to be a supplement to the local laws, rules and regulations. The Code is currently being implemented globally by the Global FX Committee (GFXC) in co-ordination with the Local FX Committee (LFXC) in each jurisdiction. RBI is a member of GFXC. 

 

RBI, along with four major Central Banks, had welcomed the publication of the Code through joint media release dated May 25, 2017 (Joint Media Release: BOK, HKMA, MAS, RBA and RBI welcome the publication of the FX Global Code). Later, RBI had issued its Statement of Commitment on April 18, 2019.

 

RBI continues to support the principles of good practices within the Code. RBI had also facilitated the formation of India Foreign Exchange Committee (IFXC) to promote adoption and adherence of the Code among FX market participants in India. The Code and other related information is available at: https://www.globalfxc.org

Source : RBI