Inquisitive Mind

To align the regulatory framework for Non-Banking Financial Companies (NBFCs) keeping in view their changing risk profile, Reserve Bank of India (RBI) has introduced the Scale Based Regulation (SBR) for NBFCs. From when is Scale Based Regulation (SBR) applicable to NBFCs? Scale Based Regulation (SBR) for Non-Banking Financial Companies (NBFCs) is effective from October 01, 2022.  What will be regulatory structure for NBFCs under SBR? The regulatory structure for NBFCs comprises of four layers based on their size, activity, and perceived riskiness.  NBFC - Base Layer (NBFC-BL) NBFC - Middle Layer (NBFC-ML)  NBFC - Upper Layer (NBFC-UL)  NBFC - Top Layer (NBFC-TL) – The Top Layer is ideally expected to be empty. Which NBFCs are included in Base Layer? The Base Layer comprises of – Non-deposit taking NBFCs below the asset size of ₹1000 crore NBFCs undertaking the following activities – NBFC-Peer to Peer Lending Platform (NBFC-P2P)  NBFC-Account Aggregator (NBFC-AA)...

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the tenth and last article in the series.  Chapter V – Penalties Section 58B – Penalties Section Offense Punishment 58B(1) Whoever in any application / declaration / return / statement / information furnished or in any prospectus / advertisement issued for the invitation of deposits of money from the public, willfully makes a false statement or willfully omits to make a material statement. Imprisonment for up to 3 years with fine. 58B(2) Any person fails to produce any book / account / document / statement / information. Fine of up to Rs.1 lakh in respect of each offence. Further fine of up to Rs.5000 for every day till the offense continues. 58B(3) Any person contravenes the ...

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the ninth article in the series.  Chapter IV – General Provisions Section 46 – Contribution by Central Government to the Reserve Fund The Central Government shall transfer to RBI rupee securities of Rs.5 crore to be allocated by RBI to the Reserve Fund. Section 46A – Contribution to National Rural Credit (Long Term Operations) Fund and National Rural Credit (Stabilisation) Fund  RBI shall contribute every year to the National Rural Credit (Long Term Operations) Fund and the National Rural Credit (Stablisation) Fund established and maintained by the National Bank under sections 42 and 43, respectively, of the National Bank for Agriculture and Rural Development Act, 1981. Section 46C – National Industrial Credit (Long Term Operations) Fund RBI shall establish and mainta...

Reserve Bank of India (RBI) has launched the Central Bank Digital Currency (CBDC) in India on a pilot basis. 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 segment is the first pilot of CBDC? The first pilot is in the Digital Rupee - Wholesale segment (e₹-W). The pilot commenced on November 01, 2022. The use case for the pilot is settlement of secondary market transactions in government securities.  What are the expected benefits of the pilot? Use of e₹-W is expected to make the inter-bank market more efficient....

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the eighth article in the series.  Chapter IIIF – Monetary Policy Section 45Z – Provisions of this Chapter to override other provisions of Act The provisions of Chapter IIIF to override any other provisions of this Act. Section 45ZA – Inflation target In consultation with RBI, the Central Government shall determine the inflation target in terms of the Consumer Price Index, once in every 5 years. Section 45ZB – Constitution of Monetary Policy Committee The Central Government may constitute a committee to be called the Monetary Policy Committee (MPC) of RBI.  MPC shall consist of the following –  Governor of RBI (chairperson) Deputy Governor of RBI, in-charge of monetary policy (member) One officer of RBI nominated by the Central Board (member) Three persons appoin...