4,071 banking fraud cases involving Rs 36,342 cr reported during H1 FY2022: RBI report

During the first half of the financial year 2021-22, the reported number of fraud cases in various banking operations increased to 4,071 as against 3,499 in the year-ago period, the RBI's Report on Trend and Progress of Banking in India 2020-21 showed. However, the amount involved in frauds in various banking operations based on the date of reporting declined to Rs 36,342 crore during April-September 2021 from Rs 64,261 crore in the corresponding period of the previous financial year, the report said on Tuesday.

In H1 2021-22, banks saw 1,802 reported cases of frauds amounting to Rs 35,060 crore which were related to advances. There were 1,532 reported cases of frauds linked to card/internet, involving Rs 60 crore, the report showed.

In terms of deposits, the number of reported cases of frauds stood at 208 of an amount involving Rs 362 crore, the report said.

During H1 of 2021-22, private sector banks (PVBs) accounted for more than half of the number of reported fraud cases. In value terms, however, the share of public sector banks (PSBs) was higher, indicating predominance of high-value frauds, it said.

While the major share of loan-related cases pertained to PSBs, PVBs accounted for a majority of card/ internet and cash-related cases, the report said.

In the financial year 2020-21, the reported number of cases of frauds declined to 7,363 (Rs 1,38,422 crore) from 8,703 cases (Rs 1,85,468 crore) in 2019-20, it said.

In terms of the amount involved, a bulk of these cases occurred earlier but were reported during the year 2020-21, it said.

In terms of the area of operations, an overwhelming majority of cases were reported during 2020-21 in terms of number and amount involved related to advances, while frauds concerning card or internet transactions made up 34.6 per cent of the number of cases, the report said.

In 2020-21, there was a marked increase in frauds related to PVBs, both in terms of number as well as the amount involved, the RBI report said.

Source: EconomicTimes

RBI approves re-designation of Rajiv Anand as Axis Bank Deputy MD

The Reserve Bank of India has approved the re-designation of Rajiv Anand as the Deputy Managing Director of Axis Bank, the lender said on Monday. In October this year, the board of directors of the bank approved to re-designate Rajiv Anand as the Deputy Managing Director of the bank, subject to approval of the Reserve Bank of India, and the shareholders of the bank."The Reserve Bank of India vide its letter dated December 27, 2021, has approved the re-designation of Rajiv Anand as the Deputy Managing Director of the bank from the date of its communication and co-terminus with his approved term of appointment till August 3, 2022 (both days inclusive)," Axis Bank said in a regulatory filing.Anand is the Executive Director (Wholesale Banking) of the bank since December 2018.Anand, 55, had joined Axis Bank in May 2013 from its asset management arm, Axis Asset Management Co Ltd, where he was the Managing Director & CEO.Anand was appointed as a director of the bank in May 2016 and thereafter as the Executive Director (Retail Banking) in August 2016.
Source: Economic Times

Last-leg capital infusion into banks may take shape in Q4

The government proposes to recapitalize public sector banks (PSBs) which have emerged from the Reserve Bank of India’s (RBI’s) prompt corrective action (PCA) framework and may need additional funds to strengthen their books, two officials said.

The finance ministry will finalize the last round of capital infusion for PSBs early next year and will look into the requirements of each bank, especially weak ones that are still under PCA or have recently been out, they added.

PSBs have been asked to provide their capital requirement needs after finalizing the accounts for the third quarter of FY22. Based on the requirements, the finance ministry will decide the quantum of capital for each bank.

The budget for FY22 had allocated ₹20,000 crore for bank recapitalization, but a large part of it is yet to be disbursed. It is expected to be released in Q4. Allocations for bank recapitalization may not be a priority in the budget for FY23 and lenders may be encouraged to tap the markets as the government is of the opinion that the financial health of PSBs is showing signs of improvement and they are capable of raising funds from the market, the officials said.

Queries to the finance ministry remained unanswered till press time.

The banks’ capital requirements will be reviewed in the next quarter, before infusing money to meet the regulatory needs. Special attention will be given to requests from weak banks that came out of PCA to ensure they can further strengthen their financials and begin to expand lending services, they added.

In September, RBI had removed UCO Bank and Indian Overseas Bank from the PCA framework following improvement in various parameters and a written commitment that the state-owned lenders will comply with the minimum capital norms. Now, only Central Bank of India remains under the PCA, which is triggered when lenders breach certain regulatory requirements such as return on assets, minimum capital and the quantum of non-performing assets.

Capital needs of the banks may be prioritized when the next round of capital infusion is announced. Recapitalization is expected to help the lenders progress faster on strengthening their financials.

Source : Livemint

RBI proposes new norms for capital requirement for banks

The Reserve Bank of India (RBI) has proposed to replace existing approaches for measuring minimum operational risk capital requirements of banks with a new Basel-III standardised approach.

'Operational risk' refers to the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.

The central bank on Wednesday issued the 'Draft Master Direction on Minimum Capital Requirements for Operational Risk' as part of the convergence of its regulations for banks with Basel-III standards.

The RBI has sought comments on the draft by 31 January next year.

All existing approaches including, the Basic Indicator Approach (BIA), The Standardised Approach (TSA)/ Alternative Standardised Approach (ASA) and Advanced Measurement Approach (AMA) for measuring minimum operational risk capital requirements, are proposed to be replaced by the new standardised approach (Basel-III Standardised Approach).

The RBI aims to put the modified norms in place from April 1, 2023.

Meanwhile, in a circular, the central bank said any payment bank or small finance bank that intends to undertake the government agency business may be appointed as an agent of the RBI upon execution of an agreement with it.

The decision, the central bank said, has been taken in consultation with the Finance Ministry.

Source :  Livemint

With Future merger delayed, RBL Bank looks to sell ₹105-crore FCRPL debt

RBL Bank is seeking buyers for its Rs 105-crore loan exposure to Future Corporate Resources Pvt Ltd (FCRPL), which holds a majority stake in Future Coupon, a 51:49 joint venture with Amazon, said people with knowledge of the matter.

FCRPL is among 25 corporate loans for which RBL is seeking offers, the people said. The decision to sell it comes in the wake of considerable delay in the two-stage merger of 19 Future Group companies with Future Enterprises, followed by a slump sale to Reliance NSE 0.10 % Group entities.

RBL is the first private bank to invite offers for a Future company. Over a dozen lenders have a cumulative loan exposure of over Rs 25,000 crore to companies of the Kishore Biyani-promoted group.

“The long stop date to close the deal has been extended to March 31, 2022, and yet there is no certainty over timelines,” said one of the persons aware of the private bank’s list.

The delay is because of a legal dispute between Future and Amazon, with the US ecommerce giant seeking to block the proposed deal with Reliance Industries.

Amazon claims its agreement with Future Coupons bars Future Retail from selling its assets to some parties, including Reliance. The Supreme Court is scheduled to hear the matter on January 11.

Early this week, the private bank invited preliminary expressions of interest for 25 corporate accounts aggregating to Rs 1,078 crore. The bank has neither indicated a reserve price for any of the accounts nor a deadline for submitting offers, the people said.

Some of the other large accounts include KKR-backed Sintex BAPL and Coffee Day Enterprises-promoted Sical Logistics, the people said. Both these companies have been admitted to the bankruptcy court for debt resolution. In both cases, the resolution professional is yet to receive binding bids.

Other Corporate A/cs

The list also includes McLeod Russel India (Rs 300 crore), Simplex Infrastructure (Rs 148.5 crore), Peninsula Land Ltd (Rs 62 crore) and Veria Lifestyle (Rs 74 crore)

“ARCs (asset reconstruction companies) are likely to make offers for Future Corporate and Sintex BAPL since for these two assets, resolution is visible,” said one of the persons quoted above.

RBL did not respond to a request for comment.

ICRA downgraded the Rs 844-crore debt facilities of FCRPL to D rating in May 2020 after it defaulted on coupon payments on bonds. FCRPL had a 44% stake in Future Retail in December 2019, which is now at 10% after several lenders invoked share pledges, according to disclosures to the stock exchange.

RBL Bank holds 4.34% shares in Future Enterprises as of September 30 after it invoked a pledge on shares belonging to a Biyani group entity.

Some ARCs may also make an offer for Sical Logistics, which received about 38 expressions of interest after it restarted the process last month since the resolution professional received very low binding offers, the people said.

Source :  Economic Times

RBI allows LIC to double its stake in IndusInd Bank

IndusInd Bank on Friday informed that the bank has received an intimation from the Reserve Bank of India (RBI) that it has granted its approval to Life Insurance Corporation (LIC), shareholder of the bank, to raise stake in the private lender to up to 9.99%. LIC currently holds 4.95% of the total issued and paid up capital of IndusInd.

The said approval is valid for a period of one year i.e. up to December 8, 2022. Shares of IndusInd Bank were trading over 1% higher in Friday's opened deals at ₹961 apiece on the BSE.

"The approval is subject to compliance with the provisions of the Master Direction on "Prior approval for acquisition of shares or voting rights in private sector banks dated November 19, 2015 and Master Direction on 'Ownership in private sector banks' dated May 12, 2016, provisions of the applicable regulations issued by the Securities and Exchange Board of India, provisions of the Foreign Exchange Management Act, 1999 and any other guidelines/regulations and statutes, as applicable. The approval is valid for a period of one year," IndusInd Bank said in an exchange filing today.

The RBI norms mandate that every person or an entity who intends to make an acquisition in private banks of more than 5% stake, has to take prior approval from the central bank. LIC's raising of stake is subject to compliance with the provisions of the directions given by RBI in 2015 and required regulations by the market regulator SEBI.

Last month, Kotak Mahindra Bank had informed that LIC has received approval from the RBI to raise its stake in lender to up to 9.99%.

Source :  Livemint

Paytm Payments Bank gets scheduled bank status from RBI

Paytm Payments Bank Limited (PPBL), an associate entity of Paytm, has gained the central bank's approval to function as a scheduled payments bank, it announced on Thursday, helping it to widen its financial services operations.

Paytm Payments Bank, a niche bank that cannot lend on its own, can now explore new business opportunities. It had over 6.4 crore savings accounts and more than ₹5,200 crore deposits, including savings accounts, current accounts and fixed deposits with partner banks at the end of March this year.

Being a Scheduled Payments Bank, Paytm Payments Bank can take part in government and other large corporations issued Request for Proposals (RFP), primary auctions, fixed-rate and variable rate repos, and reverse repos, along with participation in Marginal Standing Facility. The payments bank will now be eligible to partner in Centre-run financial inclusion schemes.

“The bank can participate in government and other large corporations issued Request for Proposals (RFP), primary auctions, fixed-rate and variable rate repos, and reverse repos, along with participation in marginal standing facility. The bank would now also be eligible to partner in government-run financial inclusion schemes," Paytm said in a statement.

The payments bank powers 33.3 crore Paytm wallets and enables consumers to make payments at more than 87,000 online merchants and 2.11 crore in-store merchants. More than 15.5 crore Paytm UPI handles have been created and are used to make and receive payments with Paytm Payments Bank, Paytm stated.

In the last financial year, Paytm Payments bank has also become the largest issuer and acquirer of FASTags in India. Recently, Paytm Payments bank emerged as one of the most successful digital banks operating in the Asia Pacific (APAC) region.

Shares in One 97 Communications ended 2.6% higher in a broader Mumbai market that was up 0.3%.

Paytm founder and billionaire Vijay Shekhar Sharma owns 51% of Paytm Payments Bank, while the rest is held by One 97 Communications Ltd.

Source: Livemint

Banks do not need RBI permission to invest, pull back overseas investments

Indian commercial banks will no longer require the Reserve Bank of India's (RBI) nod to invest or withdraw funds from their overseas branches and subsidiaries.

In the additional measures announced after the monetary policy review governor Shaktikanta Das said banks will no longer need regulatory clearance to invest or repatriate capital from their overseas subsidiaries.

"At present, banks incorporated in India can infuse capital in their overseas branches and subsidiaries; retain profits in these centres; and repatriate/ transfer profits therefrom with prior approval of the RBI. With a view to providing operational flexibility to banks, it has been decided that banks need not seek prior approval of the RBI if they meet the regulatory capital requirements," Das announced in his post policy statement.

To be sure, banks have been reducing their exposure to their overseas branches and subsidiaries as they focus on their domestic operations post the 2008 financial crisis.

The central bank will also place a discussion paper to review and update prudential norms on classification and valuation of investment portfolio by scheduled commercial banks. These norms were last reviewed in October 2000. "In view of the significant developments since then in domestic financial markets and global standards/best practices in this area, a need has been felt to review and update these norms following a consultative process," Das said.

Bankers said the central bank may come out with clarifications and updates on valuation of illiquid papers which make up most of the bond market. Since these bonds are not traded frequently, there is no standardised format to value them, unlike a regularly traded paper which is marked to its market value every day.

Source: Economic Times

RBI opens UPI to basic phones

The Reserve Bank of India (RBI) is set to bring more users under the ambit of the homegrown unified payments interface (UPI) channel, opening it up for feature phone users.

Feature phones are basic phones, which typically provide voice calling and text messaging functionalities. India has a large mobile phone consumer base of about 118 crore mobile users, of which about 74 crore have smart phones, indicating that there is a significant number of feature phone users in the country, RBI said. This points to the fact that feature phone users have limited access to innovative payment products like UPI, a real-time payment system developed by the National Payment Corporation of India (NPCI) for inter-bank transactions.

To be sure, feature phones currently have the national unified USSD platform (NUUP) option to avail of basic payment services using the short code of *99#, but RBI said this has not picked up.

“This move will increase digital penetration of financial services and help a large segment of people without access to smartphones or reliable internet services to transact digitally," said Adhil Shetty, chief executive of financial services marketplace BankBazaar.com.

RBI also proposed enhancing the transaction limit on UPI payments for the retail direct scheme and initial public offering (IPO) applications to ₹5 lakh, from ₹2 lakh earlier. Launched recently, the retail direct scheme allows individual investors to directly invest in sovereign debt papers, aiming to bring more people into the bond markets and widening the market borrowing opportunity for the government.

“Over time, UPI has also become a popular payment option for IPOs since its availability from 1 January 2019. It is reported that IPO applications of ₹2-5 lakh constitute approximately 10% of subscription applications. The transaction limit in the UPI system was enhanced from ₹1 lakh to ₹2 lakh in March 2020," it said.

That apart, RBI also announced a discussion paper to look into aspects related to charges involved in various channels of digital payments such as credit cards, debit cards, prepaid payment instruments and UPI, among others. The paper, RBI said, will also seek feedback on issues related to convenience fee, surcharging, and the measures required to make digital transactions affordable to users and economically remunerative to the providers.

Source: Livemint

RBI kept the repo rate steady for the ninth consecutive time

The RBI kept the repo rate steady for the ninth consecutive time and maintained the policy stance ‘accommodative’ for as long as necessary to support growth. We are pleased to share our monetary policy analysis and outlook. A few key highlights are appended for your ready refe

rence:

1. Policy measures – Repo rate kept unchanged at 4%.
2. GDP – Real GDP growth projection for FY22 retained at 9.5%.
3. Inflation – Inflation projection for FY22 retained at 5.3%.
4. Stance – To continue with the accommodative stance for as long as deemed necessary to revive and sustain growth on a durable basis and mitigate the impact of COVID-19 on the economy, while ensuring that inflation remains within the target going forward.
5. Other measures
   • RBI to allow banks to make one-time pre-payment with respect to Targeted Long-Term Repo Operations (TLTRO).
   • From January 2022, liquidity absorption will mainly be managed through the auction route.
6. Outlook
   • RBI to remain watchful of the new COVID variant (Omicron), and its repercussions on the global and domestic economies.
   • The central bank may narrow the policy rate corridor through a reverse repo hike depending on evolving conditions.

RBI hikes VRRR limit as its moves away from overnight auctions

Reserve Bank of India (RBI) has hiked the amount it absorbs from banks through the 14-day variable reverse repo (VRRR) auction as it moves to re-establish the VRRR as the main tool in liquidity management.

In a post monetary policy announcement, governor Shaktikanta Das said the central bank will hike the amount it absorbs through VRRR in two auctions to Rs 6.5 lakh crore on December 17 and further to Rs 7.5 lakh crore on December 31, up from the Rs 6 lakh crore, it took from banks on December 3.

Das said that from January 2022 onwards, liquidity absorption will be undertaken mainly through the auction route even as he reiterated RBI's commitment "to rebalance liquidity conditions in a non-disruptive manner while maintaining adequate liquidity to meet the needs of the productive sectors of the economy."

RBI's rebalancing of liquidity management started in February 2020, as the central bank shifted its liquidity absorption tool out of the fixed-rate overnight reverse repo window into VRRR auctions of longer maturity.

"The objective is to re-establish the 14-day VRRR auction as the main liquidity management operation. By and large, the rebalancing of liquidity has proceeded in a timely and non-disruptive manner as planned. It is also fulfilling its objective of strengthening the Reserve Bank’s control over the liquidity overhang which, in turn, reinforces the ability of the Reserve Bank to normalise liquidity conditions when warranted," Das said.

Going forward, the 14-day VRRRs will be complemented by longer-term VRRRs of 28 days, the size and maturities of which will be decided on the basis of continuous assessment of the evolving liquidity conditions. The RBI has also reserved its rights to undertake operation twist (OT), buying long-dated bonds while simultaneously selling shorter tenure bonds or buying or selling bonds under open market operations (OMOs) to infuse or absorb liquidity as needed.

Source: Economic times

IPO-bound India1 Payments installs 10,000 white-label ATMs

The IPO-bound India1 Payments, promoted by the Banktech Group of Australia and formerly known as BTI Payments, has said that it has crossed a milestone of deploying 10,000-white-lable ATMs which are labelled as India1ATMs, making it the largest player in the segment. The company has installed these machines mostly in semi urban and rural areas across 14 states and union territories, and this milestone makes India1 ATM the second largest white label ATM (WLA) brand in the semi-urban and rural areas across 14 states and union territories, and this milestone makes India1 ATM the second largest white label ATM (WLA) brand in the semi-urban and rural areas.

According to the latest data from the RBI as of September, there were 2.4 lakh ATMs in the country, of them around 28,00 are white-label machines.

The company has grown over 15 per cent over last year and account for more than 50 per cent of incremental ATMs deployed in this period.

India1ATM services over 72 million customer transactions and facilitates a gross transaction value of over Rs 13,600 crore every quarter on an average. It began operations in 2014 and since then it has installed more than a third of the WLAs.

In September, the Bengaluru-based company filed draft papers with Sebi for IPO and which is mix of fresh issues and offer for sale by promoters. The issue comprises a fresh issue of equity shares worth Rs 150 crore and an offer for sale of up to 10.31 million shares by existing shareholders and promoters.

K Srinivas, managing director and chief executive of India1 Payments, said "despite the pandemic, we have leveraged our network with an average deployment of over 300 ATMs per month for the previous four months".

Source :Economic Times

RBI appoints P N Raghunath as additional director of Ujjivan Small Finance Bank

Ujjivan Small Finance Bank (SFB) on Monday said RBI has appointed P N Raghunath as an additional director on the board of the bank.

"The Reserve Bank of India vide its letter dated November 29, 2021 has appointed P N Raghunath, General Manager, Reserve Bank of India, Bengaluru, Regional Offic ..

Regional Office as an Additional Director on the board of the bank for a period of 2 years with effect from November 29, 2021 to November 28, 2023 on till further orders, whichever is earlier," Ujjivan SFB said in a regulatory filing.

Stock of the bank closed at Rs 17.80 apiece on BSE, down 4.56 per cent over previous close.

Source :Economic Times

Industry bodies urge RBI to scrap daily loan asset classification norm

Top industry bodies are seeking the scrapping of the Reserve Bank of India's direction on loan asset classification by non-banking finance companies (NBFCs) on a daily basis as the rule could cripple the small and medium enterprises segment that is just limping back to normalcy after the Covid impact.

The Confederation of Indian Industries (CII) and the Associated Chambers of Commerce and Industry of India (Assocham) are writing to the regulator to review the norm which asks NFBCs to classify loans based on daily repayments.

In their letter to the RBI the industry bodies have argued that the strict day-to-day payments based classification would be hard to implement for the borrowers serviced by them as their cash flows and supplies are haphazard. These borrowers make lump sum payments.

"Our main point is that we mostly serve small borrowers, truck drivers, light commercial vehicles owners or even farmers. These people do not have a steady income stream like salaried people," said a person familiar with the development. "As a result, payments do not often come on or before the due date, so we give them some leeway, like paying before the end of the month. The strict classification on par with banks will derail this system and could put many borrowers in trouble."

In a clarification earlier this month, RBI said loan accounts have to be classified as NPAs unless the entire arrears of interest and principal are paid by the borrower. NBFCs have also been asked to specifically mention the exact due date of loan accounts and the break-up of the principal as well as interest. These norms have now brought loan classification by NBFCs on par with banks and is yet another step by the RBI to tighten regulations on NBFCs although they serve a different set of client .The changes will be effective from next fiscal year.

Crisil said that the impact of the new RBI norms on unsecured loan NPA is expected to be in the range of 1.5% to 3%, for MSME finance it is expected to be in the range of 1% to 3%, and 1% to 2% for vehicle finance.

Industry leaders are hoping that the central bank will at least give them some more time or introduce the new norms in a gradual or phased manner.

Source : Economic Times

The unraveling of Reliance Capital shows why RBI hates big business in banking

The crisis of confidence that erupted in India’s shadow banking industry in 2018 has claimed its most high-profile casualty yet. In a surprise announcement Monday evening, the central bank said that it had superseded the board of a financier controlled by Anil Ambani, the younger brother of India’s richest man, appointed an administrator, and would soon be sending the firm to the bankruptcy tribunal.

The unraveling of Reliance Capital Ltd. shows why the Reserve Bank of India remains reluctant to allow big business groups into mom-and-pop banking, despite facing huge pressure to allow a wave of corporate capital into the industry and reignite credit growth. The financiers’ potential to do harm is lethal even without access to insured deposits.

Shares of BT Group Plc jumped as much as 9.5% in London after the Economic Times reported that the Indian tycoon was considering an unsolicited bid for Britain’s largest phone company. Reliance said the article was “completely speculative.”

Anil Ambani’s misery couldn’t be more real, though. Creditors, including the government, are scrambling to recover the 758 billion rupees ($10 billion) owed to them by his Reliance Communications Ltd., which shuttered its mobile service four years ago. Last year, the 62-year-old former billionaire was ordered by a London judge to pay more than $700 million to a trio of Chinese banks that had lent money to RCom against personal guarantees by Ambani. Reliance Naval & Engineering Ltd., which had a contract to build patrolling vessels for the Indian Navy, is also in insolvency. Creditors are looking at 80%-90% haircuts, BloombergQuint reported in September.

Now that Reliance Capital joins his other group businesses in the bankruptcy slaughterhouse, investors will get a clearer assessment of why their firm, which was once worth more than $3 billion, is most likely headed for a complete wipeout of the $64 million in shareholder value that still remains. The “serious governance concerns,” which the Reserve Bank of India says the board failed to address effectively, need to come out in the open. That won’t improve the outcome for Reliance Capital shareholders, but it will hopefully prevent similar blowups in the future.

It will also inform the debate on whether large business houses can be trusted with banking licenses. “It has always been our ambition to create a world-class bank,” Anil Ambani said at the annual general meeting of Reliance Capital back in 2010, when the RBI had just floated a discussion paper on allowing some new lenders into the system. Luckily, those ambitions never received regulatory blessings. Otherwise, the RBI today might be grappling with the far messier task of making individual depositors whole.

Not that the resolution of Reliance Capital is going to be a cakewalk. With nearly $9 billion in assets, according to the financier’s latest annual report, meeting a $2.9 billion liability to creditors at the end of October shouldn’t have been this hard. But for more than two years now, various orders by courts and debt recovery tribunals have prevented the company from disposing off assets. Creditors who tried to sell units got many expressions of interest. Still, no deal could fructify because of layers of litigation, the Business Standard reported earlier this month.

Source : Economic Times

LIC gets RBI's nod to increase stake in Kotak Mahindra Bank to 9.99%

The Reserve Bank of India (RBI) has granted approval to state-owned insurance behemoth, Life Insurance Corporation of India (LIC), to raise its stake in private lender Kotak Mahindra Bank up to 9.99 per cent. Currently, the life insurer holds 4.96 per cent in the private lender.

In a notification to the exchanges, the lender said, “…Kotak Mahindra Bank Limited has received an intimation from LIC stating that the RBI had granted its approval to LIC, for increasing its holding in the Bank up to 9.99 per cent of the paid up equity share capital of Bank...”.

Shares of Kotak Mahindra Bank closed with gains of 2.92 per cent on the BSE post the announcement, the most among Sensex components.

The approval of the central bank will be valid for one year. As per RBI norms, prior approval of the RBI is required to increase stake in private banks beyond 5 per cent.

LIC is one of the biggest institutional investors in India’s stock market and has a stake in a number of private and public sector banks. LIC has a stake in as many 24 scheduled commercial banks, data from Capitaline shows.

Once LIC raises its shareholding in Kotak Mahindra Bank to 9.99 per cent, it will be the second largest shareholding of the insurer in a scheduled commercial bank. Among other major banks, LIC holds 8.8 per cent in Canara Bank, 8.3 per cent in Punjab National Bank and State Bank of India, 8.2 per cent in Axis Bank, and 7.6 per cent in ICICI Bank.

Source : Business Standard

RBI imposes Rs1 crore penalty on Union Bank of India

The Reserve Bank of India has imposed monetary penalty worth ₹1 crore on Union Bank of India for failure to classify an account as fraud and delay in disclosures in the annual report. In a press release on Monday, the regulator said that the bank had been penalized for non-compliance with the certain provisions of directions issued by RBI contained in “Reserve Bank of India (Fraud - Classification and Reporting by commercial banks and select FIs) Directions 2016" and “Guidelines on Sale of Stressed Assets by Banks.  

“The Statutory Inspection for Supervisory Evaluation (ISE) of the bank was conducted by RBI with reference to its financial position as on March 31, 2019 (ISE 2019) and the examination of the Risk Assessment Report, Inspection Report and all the related correspondences pertaining to ISE 2019, revealed, inter alia, noncompliance with the above-mentioned directions to the extent of (i) failure to classify an account as Red Flag Account despite presence of Early Warning Signals and (ii) failure to disclose ageing of and provisioning for Security Receipts (SRs) in its Annual Report," it said. 

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

Source : Livemint

RBI imposes monetary penalty of Rs 1 crore on State Bank of India

The Reserve Bank of India (RBI) by an order dated November 16 has imposed a monetary penalty of Rs 1 crore on the State Bank of India for contravention of section 19 (2) of the Banking Regulation Act, 1949 (the Act), informed RBI.

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

As per the press note, the irregularities were identified after a Statutory Inspections for Supervisory Evaluation (ISE) of the bank was conducted by RBI with reference to its financial positions as on March 31, 2018, and March 31, 2019, and the examination of the Risk Assessment Reports, Inspection Report and all related correspondence pertaining to the same, revealed, inter-alia, contravention of section 19 of the Act.

Section 19 (2) of the Act says that "no banking company shall hold shares in any company, whether as pledgee, mortgagee or absolute owner, of an amount exceeding thirty per cent of the paid-up share capital of that company or thirty per cent of its own paid-up share capital and reserves, whichever is less."

"After considering the bank's reply to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank, RBI came to the conclusion that the charge of contravention of the aforesaid provisions of the Act was substantiated and warranted imposition of monetary penalty on the bank, to the extent of contravention of the aforesaid provisions of the act," read the press note.

Source : Business Standard

Former RBI executive director Lily Vadera joins HDFC Bank board

HDFC Bank on Friday said its board has approved the appointment of former RBI executive director Lily Vadera as independent director.

The board of directors of the bank approved the appointment of Lily Vadera as an additional independent director of the bank for a period of five years effective from November 26, 2021, subject to the approval of the shareholders, HDFC Bank said in a regulatory filing.

Vadera, 61, has 33 years of experience in central banking. She retired as Executive Director from the Reserve Bank of India in October 2020.

As an ED of the RBI, she was in-charge of the Department of Regulation (DoR) where she dealt with the regulatory framework for various entities in the financial sector, covering all categories of banks and non-banking finance companies.

She was instrumental in putting in place a framework for a regulatory Sandbox to provide an enabling environment for fintech players to foster innovation in financial services and played a significant role in the amalgamation of banks in stress, the bank said.

She also represented RBI and played an important role as a member of the Insolvency Law Committee set up by the Ministry of Corporate Affairs.

Source : Business-standard

RBI accepts 21 of 33 working group recommendations on private banks

The Reserve Bank of India (RBI) has accepted 21 out of 33 recommendations of the internal working group that was set up to review extant ownership guidelines and corporate structure for Indian private sector banks.

The Central Bank said it had made some partial modifications where it considered them to be necessary and the remaining recommendations are under examination.

The RBI has accepted recommendation of raising cap on promoters’ stake from the current levels of 15% to 26% of the paid-up voting equity share capital of the bank.

On the lock-in period for promoters’ initial shareholding, limits on shareholding in long run, dilution requirement and voting rights, no change may be required in the extant instructions related to initial lock-in requirements, which may continue as minimum 40% of the paid-up voting equity share capital of the bank for first five years.

It has also tweaked limits for non-promoter shareholding in private banks.

Further, the Central Bank has accepted the recommendation to disallow pledge of promoter shares during lock-in period.

The RBI on November 20 had released the report on the working group recommendations on private bank ownership and corporate structure.

However, Reuters reported that the changes would not include allowing industrial groups to own lenders. Bank promoters currently do not include industrial groups whose holdings in a bank are capped at 10%.

Source : Livemint