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Date : August 22, 2023.
Fair Lending Practice - Penal Charges in Loan Accounts
Excerpts:
Reserve Bank of India issued revised instructions on Regulated Entities (RE)for charging penal interest/charges on loans
- On a review of the practices followed by REs for charging penal interest/charges on loans, the following instructions are issued for adoption.
- Penalty, if charged, for non-compliance of material terms and conditions of loan contract by the borrower shall be treated as ‘penal charges’ and shall not be levied in the form of ‘penal interest’ that is added to the rate of interest charged on the advances. There shall be no capitalisation of penal charges i.e., no further interest computed on such charges. However, this will not affect the normal procedures for compounding of interest in the loan account.
- The REs shall not introduce any additional component to the rate of interest and ensure compliance to these guidelines in both letter and spiri.
- The quantum of penal charges shall be reasonable and commensurate with the non-compliance of material terms and conditions of loan contract without being discriminatory within a particular loan / product category.
- The penal charges in case of loans sanctioned to ‘individual borrowers, for purposes other than business’, shall not be higher than the penal charges applicable to non-individual borrowers for similar non-compliance of material terms and conditions.
- The quantum and reason for penal charges shall be clearly disclosed by REs to the customers in the loan agreement and most important terms & conditions / Key Fact Statement (KFS) as applicable, in addition to being displayed on REs website under Interest rates and Service Charges.
- Whenever reminders for non-compliance of material terms and conditions of loan are sent to borrowers, the applicable penal charges shall be communicated. Further, any instance of levy of penal charges and the reason therefor shall also be communicated.
- These instructions shall come into effect from January 1, 2024.
- Read more.
RBI launches उद्गम - UDGAM - Centralised Web Portal for searching Unclaimed Deposits
The Governor, Reserve Bank of India today launched a Centralised Web Portal उद्गम UDGAM (Unclaimed Deposits – Gateway to Access inforMation). This portal has been developed by RBI for use by members of public to facilitate and make it easier for them to search their unclaimed deposits across multiple banks at one place.
The Reserve Bank of India had announced the development of a centralised web portal for searching unclaimed deposits as part of the Statement on Developmental and Regulatory Policies dated April 06, 2023. Given the increasing trend in the amount of unclaimed deposits, RBI has been undertaking public awareness campaigns from time to time to sensitise the public on this matter. Further, through these initiatives, the RBI has been encouraging members of public to identify and approach their respective banks for claiming unclaimed deposits.
The launch of the web portal will aid users to identify their unclaimed deposits/ accounts and enable them to either claim the deposit amount or make their deposit accounts operative at their respective banks. Reserve Bank Information Technology Pvt Ltd (ReBIT), Indian Financial Technology & Allied Services (IFTAS) and participating banks have collaborated on developing the portal.
To begin with, users would be able to access the details of their unclaimed deposits in respect of seven banks presently available on the portal. The search facility for remaining banks on the portal would be made available in a phased manner by October 15, 2023.
Reserve Bank of India to Launch the Pilot Project for Public Tech Platform for Frictionless Credit
Date : August 15, 2023.
Group Medical Insurance Scheme - Minutes of Meeting held on 19-07-2023 between IBA and UFBU.
Date:August 10, 2023.
Reserve Bank of India- Monetary Policy Statement, 2023-24 August 8-10, 2023
Excerpts :
- Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.
- The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
- These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
Read the full statement here.
Reserve bank issued notification on Requirement for maintaining additional CRR.
Effective from the fortnight beginning August 12, 2023, all Scheduled Commercial Banks / Regional Rural Banks / all Scheduled Primary (Urban) Co-operative Banks / all Scheduled State Co-operative Banks to maintain with the Reserve Bank of India, an incremental CRR (I-CRR) of 10 per cent on the increase in NDTL between May 19, 2023 and July 28, 2023.
You may be interested to read this also
Statement on Developmental and Regulatory Policies
Date:August 05, 2023.
Revised dearness allowance from August 2023 payable to Bank officers ,Clerks „Sub-staff and Bank Pensioners.
- Consumer Price Index(IW) April 2023:134.20
- Consumer Price Index(IW) May 2023:134.70
- Consumer Price Index(IW) June 2023:136.40
- Dearness Allowance Payable :44.24%
Click here for DA Chart and details
Date:July 26, 2023.
National Savings Certificates (NSC)- Scheme Details:
Date:July 12,2023.
National Savings Certificates (NSC ) VIII th Issue -
New Investment and Interest accrued eligible for deduction U/S 80C
Financial Year 2023-24.
Click here for calculator
Date:July 02,2023.
Post Office Small Savings Interest Rates revised from July 2023
- One year time deposit changed from 6.8% to 6.9%
- Two year time deposit changed from 6.9% to 7.0%
- Five year Recurring deposit changed from 6.2% to 6.5%
- No canges in other deposit schemes.
- Click here for details
Date:June 11,2023.
Reserve Bank of India- Monetary Policy Statement, 2023-24 Resolution of the Monetary Policy Committee (MPC) June 6-8, 2023
Excerpts: decided to:
Keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.50 per cent.
The standing deposit facility (SDF) rate remains unchanged at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent.
The MPC also decided to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.
These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.
The main considerations underlying the decision are set out in the statement below.
Date:May 24,2023.
Have you filed your Income Tax Returns for FY 2022-23?
Here are some useful links to help you file the returns.
Date:May 20,2023.
Reserve Bank of India withdraws Rs2000 Denomination Banknotes from circulation-the notes Will continue as Legal Tender-
- Excerpts from RBI press release:
This denomination is not commonly used for transactions. Further, the stock of banknotes in other denominations continues to be adequate to meet the currency requirement of the public.
- It has been decided to withdraw the Rs2000 denomination banknotes from circulation.
- The banknotes in Rs2000 denomination will continue to be legal tender.
- Members of the public may deposit Rs2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations
- Members of the public are encouraged to utilise the time up to September 30, 2023 to deposit and/or exchange the Rs2000 banknotes.
- Read FAQ for further clarifications.
Date:April 20,2023.
Clarification regarding deduction of TDS under section 192 read with sub-section (IA) of section 115BAC of the Income-tax Act, 1961 - reg.
INCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 -FINANCIAL YEAR 2022-23
CIRCULAR NO. 24/2022 of GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) CENTRAL BOARD OF DIRECT TAXES
Read here the detailed circular.
October 22 , 2022.
National Savings Certificate VIIIth issue- Investment and Accrued Interest eligible for deduction from Income for financial year 2022-23.
Regular investment in National Savings Certificate is one of the attractive investment avenue to reduce tax liability. Here is a simple calculator to know the amount you can claim as deuctions from income U/S 80C for the financial year 2022-23.
Nsc Accrued Interest Calculator-FY 2022-23.
September 08 , 2022.
Guidelines on Digital Lending.
Excerpt from RBI Circular.
- Annual Percentage Rate (APR): APR is the effective annualised rate charged to the borrower of a digital loan. .
- Digital Lending: A remote and automated lending process, largely by use of seamless digital technologies for customer acquisition, credit assessment, loan approval, disbursement, recovery, and associated customer service.
- Regulated Entities (REs )shall ensure that all loan servicing, repayment, etc., shall be executed by the borrower directly in the RE’s bank account without any pass-through account/ pool account of any third party. The disbursements shall always be made into the bank account of the borrower except for disbursals covered exclusively under statutory or regulatory mandate (of RBI or of any other regulator), flow of money between REs for co-lending transactions2 and disbursals for specific end use, provided the loan is disbursed directly into the bank account of the end-beneficiary. REs shall ensure that in no case, disbursal is made to a third-party account, including the accounts of LSPs and their DLAs, except as provided for in these guidelines.
- REs shall ensure that any fees, charges, etc., payable to LSPs are paid directly by them (REs) and are not charged by LSP to the borrower directly.
- The penal interest/charges levied, if any, on the borrowers shall be based on the outstanding amount of the loan. Further, rate of such penal charges shall be disclosed upfront on an annualized basis to the borrower in the Key Fact Statement (KFS).
- Annual Percentage Rate (APR) - APR as all-inclusive cost of digital loans for the borrower shall be disclosed upfront by REs and shall also be a part of the Key Fact Statement.
- REs shall provide a Key Fact Statement (KFS) to the borrower before the execution of the contract in a standardized format for all digital lending products.
- The KFS shall, apart from other necessary information, contain the details of APR, the recovery mechanism, details of grievance redressal officer designated specifically to deal with digital lending/ FinTech related matter and the cooling-off/ look-up period.
- Any fees, charges, etc., which are not mentioned in the KFS cannot be charged by the REs to the borrower at any stage during the term of the loan.
Read more
July 23 , 2022
The Reserve Bank (Depositor Education and Awareness Fund) Scheme, 2014
A brief excerpts from RBI Circulars:
- Any amount remaining unclaimed for ten years or more are to be transferred to the fund including the accrued interest.
- Banks to display the list of unclaimed deposits/inoperative accounts which are inactive / inoperative for ten years or more on their respective websites.
- Banks to update their websites at least on a monthly basis.
1.The Depositor Education and Awareness Fund Scheme, 2014
The amounts to be credited to the Fund shall be the credit balances in any deposit account maintained with banks which have not been operated upon for ten years or more, or any amount remaining unclaimed for ten years or more, including:-
(a) savings bank deposit accounts;
(b) fixed or term deposit accounts;
(c) cumulative/recurring deposit accounts;
(d) current deposit account;
(e) other deposit accounts in any form or with any name;
(f) cash credit account;
(g) loan accounts after due appropriation by the banks;
(h) margin money against issue of Letter of Credit/Guarantee etc., or any security deposit in any account;
(i) outstanding telegraphic transfers, mail transfers, demand drafts, pay orders, bankers cheques, travelers cheques, sundry deposit accounts, vostro accounts, inter-bank clearing adjustments and other such transitory accounts, unreconciled credit balances on account of ATM transactions, etc.; and
(j) undrawn balance amounts remaining in any prepaid card issued by banks.
Read more.
2. Operational Guidelines
As per paragraph 3(vi) of the Scheme, banks shall calculate the cumulative balances in all accounts along with interest accrued, as on the day prior to the effective date, i.e May 23, 2014 and such amounts due should be transferred to the Depositor Education and Awareness Fund (Fund) on June 30, 2014 (before the close of banking hours). Subsequently, as mentioned in paragraph 3(vii) of the Scheme, banks shall transfer to the Fund the amounts becoming due in each calendar month
Read more
3. Clarifications on Operational Guidelines
As per paragraph 3(vi) of the Scheme, banks shall calculate the cumulative balances in all accounts along with interest accrued, as on the day prior to the effective date, i.e, May 23, 2014 and such amounts due should be transferred to the Depositor Education and Awareness Fund (Fund) on June 30, 2014 before the close of banking hours. However, as regards the calculation of interest accrued on such accounts, it has been clearly indicated in paragraph 3(v) of the Scheme that bank shall transfer to the Fund the entire amount as specified in sub-paragraph (iii), including the accrued interest that the bank would have been required to pay to the customer/ depositor as on the date of transfer to the Fund”. It is once again clarified that in all such unclaimed interest bearing deposits that would be transferred to the Fund by the banks on June 30, 2014, interest accrued should be credited in the account till the date of transfer to the Fund. Illustratively, if a bank transfers to the Fund any unclaimed Saving Bank account balance on June 30, 2014 the interest up to and for June 29, 2014 would be paid into the account by the bank. The Fund would pay interest with effect from June 30, 2014 till the date of payment to the customer, at the interest rate notified by the Reserve Bank from time to time.
Read more
4.Unclaimed Deposits/ Inoperative Accounts Banks to Display list of Inoperative Accounts
Banks are, therefore, advised that they should display the list of unclaimed deposits/inoperative accounts which are inactive / inoperative for ten years or more on their respective websites. The list so displayed on the websites must contain only the names of the account holder(s) and his/her address in respect of unclaimed deposits/inoperative accounts. In case such accounts are not in the name of individuals, the names of individuals authorized to operate the accounts should also be indicated. However, the account number, its type and the name of the branch shall not be disclosed on the banks website. The list so published by the banks should also provide a 'Find ' option to enable the public to search the list of accounts by name of the account holder.
. Read more
5. Interest rates payable on unclaimed interest bearing deposit
All the banks are advised to calculate the interest payable on interest bearing deposits transferred to RBI at the rate of 4 per cent p.a. up to June 30, 2018, 3.5 per cent w.e.f. July 1, 2018 up to May 10, 2021 and at 3 per cent with effect from May 11, 2021 till the time of payment to the depositor/claimant.
Read more
6. Updation of list of inoperative accounts on their website
It is observed that banks are not updating their websites with the list of unclaimed deposits/ inoperative accounts which are inactive/ inoperative for ten years or more. Banks are, therefore, advised to update their websites at least on a monthly basis by: i) adding the names and address of the account holders whose deposits have been transferred to the Fund during the month/period. ii) deleting the names and address of account holders whose claim were admitted by the banks during the month/period. In doing this the banks need not wait for refund from the Fund.
Read more
June 25 , 2022.
RBI Payment Vision 2025.
The current Vision document builds on the Payments Vision 2019-21 document and outlines the thought process for the period up to December 2025. It may not necessarily be constrained by what the Payments Vision documents. For instance, recent developments in terms of (a) establishment of Reserve Bank Innovation Hub; (b) framework for security of card transactions like switch on / off facility; (c) guidelines on limiting customer liability in case of unauthorised transactions using Prepaid Payment Instruments (PPIs); (d) enabling Online Dispute Resolution (ODR) for digital payments;
The Payments Vision 2021 had envisaged to empower every Indian with access to a bouquet of e-payment options that is safe, secure, convenient, quick and affordable, and had set four goalposts of Competition, Cost, Convenience and Confidence with 36 specific action points and 12 expected outcomes.
The Payments Vision 2025 promises to further elevate our payment systems towards a realm of empowering users with affordable payment options accessible anytime and anywhere with convenience**
The Payments Vision 2025 document is presented across the five anchor goalposts of Integrity, Inclusion, Innovation, Institutionalisation and Internationalisation..
Goalposts for Payments Vision 2025 --
- Weave in alternate authentication mechanism(s) for digital payment transactions (para 4.1.1) --
- Broaden scope, usage and relevance of LEI in all payment activities --
- Expand interoperability to contactless transit card payments in offline mode (para 4.1.3)--
- Enhance scalability and resilience of payment systems (para 4.1.4)--
- Leverage ODR system for fraud monitoring and reporting (para 4.1.5)--
- Provide enhancements to CPFIR (para 4.1.6)--
- Provide payee name look-up for fund transfers (para 4.1.7) --
- Increase proportionate oversight of PSOs (para 4.1.8)--
- Include assessment of RTGS & NEFT under Principles for Financial Market Infrastructures (PFMIs) (para 4.1.9) --
- Explore local processing of payment transactions --
- Study creation of Digital Payments Protection Fund (DPPF) (para 4.2.10)
- Make payment systems more inclusive (para 4.1.11--
- Read full text of "RBI Payment Vision 2025."
Cash Reserve Ratio (CRR) :CRR is the portion of the deposits (total demand and time liabilities ) of a bank to be kept as cash reserve. The banks can maintain the cash reserve in the form of cash with the bank itself or credit balance in its account maintained with RBI It is a statutory requirement.
Statutory Liquidity Ratio (SLR) : SLR is the portion of deposits ( net demand and time liabilities )of a bank to be maintained as cash, gold or approved securities.
Repo Rate: Repo Rate is the rate at which banks can borrow money from RBI against listed securities with agreement to repurchase the securities at a specified future date from RBI.
Reverse Repo Rate :Reverse Repo Rate is exactly the opposite of the Repo Rate .Banks can park their funds with RBI to take advantage of the higher Reverse Repo Rate.
Bank Rate:Bank Rate is the rate at which commercial banks can borrow money from RBI. The Bank Rate movement indicates the long term health of the economy. Upward revision of Bank Rate will make funds costlier for banks which may result in banks raising their lending rates.
For further readings please follow the links :
Cash Reserve Ratio (CRR) revised
Master Direction - Reserve Bank of India [Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR)] Directions - 2021
Settlement of Claims of Deceased Depositors:
Nomination facility simplifies the procedure for settlement of claims of deceased depositors as banks get a valid discharge by making payment of the balance outstanding in a depositor's account at the time of his death or delivering contents of locker or articles kept in safe custody to the nominee.
A joint account opened as "Either or Survivor" or "Anyone or Survivors" or "Former or Survivor" or "Latter or Survivor" will permit the surviving account holder(s) to have unimpeded access to the credit balance in the account for withdrawal if one of the co-account holders dies.
Depending on the nature of claimant- Nominee, Survivor, legal heirs etc and amount of claim you may be required to submit among other documents
New Pension Scheme for Public Sector Banks and Private Banks in India- Joining Bank on or after 01.04.2010
Salient features:
- There shall be no separate Provident Fund for employees joining the services of the bank on or after 01.04.2010.
- Employees joining on or after 01.04.2010 will be covered under "The Defined Contributory Pension Scheme" as governed by the provisions of New Pension Scheme [NPS] introduced for employees of Central Government w.e.f 01.01.2004, available under "All Citizens Model" and as modified from time to time.
- The new Pension Scheme will work on defined contribution basis and will have two Tiers i.e. Tier I & II
- The contribution to Tier I will be mandatory for all the members of the scheme whereas contribution to Tier II will be optional and at the discretion of the employee.
- The Employees shall contribute 10% of the Basic pay and Dearness Allowance towards the Defined Contributory Pension Scheme and the bank shall make 14% contribution in respect of these employees.
- The scheme shall be regulated and administered by Pension Fund Regulatory And Development Authority (PFRDA) Contribution in Tier I will be kept in non-withdrawable Pension Account. There will be a Central Record Keeping Agency.
- There will be three Pension Fund Managers namely : a) LIC Pension Fund Limited b) SBI Pension Fund Limited c) UTI Retirement Solutions Limited
- The deployment of Funds will be done by NPS Trustees among LIC Pension Fund Limited, SBI Pension Fund Limited and UTI Retirement Solutions Limited.
- Exit from NPS would be governed by" employer - employee" relation but within the overall rules prescribed for the individual subscribers under ALL CITIZENS MODEL
- Read more .
Various regulations on Housing Finance-Reserve Bank of India Circular dated 01.04.2022:
Reserve Bank of India issued updated guidelines under Housing Finance covering various aspects of Housing Finance
- Purpose
- Various Regulations.
- Quantum of Loan.
- Innovative Housing Loan Products-Upfront Disbursal of Housing Loans.
- Rate of Interest.
- Exposure to Real Estate.
- Housing Loans under Priority Sector.
- Acquisition of Land.
- Construction of Building / ready Built House.
- Loans for repairs to the damaged dwelling units of families.
- Finance to a person who already owns a house.
- Purchase of a house by a borrower who proposes to let it out on rental basis.
- Buying an old house where one is presently residing as a tenant.
- Finance for construction meant for improving the conditions in slum areas .
- Credit for slum improvement schemes .
Read detailed RBI Circular.
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Consolidated RBI Circular on Opening of Current Accounts and CC/OD Accounts by Banks
- 1.1 For borrowers, where the aggregate exposure3 of the banking system is less than ₹5 crore, banks can open current accounts without any restrictions placed vide this circular subject to obtaining an undertaking from such customers that they (the borrowers) shall inform the bank(s), if and when the credit facilities availed by them from the banking system becomes ₹5 crore or more.
- 1.2 Where the aggregate exposure of the banking system is ₹5 crore or more:
- 1.2.1 Borrowers can open current accounts with any one of the banks with which it has CC/OD facility, provided that the bank has at least 10 per cent of the aggregate exposure of the banking system to that borrower. In case none of the lenders has at least 10 per cent of the aggregate exposure, the bank having the highest exposure among CC/OD providing banks may open current accounts.
- 1.2.2 Other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted within two working days of receiving such funds, to the CC/OD account maintained with the above-mentioned bank (para 1.2.1) maintaining current accounts for the borrower. The balances in such collection accounts shall not be used for repayment of any credit facilities provided by the bank, or as collateral/ margin for availing any fund or non-fund based credit facilities. However, banks maintaining collection accounts are permitted to debit fees/ charges from such accounts before transferring funds to CC/OD account.
- 1.2.3 Non-lending banks are not permitted to open current/ collection accounts.
- Read more from RBI Circular
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