#RBI Guidelines

[nbfc-advisory]

Payment Aggregator Licensing in India

As updated by the RBI in March 2020, its released framework regarding payment aggregators' and further continuation compliance stated the payment gateways now need to obtain a license and certification from PCI DSS to keep their merchant transactions as it is and smooth going.

Learn More: NBFC Advisory

[bhaskarlive]

Clearing time for cheques to be cut from 2 days to a few hours: RBI chief

The RBI aims to reduce the clearing time required for bank cheques to a few hours as part of a major step to facilitate the ease of doing business in the country, RBI Governor Shaktikanta Das said on Thursday.

At present, cheque clearing through the Cheque Truncation System (CTS) operates in a batch processing mode and has a clearing cycle of up to two working days. It is proposed to reduce the clearing cycle by introducing continuous clearing with ‘on-realisation-settlement’ in CTS, Das explained.

Source: bhaskarlive.in

[thetaxguyin]

ICAI's Guidance Note on Audit of Banks (2024 Edition)

The Institute of Chartered Accountants of India (ICAI) stands at the forefront of shaping the accounting profession, providing guidance and standards to ensure excellence and integrity in financial practices. as usual on February 14, 2024, ICAI issued the latest edition of its Guidance Note on Audit of Banks, offering comprehensive insights and directives for auditors navigating the complex…

[globallancers]

RBI Guidelines Decoded: Navigating the Path to Financial Compliance

Step into the realm of possibilities, where India stands poised on the edge of an extraordinary digital transformation. As the country embraces disruptive change across every industry, the recognition of a crucial need emerges – the advancement of India's digital infrastructure in the financial sector. This pursuit is not just about enhancing usability, interoperability, and accessibility; it signifies a synchronised dance with the global trend of embracing change. The Economic Survey of 2023 echoes this sentiment, revealing how digital advancements are propelling India's economic growth, fueling the ambition to achieve a remarkable $1 trillion digital economy by 2025. However, within this era of immense potential, the fintech sector finds itself navigating a surge of regulatory measures and compliance requirements. Let's find out more about this regulation and guidelines to get a never grip at this matter: 

The RBI's FLDG Guidelines: A New Era for Digital Lending

The Reserve Bank of India (RBI) recently released new guidelines for Financial Legal Development Guidelines (FLDG) arrangements in digital lending. This is a significant development, as it has the potential to expand the reach of digital lending and make it more accessible to borrowers.

FLDG is a lending arrangement between a bank or non-banking financial company (NBFC) and a fintech lender. Under an FLDG arrangement, the fintech lender agrees to compensate the bank or NBFC for a certain percentage of the losses incurred in the event of a loan default. This helps to mitigate the risk for the bank or NBFC, and makes them more willing to lend to borrowers who may not have a traditional credit history.

The RBI's new guidelines set out a number of requirements for FLDG arrangements. These include:

The fintech lender must be registered with the RBI.

The FLDG must be for a maximum of 5% of the loan portfolio.

The fintech lender must have adequate financial resources to support the FLDG.

The FLDG must be backed by a suitable guarantee, such as a bank guarantee or a letter of credit.

The events and circumstances that led to the FLDG regulation include:

The expansion of India's digital lending sector has experienced significant growth in recent years.

The increasing demand for credit from borrowers who may not have a traditional credit history.

The need for a mechanism to mitigate the risk for banks and NBFCs when lending to these borrowers.

The need to improve transparency in the digital lending market.

Examples of How the FLDG guidelines are already being used by banks and NBFCs in India:

IndusInd Bank has partnered with the fintech company Cred to offer FLDG-backed loans to borrowers with low credit scores.

Kotak Mahindra Bank has partnered with the fintech company Lendingkart to offer FLDG-backed loans to small businesses.

HDFC Bank has partnered with the fintech company ZestMoney to offer FLDG-backed loans to borrowers who need money for short-term expenses.

RBI guidelines particularly the FLDG guidelines, marks a significant milestone in the digital lending landscape of India. These regulations aim to foster financial inclusion by providing a mechanism to mitigate risk and support lending to borrowers without traditional credit histories. As India strives to achieve a $1 trillion digital economy, these guidelines become the guiding light for the fintech sector to navigate the path of compliance and seize the immense opportunities that lie ahead. As the wheels of progress turn, the RBI's regulatory framework ensures a robust and inclusive financial ecosystem, fueling India's journey towards prosperous digital transformation solutions.

[alsoknownashp]

Significance, Effects, and Future Outlook of repo rates in India

Repo rates are crucial in India's monetary policy framework. The Reserve Bank of India (RBI) adjusts these rates to maintain price stability and the smooth operation of the economy.

Significance of Repo Rates

Repo rates are fundamental tools employed by the RBI to control inflationary pressures and promote economic activity. When banks face short-term liquidity shortages, they can borrow from the RBI by providing eligible securities as collateral. The repo rate represents the interest charged on these borrowings. By adjusting the repo rate, the RBI aims to strike a balance between controlling inflation and encouraging economic growth.

Impact of Repo Rates

The adjustment of repo rates has a direct impact on borrowing and lending activities, which in turn affects the overall money supply in the market. An increase in the repo rate makes borrowings more expensive for banks, leading to reduced borrowing and lending activities. This decrease in money supply helps curb inflationary pressures. Conversely, a decrease in the repo rate incentivizes banks to borrow more from the RBI, making borrowing costs more affordable for businesses and individuals. This stimulates lending, investments, and overall economic growth.

Reverse Repo Rates and Their Impact

Reverse repo rates, on the other hand, refer to the rate at which the RBI borrows money from commercial banks. By offering government securities as collateral, the RBI absorbs excess liquidity from the banking system. An increase in the reverse repo rate encourages banks to park their surplus funds with the RBI, earning interest on these investments. This decreases the amount of money available for lending, leading to tighten money supply in the economy. Conversely, a decrease in the reverse repo rate prompts banks to lend more to the economy, boosting the money supply and stimulating economic activity.

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[shashank2709]

[frenzo-pay]

Revolutionizing Payment Solutions in India with FrenzoPay

FrenzoPay is a digital payment platform that is quickly gaining popularity in India. It is an all-in-one payment solution that enables businesses of all sizes to accept payments seamlessly through various modes like credit/debit cards, net banking, UPI, and mobile wallets.

What sets FrenzoPay apart is its ease of use and advanced security measures. The platform is designed to simplify the payment process for both businesses and customers, with a user-friendly interface that makes it easy to set up and use. Additionally, FrenzoPay uses SSL encryption and two-factor authentication to ensure that all transactions are safe and secure.

FrenzoPay also offers a range of other features like real-time transaction monitoring and reporting, recurring payments, and 24/7 customer support. With these features, businesses can track their payments and analyze their transaction data easily and get the help they need when they need it.

Overall, FrenzoPay is a reliable and efficient payment solution that is well-suited for businesses looking to streamline their payment process. As India's fintech sector continues to grow, FrenzoPay is poised to become a leading player in the industry.

[corporategenie]

RBI's Policy Dilemma

The Reserve Bank of India (RBI) faces a policy dilemma as it tries to balance the conflicting priorities of economic growth and inflation control. On the one hand, the RBI needs to ensure that there is sufficient liquidity in the market to support economic growth and investment. On the other hand, it needs to control inflation to ensure price stability and prevent any adverse impact on the economy. The policy dilemma arises because measures taken to support economic growth, such as reducing interest rates, can also lead to higher inflation. Conversely, measures taken to control inflation, such as raising interest rates, can dampen economic growth. To resolve this dilemma, the RBI needs to carefully calibrate its policies to balance the objectives of growth and inflation. This requires a nuanced approach that takes into account a range of factors, including global economic conditions, domestic demand and supply factors, and the impact of government policies. The RBI's policy decisions have far-reaching consequences for the economy and the people, and therefore require careful consideration and analysis.

[amansinghkunwar]

Retirement Planning 101: RBI Bonds for Senior Citizens

It is advised that retirement planning should start with the credit of your first paycheck. But what are the options available? Which investment can give you best returns? This post explores one such investment type: RBI Bonds. RBI offers bonds for senior citizens as a way to provide them with a regular income. RBI Bonds For Senior Citizens are safe and secure and offer a fixed rate of interest.

[nbfc-advisory]

RBI's recent notifications: Impacts on NBFCs in 2023 - RBI Updates

Famous for a superior understanding of regional needs, robust financial system, and personalized offerings - NBFCs ain’t untouched by rigorous changes, whether market-influenced or regulatory bodies like RBI. So let's discuss them.

Learn More:

[acquisory]

RBI REGULATIONS ON CROSS BORDER MERGERS

“This notification could boost foreign direct investment into the country. The notification of FEMA (Cross Border Merger) Regulations, 2018, is the last leg of legal provisions which allows both inbound and outbound mergers of companies in India. The real beneficiaries of these regulations would be MNCs which in many cases want to consolidate the business of a region and require mergers involving an Indian company with other companies in foreign jurisdictions ”

Background

The FEM (Cross Border Merger) Regulations, 2018 have now been notified vide notification no. FEMA 389/ 2018-RB dated 20 March, 2018 and are effective from the date of notification.

As per the Regulations, merger transactions in compliance with these regulations shall be deemed to have been approved by RBI, and hence, no separate approval should be required. In other cases, merger transactions should require prior RBI approval.

Definitions

“Cross Border Merger” means any merger, amalgamation or arrangement between an Indian company and foreign company, in accordance with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 notified under the Companies Act, 2013 (Under the draft regulations, the word “demerger” was part of the definition of “Cross border merger.” However, the same has been deleted in the notified regulations).

“Foreign company” means any company or body corporate incorporated outside India whether having a place of business in India or not.

“Indian company” means a company incorporated under the Companies Act, 2013 or under any previous company law.

“Resultant Company” means an Indian company or a foreign company, which takes over the assets and liabilities of the companies involved in…

Read more: https://www.acquisory.com/ArticleDetails/71/RBI-Regulations-on-Cross-Border-Mergers

[bhaskarlive]

RBI hikes limit for tax payments via UPI from Rs 1 lakh to Rs 5 lakh

The Reserve Bank has decided to enhance the limit for tax payments through UPI from Rs 1 lakh to Rs 5 lakh per transaction, RBI Governor Shaktikanta Das announced on Thursday.

Source: bhaskarlive.in

[credithelpindia]

RBI New Guidelines for Credit Card

If you’re like most credit card users, then you should know about the new rules RBI has put in place. Started from 1st October 2022, there are a few changes that will affect how you use your card. Don't worry though, we're here to break it down for you and tell you what you need to know. So read on to find out more!

How will the RBI new rules for credit card benefit you?

Approval of credit limits While some cardholders may like the concept of having their card limit automatically increased. However, did you realize that a rise in credit card limits might impact your CIBIL rating? This is because a higher credit card limit essentially indicates that you borrowed the higher limit from the bank. Your CIBIL score is negatively affected by a higher limit. The card issuer will no longer be permitted to automatically raise the credit card limit according to the new RBI regulations that have been effective from October 1, 2022. Additionally, the cardholder must agree to any adjustment in the credit limit. Additionally, the RBI has mandated that the issuer has written permission before changing the card limit.

Credit Card Tokenization: When buying online in the past, websites used to save your card information, including credit and debit card numbers, names, and CVVs for future use, but this posed a security concern. Your card information may be exposed in the event of a website hack or data breach, which might be a major issue. Card information is used by third-party payment apps to transmit funds from banks to platforms. In order to protect such transactions, the RBI has created a card tokenization system that encrypts credit card numbers. Customer's credit card information will no longer be used for transactions by third-party payment apps as a result of the new regulations. The credit card numbers will now be converted into an encrypted token number that will be used for transactions. This rule has been effective from 1st October 2022.

Card-issuers to seek One Time Password (OTP) Earlier, there have been numerous cases reported where credit cards have been activated and charged without the knowledge of the credit card holders. But now with the new rule implemented, this will not happen and the card issuer will not be charged. If a cardholder does not activate the card within 30 days of receiving it, the issuer must first get a one-time password (OTP) from the cardholder. Furthermore, if a cardholder refuses to activate the card, the credit card issuer shall deactivate the card within seven working days without collecting any further costs. The three new RBI guidelines will have a positive impact on credit card payments online by increasing safety.

FAQ

Is tokenization of credit cards required? Tokenization is not required, though if a user chooses not to tokenize his card, every transaction will require user to enter the card information. But in the case of customers who make these payments via cards, they won’t go through without tokenization.

How to get a token? After a customer submits all of their card information for a purchase, they will click "securing your card as per RBI requirements" as their first step toward tokenization. Once finished, the merchant will ask the operating bank to create a special token just for that transaction. The merchant will submit the request to the card network after receiving approval.The card issuer will send the buyer an OTP through email or cellphone, which must be entered on the bank page before the token can be generated. The merchant will receive the same token in the mail. In case there are any technical problems with the transaction, he can preserve it with the customer's phone number and email address.

Source: https://credithelpindia.com/blog/rbi-new-guidelines-credit-card