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Unified Payment Interface (UPI)

Unified Payment Interface (UPI) is one of the popular methods of digital payments. This article covers the important developments regarding UPI. Unified Payment Interface (UPI) Unified Payment Interface (UPI) is an initiative by National Payments Corporation of India (NPCI) together with Reserve Bank of India (RBI) and Indian Banks Association (IBA). UPI allows linking of multiple bank accounts in a single mobile application for real-time bank-to-bank payments using mobile number, virtual payment address (UPI ID) or by scanning a QR code. Benefits of UPI Single application for accessing different bank accounts. Offers peer-to-peer fund transfer, merchant payments and utility bill payments. Allows payments using mobile number; virtual payment address (UPI ID); scanning QR code; bank account number and IFSC; and Aadhaar number. Secured payment with Two Factor authentication. Funds are transferred in real-time (i.e. immediately). Available round the clock i.e. 24*365. Allows both sending ...
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Government Debt Relief Schemes (DRS)

Reserve Bank of India (RBI) has issued guidelines on Government Debt Relief Schemes (DRS). The guidelines include (i) model operating procedure (MOP) shared with the State Governments for their consideration while designing and implementing DRS and (ii) prudential guidelines for the Regulated Entities (REs). Model operating procedure (MOP) shared with the State Governments for their consideration while designing and implementing DRS What is Government Debt Relief Scheme (DRS)? Debt Relief Schemes (DRS) refer to schemes notified by the State Governments that entail funding by the fiscal authorities to cover debt obligations of a targeted segment of borrowers that the lending institutions are required to sacrifice / waive.  What are the pre-requisites for announcing DRS? Announcement / notification of DRS should include the specific stress or distress situation necessitating announcement of such support. DRS should be considered only as a measure of last resort when other measures to...
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RBI’s Monetary Policy (December 06, 2024): In A Nutshell

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on December 06, 2024. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Unchanged 6.50% Standing deposit facility (SDF) rate 6.25% Marginal standing facility (MSF) rate 6.75% Bank rate 6.75% Monetary policy stance ‘Neutral’ and to remain unambiguously focused on a durable alignment of inflation with the target, while supporting growth. Domestic Economy    GDP growth projection CPI inflation projection FY 2024-25 6.6% 4.8% Q3 of FY  2024-25 6.8% 5.7% Q4 of FY  2024-25 7.2% 4.5% Q1 of FY 2025-26 6.9% 4.6% Q2 of FY  2025-26 7.3% 4.0% Growth in real GDP in Q2 at 5.4% turned out to be much lower than anticipated. This decline in growth was led mainly by a substantial deceleration in industrial growth due to subdued performance of manufacturing companies (petroleum products, iron and steel and cement), contraction in mining activity ...
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Operational framework for reclassification of Foreign Portfolio Investment to Foreign Direct Investment (FDI)

Reserve Bank of India (RBI) has released operational framework for reclassification of Foreign Portfolio Investment to Foreign Direct Investment (FDI). What is Foreign Portfolio Investment? Foreign portfolio investment means any investment made by a person resident outside India through equity instruments where such investment is less than 10% of the post issue paid-up share capital on a fully diluted basis of a listed Indian company or less than 10% of the paid-up value of each series of equity instrument of a listed Indian company.  Fully diluted basis means the total number of shares that would be outstanding if all possible sources of conversion are exercised. Foreign Portfolio Investor (FPI) means a person registered in accordance with the provisions of the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014. What is Foreign Direct Investment (FDI)? Foreign Direct Investment (FDI) means investment through equity instruments by a person reside...
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Directions on Access Criteria for NDS-OM

Reserve Bank of India (RBI) has issued directions on access criteria for NDS-OM. What is NDS-OM? Negotiated Dealing System-Order Matching (NDS-OM) is the Electronic Trading Platform (ETP) authorised by RBI for transactions in Government securities. It is an anonymous screen-based order matching module, where the participants can trade anonymously by placing their orders on the system or accepting the orders already placed by other participants.  It is operated by Clearing Corporation of India Limited (CCIL) on behalf of RBI.  Who can access NDS-OM? Any person / entity eligible to invest in Government securities shall be eligible to access NDS-OM either through direct access or through indirect access. Direct Access – means access to NDS-OM wherein an entity that is party to a transaction directly executes / reports the transaction on / to the platform and such transactions are settled in its own Subsidiary General Ledger (SGL) account. Indirect Access – means access to N...
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Compounding of Contraventions under FEMA, 1999

Reserve Bank of India (RBI) has issued directions on compounding of contraventions under FEMA, 1999. What is contravention and compounding of contravention under FEMA, 1999? Contravention is a breach of the provisions of the Foreign Exchange Management Act (FEMA), 1999 and rules, regulations, etc. issued thereunder. Compounding refers to the process of voluntarily admitting the contravention, pleading guilty and seeking redressal.  What is be the penalty for contravention under FEMA, 1999? In terms of Section 13(1) of the FEMA, 1999, if any person contravenes any provision of FEMA, 1999, or any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorization is issued by RBI, he shall, upon adjudication, be liable to – Penalty up to thrice the sum involved in such contravention where the amount is quantifiable, or  Penalty up to ₹2 lakhs where the amount is not directly quantifiab...
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Guidance Note on Operational Risk Management and Operational Resilience

Reserve Bank of India (RBI) had released a guidance note on operational risk management and operational resilience. What is Operational Risk? Operational Risk means the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.  It includes legal risk but excludes strategic and reputational risk. It is inherent in all banking / financial products, activities, processes and systems. Basel Committee on Banking Supervision (BCBS) recognized Operational Risk as a distinct class of risk in 2001, outside of credit and market risks. What is Operational Risk Management and Operational Resilience? Operational Risk Management refers to entire gamut of activities right from risk identification, measurement and assessment, monitoring and control, mitigation, reporting to senior management and the Board of Directors on the RE’s risk exposures, Business Continuity Management, and learning through feedback for improvement. Operational Resilien...
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