24th Year of Publication

B anking
Registration RNI No.67802/98
Volume - XXIV No.05 : May 2021

Update
events

Contents of this Issue

• Interest Equalization Scheme
• Payment Banks' - Deposit limit
• Asset Classification - Covid loans
• Relaxation in ECB rules
• PS Loans to NBFCs
• Loans against Warehouse Receipts
• Review of Countercyclical Buffer
• Gold Monetization Revised Scheme
• RBI Monetary Policy April 2021
• Practical cases from Ombudsman

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2 ♦ Banking events updatE ♦ May 2021
RBI and Govt. Policy
Interest Equalization Scheme on Pre and Post
Shipment Rupee Export Credit-Extension
Further to directions dated 13.5.20, RBI intimated on 12.4.21
that Government of India has approved the extension of Interest
Equalization Scheme for pre-shipment and post-shipment Rupee
export credit, with same scope and coverage, for three more
months i.e., upto June 30, 2021. The extension takes effect
from April 01, 2021 and ends on June 30, 2021 covering a period
of three months.
Enhancement of limit of maximum balance per
customer at end of the day from Rs.1 lakh to Rs.2 lakh
in respect of Payments Banks (PBs)
In terms RBI guidelines dated 27.11.14, payment banks were
restricted to hold a maximum balance of Rs.1 lakh per individual
customer at the end of the day. It was also indicated in the
guidelines that after gauging the performance of the PBs, RBI
may consider increasing the maximum balance limit.
Considering the progress made by PBs in furthering financial
inclusion and with the objective of giving more flexibility to the
PBs, RBI decided on 8.4.21, to enhance the limit of maximum
balance at the end of the day from Rs.1 lakh to Rs.2 lakh per
individual customer of PBs with immediate effect.
Asset Classification and Income Recognition following
the expiry of Covid-19 regulatory package
The Supreme Court of India pronounced its judgement in the
matter of Small Scale Industrial Manufacturers Association vs
UOI & Ors. and other connected matters on March 23, 2021.
In this connection, RBI advised banks, on 7.4.21, as under:
I. Refund/adjustment of ‘interest on interest’
a) All lending institutions shall immediately put in place a Board-
approved policy to refund/adjust the ‘interest on interest’
charged to the borrowers during the moratorium period, i.e.
March 1, 2020 to August 31, 2020 in conformity with the above
judgement. In order to ensure that the above judgement is
implemented uniformly in letter and spirit by all lending
institutions, methodology for calculation of the amount to be
refunded/adjusted for different facilities shall be finalised by
the Indian Banks Association (IBA) in consultation with other
industry participants/bodies, which shall be adopted by all lending
institutions.
b) The above reliefs shall be applicable to all borrowers,
including those who had availed of working capital facilities
during the moratorium period, irrespective of whether
(COMPILATION- SAPANDEEP TOOR & MANJOT TOOR, - on the basis of information available on RBI Website)
moratorium had been fully or partially availed,
or not availed as per RBI guidelines.
c) Lending institutions shall disclose the
aggregate amount to be refunded/adjusted
in respect of their borrowers based on the
above reliefs in their financial statements for
the year ending March 31, 2021.
II. Asset Classification
Asset classification of borrower accounts by
all lending institutions following the above
judgment shall continue to be governed by
the extant instructions as clarified below:
i. In respect of accounts which were not
granted any moratorium in terms of the
Covid19 Regulatory Package, asset
classification shall be as per the criteria laid
out Master circular dated 1.7.2015, or other
relevant instructions as applicable to the
specific category of lending institutions
(IRAC Norms).
ii. In respect of accounts which were granted
moratorium in terms of the Covid19
Regulatory Package, the asset classification
for the period from March 1, 2020 to August
31, 2020 shall be governed in terms of RBI
circular dated 17.4.20 and 23.5.20. For the
period commencing September 1, 2020,
asset classification for all such accounts shall
be as per the applicable IRAC Norms.
External Commercial Borrowings
(ECB) Policy – Relaxation in the
period of parking of unutilised ECB
proceeds in term deposits
In terms of RBI’s extant guidelines (26.3.19),
ECB borrowers are allowed to park ECB
proceeds in term deposits with AD Category-
I banks in India for a maximum period of 12
months cumulatively.
Based on requests from stakeholders,
including Industry associations, and with a
view to providing relief to the ECB
borrowers affected by the Covid-19
pandemic, on 7.12.21, RBI decided to relax
the above stipulation as a one-time measure.
Accordingly, unutilised ECB proceeds drawn
down on or before March 01, 2020 can be

parked in term deposits with AD Category-I banks in India
prospectively for an additional period up to March 01, 2022.
Priority Sector Lending (PSL) - Lending by banks
to NBFCs for On-Lending
As per RBI circular 23.3.20, RBI had advised that the
bank loans to registered NBFCs (other than MFIs) for
on-lending will be eligible for classification as priority sector
under Agriculture and Micro & Small Enterprises up to
March 31, 2021 and will be reviewed thereafter.
With a view to ensure continued availability of credit to
these sectors to aid faster economic recovery, RBI decided
on 7.4.21, to extend the PSL classification for lending by
banks to NBFCs for on-lending by six months i.e. up to
September 30, 2021.
However, bank loans to HFCs for on-lending for the
purpose of housing, will continue on an on-going basis.
Further, existing loans disbursed under the on-lending model
will continue to be classified under Priority Sector till the
date of repayment/maturity.
Priority Sector Lending (PSL) – Increase in limits
for bank lending against Negotiable Warehouse
Receipts (NWRs) / electronic Negotiable
Warehouse Receipts (eNWRs)
As per RBI circular dated 4.9.20, on Priority Sector
Lending, bank loans against pledge/ hypothecation of
agricultural produce (including warehouse receipts) for a
period not exceeding 12 months are eligible for
classification under PSL, subject to a limit up to Rs.50
lakh per borrower.
With a view to ensure greater flow of credit to the farmers
against pledge/hypothecation of agricultural produce, and
to encourage use of NWR/eNWR issued by regulated
warehouses as a preferred instrument for availing such
finance by the farmers, RBI decided on 7.4.21, to enhance
the PSL limit for loans against NWRs/eNWRs from Rs.50
lakh to Rs.75 lakh per borrower. The PSL limit backed by
the warehouse receipts other than NWR/eNWR will
continue to be Rs.50 lakh per borrower, for corporate
farmers and individual farmers.
Review of Requirement of Counter-Cyclical Capital Buffer
As per CCyB framework put in place by RBI as per
guidelines dated Feb 5, 2015, it was advised that the CCyB
would be activated as and when the circumstances
warranted, and that the decision would normally be pre-
announced. Based on the review and empirical testing of
CCyB indicators, RBI decided (18.4.21) that it is not
necessary to activate CCyB, at this point in time. • Phone: 0172-2665623, 09988221167
Banking events updatE ♦ May 2021 ♦ 3
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4 ♦ Banking events updatE ♦ May 2021

RBI Gold Monetization Scheme Directions 2015

RBI circulated the revised directions on 05.04.2021. Summary is
N S Toor App
provided:
i. All designated banks will be eligible to implement the scheme. Banks Products
available
can limit the scheme to no. of branches, at their discretion.
ii. Denomination : Principal on short term bank deposit (STBD) and

Video Lessons
medium and long term govt. deposit (MLTGD) in gold. Interest in Indian
Rupees with reference to the value of gold at the time of deposit.
iii. Depositors- Resident Indians [Individuals - including joint account,
HUFs, Proprietorship & Partnership firms, Trusts, Mutual Funds/
Exchange Traded Funds registered with SEBI, Companies, charitable PDF Text
institutions, Central Govt., State Government or any other entity owned
Video lessons for-
by Central Government or State Government].
iv. Deposits shall be made at Collection and Purity Testing Centre (CPTC · CAIIB - Advanced Bank
- certified by BIS & notified by Central Govt.) / GMS Mobilisation, Management
Collection & Testing Agent (GMCTA-Jewellers certified by BIS as CPTC · CAIIB- Bank Financial
and recognized by banks. Gold deposits shall be assayed at CPTC/ Management
GMCTA.
· JAIIB - Principles and
Banks may allow the depositors to deposit directly with refiners, that Practice of Banking
have facilities to carry out final assaying and to issue deposit receipts of
the standard gold of 995 fineness to the depositor. · JAIIB - Accounting &
vi. Interest will start accruing from the date of conversion of gold deposited Finance for Bankers
into tradable gold bars after refinement or 30 days after the receipt of · JAIIB - Legal & Reg aspects
gold at the CPTC/GMCTA or the bank’s designated branch, as the case of Banking
may be, whichever is earlier.
· Bank Promotion Exam -
vii. On the day the gold deposited starts accruing interest, the banks shall General Banking
translate the gold in liabilities and assets in Indian Rupees by crossing the
London AM fixing for Gold / USD rate with the Rupee-US Dollar · Certified Credit
reference rate announced by Financial Benchmarks India Private Limited Professionals
(FBIL) on that day. The custom duty for import of gold will be added to · Balance-sheet Analysis
the value to arrive at the final value of gold for subsequent valuation or
for the conversion of gold into Indian Rupees. · Foreign Exchange
Operations
viii. Designated banks shall report to the RBI, the gold mobilized on a
monthly basis by 7th day of the month. Facility to watch the videos,
ix. The quantity of gold will be expressed up to three decimals of a gram. on-line and off-line available.
Min and max deposit: Minimum deposit at any one time shall You can download videos to
be 10 grams without any maximum limit. watch off-line, during validity
Types of deposits period of a course.
1 Short Term Bank Deposit (STBD) To download the App go to
i. It shall be treated as bank’s on-balance sheet liability. Google Play Store and
download NS Toor App. After
ii. Period is 1-3 years (with roll over facility). Deposits can also be for
broken periods (e.g. 1 year 3 months; 2 years 4 months 5 days; etc.). installation, go to Store
ROI payable for maturities with broken periods shall be calculated as the Section to subscribe the
sum of interest for the completed year plus interest for the number of course.
I
remaining days at the rate of D/360*ARI (ARI =
Annual Rate of Interest D = Number of days)
iii. The deposit will attract CRR and SLR requirements.
Stock of gold with banks in their books will be an eligible
asset for meeting the SLR requirement.
iv. Banks can fix the interest rates on these deposits.
v. With effect from April 5, 2021, interest shall be
denominated and paid in Indian Rupee. Principal at
maturity will be paid either in Indian Rupee equivalent
of the deposited gold based on the prevailing price of
gold on redemption date, or in gold. Premature
redemption shall be in Indian Rupee equivalent or gold.
2.2.2 Medium & Long Term Govt. Deposit (MLTGD)
i. The deposit will be accepted by the designated banks
on behalf of the Central Govt.
ii. It will not be reflected in bank balance sheet.
(a) Maturity: MTGD for 5-7 years and LTGD for 12-
15 years. It can be allowed for broken periods (e.g. 5
years 7 months; 13 years 4 months 15 days; etc.).
(b) Rate of interest: The current rate as notified by
the Central Govt. is (i) on medium term deposit – 2.25%
p.a. and on long term deposit – 2.50% p.a.
Broken period ROI rules, shall be apply as for STBD.
(c) Interest payment periodicity: 31st Mar every year.
(d) Lock-in period: MTGD 3 years & LTGD 5 years.
(e) Interest on premature withdrawal : Penalty shall
recovered @ 0.375% for deposit up to 5 years & 0.25%
for deposit up to 7 years for MTGD and @ 0.25% for
deposit up to 7 years, 0.375% for deposit up to 12 years
and for 0.25% up to 15 years in case of LTGD.
v. If redemption is in gold, an administrative charge at
a rate of 0.2% of the notional redemption amount in
terms of INR shall be collected from the depositor.
viii. Designated banks will be paid handling charges
for MLTGD @flat 1.5% and commission @ 1% of
the rupee equivalent of the amount of gold mobilized.
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Banking events updatE ♦ May 2021 ♦ 5
2.3 Opening of gold deposit accounts
Depositors not already having an account with bank,
shall open a gold deposit account with zero balance at
any time prior to tendering gold at the CPTC/GMCTA.
The banks will credit STBD or MLTGD, with amount
of 995 fineness gold as per advice received from CPTC/
GMCTA, after 30 days of receipt of gold by them.
2.4 Collection and Purity Testing Centres (CPTC)
i. 995 fineness equivalent amount of gold as determined
by the CPTC will be final. Any difference in quantity
or quality found after issuance of the receipt by the
CPTC shall be settled among CPTC, the refiner and
the designated bank as per tripartite agreement.
ii. The depositor shall produce the receipt showing 995
fineness equivalent amount of gold issued by CPTC to
the bank branch, either in person or through post.
iii. On submission of the deposit receipt by the depositor,
designated bank shall issue the final deposit certificate
on the same day or 30 days after the date of the
tendering of gold at the CPTC, whichever is later.
2.5 GMS Mobilisation, Collection & Testing Agent
i.Jewellers/Refiners certified as CPTCs by BIS and
meeting additional eligibility conditions set by IBA may
be recognised by designated banks as GMCTA.
ii.As GMCTAs will carry out functions of CPTC, rules
applicable to CPTCs shall also apply to GMCTA.
iii. The designated banks shall pay a maximum of 1.5%
as incentive/handling charges to the gold handling/
mobilizing functions performed by GMCTAs.
2.6 Transfer of gold to the Refiners
i. The refined gold may, at the option of the designated
bank, be kept in the vaults maintained by the
refiners, GMCTAs or at the branch itself.
GMS - linked Gold Metal Loan (GML) Scheme
The gold mobilized under STBD may be provided to
jewellers as GML. Banks can also purchase gold
auctioned under MLTGD to extend GML.
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6 ♦ Banking events updatE ♦ May 2021
RBI Monetary Policy April 2021
RBI announced the policy statement on 7.4.2021. It sets out various
developmental and regulatory policy measures on:
I. Liquidity Measures
1. TLTRO on Tap Scheme – Extension of Deadline
To increase the focus of liquidity measures on revival of activity in
specific sectors that have both backward and forward linkages
and having multiplier effects on growth, the RBI had announced
TLTRO on Tap Scheme on Oct 9, 2020 to be available up to March
31, 2021. Additionally, 5 sectors announced on Oct 21, 2020, 26
stressed sectors identified by Kamath Committee were also brought
within sectors eligible under on tap TLTRO on December 4,
2020 and bank lending to NBFCs on February 5, 2021.
Liquidity availed by banks under the scheme is to be deployed in
corporate bonds, commercial paper, and non-convertible debentures
issued by entities in these sectors. It can also be used to extend
bank loans and advances to these sectors. Investments made by
banks under this facility can be classified as held to maturity (HTM)
even above the 25% of total investment permitted to be included in
the HTM portfolio. All exposures under this facility are exempted
from reckoning under the large exposure framework (LEF). RBI
decided to extend the TLTRO for 6 months till Sept 30, 2021.
2. Liquidity Facility for All India Financial Institutions
To support the continued flow of credit to the real economy in the
aftermath of the COVID-19 pandemic, special refinance facilities
for a total amount of Rs.75,000 crore were provided during April-
August 2020 to NABARD, SIDBI, NHB and EXIM Bank for a
period of one year. NABARD, SIDBI and NHB will repay the
facilities extended to them during April-May 2020. RBI decided to
extend fresh support of Rs.50,000 crore to the AIFIs for new
lending in 2021-22. Accordingly, NABARD will be provided a
special liquidity facility (SLF) of Rs.25,000 crore, NHB of
Rs.10,000 crore and SIDBI of Rs.15,000 crore, for a period of
upto one year, at the prevailing policy repo rate.
II. Regulation and Supervision
3. Enhancement of limit of maximum balance per customer at end
of the day from Rs.1 lakh to Rs.2 lakh for Payments Banks
The extant “Guidelines for Licensing of Payments Banks” issued
on November 27, 2014 allow payments banks to hold a maximum
balance of Rs.1 lakh per individual customer. RBI decided to
enhance the limit of maximum balance at end of the day from Rs.1
lakh to Rs.2 lakh per individual customer.
4. Asset Reconstruction Companies – Constitution of a Committee
After enactment of Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest (SARFAESI) Act in
2002, regulatory guidelines for Asset Reconstruction Companies
(ARCs) were issued in 2003 to enable development of this sector
and to facilitate smooth functioning of ARCs.
RBI proposed to constitute a Committee to
undertake a comprehensive review of the
working of ARCs in the financial sector
ecosystem and recommend suitable measures
for enabling such entities to meet the growing
requirements of the financial sector.
5. Permitting banks to on-lend through NBFCs
RBI had decided in August 2019 to allow banks
to classify lending to registered NBFCs (other
than MFIs) as Priority Sector Lending (PSL)
up to 5 per cent of a bank’s total PSL, for on-
lending to Agriculture/MSME/Housing till
March 31, 2020. This dispensation was later
extended up to March 31, 2021. An amount of
around Rs.37,000 crore has been lent by banks
to NBFCs for on-lending to the specified
priority sectors by December 2020. To ensure
continued availability of credit to these sectors,
to aid faster economic recovery, RBI decided
to extend the PSL classification for lending to
NBFCs for ‘on-lending’ to the above sectors
for six months, i.e. up to September 30, 2021.
6. Priority Sector Lending (PSL) guidelines-
Enhancement of Loan limit against eNWR/
NWR
To encourage farm credit to individual farmers
against pledge/hypothecation of agricultural
produce and leverage the inherent safety of
Negotiable Warehouse Receipts (NWRs)/
electronic-NWRs(e-NWRs) issued by the
warehouses registered and regulated by
Warehousing Development and Regulatory
Authority (WDRA), RBI decided to enhance
the loan limit from Rs.50 lakh to Rs.75 lakh
per borrower. The Priority Sector loan limit
backed by other Warehouse Receipts will
continue to be Rs.50 lakh per borrower.
III. Debt Management
7. Review of Way and Means Advances (WMA)
limits for the State Governments/UTs
An Advisory Committee (Chairman: Shri
Sudhir Shrivastava) recommended an overall
revised limit of Rs.47,010 crore for all states,
as against the current limit of Rs.32,225 crore
(fixed in February 2016), representing an
increase of about 46%. The committee also
recommended the continuation of the enhanced
interim WMA limit of Rs.51,560 crore (60%
 Banking events updatE ♦ May 2021 ♦ 7

increase in the current limits allowed by RBI during the last fiscal, for
a further period of six months i.e., from April 1, 2021 up to September
30, 2021. RBI accepted both the recommendations.
IV. Financial Inclusion
8. Financial Inclusion Index: To measure the extent of financial
inclusion in the country, RBI will construct and periodically publish a
“Financial Inclusion Index” (FI Index). To begin with, the FI Index
will be published annually in July for FY ending previous March.
V. Payments Systems
9. Centralised Payment Systems (CPS), viz- RTGS and NEFT –
Membership for entities other than banks
Membership to the RBI-operated Centralised Payment Systems (CPSs)
– RTGS and NEFT – are so far limited to banks, with a few exceptions.
Over the last few years, the role of non-bank entities in payment
space (e.g. Prepaid Payment Instrument (PPI) issuers, Card Networks,
White Label ATM (WLA) operators, Trade Receivables Discounting
System (TReDS platforms), has grown in importance and volume,
RBI decided to enable, in a phased manner, payment system operators,
regulated by RBI, to take direct membership in CPSs. This facility is
expected to minimise settlement risk in the financial system and enhance
the reach of digital financial services to all user segments. These entities
will, not be eligible for any liquidity facility from RBI to facilitate
settlement of their transactions in these CPSs.
10. Interoperability of Prepaid Payment Instruments (PPIs), and
Increase in account limit to Rs.2 lakh
To promote optimal utilisation of payment instruments (like cards,
wallets etc.), and given the constraint of scarce acceptance
infrastructure (like PoS devices, ATMs, QR codes, bill-payment touch
points, etc.), RBI has been stressing on the benefits of interoperability
amongst the issuing and acquiring entities alike, banks or non-banks.
Master Direction on Issuance and Operation of PPIs dated October
11, 2017 laid down a road-map for a phased implementation of
interoperability amongst PPIs issued by banks and non-banks.
Thereafter, the guidelines issued in October 2018 enabled
interoperability, on a voluntary basis. Even after two years, migration
towards full-KYC PPIs, and interoperability, is not significant. RBI
proposed to make interoperability mandatory for full-KYC PPIs and
for all acceptance infrastructure. To incentivise the migration of PPIs
to full-KYC, RBI proposed to increase the limit of outstanding balance
in such PPIs from the current level of Rs.1
lakh to Rs.2 lakh.
11. Permitting Cash Withdrawal from Full-
KYC PPIs issued by Non-banks
Presently, cash withdrawal is allowed only
for full-KYC PPIs issued by banks and this
facility is available through ATMs and PoS
terminals. Holders of such PPI, given the
comfort that they can withdraw cash as
required, are less incentivised to carry cash
and consequently more likely to perform
digital transactions. As a confidence-
boosting measure, it is proposed to allow
the facility of cash withdrawal, subject to a
limit, for full-KYC PPIs of non-bank PPI
issuers as well. The measure, in conjunction
with the mandate for interoperability, will
give boost to migration to full-KYC PPIs
and would also complement the acceptance
infrastructure in Tier III to VI centres.
VI. External Commercial Borrowings
12. Relaxation in the period of parking of
External Commercial Borrowing (ECB)
proceeds in term deposits
Under the extant ECB framework, ECB
borrowers are allowed to place ECB
proceeds in term deposits with AD Category-
I banks in India for a maximum period of
12 months. In view of the difficulty faced
by borrowers in utilizing already drawn
down ECBs due to Covid-19 pandemic
induced lockdown and restrictions, it has
been decided to relax the above stipulation
as a one-time measure, with a view to
provide relief. Accordingly, unutilised ECB
proceeds drawn down on or before March
1, 2020 can be parked in term deposits with
AD Category-I banks in India prospectively
up to March 1, 2022. Guidelines in this
regard will be issued separately.)

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(Ph 011 23361966)
 Banking events updatE ♦ May 2021 ♦9
bank’s designated branch, as the case may 14 Under Gold Monetization Scheme (Revised
be, whichever is earlier. in 2021), designated banks are paid handling
a 10 days b 15 days charges (including gold purity testing,
c 30 days refining, transportation, storage and any other
relevant costs) for MLTGD at a flat rate of
d 45 days
___ % and commission at the rate of ___ %
09 Under Gold Monetization Scheme (Revised of the rupee equivalent of the amount of gold
in 2021), period of short term bank deposit is: mobilized:
a 1-3 years a 1.5% and 1%
b 5-7 years b 1.0% and 1%
c >7 to <12 years c 1.0% and 1.5%
d 12-15 years d 1.5% and 1.5%
10 Under Gold Monetization Scheme (Revised 15 The designated banks shall pay a maximum
in 2021), period of medium term govt. deposit of ___ % as incentive/handling charges to
is: the gold handling/ mobilizing functions
a 1-3 years performed by GMS Mobilisation, Collection
b 5-7 years & Testing Agent (GMCTAs).
c >7 to <12 years a 0.5% b 1%
d 12-15 years c 1.5% d 2%
11 Under Gold Monetization Scheme (Revised 16 The term FETERS stands for?
in 2021), period of long term govt. deposit is: a Foreign Electronic Transactions Exchange
a 1-3 years Reporting System
b 5-7 years b Foreign Exchange Transactions Electronic
c >7 to <12 years Regulation System
d 12-15 years c Foreign Exchange Transit Electronic
Regulation System
12 Under Gold Monetization Scheme (Revised
in 2021), which statement does not match in d Forward Exchange Transactions Electronic
relation to rate of interest? Reporting System
a Short term bank deposit – bank rate 17 The total indebtedness ratio of firm which was
4:1 earlier remains constant but the debt equity
b medium term govt. deposit – 2.25% ratio of the firm declined from 2:1 to 1.5:1.
c long term govt. deposit – 2.5% Which of the following could be the possible
13 Under Gold Monetization Scheme (Revised cause of this?
in 2021), lock in period (during which pre- a the percentage of current liabilities declined in
mature payment is not allowed) is ____ for the total outside liabilities of the firm
medium and long term govt. deposit scheme b the percentage of long term liabilities decreased
as under: in the total outside liabilities of the firm
a 3 years and 3 years c the percentage of tangible net worth decreased
b 3 years and 5 years in the total liabilities of the firm
c 5 years and 5 years d a and b above
d no lock in e a to c above
Disclaimer : We have taken every care to provide information, we
believe to be accurate and reliable and do not assume responsibility of any
kind nor shall be liable for losses & consequence arising from use thereof. ANSWERS
Since this information is based on the published reports mostly, correct- 01-B 02-B 03-C 04-D 05-C 06-B 07-A 08-C 09-A 10-B
ness or otherwise thereof may be verified by the user with the original
sources, in advance. ................................................Editor 11-D 12-A 13-B 14-A 15-C 16-D 17-B
10 ♦ Banking
Banking events ♦updatE
events updatE ♦ May
May 2021 ♦ 2021
10 Registration RNI No. 67802/98 Postal Regn No.CHD /0001/2015-17
Practical Problems based on Ombudsman Decisions DATA COLUMN
1) The complainant stated that the deposit of Rs.30,000/- made in the Business of Banks
account of his business partner was not credited in the account. The (Rs.in cr) 10.04.20 26.03.21
complainant produced the original counterfoil of the slip as evidence of Aggregate deposits
Cash in hand/RBI
13714927
486791
15113178
633445
having deposited the amount. The bank initially stated that the matter was Investments 3925665 4462521
time barred. The bank also stated that the amount was deposited by the -Food Bank Credit: 10339299 109515561
54073 61254
servant of the complainant who had been tutored and the details of the -Non-Food 10295226 10890307
deposit could not be confirmed by the depositor. The bank was provided Cash-Deposit Ratio
Investment-Deposit
5.27
28.14
3.83
30.23
with the original counterfoil slip of having deposited the amount. Sequel Credit-Deposit 72.95 71.74
to this, the bank confirmed that based on the findings of internal Money Stock
(Rs.in cr) 31.03.20 26.03.21
investigation they have refunded the amount to the complainant, recovering M3 (Out of which) 16799930 18772693
the same from one of their employees. (a) Currency with public 2349715 2757750
(b) Demand deposits-Banks 1737692 1984256
2) In a complaint about 13 online transactions, the complainant informed (c) Time Deposits - Banks 12674016 13983341
that the said transactions were not undertaken by him, neither had he (d) Other deposits with RBI 38507
Sources of Money Supply
47347

received any SMS alert in respect of these transactions. The bank initially (a) Net Bank credit to Govt 4906583 5692564
contended that the account holder might have compromised his CVV, (b) Bank credit to Comrcl sectr 11038644
(c) Net Forex assets of Banks 3798902
11612099
4511386
expiry date on debit card and personal six digit 3D secure PIN number Important Banking Indicators
which are mandatory for effecting the online transactions. The bank Statutory Liquidity Ratio 18.00% (10.04.2020)
Cash Reserve Ratio 03.00% (28.03.2020)
reiterated that as the transactions were undertaken on the basis of Overnight LAF (of NDTL) 0.25%
information strictly personal to customer, it was, therefore, precluded 14days term Repo(of NDTL) 0.75%
Reverse Repo Rate 03.35% (22.05.2020)
from repudiating the transactions with the merchant. BO advised the bank Repo Rate 04.00% (22.05.2020)
to furnish their comments regarding non transmission of SMS alerts even MSF Rate 04.25% (22.05.2020)
Bank Rate 04.25% (22.05.2020)
though the mobile number of complainant was registered with the bank. Small Savings Interest Rates
The bank could not explain the lapse and decided to reverse the amount P P F 7.1% (01.04.2020)
5-year NSC 6.8% (01.04.2020)
of the transactions as a service gesture. Sukanya Smridhi 7.6% (01.04.2020)
Senior Citizen Saving 7.4% (01.04.2020)
3) The complainant’s account was debited for Rs.33464 through
Capital & Money Market Indicators
unauthorized online transactions. The complainant had never used his Parameter end-Apr20 end-Apr21
card for online transactions. There were a total of 10 transactions in his Dollar-spot TT (Rs.) 70.93 75.09
BSE - Sensex (points) 31863 47822
account from 11:30 PM to 00:30 AM the next day. The bank stated in its NSE - Nifty(S&P CNX) 9313 14347
reply that all the transactions were secured transactions and proceeded Foreign reserves (Million $) 479568 581213
Gold /Oz in USD) 1834 1723
using PIN and OTP. But, the bank could not submit the documents
evidencing the OTP and SMS alerts provided to the customer. The bank
was asked to refund the disputed amount to the complainant.
INDIAN ECONOMY-IMPORTANT PARAMETERS
Growth estimate for FY 2021-22 : 11-11.5%
4) A Complainant complained about fraudulent POS transaction on his GDP@constant mkt prices (cr) 2018-19 : 20442233
ATM card in Paris while he was physically present in India (the same was GVA@2011-12 basic prices (cr) 2018-19 : 12906936
supported by his passport). The bank admitted that the disputed GDP projected by Govt. for 2021-22 : 22287379
transactions had been done abroad making use of complainant’s ATM Fiscal Deficit Target (2021-22) 6.8% of GDP :1506812 cr
Card. Bank also submitted that two unsuccessful POS transactions Revenue Deficit Target (2021-22) 5.1.% of GDP :1140576 cr
Wholesale Price Index : 7.1%
attempts in India were also observed on the same day, which was declined Exports during 2019-20 (Goods+services) : 528.5 bn
due to insufficient balance. Bank’s submitted that, transactions were Imports during 2019-20 (Goods+services) : 598.6 Bn
successful and no irregularities were observed. In the conciliation meeting India's share in world merchandise export : 1.70%
bank was asked if any limit was fixed for international use on the card, if India's currency rating (S&P) : BB Postv
India's external debt (Jun 2020) US $ : 554.5 Bn
OTP/SMS alert were delivered to registered mobile no. of card holder in
Tax-GDP ratio (2019-20) : 9.9%
respect of disputed transactions, if Card was EMV Chip and PIN enabled, Apr20- Feb21:Export $ 439.6 bn Imports : 447.4 bn
if transaction pattern monitoring software was in place. Bank’s response Per capita GDP 2019-20 (Rs.) : 108620
to these queries was found inadequate. The bank submitted that SMS log Indian economy's ranking in PPP terms : 3rd
indicated that SMS alerts were not delivered, issued card was a magnetic Indian economy's ranking in world in value: 7th
stripe one and separate limit for international transactions was not set as
per the regulatory instructions. Bank was advised to pay the disputed OUR PUBLICATIONS : REFER PAGE 9,11
amount to the complainant within two working days. • DATE OF DESPATCH - May 7/ 10, 2021
Published by Chand Singh at 1008, Sector 45-B, Chandigarh - Printed by Chand Singh in digital form. Editor - Chand Singh