Summary of RBI notifications, Circulars for the month of May 2022

Master Direction update

i. Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022

-RBI/2022-23/92, DoR.AUT.REC.No.27/24.01.041/2022-23 dated 21.04.2022

-Master Direction – Credit Card & Debit Card – Issuance & Conduct Directions, 2022

-These Directions shall be effective from July 01, 2022.

Notifications update

ii. Bharat Bill Payment System – Amendment to guidelines

• RBI/2022-2023/58, DPSS.POLC.No. S-253/02-27-020/2022-23 dated 26.05.2022
• Bharat Bill Payment System – Amendment to guidelines
• This has reference to the guidelines on Bharat Bill Payment System (BBPS) issued by the Reserve Bank of India (RBI) vide circular DPSS.CO.PD.No.940/02.27.020/2014-2015 dated November 28, 2014. As announced in the Statement on Development and Regulatory Policies dated April 08, 2022, the minimum net-worth requirement for non-bank Bharat Bill Payment Operating Units (BBPOUs) stands reduced to ₹25 crore. The BBPS guidelines have been suitably amended.

 iii. Housing Finance – Loans for repairs/additions/alterations – Enhancement of limits

• Housing Finance – Loans for repairs/additions/alterations – Enhancement of limits
• The ceiling on loans to individuals for carrying out repairs/additions/alterations to their dwelling units was revised upwards to ₹2 lakh in rural and semi-urban areas and ₹5 lakh in urban areas.
• The ceiling on such loans is now revised to ₹10 lakh in metropolitan centres (those centres with population of 10 lakh and above) and ₹6 lakh in other centres.

iv. Guidelines on import of gold by Qualified Jewellers as notified by – The International Financial Services Centers Authority (IFSCA)

•  RBI/2022-2023/57, A.P. (DIR Series) Circular No.04 dated 25.05.2022

v. Reserve Bank of India (Financial Statements – Presentation and Disclosures) Directions, 2021 – Reporting of reverse repos with Reserve Bank on the bank’s balance sheet : Applicable to all commercial Bank.

• RBI/2022-23/55, DOR.ACC.REC.No.37/21.04.018/2022-23 dated 19.05.2022
• Please refer to the ‘Notes and Instructions for Compilation’ given in Part A of Annexure II to the Reserve Bank of India (Financial Statements – Presentation and Disclosures) Directions, 2021, regarding the reporting of reverse repo transactions by the banks on their balance sheet.
• In order to bring more clarity on the presentation of reverse repo on the balance sheet, it has now been decided that All type of reverse repos with the Reserve Bank including those under Liquidity Adjustment Facility shall be presented under sub-item (ii) ‘In Other Accounts’ of item (II) ‘Balances with Reserve Bank of India’ under Schedule 6 ‘Cash and balances with Reserve Bank of India’.
• Reverse repos with banks and other institutions having original tenors up to and inclusive of 14 days shall be classified under item (ii) ‘Money at call and short notice’ under Schedule 7 ‘Balances with banks and money at call and short notice’.
• Reverse repos with banks and other institutions having original tenors more than 14 days shall be classified under Schedule 9 – ‘Advances’ under the following heads, ‘Cash credits, overdrafts and loans repayable on demand, Secured by tangible assets and Banks (iv) ‘Others’ (as the case may be).

vi. Regulations Review Authority (RRA 2.0) – Recommendations for Withdrawal of Circulars

• RBI/2022-23/48, DoR.RRA.36/01.01.101/2022-23 dated 13.05.2022
• https://www.rbi.org.in/scripts/FS_Notification.aspx?Id=12315&fn=2&Mode=0

vii. Maintenance of Cash Reserve Ratio (CRR)

• RBI/2022-23/46 DOR.RET.REC.33/12.01.001/2022-23 dated 04.05.2022
• As announced in the Governor’s Statement dated May 04, 2022, it has been decided to increase the Cash Reserve Ratio (CRR) of all banks by 50 basis points from 4.00 percent to 4.50 percent of their Net Demand and Time Liabilities (NDTL), effective from the reporting fortnight beginning May 21, 2022.

viii. Change in Bank Rate

• RBI/2022-23/45, DOR.RET.REC.32/12.01.001/2022-23 dated 04.05.2022
• As announced in the Monetary Policy Statement 2022-23 dated May 04, 2022, the Bank Rate is revised upwards by 40 basis points from 4.25 per cent to 4.65 per cent with immediate effect.
• All penal interest rates on shortfall in reserve requirements, which are specifically linked to the Bank Rate, also stand revised as indicated in the Annex.

ix. Legal Entity Identifier (LEI) for Borrowers

• RBI/2022-23/34,DOR.CRE.REC.28/21.04.048/2022-23 dated 21.04.2022.
• It has been decided that the guidelines on LEI stand extended to Primary (Urban) Co-operative Banks (UCBs) and Non-Banking Financial Companies (NBFCs). It is further advised that non-individual borrowers enjoying aggregate exposure of ₹5 crore and above from banks¹and financial institutions (FIs)² shall be required to obtain LEI codes as per the timeline given in the Annex.
• Timeline for obtaining LEI by borrowers

x. Consolidated Circular on Opening of Current Accounts and CC/OD Accounts by Banks

• RBI/2022-23/27, DOR.CRE.REC.23/21.08.008/2022-23 dated 19.04.2022
• It shall apply to current accounts and CC/OD accounts opened or maintained with the following Regulated Entities (REs): All Scheduled Commercial Banks and All Payments Banks

xi. Basel III Framework on Liquidity Standards – Liquidity Coverage Ratio (LCR)

• RBI/2022-23/25, DOR.LRG.REC.19/21.04.098/2022-23 dated 18.04.2022
• This circular is applicable to all Commercial Banks other than Regional Rural Banks, Local Area Banks and Payments Banks.

PRESS RELEASES

• For the Press Releases refer link https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx.

SPEECHES & INTERVIEWS

xii. Resolution of Stressed Assets and IBC

(Address delivered by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India – April 30, 2022 – in the International Research Conference on Insolvency and Bankruptcy held at IIM Ahmedabad)

• He addressed on resolution of stressed assets and IBC. India has come a long way in improving the credit discipline in the country. However, as with any public policy, it is always a work in progress with scope for improvement at any time.

xiii. Governor’s (Shaktikanta Das) Interview with media on May 23, 2022

Key notes :-

• He discussed on various topics on steps taken by RBI to cut down Inflation, OMO (Open Market operations), cryptos and Rupee Fluctuations.
• For the inflation, the target for the advanced economies, for example, is 2 per cent; the USA is at 8.3 per cent; the United Kingdom is at 9 per cent; the euro area is more than 7 per cent;. except for Japan and one more country, all of them are in excess of 7 per cent. In India, our target is 4 per cent and we have a tolerance band which goes up to 6 per cent; we are 7.8 per cent.
• On Cryptos, our position remains very clear. It will seriously undermine the monetary, financial and macroeconomic stability of India. And we stick to that position.  

The Author is a young practicing FCA based out at Ahmedabad, Gujarat, India, specialising in NBFC matters. She is also DISA, FAFP and FXTM. Her area of interest includes, amongst others, GST and Writing. She can be reached on +918879051225 or [email protected].