Inquisitive Mind

Reserve Bank of India (RBI) has revised the guidelines on opening of and operation in deposit accounts of minors. What are the revised instructions on opening of and operation in the deposit accounts of minors? Minors of any age may be allowed to open and operate savings and term deposit accounts through his / her natural or legal guardian. They may also be allowed to open such accounts with mother as guardian. Minors above such an age limit not less than 10 years and up to such amount and such terms as may be fixed by the banks, may be allowed to open and operate savings / term deposit accounts independently, if they so desire, and such terms shall be duly conveyed to the account holder. On attaining the age of majority, fresh operating instructions and specimen signature of the account holder shall be obtained and kept on record. Moreover, if the account is operated by the guardian, the balance shall be got confirmed.  The banks are free to offer additional banking facilities lik...

The bi-monthly monetary policy of Reserve Bank of India (RBI) was announced on April 09, 2025. Here are some of the highlights of the monetary policy announcement. Rates   Change Rate Policy repo rate Reduced by 0.25% 6.00% Standing deposit facility (SDF) rate 5.75% Marginal standing facility (MSF) rate 6.25% Bank rate 6.25% Monetary policy stance Monetary policy stance was changed from ‘neutral’ to ‘accommodative’. Monetary policy stance – Accommodative – entails easy monetary policy that is geared towards stimulating the economy through softer interest rates. Tightening – refers to contractionary monetary policy whereby interest rates are hiked to restrain spending and curb economic activity, all with the objective of reining in inflation.  Neutral – is typically associated with a state of economy which neither calls for stimulating economic activity nor calls for controlling inflation by curtailing demand and provides flexibility to move in either direction on the basis of ...

Reserve Bank of India (RBI) has issued the revised guidelines on Priority Sector Lending (PSL) which has come into effect from April 01, 2025.  To whom does Priority Sector Lending (PSL) guidelines apply? Priority Sector Lending (PSL) guidelines apply to – Commercial Bank [including Regional Rural Bank (RRB), Small Finance Bank (SFB), Local Area Bank (LAB)] Primary (Urban) Co-operative Bank (UCB) other than Salary Earners’ Bank  What are the categories under PSL? The categories under priority sector are as follows – Agriculture Micro, Small and Medium Enterprises Export Credit Education Housing Social Infrastructure Renewable Energy Others What are the PSL targets for banks? The targets and sub-targets set under PSL, to be computed on the basis of the Adjusted Net Bank Credit (ANBC) / Credit Equivalent of Off-Balance Sheet Exposures (CEOBE) as applicable as on the corresponding date of the preceding year are as below – Categories Total Priority Sector A...

Reserve Bank of India (RBI) has invited applications for recognition of Self-Regulatory Organisation for the Account Aggregator ecosystem (SRO-AA). Who are Account Aggregators (AAs)? Account Aggregators (AAs) undertake the business of account aggregation, i.e., retrieve / collect specified financial information from Financial Information Providers (FIPs) and aggregate, consolidate and present such information to the customers or Financial Information Users (FI-Us). What is the need of Self-Regulatory Organisations for Account Aggregator ecosystem (SRO-AA)? The FIPs and FI-Us fall under the purview of different Financial Sector Regulators (FSRs), i.e., Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority of India (PFRDA). Further, Department of Revenue is deemed to be the regulator for Goods and Services Tax Network for the purpose of onboarding the ...

Reserve Bank of India (RBI) has released directions on forward contracts in government securities. What is Bond Forward? Bond forward means a rupee interest rate derivative contract in which one counterparty (buyer) agrees to buy a specific government security from another counterparty (seller) on a specified future date and at a price determined at the time of the contract. Which transactions shall be covered under the directions? The directions shall apply to forward contracts in government securities (referred to as bond forwards) undertaken in the Over-the-Counter (OTC) market in India. Who are market participants? The following persons shall be eligible to undertake bond forward transactions – A resident A non-resident who is eligible to invest in Government Securities Who are market-makers? Market-maker means an entity which provides prices to users and other market-makers. The following entities shall be eligible to undertake transactions in bond forwards as market-makers – Sche...