June 2022

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Contents
1.1 Individual Housing Loans by Cooperative Banks – Enhancement in Limits.................................................. 3
1.2 Credit to Commercial Real Estate - Residential Housing (CRE-RH) .............................................................. 3
1.3 RBI announces results of its First Global Hackathon - HARBINGER 2021 ..................................................... 4
1.4 RBI reduces minimum net worth norm for non-bank Bharat Bill Payment Operating Units ....................... 6
1.5 Premature redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for premature
redemption due on May 30, 2022 (Series I of SGB 2015) ........................................................................................ 7
1.6 Sectoral Deployment of Bank Credit – April 2022 ........................................................................................ 8
1.7 House price index rises 1.8% in Q4FY22: RBI data ....................................................................................... 9
1.8 Interest Equalization Scheme (IES) on Pre and Post Shipment Rupee Export Credit - Extension ................ 9
1.9 Reserve Bank Announces Opening of Fourth Cohort under the Regulatory Sandbox ...............................10
1.10 Branches of Indian Banks in GIFT-IFSC – acting as Professional Clearing Member (PCM) .........................11
1.11 Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC) June 6-8,
2022 12
1.12 Statement on Developmental and Regulatory Policies ..............................................................................13
1.13 Payments Infrastructure Development Fund (PIDF) – Updated ................................................................15
1.14 RBI's 'Payments Vision 2025' ......................................................................................................................16
1.15 Nominations for part-time Non-official Directors on the Central Board of Reserve Bank of India ...........19
1.16 Report of the Regulations Review Authority (RRA 2.0) ..............................................................................19
1.17 Sovereign Gold Bond Scheme 2022-23 ......................................................................................................20
1.18 RBI releases the Financial Stability Report (FSR), June 2022 ......................................................................21
1.19 RBI discussion at the 16th Statistics Day Conference.................................................................................22
1.20 Deposits with Scheduled Commercial Banks - March 2022 .......................................................................22
1.21 RBI released data on the performance of the private corporate sector during 2021-2022 ......................23
1.22 Reserve Bank of India (Variation Margin) Directions, 2022 .......................................................................24
1.23 Master Direction – Reserve Bank of India (Margining for Non-Centrally Cleared OTC Derivatives)
Directions, 2022 – Draft..........................................................................................................................................25
1.24 76th Round of Survey of Professional Forecasters on Macroeconomic Indicators .....................................25
1.25 Processing of e-mandates for recurring transactions ................................................................................26
1.26 RBI appoints Shri Venkat Nageswar Chalasani as a member in an Advisory Committee ..........................26

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1.1 Individual Housing Loans by Cooperative Banks – Enhancement in Limits
• RBI has decided to revise the limits on individual housing loans sanctioned by co-operative banks
to an individual borrower as under:

➢ For Urban Cooperative Banks (UCBs): -

Existing Limit* Revised Limit*

Category of the bank
(per individual borrower) (per individual borrower)
(a) Tier-I UCBs ₹30 lakh ₹60 lakh
(b) Tier-II UCBs ₹70 lakh ₹140 lakh
*subject to prescribed prudential exposure limits

➢ For Rural Cooperative Banks {State Cooperative Banks (StCBs) and District Central
Cooperative Banks (DCCBS)}

Existing Limit Revised Limit

Category of the bank (per individual (per individual
borrower) borrower)
(a) StCBs/DCCBs having assessed net worth less
₹20 lakh ₹50 lakh
than ₹100 crore
(b) StCBs/DCCBs having assessed net worth equal to
₹30 lakh ₹75 lakh
or more than ₹100 crore

Why the revision in the limits is needed?

• Existent guidelines prescribe prudential limits on the amount of individual housing loans that
can be extended by Primary (Urban) Co-operative Banks (UCBs), and Rural Cooperative Banks
(RCBs - State Cooperative Banks and District Central Cooperative Banks) to their customers.
• These limits were last revised for UCBs in 2011 and for RCBs in 2009.
• Taking into account the increase in housing prices, since the limits were last revised and
considering the customer needs, it has been decided to increase the existing limits on
individual housing loans by cooperative banks.

1.2 Credit to Commercial Real Estate - Residential Housing (CRE-RH)

• RBI has decided to allow State Cooperative Banks (StCBs) and District Central Cooperative Banks
(DCCBS) to extend finance to Commercial Real Estate-Residential Housing (CRE-RH) within the
existing aggregate housing finance limit of 5% of their total assets.
➢ CRE-RH shall consist of loans to builders/developers for residential housing projects (except
for captive consumption). Such projects should ordinarily not include non-residential
commercial real estate.
➢ However, integrated housing projects comprising some commercial space (e.g. shopping
complex, school, etc.) can also be classified under CRE-RH, provided that the commercial area
in the residential housing project does not exceed 10% of the total Floor Space Index (FSI) of
the project.

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 ➢ Standard asset provision of 0.75% and risk weight of 75% shall be maintained for CRE-RH
advances.
➢ Banks shall have a Board-approved policy for financing CRE-RH and a review note on the
performance of the CRE-RH portfolio shall be placed before the Board at least on a half-yearly
basis.

Additional Information

• Standard Asset is one which does not disclose any problems and which does not carry more
than normal risk attached to the business. Such an asset should not be an NPA.
• Risk weight is capital required to be set aside (depicted as percentage of total loan disbursed
in a category), stipulated by the Reserve Bank of India for banks, for their assets.

1.3 RBI announces results of its First Global Hackathon - HARBINGER 2021
• Recently, Reserve Bank released the result for its first global hackathon – “HARBINGER 2021 –
Innovation for Transformation” that was organized in November 2021.
• Theme of the Hackathon: - ‘Smarter Digital Payments’
• The Hackathon invited participants to identify and develop solutions that have the potential to
➢ make digital payments accessible to the under-served
➢ enhance the ease of payments and user experience
➢ strengthen the security of digital payments and promoting customer protection
• HARBINGER 2021 invited innovative ideas for 4 problem statements in the payment and
settlement systems landscape.
• The hackathon received encouraging response with 363 proposals submitted by teams from
within India and from 22 other countries including the USA, UK, Sweden, Singapore, Philippines,
and Israel.
• The Hackathon ran in three phases with: -
➢ shortlisting of proposals in the first phase- 25 proposals were shortlisted by a Jury
consisting of external experts
➢ solution development in the second phase- shortlisted teams worked on developing
their solution(s) under the guidance of external mentors.
➢ the final evaluation in the third phase held in Bengaluru wherein 24 finalist teams
presented their solutions
• The results of the Hackathon are as follows for each Problem Statement:

Sl.
Problem Statement Results Products Description
No.
1 Innovative, easy- Winner Tone Tag
to-use, non-mobile (Brand of The solution enables quick and easy peer-to-
digital payment Naffa peer (P2P) or peer-to-merchant (P2M)
solutions for Innovations payments with customers making payments
converting small- Pvt. Ltd.) by using their voice.
ticket cash (INDIA)

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 transactions to Runner- Extolabs LLC ExtoPay provides a biometric smart card-
digital mode up (USA) based solution that supports multi-factor
authentication including biometric
authentication.
2 Alternate Winner napID The solution enables a customer to
authentication Cybersec Pvt. activate/de-activate payment credentials
mechanism for Ltd.(INDIA) (username, password, card number, etc.)
digital payments with a click on napID application.
Joint 1) neoEYED The neoEYED AI algorithm monitors
Runners- (USA) behavioural patterns to create a digital
up profile of the user. It generates a “Trust
Score” of each transaction based on
customer behaviour and matches it with the
digital profile to authenticate the
transaction.
2) Sperotel Sperotel Messaging is an end-to-end
Technologies encrypted messaging platform that can be
LLP (INDIA) used to send secure OTP. On the payment
portal, the customer can choose this
platform instead of SMS for receiving OTP.
3 Context-based Winner Tone Tag
The solution creates a virtual area inside the
retail payments to (Brand of
store which can be detected by the
remove the Naffa
customer’s mobile phone. Payments are
physical act of Innovations
made automatically/through voice
payment* Pvt. Ltd.)
authentication on completion of purchase.
(INDIA)
4 Social Media Winner TrustCheckr TrustCheckr provides AI-based solution
Analysis and (INDIA) analysing information from social media
Monitoring tool for platforms to assist in warning customers
detection of digital about potential frauds.
payment fraud and Joint 1) Ezetap This solution facilitates social media
disruption Runners- Mobile analytics using predictive analysis, machine
up Solutions Pvt. learning, sentiment analysis, etc. to provide
Ltd. (INDIA) fraud detection and prevention services.
2) Lalit Kumar Obsei, the product, is an AI-powered real-
Pagaria time social media analytics tool. It performs
(INDIA) sentiment analysis, classification, and
provides results in the form of a
customisable and programmable dashboard.
It can also help understand customer
feedback in their native languages.
*No Runner-up team selected by the jury
• Evaluation and Selection of the winners and runners-up was based on parameters like
innovation, technology, demonstration, user experience, security, ease of implementation

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1.4 RBI reduces minimum net worth norm for non-bank Bharat Bill Payment Operating Units
Recently in May, the Reserve Bank of India (RBI) has reduced the minimum net worth requirement
for non-bank Bharat Bill Payment Operating Units (BBPOUs) from ₹100 crore to ₹25 crore.
• This move is aimed at facilitating greater penetration of bill payments through Bharat Bill
Payment System (BBPS) and to encourage participation of a greater number of non-bank Bharat
Bill Payment Operating Units (BBPOUs) in BBPS.

Bharat Bill Payment System – Rationalisation of Net-worth Requirement for Operating Units

• Bharat Bill Payment System (BBPS) is an interoperable platform for bill payments and the scope
and coverage of BBPS extends to all categories of billers who raise recurring bills.
➢ Users of BBPS enjoy benefits like standardised bill payment experience, centralised customer
grievance redressal mechanism, prescribed customer convenience fee, etc.
➢ BBPS has seen an increase in the volume of transactions as well as number of onboarded
billers.

• It is observed that there has not been a corresponding growth in the number of non-bank Bharat
Bill Payment Operating Units (BBPOUs).
➢ The current requirement of net worth for a non-bank BBPOU to obtain authorisation is ₹100
crore and it is viewed as a constraint to greater participation.
➢ It is, therefore, proposed to align the net worth requirement of non-bank BBPOUs with that of
other non–bank participants who handle customer funds (like Payment Aggregators) and have
a similar risk profile.
➢ Accordingly, the net worth requirement for non-bank BBPOUs is being reduced to ₹25 crore.
The necessary amendment to regulations will be carried out shortly.

Background

BBPS
• The Bharat Bill Payment System (BBPS) is an RBI
conceptualized system driven by National
Payments Corporation of India (NPCI).
• It is a one-stop payment platform for all bills,
providing an interoperable and accessible
“Anytime Anywhere” bill payment service to
customers across the country with certainty,
reliability and safety of transactions.
• Payments through BBPS may be made using cash, transfer cheques and electronic modes. Bill
aggregators and banks, who will function as operating units, will carry out these transactions
for the customers.

NPCI
• National Payments Corporation of India (NPCI) is an umbrella
organization for all retail payments system in India.
• It was set up with the guidance and support of the Reserve Bank of
India (RBI) and Indian Banks’ Association (IBA).
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 • NPCI has ten promoter banks. The ten core promoter banks are State Bank of India, Punjab
National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank
Limited, HDFC Bank Limited, Citibank N. A. and HSBC

1.5 Premature redemption under Sovereign Gold Bond (SGB) Scheme - Redemption Price for
premature redemption due on May 30, 2022 (Series I of SGB 2015)
Recently, the premature redemption price of SGB issued on November 30, 2015 was announced.
• In terms of GOI Notification dated October 30, 2015 (SGB 2015, Series I - Issue date November
30, 2015) on Sovereign Gold Bond Scheme, premature redemption of Gold Bond may be
permitted after fifth year from the date of issue of such Gold Bond on the date on which interest
is payable.
➢ Accordingly, the next due date of premature redemption of the above tranche shall be May
30, 2022. (For the bonds issued on November 30, 2015)
• Further, the redemption price of SGB shall be based on the simple average closing gold price of
999 purity of the week (Monday-Friday) preceding the date of redemption as published by the
India Bullion and Jewellers Association Ltd (IBJA).
➢ Accordingly, the redemption price for the fourth premature redemption due on May 30, 2022
shall be Rs. 5119/- (Rupees Five thousand one hundred nineteen only) per unit of SGB based
on the simple average of closing gold price for the week May 23-27, 2022.

Background

About Sovereign Gold Bonds

• Launched in: November 2015.

• Objective: To reduce the demand for physical gold and shift a part of the domestic savings
(to purchase of gold) into financial savings.
• Issuance: The Gold Bonds are issued as Government of India Stock under the Government
Securities (GS) Act, 2006.
➢ These are issued by the Reserve Bank of India (RBI) on behalf of the Government of
India.
➢ The Bonds will be sold through Scheduled Commercial banks (except Small Finance
Banks and Payment Banks), Stock Holding Corporation of India Limited (SHCIL), Clearing
Corporation of India Limited (CCIL), designated post offices, and recognised stock
exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange
Limited.
• Eligibility: It is restricted for sale to resident individuals, Hindu Undivided Families (HUFs),
trusts, universities and charitable institutions.
• Price: The price is calculated based on the spot price of gold as provided by the Mumbai-
based India Bullion and Jewellers Association (IBJA).
• Term: Maturity period is 8 years, with an option to exit the investment after the first five
years (Premature redemption)
• Investment Limit: Gold bonds can be purchased in multiples of one unit.

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 ➢ The upper limit for retail (individual) investors and HUFs is 4 kilograms (4,000 units) each
per financial year.
➢ For trusts and similar entities, an upper limit of 20 kilograms per financial year is
applicable.
➢ Minimum permissible investment is 1 gram of gold.
• Interest Rate: A fixed rate of 2.5% per annum is applicable on the scheme, payable semi-
annually.
➢ The interest on Gold Bonds shall be taxable as per the provision of the Income Tax Act,
1961.

1.6 Sectoral Deployment of Bank Credit – April 2022

Recently in May, RBI released data on sectoral deployment of bank credit for the month of April 2022
collected from select 40 scheduled commercial banks that account for about 93 per cent of the total
non-food credit deployed by all scheduled commercial banks.
• On a year-on-year (y-o-y) basis, non-food bank credit registered a growth of 11.3 per cent in April
2022 as compared with 4.7 per cent a year ago.

Highlights of the sectoral deployment of bank credit are given below:

• Credit growth (y-o-y) to agriculture and allied activities continued to be robust at 10.6 per cent
in April 2022 (10.7 per cent in April 2021).
• Credit growth to industry accelerated to 8.1 per cent in April 2022 from a contraction of 0.4 per
cent in April 2021.
➢ Size-wise, credit to medium industries registered a growth of 53.5 per cent in April 2022 as
compared with 44.8 per cent last year.
➢ Credit growth to micro and small industries rose to 29.0 per cent from 8.7 per cent, while
credit to large industries recorded a growth of 1.6 per cent against a contraction of 3.6 per
cent during the same period last year.
• Within industry, credit growth to ‘all engineering’, ‘beverage & tobacco’, ‘chemicals & chemical
products’, ‘food processing’, ‘gems & jewellery’, ‘infrastructure’, ‘leather & leather products’,
‘mining and quarrying’, ‘petroleum, coal products & nuclear fuels’, ‘rubber, plastic & their
products’ and ‘vehicles, vehicle parts & transport equipment’ accelerated in April 2022 as
compared with the corresponding month of the previous year. However, credit growth to ‘basic
metal & metal products’, ‘cement & cement products’, ‘construction’, ‘glass & glassware’, ‘paper
& paper products’, ‘textiles’ and ‘wood & wood products’ decelerated/contracted.
• Credit growth to services sector picked up to 11.1 per cent in April 2022 as compared with 2.4
per cent a year ago, mainly due to ‘NBFCs’, ‘trade’, ‘tourism, hotels & restaurants’ and ‘transport
operators’.
• Personal loans segment continued to perform well, registering acceleration in growth to 14.7 per
cent in April 2022 from 12.1 per cent in April 2021, primarily driven by ‘housing’ and ‘vehicle
loans’ segments.

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1.7 House price index rises 1.8% in Q4FY22: RBI data
Recently in May, the Reserve Bank released its quarterly house price index (HPI) (base: 2010-11=100)
for Q4:2021-22, based on transaction-level data received from the housing registration authorities in
ten major cities (viz., Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata,
Lucknow, and Mumbai).

Highlights

• All India HPI recorded an annual growth (y-o-y) of 1.8 per cent in Q4:2021-22 as compared with
3.1 per cent in the previous quarter and 2.7 per cent a year ago.
➢ The y-o-y movements in HPI varied widely across the cities - ranging from a growth of 19.2 per
cent (Kolkata) to a contraction of 11.3 per cent (Bengaluru).
• On a sequential (q-o-q) basis, all India HPI registered a contraction of 1.1 per cent in Q4:2021-22;
only Kolkata, Chennai and Kanpur recorded sequential growth whereas the index contracted for
the remaining cities, with Bengaluru recorded the highest sequential contraction of 11.1 per
cent.

1.8 Interest Equalization Scheme (IES) on Pre and Post Shipment Rupee Export Credit - Extension
Recently, RBI introduced changes with respect to notification issued on March 8, 2022 concerning IES
scheme. In the notification dated march 8, 2022, it was stated that the extended IES would not be
available to those beneficiaries who were availing of the benefit under any Production Linked
Incentive (PLI) scheme of the Government.
• In this regard, Government has issued a clarification that the extended IES will also be available
to such beneficiaries for segments other than for which they have availed of PLI benefits.
• It is further advised that banks shall obtain a Self-Declaration under the IES from the exporters
as per the format given by RBI.
• These provisions shall be deemed effective from October 1, 2021. Other provisions of the
aforesaid circular shall remain unchanged, which are discussed below.

Background

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Interest Equalization Scheme on Pre and Post Shipment Rupee Export Credit - Extension

1. Government of India has approved the extension of Interest Equalization Scheme for Pre and Post
Shipment Rupee Export Credit (‘Scheme’) up to March 31, 2024 or till further review, whichever
is earlier. The extension takes effect from October 1, 2021 and ends on March 31, 2024. The
modifications made by the Government to the Scheme are detailed below:
➢ 1.1 ‘Telecom Instruments’ sector having six HS lines1 shall be out of the purview of the
Scheme, except for MSME manufacturer exporters.
➢ 1.2 Revised interest equalization rates under the Scheme will now be 3 per cent for MSME
manufacturer exporters exporting under any HS lines, and 2 per cent for manufacturer
exporters and merchant exporters exporting under 410 HS lines (after excluding 6 HS lines
pertaining to Telecom Sector as mentioned above).
➢ 1.3 Banks, while issuing approval to the exporter, will necessarily furnish i) the prevailing
interest rate, ii) the interest subvention being provided, and iii) the net rate being charged to
each exporter, so as to ensure transparency and greater accountability in the operation of the
Scheme.
➢ 1.4 The extended Scheme will not be available to those beneficiaries who are availing the
benefit under any Production Linked Incentive (PLI) scheme of the government. (The above
news is with regard to this aspect)
2. For the period from October 1, 2021 to March 31, 2022, banks shall identify the eligible exporters
as per the Scheme, credit their accounts with the eligible amount of interest equalisation and
submit sector-wise consolidated reimbursement claim for the said period to the Reserve Bank by
April 30, 2022.
3. With effect from April 1, 2022, banks shall reduce the interest rate charged to the eligible
exporters upfront as per the guidelines and submit the claims in original within 15 days from the
end of the respective month, with bank’s seal, and signed by authorised person, in the prescribed
format, as modified.
4. Other provisions of the extant instructions issued by the Bank on the captioned Scheme shall
remain unchanged.

Additional Information

About Interest Equalisation Scheme (IES)

• Introduced on 1st April 2015 for five years as a part of FTP 2015-20.
• Under this, pre- and post-shipment export credit is provided ranging between 3 to 5%.
• The differential rate is reimbursed to the banks by the government.
• All exports from MSMEs and an additional 416 items identified will be covered under this.
• With the pandemic, govt extended the FTP also with this scheme. In the current fiscal, this
scheme was extended twice for three months each and this creates uncertainty in the minds of
the exporters and if the scheme is applied/extended for a longer period, this would bring in
certainty for the exporters which will help them in pricing their exports.

1.9 Reserve Bank Announces Opening of Fourth Cohort under the Regulatory Sandbox
• Recently, Reserve Bank of India (RBI) has announced opening of application window for the
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 Fourth Cohort under the Regulatory Sandbox (RS) to eligible entities.
• Theme for the Fourth Cohort: ‘Prevention and Mitigation of Financial Frauds’.
• Under this cohort the focus would be on using technology to reduce the lag between the

Background

• In 2019, the RBI rolled out its regulatory sandbox framework, and has so far released four
thematic cohorts.
• Regulatory sandbox is a framework that allows live testing of new products or services in a
controlled/test regulatory environment for which regulators may permit certain relaxations for
the limited purpose of the testing.
• The themes of the cohorts are as follows:
➢ First cohort - ‘Retail Payments’
➢ Second cohort - ‘Cross Border Payments’
➢ Third cohort - ‘MSME Lending’
occurrence and detection of frauds, strengthening the fraud governance structure and
minimizing response time to frauds.

1.10 Branches of Indian Banks in GIFT-IFSC – acting as Professional Clearing Member (PCM)
• Recently, on a review by RBI, it has been decided to allow the branches of Indian banks
operating in Gujarat International Finance Tec-City - International Financial Services Centre
(GIFT-IFSC) to act as PCM of India International Bullion Exchange (IFSC) Limited (IIBX).
• The instructions are applicable to domestic scheduled commercial banks (including foreign
banks operating through a Wholly Owned Subsidiary incorporated in India), which are
authorised to deal in foreign exchange and have a branch in GIFT-IFSC.
• Procedure for Application
➢ The parent bank (‘bank’) shall seek a No Objection Certificate (NoC) from the Reserve Bank
of India prior to its branch in GIFT-IFSC seeking professional clearing membership of IIBX.
➢ An eligible bank shall, with prior approval of its Board, make an application to the
Department of Regulation, RBI with details of its proposed business plan as a PCM along
with particulars of the risk management architecture instituted at its branch in GIFT-IFSC.

Additional Information for IIBX

• India's bullion market is one of the largest in the world, the second largest in terms of
consumption and holds an important position globally, but it lacks organization and structure.
• Finance Minister Ms. Nirmala Sitharaman in the 2020 Union Budget announced the setting up
of India International Bullion Exchange (IIBX) at IFSC at GIFT City in Gandhinagar, Gujarat.
• Pursuant to Memorandum of Understanding between National Stock Exchange of India Limited
(NSE), the Multi Commodity Exchange of India Limited (MCX), India INX International Exchange
(IFSC) Limited (INDIA INX), National Securities Depository Limited (NSDL), Central Depository
Services (India) Limited (CDSL)

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 ➢ the holding company India International Bullion Holding IFSC Ltd. (IIBH) has been created
for setting up and operationalising International Bullion Exchange, Bullion Clearing
Corporation and Bullion Depository in IFSC, GIFT City.

About PCM

• PCM are clearing members who are not trading members. They are typically banks, custodians
etc. who clear and settle trades executed for their clients (individuals, institutions etc.). In such
an event, the functions and responsibilities of the PCM would be similar to Custodians.

1.11 Monetary Policy Statement, 2022-23 Resolution of the Monetary Policy Committee (MPC)
June 6-8, 2022
• Recently, MPC at its meeting decided to: -
➢ Increase the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points
to 4.90 percent, with immediate effect, based on an assessment of the current and evolving
macroeconomic situation.
➢ Remain focused on withdrawal of accommodation to ensure that inflation remains within
the target going forward, while supporting growth.
• These decisions are with the objective of achieving the medium-term target for consumer price
index (CPI) inflation of 4% within a band of +/- 2%, while supporting growth.
• The standing deposit facility (SDF) rate stands adjusted to 4.65% and the marginal standing
facility (MSF) rate and the Bank Rate to 5.15 %.
➢ SDF is .25% less than Repo Rate and MSF is .25% more than Repo Rate.
➢ LAF corridor has SDF at its floor as it’s the lowest rate in LAF, in middle is Repo rate and at the
ceiling is MSF as it’s the highest rate of LAF.

Assessment of the Global Economy: -

• Since the MPC’s meeting in May 2022, the global economy continues to grapple with multi-
decadal high inflation and slowing growth, persisting geopolitical tensions and sanctions,
elevated prices of crude oil and other commodities and lingering COVID-19 related supply
chain bottlenecks.
• Global financial markets have been under turbulence amidst growing stagflation concerns,
leading to a tightening of global financial conditions and risks to the growth outlook and
financial stability.

Assessment of the Domestic Economy: -

• According to the provisional estimates released by the National Statistical Office (NSO) on May
2022, India’s real gross domestic product (GDP) growth in 2021-22 was 8.7% that is 1.5% above
the pre-pandemic level (2019-20).
• Available information for April-May 2022 indicates a broadening of the recovery in economic
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 activity.
➢ Urban demand is recovering, and rural demand is gradually improving.
➢ Merchandise exports posted robust double-digit growth for the fifteenth month in a row
during May while non-oil non-gold imports continued to expand at a healthy pace, pointing
to recovery of domestic demand.
• CPI headline inflation rose further from 7.0 % in March 2022 to 7.8 % in April 2022, reflecting
broad-based increase in all its major constituents.

➢ Food inflation pressures accentuated, led by cereals, milk, fruits, vegetables, spices and
prepared meals. Fuel inflation was driven up by a rise in LPG and kerosene prices.
➢ Core inflation (i.e., CPI excluding food and fuel) hardened across almost all components,
dominated by the transport and communication sub-group.
• Overall system liquidity remains in large surplus, with the average daily absorption under the
LAF moderating to ₹5.5 lakh crore during May 4 - May 31 from ₹7.4 lakh crore during April 8 -
May 3, 2022, in consonance with the policy of gradual withdrawal of accommodation.
• Money supply (M3) and bank credit from commercial banks rose (y-o-y) by 8.8% and 12.1%,
respectively, as on May, 2022.
• India’s foreign exchange reserves were placed at US$ 601.4 billion as on May, 2022.

Outlook: -

• On the assumption of a normal monsoon in 2022 and average crude oil price (Indian basket) of
US$ 105 per barrel, inflation is now projected at 6.7% in 2022-23, with Q1 at 7.5%; Q2 at 7.4%;
Q3 at 6.2%; and Q4 at 5.8%, with risks evenly balanced.
• The real GDP growth projection for 2022-23 is retained at 7.2%, with Q1 at 16.2%; Q2 at 6.2%;
Q3 at 4.1%; and Q4 at 4.0%, with risks broadly balanced.
➢ The projections indicate that inflation is likely to remain above the upper tolerance level of
6% through the first three quarters of 2022-23.
6 Members of the MPC – Dr. Shashanka Bhide, Dr. Ashima Goyal, Prof. Jayanth R. Varma, Dr.
Rajiv Ranjan, Dr. Michael Debabrata Patra, and Shri Shaktikanta Das.

1.12 Statement on Developmental and Regulatory Policies

• Statement sets out various developmental and regulatory policy measures relating to (i)
Regulation; (ii) Financial Markets; and (iii) Payment and Settlement systems.

Regulation and Supervision: -

• Individual Housing Loans by Cooperative Banks – Enhancement in existing Limits

➢ The limits for Tier I /Tier II UCBs shall stand revised from ₹30 lakh/ ₹70 lakh to ₹60 lakh/ ₹140
lakh, respectively.

➢ For Rural Cooperative Banks (RCBs), the limits shall increase from ₹20 lakh to ₹50 lakh for
RCBs with assessed net worth less than ₹100 crore; and from ₹30 lakh to ₹75 lakh for other
RCBs.
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• Permitting Rural Co-operative Banks (RCBs) i.e. State Co-operative Banks (StCBs) and District
Central Co-operative Banks (DCCBs), to Lend to Commercial Real Estate - Residential Housing
(CRE-RH) Sector
➢ It has been decided to allow StCBs and DCCBs to extend finance to CRE-RH within the
existing
aggregate housing finance limit of 5 per cent of their total assets.

• Permitting Urban Cooperative Banks (UCBs) to Offer Door-step banking

➢ It has been decided to permit UCBs to extend doorstep banking services to their
customers
on par with scheduled commercial banks.

Note: Detailed circular will be issued separately in all of the above points as per the RBI.

Financial Markets: -

• Margin Requirements for Non-centrally Cleared Derivatives (NCCDs)

➢ Well-established variation and initial margining requirements for over the counter (OTC)
NCCD transactions contribute to financial stability and are a key component of the post-
crisis G20 recommendations for these markets.
➢ With the objective of strengthening the resilience of OTC derivative market, the Reserve
Bank had earlier issued a discussion paper to implement global practices related to margin
requirements for OTC derivatives.
➢ The promulgation of the Act for Bilateral Netting of Qualified Financial Contracts, 2020,
ensuring legal recognition for bilateral netting of an OTC derivative transaction, has put in
place a significant enabler for efficient margining.
Additional Information

• NCCDs means permitted derivatives which are not cleared by a central counter party.
• Variation margin means the collateral that is collected or paid to reflect the current mark-to-
market exposure resulting from changes in the market value of a derivative contract.
• Bilateral netting is a legal process of merging or consolidating all swap agreements between two
parties into a single agreement.
• The G20 is a strategic multilateral platform connecting the world's major developed and
emerging economies. The Group of 20, or G-20, is a group of finance ministers and central bank
governors from 19 of the world's largest economies and the European Union.
Payment and Settlement Systems: -

• e-Mandates on Cards for Recurring Payments – Enhancement of Limit

➢ The framework on processing of e-mandate based recurring payments provides for an
Additional Factor of Authentication (AFA) during registration after that subsequent
recurring transactions are executed without AFA.
➢ As a risk mitigant and customer facilitation measure, the issuer shall send a pre-transaction
notification to the cardholder, at least 24 hours prior to the actual charge / debit to the
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 card.
➢ To further augment customer convenience and leverage the benefits available under the
framework, it is proposed to enhance the limit from ₹5,000 to ₹15,000 per recurring
payment.
• Enhancements to Unified Payments Interface (UPI) – Linking of RuPay Credit Cards
➢ UPI has become the most inclusive mode of payment in India. In May 2022 alone, 594.63 crore
transactions amounting to ₹10.40 lakh crore were processed through UPI.

➢ UPI currently facilitates transactions by linking Savings / Current Accounts through Debit
Cards of users.
➢ To further deepen the reach and usage, it is proposed to allow linking of credit cards to UPI.
To start with Rupay credit cards will be enabled with this facility.

➢ This facility would be available after the required system development is complete.
Necessary instructions will be issued to NPCI separately.
• Review of Payments Infrastructure Development Fund Scheme
➢ The PIDF Scheme was operationalised by the Reserve Bank in January 2021 to incentivise
the deployment of payment acceptance infrastructure such as physical Point of Sale (PoS),
mPoS (mobile PoS), Quick Response (QR) codes in Tier-3 to 6 centres and North Eastern
States.
➢ The Scheme had targeted 90 lakh PoS terminals and QR codes to be deployed over three
years (till end-2023).
➢ Beneficiaries of PM SVANidhi Scheme in Tier-1 and 2 centres were included in August 2021.
As at end-April 2022, over 1.18 crore new touch points have been deployed under the
Scheme.
➢ It is now proposed to make modifications to the PIDF Scheme by, enhancing the subsidy
amount, simplifying the subsidy claim process, etc.

1.13 Payments Infrastructure Development Fund (PIDF) – Updated

• Recently, Reserve Bank of India (RBI) has updated norms under the PIDF scheme.
• Under the Target Geographics, Union Territories of Jammu and Kashmir, and Ladakh (UTs of J
& K and Ladakh) has been added to be given special focus other than the Northeastern states of
the country.
• As the cost structure of acceptance devices vary, subsidy amounts shall accordingly differ by
the type of payment acceptance device deployed.
➢ A subsidy of 30% to 50% of cost of physical PoS and 50% to 75% subsidy for Digital PoS
was offered. The subsidy percentages have been enhanced for 60% to 75% of cost of
physical PoS and 75% to 90% for Digital PoS shall be offered.

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 • Subsidy shall be granted on quarterly basis. The subsidy claims shall be processed and initially
75% of the subsidy amount shall be released. The balance 25% shall be released later after
ensuring that performance parameters are achieved,
➢ including conditions for ‘active’ status of the acceptance device and ‘minimum usage’
criteria, as defined by the Advisory Council (AC), and subject to the status of the acceptance
device being active in 3 out of the 4 quarters of the ensuing year.
• The scheme is on reimbursement basis; accordingly, the claim shall be submitted only after
making payment to the vendor.

• Acquirers that deploy the PoS shall submit their claims through their bankers to RBI, Mumbai
Regional Office (MRO) with self-declaration about non-duplication of claims from other
schemes, uniqueness of terminalized merchants and inter-operability of deployed devices.
• Implementation of targets under PIDF shall be monitored by RBI, MRO with assistance from Card
networks, Indian Banks’ Association (IBA) and Payments Council of India (PCI).

1.14 RBI's 'Payments Vision 2025'

• Recently, The Reserve Bank of India (RBI) has placed on its website the “Payments Vision 2025”.
• Core theme of Payments Vision 2025 - ‘E-Payments for Everyone, Everywhere, Everytime’ (4Es)
• Aim: to provide every user with safe, secure, fast, convenient, accessible, and affordable e-
payment options. (6 Attributes)
• Payments Vision 2025 has been prepared after considering the inputs from various
stakeholders and guidance from the Board for Regulation and Supervision of Payment and
Settlement Systems of the RBI.
• The activities to be taken up during the period up to 2025 as part of Vision 2025 are captured
across five anchor goalposts of Integrity, Inclusion, Innovation, Institutionalisation and
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 Internationalisation. (5 goalposts)
➢ They cover 47 specific initiatives and 10 expected outcomes. Payments Vision 2025 builds
on the initiatives of Payments Vision 2019-21.
• The Payment Vision Document Brief Overview: -

• Initiatives under each Goalpost as per the Payments Vision 2025: -

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Background

• RBI has been providing strategic direction and implementation plan for structured
development of the payment and settlement systems in India through periodic Payments
Vision documents right from the year 2001.
• The Payments Vision 2021 had envisaged to empower every Indian with access to a bouquet of
e-payment options that is safe, secure, convenient, quick, and affordable, and had set four
goalposts of Competition, Cost, Convenience and Confidence with 36 specific action points and
12 expected outcomes.

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1.15 Nominations for part-time Non-official Directors on the Central Board of Reserve Bank of India
• Recently, The Central Government has nominated Shri Anand Gopal Mahindra, Shri Venu
Srinivasan, Shri Pankaj Ramanbhai Patel and Dr Ravindra H. Dholakia as part-time non-official
Directors on the Central Board of Reserve Bank of India (RBI).
• Appointed for the term: - Four years with effect from June 2022 or until further orders, whichever
is earlier.

About Central Board of RBI

• The central board is the highest decision making body of the apex bank headed by the RBI
governor.
• The Reserve Bank's affairs are governed by a central board of directors. The board is appointed
by the Government of India in keeping with the Reserve Bank of India Act.
➢ Appointed/nominated for a period of four years
• Constitution:
➢ Official Directors (Full-time): Governor and not more than four Deputy Governors
➢ Non-Official Directors (Nominated by Government): ten Directors from various fields
and two government Official and four Directors - one each from four local boards.

1.16 Report of the Regulations Review Authority (RRA 2.0)

• Recently, RRA 2.0 has submitted its report containing final set of recommendations to RBI.
• The report is based on the extensive consultations with both internal as well as external
stakeholders.
• The report contains recommendations on ease of compliance and reduction in regulatory
burden, streamlining of reporting mechanism and dissemination and ease of accessibility of
regulatory instructions.
• The recommendations of the RRA would be internalised by the Reserve Bank to achieve the
intended outcomes.

Additional Information for RRA 2.0

• RRA 2.0 was set-up by the RBI in April 2021, with the objective of reducing the compliance
burden on Regulated Entities (REs) by streamlining the regulatory instructions and rationalising
reporting requirements.
• RRA has recommended withdrawal of 714 circulars in the four tranches of interim
recommendations.
• RRA had recommended discontinuation / merger / conversion to online filing of 65 regulatory
returns and creation of a new “Regulatory Reporting” link on the RBI website to consolidate
information relating to regulatory reporting and submission of returns by REs at a single place.
• Going Forward - Setting up of RRA exercise should, going forward, result in clarity,
simplification, accessibility and rationalisation in regulatory instructions and returns.

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1.17 Sovereign Gold Bond Scheme 2022-23
• Government of India, in consultation with the Reserve Bank of India, has decided to issue
Sovereign Gold Bonds (SGBs) in tranches as per the calendar specified below:

S.
Tranche Date of Subscription Date of Issuance
No.

1. 2022-23- Series I June 20 - June 24, 2022 June 28, 2022

2. 2022-23 Series II August 22 - August 26, 2022 August 30, 2022

• The features of the SGB are as under:.

Sl.
Item Details
No.
1 Product name Sovereign Gold Bond Scheme 2022-23
2 Issuance To be issued by Reserve Bank of India on behalf of the Government of
India.
3 Eligibility The SGBs will be restricted for sale to resident individuals, HUFs, Trusts,
Universities and Charitable Institutions.
4 Denomination The SGBs will be denominated in multiples of gram(s) of gold with a basic
unit of One gram.
5 Tenor The tenor of the SGB will be for a period of eight years with an option of
premature redemption after 5th year to be exercised on the date on which
interest is payable.
6 Minimum size Minimum permissible investment will be One gram of gold.
7 Maximum limit The maximum limit of subscription shall be 4 Kg for individual, 4 Kg for
HUF and 20 Kg for trusts and similar entities per fiscal year (April-March)
notified by the Government from time to time.
8 Joint holder In case of joint holding, the investment limit of 4 KG will be applied to the
first applicant only.
9 Issue price Price of SGB will be fixed in Indian Rupees on the basis of simple average
of closing price of gold of 999 purity, published by the India Bullion and
Jewellers Association Limited (IBJA) for the last three working days of
the week preceding the subscription period. The issue price of the SGBs
will be less by ₹50 per gram for the investors who subscribe online and pay
through digital mode.
10 Payment option Payment for the SGBs will be through cash payment (upto a maximum of
₹20,000) or demand draft or cheque or electronic banking.
11 Issuance form The SGBs will be issued as Government of India Stock under Government
Securities Act, 2006. The investors will be issued a Certificate of Holding
for the same. The SGBs will be eligible for conversion into demat form.
12 Redemption price The redemption price will be in Indian Rupees based on simple average
of closing price of gold of 999 purity, of previous three working days
published by IBJA Ltd.
13 Sales channel The SGBs will be sold through Commercial banks (except Small Finance
Banks and Payment Banks), Stock Holding Corporation of India Limited
(SHCIL), Clearing Corporation of India Limited (CCIL), designated post
offices (as may be notified) and recognised stock exchanges viz., National
Stock Exchange of India Limited and Bombay Stock Exchange Limited,
either directly or through agents.
14 Interest rate The investors will be compensated at a fixed rate of 2.50 percent per
annum payable semi-annually on the nominal value.
15 Collateral The SGBs can be used as collateral for loans. The loan-to-value (LTV)
ratio is to be set equal to ordinary gold loan mandated by the Reserve Bank
from time to time.
17 Tax treatment The interest on SGBs shall be taxable as per the provision of Income
Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of
SGB to an individual is exempted. The indexation benefits will be provided
to long term capital gains arising to any person on transfer of the SGB.
18 Tradability The SGBs shall be eligible for trading.

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 19 SLR eligibility The SGBs acquired by the banks through the process of invoking
lien/hypothecation/pledge alone, shall be counted towards Statutory
Liquidity Ratio (SLR).
20 Commission Commission for distribution of the SGB shall be paid at the rate of one
percent of the total subscription received by the receiving offices and
receiving offices shall share at least 50 percent of the commission so
received with the agents or sub agents for the business procured through
them.

Definitions

• The indexation benefit is applied to the investment amount to tax returns fairly, which factors
in inflation. Basically, indexation helps to calculate the new value of investment, considering
inflation and also help to get real capital gain.
• SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form
of liquid cash, gold or other securities with itself.
• A loan-to-value (LTV) ratio compares the amount of a loan customer is hoping to borrow against
the appraised value of the property the customer wants to buy (that will be kept as collateral).

1.18 RBI releases the Financial Stability Report (FSR), June 2022
• Recently, the Reserve Bank released the 25th issue of the FSR, which reflects the collective
assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on
risks to financial stability and the resilience of the financial system.
Highlights of the Report: -
• The outlook for the global economy is shrouded by considerable uncertainty because of the war
in Europe, front-loaded monetary policy normalisation by central banks in response to
persistently high inflation and multiple waves of the COVID-19 pandemic.
• Inspite of the challenges from global spillovers, the Indian economy remains on the path of
recovery, though inflationary pressures, external spillovers, and geopolitical risks warrant
careful handling and close monitoring.
• Banks as well as non-banking financial institutions have sufficient capital buffers to withstand
shocks.
• The capital to risk weighted assets ratio (CRAR) and Common Equity Tier 1 (CET-1) Ratio of SCBs
rose to a new high of 16.7% and 13.6%, while their gross non-performing asset (GNPA) ratio fell
to a six-year low of 5.9 % in March 2022.
• The CRAR of urban co-operative banks (UCBs) rose to 15.8 % in March 2022 while that of NBFCs
stood at 26.9 per cent.
• Macro stress tests for credit risk reveal that SCBs would be able to comply with the minimum
capital requirements even under severe stress scenarios.

Additional Information

• The FSR is published biannually and includes contributions from all the financial sector
regulators.

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 • The FSDC Sub-committee has set up under the chairmanship of Governor, RBI. The Chairman
of the Council is the finance minister, and its members include the heads of financial sector
Regulators.
Definitions

• CRAR or Capital adequacy ratio (CAR) is the ratio of a bank’s available capital, in relation to the
risks involved in terms of loan disbursement (assets of the banks). In other words, capital
adequacy ratio is the ratio of a bank’s capital in relation to its assets and liabilities.
• Common Equity Tier 1 (CET1) capital includes the core capital that a bank holds in its capital
structure and it encompasses ordinary shares and retained earnings. It compares a bank’s
capital against its risk-weighted assets to determine its ability to withstand financial distress.

1.19 RBI discussion at the 16th Statistics Day Conference

• Recently, The Reserve Bank organised its 16th annual conference on ‘Statistics Day’ designated
by the Government of India on June 29 to commemorate the birth anniversary of (Late) Professor
Prasanta Chandra Mahalanobis in recognition of his notable contributions in the fields of
economic planning and statistical developments in India.
• The challenges to statistical compilation and modelling during uncertain times were discussed at
the 16th Statistics Day Conference.

1.20 Deposits with Scheduled Commercial Banks - March 2022

• The Reserve Bank released the web publication ‘Deposits with Scheduled Commercial Banks –
March 2022’ on its Database on Indian Economy (DBIE) portal.
• Scheduled commercial banks (SCBs) report branch-wise data on type of deposits (current, savings
and term), its institutional sector wise ownership, maturity pattern of term deposits as well as
number of employees under Basic Statistical Return (BSR) -2 survey.
• These data are released at disaggregated level (viz., type of deposits, population groups, bank
groups, states, districts, centres, interest rate ranges, size, original and residual maturity).
Highlights of the Data: -
• Bank deposit growth (y-o-y) moderated to 10.0% in March 2022 as compared with 11.9% a year
ago; current, savings and term deposits increased by 10.9%, 13.3% and 7.9%, respectively, during
2021-22.
• The share of current account and savings account (CASA) deposits in total deposits has been
increasing over the years and stood at 44.8% in March 2022 as compared with 41.7% three years
ago; these deposits accounted for 60.9% and 55.6% of incremental deposits during 2020-21 and
2021-22, respectively.
• Household sector held the dominant share (62.6%) in total deposits followed by non-financial
corporations, general government, rest of the world and financial corporations, respectively.
• Female depositors accounted for 19.8% of total deposits in March 2022; their share in
incremental bank deposits during 2021-22 increased to 34.3% from 15.2% in the previous year.
• General Government and financial corporations together account for over one fourth of the
incremental deposits during 2021-22 as compared to 5.8% share in the previous year.

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• Large size deposits (i.e., ₹ 1 crore and above) have nearly 40.0% share in total term deposits.
• Consistent with the monetary and liquidity conditions, interest rates on term deposits
moderated further during 2021-22; the share of term deposits bearing over 6% interest rate came
down to 14.4% in March 2022 (31.0% a year ago; 78.7% two years ago).
• Seven states, viz., Maharashtra, National Capital Territory (NCT) of Delhi, Uttar Pradesh,
Karnataka, Tamil Nadu, West Bengal, and Gujarat, together accounted for 63.3 % of bank
deposits.

1.21 RBI released data on the performance of the private corporate sector during 2021-2022
• The Reserve Bank released data on the performance of the private corporate sector during 2021-
22 drawn from abridged financial results of 3,166 listed non-government non-financial (NGNF)
companies
• Private corporate sales and profitability recorded healthy growth in during 2021-22 as the effects
of the COVID-19 pandemic subsided and economic activities recovered, especially in the second
half of the year.
Highlights of the Data: -
• Sales
➢ Sales of 1,865 listed private manufacturing companies witnessed broad based recovery
and expanded by 36.7% during 2021-22 as compared with a contraction of 2.8% in the
preceding year, both volume and price components contributed to the higher growth, and
it was also aided by favourable base effects
➢ Information Technology (IT) companies also improved their performance and their sales
growth accelerated to 19.8% from 4.4% in the previous year
➢ Sales in non-IT services sector made a broad-based recovery in 2021-22, registering 27.2%
annual expansion as against 14.6% decline in the previous year
• Expenditure
➢ Consistent with the rise in production and sales, manufacturing companies’ expenditure
on raw materials increased by 48.6% during the year and its share in their total sales
increased.
➢ Unlike manufacturing and non-IT sector, which witnessed recovery and growth during
2021-22 after the pandemic-led contraction in sales and staff cost in the previous year, the
IT sector weathered the successive waves of the pandemic and logged sustained growth
in both these parameters even during pandemic.
• Interest
➢ Interest cost moderated for manufacturing and IT companies during the year.
➢ The interest coverage ratio (ICR) of manufacturing companies improved to 8.4 in 2021-22
from 5.0 in the previous year due to lower interest expenses and rise in profits; ICR
continued to remain below the unity for non-IT services companies.
• Profit
➢ Inspite of the input cost pressures, net profits of manufacturing companies surged by
50.2% during 2021-22 and it also increased for the IT companies, whereas the non-IT
services sector continued to record losses at the aggregate level.
➢ Operating profit margins remained healthy for all the three sectors.
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 ➢ Net profit margins remained stable for manufacturing and IT companies, whereas it
remained in the negative terrain for non-IT services companies.
Definitions

• Operating profit is the total income a company generates from sales after paying off all
operating expenses, such as rent, employee payroll, equipment and inventory costs. The
operating profit figure excludes gains or losses from interest, taxes and investments.
• Net Profit is the profit generated from all sources after deducting all expenses.
• ICR (i.e., ratio of earnings before interest and tax to interest expenses) is a measure of debt
servicing capacity of a company. The minimum value for a viable ICR is 1.

1.22 Reserve Bank of India (Variation Margin) Directions, 2022

• Reserve Bank of India recently issued the Master Direction – Reserve Bank of India (Variation
Margin) Directions, 2022. These Directions shall come into force with effect from December 01,
2022.
• Applicable to:
o Non-centrally cleared foreign exchange derivative contracts undertaken in terms of the
Foreign Exchange Management
o Non-centrally cleared interest rate derivative contracts undertaken in terms of the Rupee
Interest Rate Derivatives (Reserve Bank) Directions, 2019
o Non-centrally cleared credit derivative contracts undertaken in terms of Master Direction –
Reserve Bank of India (Credit Derivatives) Directions, 2022
o Any other non-centrally cleared derivative (NCCD) contract as may be specified by the
Reserve Bank.
• Covered entities:
o Domestic Covered Entities:
▪ Entities regulated by a financial sector regulator (including branches of foreign
banks operating in India) and having an Average Aggregate Notional Amount
(AANA) of outstanding NCCDs of ₹25,000 crore and above, on a consolidated group
wide basis.
▪ Other resident entities having an AANA of outstanding NCCDs of ₹60,000 crore and
above, on a consolidated group wide basis.
o Foreign Covered Entities:
▪ Non-resident financial entities having an AANA of outstanding NCCDs of USD 3
billion and above, on a consolidated group wide basis.
▪ Other non-resident entities having an AANA of outstanding NCCDs of USD 8 billion
and above, on a consolidated group wide basis.
• A minimum transfer amount, not exceeding ₹3.5 crore, may be applied for the exchange of
Variation Margin. The entire margin amount shall be exchanged if the Variation Margin amount
exceeds the minimum transfer amount.

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 Additional Information
• Variation margin means the collateral that is collected or paid to reflect the current mark-to-
market exposure resulting from changes in the market value of a derivative contract.
• Central counterparty means an entity that interposes itself between counterparties to
contracts traded in one or more financial markets, becoming the buyer to every seller and the
seller to every buyer and thereby ensuring the performance of open contracts.
• Non-centrally cleared derivatives (NCCDs) mean derivative contracts whose settlement is not
guaranteed by a central counterparty.

1.23 Master Direction – Reserve Bank of India (Margining for Non-Centrally Cleared OTC
Derivatives) Directions, 2022 – Draft
• Reserve Bank of India (RBI), as per the powers conferred under Reserve Bank of India Act, 1934,
issued Draft Master Direction – Reserve Bank of India (Margining for Non-Centrally Cleared OTC
Derivatives) Directions, 2022.
• Applicability: Same as Reserve Bank of India (Variation Margin) Directions, 2022 (discussed in
news above).
• Covered Entities for exchange of Initial Margin
o Domestic Covered Entities for exchange of Initial Margin
▪ Entities regulated by a financial sector regulator (including branches of foreign
banks operating in India) and having an Average Aggregate Notional Amount
(AANA) of outstanding NCCDs of ₹60,000 crore and above, on a consolidated group
wide basis.
o Foreign Covered Entities for exchange of Initial Margin
▪ Non-resident financial entities having an AANA of outstanding NCCDs of USD 8
billion and above, on a consolidated group wide basis.
• A threshold amount, not exceeding Rs. 450 crore, may be applied for the exchange of initial
margin.
• A minimum transfer amount, not exceeding ₹4.5 crore, may be applied for the exchange of
Variation Margin and Initial Margin combined.
• Initial Margin between two Domestic Covered Entities – IM shall be exchanged using the following
collateral types:
o Indian Currency
o Debt securities issued by Government of India and State Governments

Additional Information
• Initial margin means the collateral that is collected to cover the potential future exposure that
could arise from future changes in the market value of a derivative contract during the time it
takes to close out and/or replace the position in the event of a counterparty default.

1.24 76th Round of Survey of Professional Forecasters on Macroeconomic Indicators

• Conducted and resulted by: RBI
• Participants: 34 panelists
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• Conducting since: September 2007
• Output (GDP)
o Real gross domestic product (GDP) growth projection for 2022-23 has been revised down by
30 basis points (bps) from the last survey round to 7.2% and is expected to grow by 6.5% in
2023-24.
o GDP growth forecasts have been placed in the wide range of 5.4 - 9.2% for 2022-23 and in the
range 5.4- 8.0% for 2023-24.
o Forecasters have assigned highest probability to real GDP growth lying between 7.0-7.4% in
2022-23. For 2023-24, highest probability has been assigned to the range 6.5-6.9%.
o Projection of annual growth in real private final consumption expenditure (PFCE) and real
gross fixed capital formation (GFCF) for 2022-23 are expected at 7.4% and 8.7%, respectively.
o Real gross value added (GVA) growth projection for 2022-23 has been revised down by 20 bps
to 6.8% mainly due to downward revision of GVA growth from industry by 70 bps.
• Inflation
o Headline consumer price index (CPI) inflation is expected to remain at above 7.0% during
H1:2022-23 and moderate thereafter to 5.9% by Q4:2022-23.
o CPI inflation, excluding food and beverages, pan, tobacco and intoxicants, and fuel and light,
is expected at 6.6% in Q1:2022-23 and gradually soften subsequently to 5.7% in Q4:2022-23.
o Forecasters have assigned the highest probability to CPI inflation lying in the range of 7.0-7.4%
in Q1:2022-23 and Q2:2022-23; and in the range of 6.0-6.4% in the subsequent two quarters.
• External Sector
o Merchandise exports and imports are projected to grow by 9.3% and 16.0%, respectively,
during 2022-23 and further by 7.7% and 8.0%, respectively, during 2023-24
o Current account deficit is expected at 3.0% (of GDP at current market prices) in 2022-23 and
at 2.5% in 2023-24.

1.25 Processing of e-mandates for recurring transactions

• On a review of implementation of the e-mandate framework and the protection available to
customers, RBI has decided to increase the Additional Factor of Authentication (AFA) limit from
₹5,000/- to ₹15,000/- per transaction to waive.
• The decision has been made as per the Payment and Settlement Systems Act, 2007.
Background
• The e-mandate framework prescribed an Additional Factor of Authentication (AFA), inter alia,
while processing the first transaction in case of e-mandates / standing instructions on cards,
prepaid payment instruments and Unified Payments Interface.
• For subsequent transactions with transaction values up to ₹5,000/- (AFA limit), prescription of
AFA was waived.

1.26 RBI appoints Shri Venkat Nageswar Chalasani as a member in an Advisory Committee
• Reserve Bank of India (RBI) recently appointed Shri Venkat Nageswar Chalasani as a member in
the Advisory Committee of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance
Limited (SEFL).

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Background
• RBI had constituted an Advisory Committee under the Insolvency and Bankruptcy (Insolvency
and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating
Authority) Rules, 2019.
• Aim of the committee: To advise the Administrator in the operations of the financial service
providers during the corporate insolvency resolution process.

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