Inquisitive Mind

Reserve Bank of India (RBI) has migrated the payments fraud reporting module to DAKSH. What is DAKSH? “दक्ष (DAKSH) - Reserve Bank’s Advanced Supervisory Monitoring System” is a SupTech initiative which is expected to make the Supervisory processes more robust.  DAKSH means ‘efficient’ & ‘competent’, reflecting the underlying capabilities of the application.  What are the features of DAKSH? DAKSH is a web-based end-to-end workflow application through which Reserve Bank of India (RBI) will monitor compliance requirements in a more focused manner with the objective of further improving the compliance culture in Supervised Entities (SEs) like Banks, NBFCs, etc.  The application will also enable seamless communication, inspection planning and execution, cyber incident reporting and analysis, provision of various MIS reports etc., through a Platform which enables anytime-anywhere secure access. What is the payments fraud reporting platform for banks? Earlier, banks were re...

Reserve Bank of India (RBI) has issued consolidated guidelines on Opening of Current Accounts and CC / OD Accounts by Banks. Which entities are covered by the guidelines? The guidelines apply to Current accounts and Cash Credit (CC) / Overdraft (OD) accounts opened / maintained with – All Scheduled Commercial Banks All Payments Banks Opening of Current Accounts for borrowers availing CC / OD facilities from the banking system Aggregate exposure of banking system to the borrower Opening current account Conditions Less than ₹5 crore Banks can open current accounts Banks shall obtain an undertaking from the customers that they shall inform the banks, when the credit facilities availed by them from the banking system becomes ₹5 crore or more. ₹5 crore or more Current accounts with any one of the banks with which it has CC / OD facility Current account by bank having least 10% of the aggregate exposure of the bank...

An active internet connection is necessary for carrying out any digital payments. However, Reserve Bank of India (RBI) has introduced a framework for carrying out small value digital payments in offline mode. What is offline payment? An offline payment means a transaction which does not require internet or telecom connectivity to take effect.  What is the basis of framework for small value digital payments in offline mode? Reserve Bank of India (RBI) had, vide circular dated August 06, 2020, permitted a pilot scheme to encourage technological innovations that enable small value digital transactions in offline mode. It was stated therein that the decision on formalising such a system would be based on the experience gained. With encouraging feedback from the pilots, a framework for carrying out small value digital payments in offline mode across the country has been introduced. What are the instructions for Payment System Operators (PSOs) and Payment System Participants (PSPs)? Auth...

We use different negotiable instruments in various financial transactions. What are Negotiable Instruments? As per Section 13 of Negotiable Instruments Act, 1881, a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer. What is Promissory Note? As per Section 4 of Negotiable Instruments Act, 1881, a promissory note is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. Who are the parties to Promissory Note? The parties to promissory note are – Maker / promisor – a person who promises to pay Payee / promise – a person to whom it is payable What is Bill of Exchange? As per Section 5 of Negotiable Instruments Act, 1881, a bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain per...

This article consolidates the Net-worth / NOF requirements of various entities regulated by Reserve Bank of India (RBI). Entity Net-worth at the time of application Net-worth at the end of 3rd financial year from receiving final authorisation Non-bank entities seeking authorisation from RBI for issuing Prepaid Payment Instruments (PPIs) ₹5 crore ₹15 crore   Entity Net-worth at the time of application Net-worth by March 31, 2023 Payment Aggregators ₹15 crore ₹25 crore   Entity Net-worth Entity applying under Regulatory Sandbox ₹10 lakh Tier 1 Urban Cooperative Banks (UCBs) operating in single district ₹2 crore All other Urban Cooperative Banks (UCBs) (of all tiers) ₹5 crore Bharat Bill Payment Operating Units (BBPOUs) ₹25 crore Banks and non-bank Pay...

Reserve Bank of India (RBI) has announced the launch of the first pilot for retail digital Rupee (e₹-R). What is Central Bank Digital Currency (CBDC)? Reserve Bank of India (RBI) broadly defines Central Bank Digital Currency (CBDC) as the legal tender issued by a central bank in a digital form.  What is the basis of pilot launch of CBDC in India? RBI had released a ‘Concept Note on Central Bank Digital Currency for India’ on October 07, 2022 and had announced to soon commence pilot launches of Digital Rupee (e₹) for specific use cases. ( Highlights of Concept Note on Central Bank Digital Currency ) When and in which segments are the pilot of CBDC? The first pilot in the Digital Rupee - Wholesale segment (e₹-W) had commenced on November 01, 2022. The use case for the pilot was settlement of secondary market transactions in government securities. ( Pilot launch of Central Bank Digital Currency (CBDC) in India ) RBI has now announced the launch of the first pilot for retail digital Ru...

Reserve Bank of India (RBI) has enhanced the Held to Maturity (HTM) limit for Statutory Liquidity Ratio (SLR) eligible securities. What is Statutory Liquidity Ratio (SLR)? Banks shall maintain in India assets (SLR assets) the value of which shall not, at the close of business on any day, be less than 18% (not exceeding 40%) of their total net demand and time liabilities in India as on the last Friday of the second preceding fortnight. How is SLR to be maintained by banks? The SLR can be maintained by banks in the following forms – Cash Gold Unencumbered investment in any of the following approved securities / SLR securities – Dated securities of the Government of India  Treasury Bills of the Government of India Cash Management Bill (CMB)  State Development Loans (SDLs) of the State Governments  Any other instrument as may be notified by RBI (as and when prescribed) What are investment categories? Banks shall classify their entire investment portfolio (including SLR securi...

We have been withdrawing cash at ATMs using our debit and credit cards. Now, there is an option for card-less cash withdrawals at ATMs. What is interoperable Card-less Cash Withdrawal (ICCW) at ATMs? The customers, who are live on Unified Payments Interface (UPI), can now withdraw cash from any participating banks’ ATMs (enabled for ICCW) without using their cards. How are ICCW transactions offered? The ICCW transactions using UPI for authorisation has been implemented by National Payments Corporation of India (NPCI). Banks and White Label ATM Operators (WLAO) are required to offer ICCW transactions at their ATMs using UPI for customer authorisation. The settlement of the transactions would be through National Financial Switch (NFS) / ATM networks.  What other guidelines are applicable to ICCW transactions? The on-us / off-us ICCW transactions shall be processed without levy of any charges other than those prescribed under the circular on Interchange Fee and Customer Charges. Withd...

Funds can be reemitted abroad for various purposes under Liberalised Remittance Scheme (LRS). What is LRS? And what is the ceiling limit for remittances under LRS? What is Liberalised Remittance Scheme (LRS)? Under the Liberalised Remittance Scheme (LRS), all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.  The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc. What if LRS limit is exhausted? The release of foreign exchange exceeding USD 2,50,000 requires prior permission from Reserve Bank of India (RBI). What are permissible capital account transactions under LRS? The permissible capital account transactions by an individual under LRS are – Opening of foreign currency account abroad with a bank. Acquisition of immovable property abroad, Overseas Direct Investment (ODI) and Overseas Portfolio Investme...