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RBI RESTRICTS OPERATIONS OF SHUSHRUTI BANK OF BENGALURU

Dated 10.04.2022 : Reserve Bank of India ( RBI ) has put restrictions on operations of Shushruti Souharda Sahakara Bank Niyamita, Bangalore , Karnataka under section 35A and Section 56 of Banking Regulations Act .

As per Press release dated 07 .04.2022 , customers of Shushriti bank will not be able to draw more than Rs 5,000 from their all accounts including savings Bank , Current A/C or any other deposit account . Further Shushruti Bank will not be not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits,. It will also not permitted to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated April 07 , 2022. The restrictions will remain operative for next six months .

As per the Bank's website , Shushruti Bank , head quartered in Bengaluru started its banking business in 1998. It has 25,000 cutomers with more than Rs 183 crores deposits . The bank's  head office is situated at Andrahalli main Road, Peenya 2nd Stage in Bengaluru and bank is operating with 4 branches in Peenya, Wilson Garden, Chikkalasandra, Sanjay Nagar and at Chikkaballapura , all in Bangalore

For RBI Press Release , CLICK HERE

GOOD NEWS FOR PMC BANK CUSTOMERS AS
PMC BANK BRANCHES COMMENCE TO WORK AS UNIITY SFB BRANCHES .
BUT HAVE TO WAIT FOR 10 YEARS FOR COMPLETE SETTLEMENT
JOB OF EMPLOYEES GUARANTEED FOR 3 YEARS

Dated 26.01.2022 : The Government of India yesterday sanctioned and notified the Scheme for the amalgamation of the Punjab and Maharashtra Co-operative Bank Ltd. (PMC Bank) with Unity Small Finance Bank Ltd. (USFBL). The amalgamation has come into force with effect from yesterday. All the branches of the PMC Bank will function as branches of Unity Small Finance Bank Ltd. with immediate effect .

DISCHARGE OF LIABILITIES OF PMC BY THE UNITED SF BANK :

As per the Gazette notification ,

a) any sums deposited by any employee of PMC Bank with that bank as staff security deposits, together with interest, if any, accrued thereon up to the appointed date, shall be paid, in case the employee has chosen not to continue in the services of the transferee bank or provided for in full by the transferor bank;

(b) every savings bank account or current account or any other deposit account including a fixed deposit, cash certificate, monthly deposit, deposit payable at call or short notice or any other deposits by whatever name called with the PMC Bank , the transferee bank shall open with itself on the appointed date a corresponding and similar account in the name of the respective holder thereof crediting thereto full amount including interest accrued till March 31, 2021: Provided that where the transferee bank entertains a reasonable doubt about the correctness of the entries made in any particular account, it may, with the approval of the Reserve Bank, withhold the credit to be made in that account for a period not exceeding three months from the appointed date, within which, the transferee bank shall ascertain the correct balance in such account.

(c) Unity SF Bank will pay -

(i) the amount received from Deposit Insurance and Credit Guarantee Corporation to all the eligible depositors of PMC Bank , which would be an amount equal to the balance in their deposit accounts or ₹5,00,000 (Rupees five lakh only), whichever is less, in accordance with the Deposit Insurance and Credit Guarantee Corporation rules of distribution of such amounts ;

(ii) at the end of first year from the appointed date, over and above the payment already made, an additional amount equal to the balance in their deposit account or ₹50,000 (Rupees fifty thousand only), whichever is less, on demand only to the retail depositors of PMC Bank ;

(iii) at the end of two years from the appointed date, over and above the payment already made, an additional amount equal to the balance in their deposit account or ₹50,000 (Rupees fifty thousand only), whichever is less, on demand only to the retail depositors of PMC Bank ;

(iv) at the end of three years from the appointed date, over and above the payments already made, an additional  amount equal to the balance in their deposit account or ₹1,00,000 (Rupees one lakh only), whichever is less,  on demand only to the retail depositors of PMC Bank

(v) at the end of four years from the appointed date, over and above the payment already made, an additional  amount up to the balance in their deposit account or ₹2,50,000 (Rupees two lakh fifty thousand only), whichever is less, on demand only to the retail depositors of PMC Bank .

(vi) at the end of five years from the appointed date, over and above the payment already made, an additional  amount up to the balance in their deposit account or ₹5,50,000 (Rupees five lakh fifty thousand only),  whichever is less, on demand only to only the retail depositors of PMC Bank .

(vii) the entire remaining amount of deposits (after making payment as mentioned in clause (i), (ii), (iii), (iv), (v) and (vi) above in the accounts of the retail depositors of transferor bank after ten years from the appointed  date, on demand .

INTEREST :

(d) No interest on any of the interest bearing deposits with PMC Bank shall accrue after March 31, 2021 for a period of five years from the appointed date, and afterwards, simple interest at the rate of 2.75 per cent. per annum shall be paid at the end of each year for the amounts remaining outstanding which shall be payable from the date after five years from the appointed date.

(e) In respect of balances in any current account or any other non-interest bearing account, no interest shall be payable to the account holders, except that after a period of five years, simple interest at the rate of 2.75 per cent. per annum shall be paid to the balances of the retail depositors in the same manner as applicable to interest bearing deposits.

(f) On and from the appointed date, 80 per cent. of the uninsured deposits outstanding (aggregate in various accounts) to the credit of each institutional depositor of the transferor bank shall be converted into Perpetual NonCumulative Preference Shares of transferee bank with dividend of one per cent. per annum payable annually.

g) At the end of the 10th year from the appointed date, transferee bank will use ‗Net Cash Recoveries‘ (net of expenses related to such recoveries) from assets pertaining to Housing Development and Infrastructure Limited Group in excess of the principal amount of advances to Housing Development and Infrastructure Limited Group outstanding as on March 31, 2021 to buyback Perpetual Non-Cumulative Preference Shares at face value on a pro rata basis.

Rights and obligations of employees of PMC BANK :  All the employees of the transferor bank shall continue in service on the same remuneration and terms and conditions of service for a period of three years from the appointed date, as were applicable to such employees immediately before the close of business on the appointed date:

Appointed date is 25th, January 2022

To read complete Gazette notification , CLICK HERE

RBI SUPERSEDES THE BOARD OF RELIANCE CAPITAL LIMITED

01.12.2021 : Reserve Bank has superseded the Board of Directors of M/s Reliance Capital Ltd (RCL) in view of the defaults by the company in meeting the various payment obligations to its creditors and serious governance concerns which the Board has not been able to address effectively.

Shri Nageswar Rao Y (Ex-Executive Director, Bank of Maharashtra) has been appointed as the Administrator of the company . The Reserve Bank will shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019. Reserve Bank will also apply to the NCLT, Mumbai for appointing the Administrator as the Insolvency Resolution Professional.

Reserve Bank has also constituted a three-member Advisory Committee to assist the Administrator in discharge of his duties. The members of the Advisory Committee are as follows:

Shri Sanjeev Nautiyal, ex-DMD, State Bank of India

Shri Srinivasan Varadarajan, ex-DMD, Axis Bank

Shri Praveen P Kadle, ex-MD & CEO, Tata Capital Limited .

Reliance Capital Limited belong to Anil Ambani Group of companies and the group companies include Reliance Nippon Life Insurance , Reliance General Insurance , Reliance Money , Reliance Home Finance , Reliance Securities , Reliance Health Insurance and Reliance Asset Reconstructions . Shri Anil D. Ambani was the Chairman of Reliance Capital Limited .

DEPOSITORS OF PMC BANK TO WAIT FOR 10 YEAR TO GET THEIR FULL MONEY BACK .

Dated 24.11.2021 : Reserve Bank of India ( RBI ) had put restrictions in September 2019 on operations of Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra ( PMC Bank ) under section 35A of Banking Regulations Act . Then  customers of PMC bank were able to draw just Rs 1,000 from their all accounts including savings Bank , Current A/C or any other deposit account .

At that time , PMC Bank was one of the large interstate co-operative banks with network in seven states with 137 branches and customer deposit size of more than Rs 11,000 crores . It was one of the top ten co-operative banks in the country . The bank founded in 1984 had branches in Maharashtra , Karnataka , Delhi , Goa , Andhra Pradesh and Madhya Pradesh .

The sudden freeze of the bank has sent shock waves to its main customers in Mumbai where it is headquartered .  Subsequently the limits were raised up to Rs 50,000 per customers in stages .

Since RBI , in a bid to revive the bank had called for bids to participate in reconstruction of the bank and Centrum had offered to participate in reconstruction of the bank, in response to the Expression of Interest (EOI) dated November 3, 2020 floated by the bank. Now RBI has announced a scheme for amalgamation of PMC Bank with the newly floated Unity Small Finance bank owned by Centrum group .

PAYMENT FOR RETAIL DEPOSITORS

As per the draft scheme announced by RBI ,

(I) the amount received from DICGC to all the eligible depositors of the PMC bank, which would be an amount equal to the balance in their deposit accounts or Rs.5,00,000 (Rupees five lakh only), whichever is less, in accordance with the rules of distribution of such amounts;

(II) at the end of two years from the appointed date, over and above the payment already made, an additional amount equal to the balance in their deposit account or Rs.50,000 (Rupees fifty thousand only), whichever is less, on demand only to the retail depositors of the transferor bank,
(III) at the end of three years from the appointed date, over and above the payments already made, an additional amount equal to the balance in their deposit account or Rs.1,00,000 (Rupees one lakh only), whichever is less, on demand only to the retail depositors of the transferor bank,
(IV) at the end of four years from the appointed date, over and above the payment already made, an additional amount upto the balance in their deposit account or Rs.3,00,000 (Rupees three lakh only), whichever is less, on demand only to the retail depositors of the transferor bank.

(V) at the end of five years from the appointed date, over and above the payment already made, an additional amount upto the balance in their deposit account or Rs.5,50,000 (Rupees five lakh fifty thousand only), whichever is less, on demand only to only the retail depositors of the transferor bank.
(VI) the entire remaining amount of deposits (after making payment as mentioned in clause (I), (II), (III), (IV) and (V) above in the accounts of the retail depositors of transferor bank after 10 years from the appointed date, on demand.

INTEREST PAYMENT

The interest on any of the interest bearing deposits with the PMC Bank shall not accrue after March 31, 2021 except in the manner provided hereunder. No further interest will be payable on the interest bearing deposits of PMC Bank for a period of five years from the appointed date. In respect of balances in any current account or any other non-interest bearing account, no interest shall be payable to the account holders, Provided further that interest at the rate of 2.75 per cent per annum shall be paid on the retail deposits of the PMC bank which shall be remaining outstanding after the said period of five years from the appointed date. This interest will be payable from the date after five years from the appointed date .

INSTITUTIONAL DEPOSITORS :

(1) On and from the appointed date, 80 per cent of the uninsured deposits outstanding  (aggregate in various accounts) to the credit of each institutional depositor of the PMC  bank shall be converted into Perpetual Non-Cumulative Preference Shares  (PNCPS) of transferee bank with dividend of one per cent per annum payable annually. After ten years from the appointed date, the transferee bank may consider additional
benefits for such PNCPS holders either in the form of providing a step up in coupon rate or a call option, upon receipt of approval from the Reserve Bank.

(2) The remaining 20 per cent amount of the institutional deposits will be converted into equity warrants of transferee bank at a price of Re.1 per warrant. These equity warrants  will further be converted into equity shares of the transferee bank at the time of the  Initial Public Offer (IPO) when the transferee bank goes for public issue. The price for  such conversion will be determined at the lower band of the IPO price.

EMPLOYEES OF PMC BANK

All the employees of the transferor bank shall continue in service on the same remuneration and terms and conditions of service for a period of three years from the appointed date, as were applicable to such employees immediately before the close of business on the
appointed date

To read complete draft scheme of RBI , CLICK HERE

RBI TWEAKS ITS EARLIER INSTRUCTION ON CD OPENING

Dated 01.11.2021 : In August 2020 , Reserve Bank of India had prohibited banks from opening current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions of such entities shall be routed through the CC/OD account. However the rule was exempted in case a bank had a share of 10 per cent or more in the total exposure of the banking system to the borrower . In case if a bank’s exposure to a borrower was less than 10 per cent of the exposure of the banking system to that borrower, while credits were freely permitted for the current account maintained , debits to the CC/OD account could only be for credit to the CC/OD account of that borrower with a bank that had 10 per cent or more of the exposure of the banking system to that borrower.

Now tweaking the above rule , RBI has issued fresh guidelines on opening of current accounts which are as follows :

i) For borrowers, where the exposure of the banking system is less than ₹5 crore, there is no restriction on opening of current accounts or on provision of CC/OD facility by banks, subject to obtaining an undertaking from such borrowers that they shall inform the bank(s), as and when the credit facilities availed by them from the banking system reaches ₹5 crore or more.
(ii) In respect of borrowers where exposure of the banking system is ₹5 crore or more, such borrower can maintain current accounts with any one of the banks with which it has CC/OD facility, provided that the bank has at least 10 per cent of the exposure of the banking system to that borrower.
Further, other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted within two working days of receiving such funds, to the CC/OD account maintained with the above-mentioned bank maintaining current accounts for the borrower. In case none of the lenders has at least 10% exposure of the banking system to the borrower, the bank having the highest exposure may open current accounts. Non-lending banks are not permitted to open current accounts.

However there is no restriction on opening and maintaining following types of accounts :

Inter-bank accounts
Accounts of All India Financial Institutions (AIFIs), viz., EXIM Bank, NABARD, NHB, and SIDBI
Accounts opened under specific instructions of Central Government and State Governments
Accounts attached by orders of Central or State governments/regulatory body/Courts/investigating agencies etc. wherein the customer cannot undertake any discretionary debit

RBI has asked all banks to implement the new guidelines within 30 days of their issue of instructions .

To go through RBI Notification dated 29.10.2021 in this regard , CLICK HERE

TERM OF MR SHAKTIKANTA DAS AS GOVERNOR OF RBI IS EXTENDED

Dated 31.10.2021 : The Government of India has reappointed current Governor of Reserve Bank of India Mr Shaktikant Das , for a further period of three years from 11.12.2021 .

Mr Shaktikant Das was appointed as the Governor earlier in December 2018 by the Government . He had retired as Economic Affairs Secretary in 2017 . He had replaced Dt Urjit Patel who had resigned from the post of the Governor . He is the 25th Governor of RBI . Mr Das was a member of Finance Commission and Government's representative in G20 Summit earlier to the appointment as the Governor .

Good News for PMC Bank Customers : UNITY SFB GETS LICENCE

Dated 13.10.2021 : Reserve Bank of India (RBI) has issued a small finance bank (SFB) licence to Unity Small finance Bank which is floated by the Centrum Group-BharatPe consortium. The newly floated bank is expected to take over the assets and liabilities of the beleaguered PMC Bank which is put under section 35a OF RBI Act restricting its operations .

Reserve Bank of India ( RBI ) had put restrictions on operations of Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra ( PMC Bank ) under section 35A of Banking Regulations Act in September 2019 . Its customers were allowed just Rs 1,000 from their accounts then . Subsequently the limits were raised up to Rs 50,000 per customers in stages .

The Unity SFB will have to be guided by the directions and timelines of the RBI on the amalgamation of Punjab & Maharashtra Co-Operative Bank Limited with them .  Centrum consortium was one of the bidders that had offered to participate in reconstruction of the bank, in response to the Expression of Interest (EOI) dated November 3, 2020 floated by the bank. RBI and PMC Bank have been engaging with them in order to secure best possible terms for the depositors and other stakeholders of PMC Bank while ensuring long term viability of the reconstructed entity.

Once RBI announces the terms of amalgamation , PMC Bank customers can know how much their deposit with the bank can be recovered .

To read press release of Centrum in this regard , CLICK HERE

About centrum Group : The group was established in 1997 . Centrum has diversified fee businesses and a lending platform for institutions and  individuals. Institutional services include Investment Banking, Mid-corporates & SME credit and Broking to  FIIs, Pension Funds, Indian Mutual Funds, Domestic Institutions etc. It also provides MSME credit, Wealth  Management Servicesto HNIs and Family Offices, Affordable Housing finance in tier 2 & 3 cities, Micro Finance  loans and Retail Broking. Its Asset Management business offers funds across Private Debt and Venture Capital.

About Bharat Pe : BharatPe was co-founded by Ashneer Grover and Shashvat Nakrani in 2018 with the vision of making financial
inclusion a reality for Indian merchants. In 2018, BharatPe launched India’s first UPI interoperable QR code, the first zero MDR payment acceptance service. In 2020, post-Covid, BharatPe also launched India’s only zero  MDR card acceptance terminals – BharatSwipe. Currently serving over 70 lakh merchants across 140+ cities,  the company is a leader in UPI offline transactions, processing 11 crores+ UPI transactions per month  (annualized Transaction Processed Value of US$ 11+ Bn). The company has already facilitated disbursement  of loans totaling to over Rs. 2,200 crores to its merchants, since launch. BharatPe’s POS business processes  payments of over Rs. 1,400 crores/ month. BharatPe has raised close to US$ 600 million in equity and debt,  till date. The company’s list of marquee investors includes Tiger Global, Dragoneer Investment Group, Steadfast Capital, Coatue Management, Ribbit Capital, Insight Partners, Steadview Capital, Beenext, Amplo
and Sequoia Capital. In June 2021, the company announced the acquisition of PAYBACK India, the country’s  largest multi-brand loyalty program company with 100 million+ members. In June 2021, it was also given an  in-principle approval by Reserve Bank of India to establish a Small Finance Bank, in partnership with Centrum  Financial Services Limited (Centrum), the established and profitable NBFC arm of the Centrum Group.

Source : websites of respective companies .

BAD BANK GETS LICENCE FROM RBI :

Dated 06.10.2021 : Indian Bankers Association Chairman Sri Rajkirn Rai has tweeted that RBI has granted licence to NARCL on 4th, October 2021 . Further it is reported that Sri P.M.Nair from State Bank of india is appointed as the Managing Director of the company . IBA CEO Mehta, SBI Deputy Managing Director S S Nair and Canara Bank's Chief General Manager Ajit Krishnan Nair have been selected as the Directors of the company .

BAD BANK ( NARCL ) TO BE GUARANTEED BY THE GOVERNMENT

Central Government guarantee of Rs.30,600 crore to the Bad Bank - NARCL

Dated 17.09.2021 :   In the Union Budget for 2021-22, the Government announced a proposal for setting up the National Asset Reconstruction Company Limited (NARCL), popularly termed as a “bad bank”, to consolidate and take over stressed debt from banks. The aggregation of assets is expected to assist in turning around the assets and eventually offloading them to AIFs and other potential investors .

Now  Central Government will issue guarantee of Rs.30,600 crore to back Security Receipts issued by National Asset Reconstruction Company Limited (NARCL) for acquiring stressed loan assets and the proposal was approved by Union Cabinet yesterday . NARCL has proposed to acquire stressed assets of about Rs. 2 Lakh crore in phases within regulations of RBI. It intends to acquire these through 15% Cash and 85% in Security Receipts (SRs). The GoI guarantee will be valid for five years and condition precedent for invocation of guarantee will be resolution or liquidation. Further, to disincentivize delay in resolution, NARCL has to pay a Guarantee fee which increase with passage of time.

WHAT IS NARCL ? NARCL has been incorporated under the Companies Act and has applied to Reserve Bank of India for license as an Asset Reconstruction Company (ARC). NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. PSBs will have 51% ownership in NARCL and hence will be treated as Public Sector Bank .

Capitalization of NARCL would be through equity from banks and Non-Banking Financial Companies (NBFCs). it will also raise debt as required. The GoI guarantee will reduce upfront capitalization requirements.

NARCL is intended to resolve stressed loan assets above ₹500 crore each amounting to about ₹ 2 lakh crore. In phase I, fully provisioned assets of about Rs. 90,000 crores are expected to be transferred to NARCL, while the remaining assets with lower provisions would be transferred in phase II.  After acquiring NPAs from the banks , NARCL will engage IRDCL (   India Debt Resolution Company Ltd. ) to manage the bad assets acquired by it . IDRCL is a service company/operational entity which will manage the asset and engage market professionals and turnaround experts. Public Sector Banks (PSBs) and Public FIs will hold a maximum of 49% stake and the rest will be with private sector lenders.

To read the press release of Finance ministry in the matter , CLICK HERE

TIME LIMIT TO COMPLY WITH THE FRESH GUIDELINES ON CURRENT ACCOUNT OPENING FURTHEREXTENDED : RBI

Dated 05.08.2021 : During the month of August 2020 , Reserve Bank of India ( RBI ) had prohibited banks from opening current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions of such entities shall be routed through the CC/OD account. ( But in case a bank has a share of 10 per cent or more in the total exposure of the banking system to the borrower, it can provide CC/OD facility as hitherto ). If a bank’s exposure to a borrower is less than 10 per cent of the exposure of the banking system to that borrower, while credits are freely permitted for the current account maintained , debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10 per cent or more of the exposure of the banking system to that bank .

Further RBI had asked banks to ensure compliance with the above instructions within a period of three months for the existing accounts also . Now RBI has permitted time up to October 31st , 2021 for compliance with the instructions of the instructions given in the August month as it will be shortly publishing FAQ on the implementation of the guidelines .

To read RBI Notification dated 04.08.2021 , CLICK HERE

LIGHT AT THE END OF THE TUNNEL FOR PMC BANK CUSTOMERS :

Dated 19.06.2021 : PMC Bank was one of the large interstate co-operative banks with network in seven states with 137 branches and customer deposit size of more than Rs 11,000 crores Reserve Bank of India ( RBI ) had put restrictions on operations of Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra ( PMC Bank ) under section 35A of Banking Regulations Act in September 2019 . Its customers were allowed just Rs 1,000 from their accounts then . Subsequently the limits were raised up to Rs 50,000 per customers in stages .

While other banks , like Yes Bank & Lakshmi Vilas Bank , which were in trouble in similar fashion , the bank customers of those banks were rescued by take over from other banking entities . But the customers of PMC are still waiting even after 20 months of closure of the bank .

Now a fresh news of RBI granting “in-principle” approval to Centrum Financial Services Limited (the applicant) to set up a small finance bank has rekindled the hope of PMC Bank customers . Centrum is one of the bidders that had offered to participate in reconstruction of the bank, in response to the Expression of Interest (EOI) dated November 3, 2020 floated by the bank. RBI and PMC Bank are engaging with such bidders in order to secure best possible terms for the depositors and other stakeholders while ensuring long term viability of the reconstructed entity.

With the banking licence , Centrum will be able to take over PMC Bank and run it . However we have to wait to see whether the negotiation will end with positive result and what will be the terms & conditions of the agreement . Any how the hope of PMC customers are rekindled now .

To read the RBIPress release in this regard , CLICK HERE

FINANCE MINISTRY POOH-POOHS MEDIA REPORTS ON CAIRN LEGAL ISSUE :

Dated 24.05.2021 : A fortnight back , many news papers had reported , quoting unofficial sources , that "  The finance ministry has asked public sector banks (PSBs) to be on high vigil against any attempt being made to seize their overseas deposits to recover USD 1.2 billion that the UK's Cairn Energy plc has been awarded against India levying retrospectively " . They also had indicated that Cash of Indian banks lying in nations such as the US and the UK could be easy target for Cairn energy for seizing and enforcing the arbitration award . The news had put some cloud on international operations of some Public Sector Banks as news also had said that PSBs might be forced to withdraw their nostro balances abroad in the fear of seizure of their accounts abroad .

Now Finance Ministry has come out with a press notification condemning such reports   claiming that the Government of India had purportedly asked state-owned banks to withdraw funds from foreign currency accounts abroad in anticipation of the potential seizure of such accounts with regard to the Cairn legal dispute. It has categorically stated that all such source based reports as false, the Government of India said that these are totally incorrect reports which were not based on true facts .

Finance ministry also states that Government of India is vigorously defending its case in the legal dispute with the Cairn energy. The Government has filed an application on March 22, 2021 to set aside the December 2020 international arbitral award in The Hague Court of Appeal. This proceeding is pending. The Government is pursuing legal avenues to defend its case in this dispute worldwide.

In the mean time ,   it appears , as per the statement of the Ministry ,  that the CEO and the representatives of Cairns had approached them for discussions to resolve the matter. Statement says that Constructive discussions have been held and the Government is open for an amicable solution to the dispute within the country’s legal framework.

To read Press Release dated 23.05.2021 , CLICK HERE

RBI CANCELS WEST BENGAL'S UNITED CO-OPERATIVE BANK LICENCE

Dated 15.05.2021 : Reserve Bank of India (RBI) has, vide order dated May 10, 2021 cancelled the licence of United Co-operative Bank Ltd., Bagnan, West Bengal. Consequently, the bank ceases to carry on banking business, with effect from the close of business on May 13, 2021. The Registrar of Cooperative Societies, West Bengal has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.The Reserve Bank cancelled the licence of the bank as:

The bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of section 11(1) and section 22 (3) (d) read with section 56 of the Banking Regulation Act, 1949.
The bank has failed to comply with the requirements of section 22 (3) (a), 22 (3) (b), 22 (3) (c), 22 (3) (d) and 22 (3) (e) read with section 56 of the Banking Regulation Act, 1949;
The continuance of the bank is prejudicial to the interests of its depositors;
The bank with its present financial position would be unable to pay its present depositors in full; and
Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

To read press release of RBI on this regard , CLICK HERE

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TAX PLANNING FOR FY 2020-21 ( AY 2021-22 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation

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SUPREME COURT LIFTS BAN ON DECLARING NPAS ,
REFUSES COMPLETE WAIVER OF INTEREST DURING LOCKDOWN PERIOD :

Dated 24.03.2021 : In the month of September 2020 , Supreme court had  ,through an interim order ,  instructed banks not to declare any account as Non-performing Asset ( NPA ) if they were not declared as NPA as on 31.08.2020 till further orders .

Now the court lifted the ban in an order issued yesterday . It also told that they do not want to interfere in policy decisions taken by Reserve Bank of India ( RBI ) or Government of India . It also rejected to entertain the plea for complete waiver of interest during the lockdown period , as bankers are obliged to pay interest to their deposit customers . However court told that no compound interest can be charged by the banks during moratorium period .

We may recall here that RBI that, in the month of May , had permitted lending institutions to extend the moratorium on term loan instalments by another three months, i.e., from June 1, 2020 to 4 August 31, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, was allowed to be shifted across the board by another three months. The decision was taken  in view of the extension of the lockdown and continuing disruptions on account of COVID-19 . Some borrowers who were not satisfied with the just moratorium were seeking total waiver of interest for the period of moratorium on the loan taken by them .

As per court intervention , Government of India had announced in the month of October a  Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020) who had total bank borrowings of less than Rs 2 crores .

The Supreme Court (SC) was hearing such petitions seeking interest waiver on loan moratorium granted by Reserve Bank of India (RBI) earlier. Justice Bhushan , one of the judges hearing the case , had observed that banks should not declare accounts as a non-performing assets (NPA) for two months and banks must not take coercive action against borrowers. Now with the lifting of the ban , banks have to classify such accounts which hitherto escaped from being called NPAs on account of the court ban . It is expected that with this verdict , the bank balance sheets will be adversely affected with ballooning NPA loans and higher provision requirement .

We have to wait to see whether Government will come out with a compond interest waiver plan for large advances as done for small borrowers in the month of October .

Source : Media

FOREIGNERS CAN OWN INDIAN INSURANCE COMPANIES NOW : NEW BILL

Dated 19.03.2021 : As per the Insurance Amendment bill 2021 , passed by Rajyasabha yesterday , Foreign investment in Indian insurance companies can go up to 74 % and there is no restriction on their ownership and control . The bill was introduced by minister of Corporate affairs Ms Nirmala Sitharaman . Presently there is a limit of 49 % . While permitting individual investment , the government may put additional terms 7 conditions for such investments .

However Minister has clarified that the individual insurance company may decide up on the level foreign investment participation within the overall limit of 74 % . The minister hoped that the bill will give impetus to growth of insurance business in India .

To read the original bill , CLICK HERE ( Courtesy : PRSINDIA.ORG )

REPORTS ON CURRENCY NOTES INCORRECT : RBI

Dated 27.01.2021 . There has been rumours in social media with regard to withdrawal of currency notes of Rs 100 denomination . Now Reserve Bank of India ( RBI ) has clarified that reports on withdrawal of old Rs 5 , Rs 10 & Rs 100 notes are incorrect .

Source : RBI Twitter account

RBI CANCELS LICENCE

LICENCE OF THE KARAD JANATA SAHAKARI BANK CANCELLED : RBI

Dated 09.12.2020 : Reserve Bank of India ( RBI ) , cancelled the license of beleaguered co-operative bank The Karad Janata Sahakari Bank Limited as RBI found the following deficiencies in the working of the bank :

1. The bank does not have adequate capital and earning prospects.
2. The bank has failed to comply with various requirements of the Banking Regulation Act, 1949 .
3. The continuance of the bank is prejudicial to the interests of its depositors .
4. The bank with its present financial position would be unable to pay its present depositors in full; and
5. Public interest would be adversely affected if the bank is allowed to carry on its banking business any further.

Consequent to the cancellation of its licence, The Karad Janata Sahakari Bank Ltd, Karad, Maharashtra is prohibited from conducting the business of ‘banking’ which includes acceptance of deposits and repayment of depositswith immediate effect.

With the cancellation of licence and commencement of liquidation proceedings, the process of paying the depositors of The Karad Janata Sahakari Bank Ltd., Karad, Maharashtra as per the DICGC Act, 1961 will be set in motion. On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of ₹ 5,00,000/- (Rupees Five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.

RBI assured that more than 99% of the depositors of the bank will get full payment of their deposits from DICGC.

LAKSHMIVILAS BANK TO OPERATE AS DBS BANK FROM 27TH, NOV

Dated 25.11.2020 : Finally the customers of Lakshmivilas Bank can relax now . The Government of India has today permitted the amalgamation   of the Lakshmi Vilas Bank Ltd. with DBS Bank India Ltd. The amalgamation will come into force on November 27, 2020. All the branches of the Lakshmi Vilas Bank Ltd. will function as branches of DBS Bank India Ltd. with effect from this date.

Today Government of India issued a Gazette Notification with regard to the scheme of amalgamation and the details of the  scheme is as per draft scheme announced earlier by RBI .

Customers, including depositors of the Lakshmi Vilas Bank Ltd. will be able to operate their accounts as customers of DBS Bank India Ltd. with effect from November 27, 2020. Consequently the moratorium on the Lakshmi Vilas Bank Ltd. will cease to be operative from that date. DBS Bank India Ltd. is making necessary arrangements to ensure that service, as usual, is provided to the customers of the Lakshmi Vilas Bank Ltd.

SALIENT FEATURES OF THE AMALGAMATION SCHEME:

1 . DBS Bank will take over entire assets and liabilities of LVB from 27.11.2020 .
2. Depositors and other creditors will be paid as per contact .
3. All employees will continue to be in appointment and paid as hitherto .
4. DBS Bank will have option to reorganize the branches as per its convenience .
5. Paid up share capital and reserves of LVB will be written off and delisted from SEBI .

To go through the Gazette Notification , CLICK HERE

LARGE CORPORATES / INDUSTRIAL HOUSES MAY BE PERMITTED TO OPEN BANKS : RBI PANEL

Dated 21.11.2020 : An internal working group formed by Reserve Bank of India ( RBI ) has recommended that large corporate and industrial houses might be permitted to promote their own banks . However it puts a caveat that permission to be given   only after necessary amendments to the Banking Regulation Act, 1949 (to prevent connected lending and exposures between the banks and other financial and non-financial group entities); and strengthening of the supervisory mechanism fr large conglomerates, including consolidated supervision. The group also recommends that permission may be given for NBFCs to convert to banks .

The Internal Working Group (IWG) was formed on on June 12, 2020 by RBI to review extant ownership guidelines and corporate structure for Indian private sector banks. The key recommendations of the group are as follows:

1. The cap on promoters’ stake in the long run (15 years) may be raised from the current level of 15 per cent to 26 per cent of the paid-up voting equity share capital of the bank. As regards non-promoter shareholding, a uniform cap of 15 per cent of the paid-up voting equity share capital of the bank may be prescribed for all types of shareholders.

2. Large corporate/industrial houses may be allowed as promoters of banks only after necessary amendments to the Banking Regulation Act, 1949 (to prevent connected lending and exposures between the banks and other financial and non-financial group entities); and strengthening of the supervisory mechanism for large conglomerates, including consolidated supervision.

3. Well run large Non-banking Finance Companies (NBFCs), with an asset size of ₹50,000 crore and above, including those which are owned by a corporate house, may be considered for conversion into banks subject to completion of 10 years of operations and meeting due diligence criteria and compliance with additional conditions specified in this regard.

4. For Payments Banks intending to convert to a Small Finance Bank, track record of 3 years of experience as Payments Bank may be considered as sufficient.

5. Small Finance Banks and Payments Banks may be listed within ‘6 years from the date of reaching net worth equivalent to prevalent entry capital requirement prescribed for universal banks’ or ‘10 years from the date of commencement of operations’, whichever is earlier.

6. The minimum initial capital requirement for licensing new banks should be enhanced from ₹500 crore to ₹1000 crore for universal banks, and from ₹200 crore to ₹300 crore for small finance banks.

7. Non-operative Financial Holding Company (NOFHC) should continue to be the preferred structure for all new licenses to be issued for universal banks. However, it should be mandatory only in cases where the individual promoters / promoting entities/ converting entities have other group entities.

8. While banks licensed before 2013 may move to an NOFHC structure at their discretion, once the NOFHC structure attains a tax-neutral status, all banks licensed before 2013 shall move to the NOFHC structure within 5 years from announcement of tax-neutrality.   Till the NOFHC structure is made feasible and operational, the concerns with regard to banks undertaking different activities through subsidiaries/ Joint Ventures/ associates need to be addressed through suitable regulations. Banks currently under NOFHC structure may be allowed to exit from such a structure if they do not have other group entities in their fold.

9 . Whenever new licensing guidelines are issued, if new rules are more relaxed, benefit should be given to existing banks, and if new rules are tougher, legacy banks should also conform to new tighter regulations, but a non-disruptive transition path may be provided to affected banks.

Now RBI has called for public reaction to the proposals and one may send comments to RBI before 15th, January 2021 to the
email : [email protected];

It may be noted here that some of the public sector banks operating now were promoted by leading industrial houses before their nationalization in 1969 .

For RBI Press release dated 20.11.2020 , CLICK HERE

LAKSHMIVILAS BANK ON MORATORIUM , TO BE AMALGAMATED
Dated 18.11.2020 : Government of India   yesterday , on the recommendations of Reserve Bank of India ( RBI ) , placed beleaguered Private bank The Lakshmi Vilas Bank Limited under moratorium for a period of 30 days .

RBI had recommended the move on account of bank's steady decline with the bank incurring continuous losses over the last three years, eroding its net-worth. " The bank has not been able to raise adequate capital to address issues around its negative net-worth and continuing losses. Further, the bank is also experiencing continuous withdrawal of deposits and low levels of liquidity. It has also experienced serious governance issues and practices in the recent years which have led to deterioration in its performance. The bank was placed under the Prompt Corrective Action (PCA) framework in September 2019 considering the breach of PCA thresholds as on March 31, 2019 " .

Now the customers of the bank will not be able to draw more than Rs 25,000 from their all accounts including savings Bank , Current A/C or any other deposit account . Further the Bank will not be not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal  of funds and acceptance of fresh deposits,. It will also not permitted to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated November 17 , 2020 .

As per Gazette notification issued by the Government of India ,
"  .  The Central Government hereby also directs that during the period of moratorium, the Lakshmi Vilas  Bank Limited (the said banking company) shall not, without the permission in writing of the Reserve Bank  of India,--
(a) make, in the aggregate, payment to a depositor of a sum exceeding Rs 25,000 lying to his credit, in any savings, current or any other deposit account, by whatever name called:
Provided that if a depositor maintains more than one account in the same capacity and  in the same right, the total amount payable from all the accounts together shall not exceed the  limit indicated above:
Provided further that wherever such depositor is having dues payable to the bank in  any manner, either as a borrower or surety, the amount payable to such depositor shall be made  after adjusting the relevant borrowal accounts;
(b) make, in the aggregate, payment to any creditor exceeding a sum of Rs 25,000/-   if not otherwise provided in this order, so however that this shall not affect—
(i) making of payment of amounts towards any drafts or pay orders issued by the Lakshmi Vilas Bank Limited and remaining unpaid on the date on which the order of moratorium  comes into force;
(ii) paying the proceeds of the bills received for collection on or before the 17th day of November, 2020;
(iii) making payment towards existing liabilities for call money or inter-bank borrowings  including letters of credit, which are falling due during the period of moratorium

Without prejudice to the conditions stipulated in sub-paragraph (a) of paragraph 2, in relation to  payment to any depositor of the Lakshmi Vilas Bank Limited, the Reserve Bank may by a general or  special order, permit the said banking company to allow payment to its depositors an amount in excess of Rs 25,000  to meet unforeseen expenses, as under:
(i) in connection with the medical treatment of the depositor or any person actually dependent  on him;
(ii) towards the cost of higher education of the depositor or any person actually dependent on him for education in India or outside India;
(iii) to pay obligatory expenses in connection with marriage or other ceremonies of the depositor  or his children or of any other person actually dependent upon him;
(iv) in connection with any other unavoidable emergency: Provided that the amount so allowed to be paid out of the balance lying to the credit of the depositor--
(a) shall be reckoned towards the payment due to him under any scheme of reconstruction or amalgamation as may be sanctioned by any competent authority in relation to the  said banking company and subject to such conditions as may be provided under such
scheme about appropriation of any payment made to a depositor of the said banking  company before or on the coming into force of the scheme; and
(b) shall not exceed the sum of five lakh rupees or the actual balance lying to the credit of
the account of such depositor, whichever is less.

SUPERSESSION OF BOARD OF DIRECTORS : RBI has further superseded the board of directors of the bank for 30 days and appointed an administrator .  Shri T. N. Manoharan, former Non Executive Chairman of Canara Bank has been appointed as the Administrator under Sub-section (2) of Section 36 A C A of the Act.

AMALGAMATION PLAN WITH DBS BANK INDIA :

In the back of moratorium announcement , RBI has also announced an amalgamation plan , through which DBS BANK INDIA will take over the business of the Lakshmi Vilas Bank . RBI has given time up to 20th November , 2020 for raising any objections to the terms of the draft scheme which is put in public domain now . DBS Bank India is an Indian subsidiary of DBS Bank Singapore .

SALIENT FEATURES OF THE AMALGAMATION SCHEME:

1 . DBS Bank will take over entire assets and liabilities of LVB
2. Depositors and other creditors will be paid as per contact
3. All employees will continue to be in appointment and paid as hitherto .
4. DBS Bank will have option to reorganize the branches as per its convenience .
5. Paid up share capital and reserves of LVB will be written off and delisted from SEBI .

 ABOUT LAKSHMI VILAS BANK :

History :   Lakshmi Vilas Bank was founded in 1926 by a group of seven businessmen in Karur under the leadership of Shri V.S.N. Ramalinga Chettiar. The mission was to cater to the financial needs of the people in and around the textile city of Tamil Nadu, Karur involved in various trading businesses, industries and agriculture.
Lakshmi Vilas Bank expanded its branch network considerably during the period 1961-65, when the Bank took over nine other banks. In 1974, the bank started expanding the branch network beyond Tamil Nadu to leverage opportunities in the pan-Indian market. Branches were set up in the neighbouring states of Andhra Pradesh, Karnataka and Kerala, important financial centres such as Mumbai, New Delhi and Kolkata as well as in other significant business centres in Maharashtra, Gujarat and Madhya Pradesh.  In July 2014, the bank moves its corporate office moved to Chennai.

OPERATIONS    As 30th of Sep 2020 :    Bank's  operations are spread over a network of 563 branches (includes 7 Commercial Banking Branches, 1 Satellite branch) and 5 extension counters with PAN India presence, supervised by 7 Regional Offices.

Bank has 32 “B” Category Branches , 974 ATMs and deployed POS machines at various merchant establishments.
the bank has presence in 16 States and 3 Union Territories across the length and breadth of the country

FINANCIALS :  The Bank’s Gross Advances as on 30th Sep 2020 was to the tune of Rs 16,622 crores, with Net Interest Income at Rs 79.52 crores.
Total Deposits were pegged at Rs 20,973 crores. The bank has a total business mix of Rs 37,595 Crores as on 30th Sep 2020.

SHARE HOLDING OF LVB :  The total paid-up share capital of the troubled Lakshmi Vilas Bank is likely to be written-off as the merger with DBS Bank India goes ahead. Shares were last traded at Rs 12.45 per share before RBI announced the amalgamtion scheme .

It is reported that 93.2 per cent stake is held by public and only 6.8 per cent by promoters in LVB.

For RBI Press Release ,        CLICK HERE   For Gazette notification , CLICK HERE

TIME LIMIT TO COMPLY WITH THE FRESH GUIDELINES ON CURRENT ACCOUNT OPENING EXTENDED : RBI

Dated 05.11.2020 : During the month of August 2020 , Reserve Bank of India ( RBI ) had prohibited banks from opening current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions of such entities shall be routed through the CC/OD account. ( But in case a bank has a share of 10 per cent or more in the total exposure of the banking system to the borrower, it can provide CC/OD facility as hitherto ). If a bank’s exposure to a borrower is less than 10 per cent of the exposure of the banking system to that borrower, while credits are freely permitted for the current account maintained , debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10 per cent or more of the exposure of the banking system to that bank .

Further RBI had asked banks to ensure compliance with the above instructions within a period of three months for the existing accounts also . Now RBI has permitted time up to December 15th , 2020 for compliance with the instructions of the instructions given in the August month as it will be shortly publishing FAQ on the implementation of the guidelines .

To read RBI Notification dated 02.11.2020 , CLICK HERE

Earlier report on the matter , read below :

NO CURRENT ACCOUNT TO BE OPENED IF ENTITY HAS CC/ OD FACILITY FROM OTHER BANKS : RBI

Dated 07.08.2020 : Reserve Bank of India has prohibited banks from opening current accounts for customers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions of such entities shall be routed through the CC/OD account. But in case a bank has a share of 10 per cent or more in the total exposure of the banking system to the borrower, it can provide CC/OD facility as hitherto . If a bank’s exposure to a borrower is less than 10 per cent of the exposure of the banking system to that borrower, while credits are freely permitted for the current account maintained , debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10 per cent or more of the exposure of the banking system to that borrower.

Funds will be remitted from these accounts to the said transferee CC/OD account at the frequency agreed between the bank and the borrower. Further, the credit balances in such accounts shall not be used as margin for availing any non-fund based credit facilities. In case there is more than one bank having 10 per cent or more of the exposure of the banking system to that borrower, the bank to which the funds are to be remitted may be decided mutually between the borrower and the banks. It may be noted that banks with exposure to the borrower of less than 10 per cent of the exposure of the banking system can offer working capital demand loan (WCDL) / working capital term loan (WCTL) facility to the borrower.

In case of customers who have not availed CC/OD facility from any bank, banks may open current accounts as under:

In case of borrowers where exposure of the banking system is ₹50 crore or more, banks shall be required to put in place an escrow mechanism. Accordingly, current accounts of such borrowers can only be opened/maintained by the escrow managing bank. However, there is no restriction on opening of ‘collection accounts’ by lending banks subject to the condition that funds will be remitted from these accounts to the said escrow account at the frequency agreed between the bank and the borrower. Further, the balances in such accounts shall not be used as margin for availing any non-fund based credit facilities. While there is no prohibition on amount or number of credits in ‘collection accounts’, debits in these accounts shall be limited to the purpose of remitting the proceeds to the said escrow account. Non-lending banks shall not open any current account for such borrowers.

For borrowers who do not avail CC/ OD facility , following guidelines will apply :

1. In case of borrowers where exposure of the banking system is ₹5 crore or more but less than ₹50 crore, there is no restriction on opening of current accounts by the lending banks. However, non-lending banks may open only collection accounts and funds to be remitted to lender bank

2. In case of borrowers where exposure of the banking system is less than ₹5 crore, banks may open current accounts subject to obtaining an undertaking from such customers to the effect that customers shall inform the bank(s), if and when the credit facilities availed by them from the banking system becomes ₹5 crore or more.

3. Banks are free to open current accounts of prospective customers who have not availed any credit facilities from the banking system, subject to necessary due diligence as per their Board approved policies.

Further RBI has advised that borrowals from term loans s should not be routed through current accounts , but direct payment must be made to the suppliers of goods / services .

To read the RBI Notification on the subject , CLICK HERE

UNLOCK 5.00 EXTENDED

28.10.2020 : Ministry of Home Affairs , Government of India ( MHA ) yesterday extended the guidelines for Unlock 5.0 issued on 30.09.2020 by one month period to 30.11.2020 from earlier validity which was till 31.10.2020 .

For complete details of the guidelines dated 27.10.2020 , CLICK HERE
For complete details of the guidelines dated 30.09.2020 CLICK HERE

GUIDELINES FOR UNLOCK 5.0 : CINEMAS TO OPEN

01.10.2020 : Ministry of Home Affairs , Government of India ( MHA ) yesterday issued guidelines for Unlock 5.0 which will be effective till 31.10.2020 .

As per the guidelines , Following Activities will be permitted from 15th October 2020, in areas outside the Containment Zones

1. Cinemas/ theatres/ multiplexes will be permitted to open with upto 50% of their seating capacity, for which, SOP will be issued by Ministry of Information & Broadcasting.
2. Business to Business (B2B) Exhibitions will be permitted to open, for which, SOP will be issued by the Department of Commerce.
Swimming pools being used for training of sportspersons will be permitted to open, for which the standard operating procedure (SOP) will be issued by Ministry of Youth Affairs & Sports (MoYA&S).
3. Entertainment parks and similar places will be permitted to open, for which the SOP will be issued by Ministry of Health & Family Welfare (MoHFW).

Opening of Schools, colleges, education institutions and coaching institutions

For re-opening of schools and coaching institutions, State/ UT Governments have been given the flexibility to take a decision after 15th October 2020, in a graded manner. The decision shall be taken in consultation with the respective school/ institution management, based on their assessment of the situation, and subject to certain conditions.

Regulation of gatherings

Social/ academic/ sports/ entertainment/ cultural/ religious/ political functions and other congregations have already been permitted with a ceiling of 100 persons, outside Containment Zones only. Now State/ UT Governments have been given the flexibility to permit such gatherings beyond the limit of 100 persons, outside Containment Zones, after 15th October 2020, which will be subject to certain conditions

All activities, except International air travel of passengers, other than permitted by MHA. , shall be permitted outside containment zones:   Lockdown measures would continue to be implemented strictly in the containment zones. These will be demarcated by the District Authorities . In containment zones , only essential activities will be permitted .

Other Issues :

1 . States not to impose any local lockdown outside Containment Zones
2.  No restriction on Inter-State and intra-State movement
3.   Vulnerable persons, i.e., persons above 65 years of age, persons with co-morbidities, pregnant women, and children below the age of 10 years, are advised to stay at home, except for meeting essential requirements and for health purposes.

For complete details of the guidelines , CLICK HERE

INTEREST ON INTEREST WAIVER SCHEME : SBI TO CO-ORDINATE

Dated 27.10.2020 : Government of India has announced a Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (1.3.2020 to 31.8.2020) . State Bank of India is designated as nodal agency for implementing the scheme . Details of the scheme are as follows :

WHO IS ELIGIBLE FOR THE EXGRATIA PAYMENT ?

1 . All borrowers of all banks including co-operative banks and Regional rural banks , Financial institutions and NBFC registered with RBI are eligible for the benefits of the scheme . Total borrowal limit should not have exceeded Rs 2 crores
2. The accounts should not have become NPA as on 29.02.2020 and the amount outstanding as on 29.02.2020 is eligible .
3. Borrowers must be from any of the following semnents :
a. MSME Loans
b. Education loans
c . Housing Loans
d. Consumer durable loans
e. Credit card dues
f. Automobile loans
g. Personal loans to professionals
h. Consumption loans

BENEFIT OF THE SCHEME :

Ex -gratia payment will be given o the above set of borrowers an amount equivalent to the difference between simple interest and compond interest for the period from 01.03.2020 to 31.08.2020 for the outstanding as on 29.02.2020 irrespective of whether borrowers have availed moratorium or not . The financial institutions have to make ex-gratia payment on or before 05.11.2020 .

RATE OF INTEREST : All loans except credit card dues , Interest rate as prevailing reckoned will be contacted rate of the individual loan prevailing on 29.02.2020 . For credit card dues , Weighted Average Lending Rate ( WALR ) taken for loans on EMI basis will be reckoned .

CLAIM PROCEDURE : Lending institutions should submit their pre-audited claims to the designated offices of State Bank of India before 15.12.2020 . Audit to be done by statutory auditors of the institutions / banks . Government will reimburse the claim through SBI .

For the detailed guidelines issued by Government of India , CLICK HERE

INSURANCE COMPANIES TO ISSUE SECURITY BONDS

INSURANCE COMPANIES TO ISSUE SECURITY BONDS TOWARDS INFRASTRUCTURE PROJECTS

Dated 20.10.2020 : A working Group appointed by IRDAI and Headed by Sri G . Srinivasan has recommended re- entry of Insurance companies in to Security Bond Market

The group has recommended that the Surety Bonds business may be revived by insurance companies with offering of surety bonds to
Construction Companies in India that covers road projects, housing/commercial  buildings and other projects of Government/Private. The contract bonds may include:  Bid Bonds, Performance Bonds, Advance Payment Bonds & Retention Money. The limit  of guarantee may be limited to maximum 30 percent of Project Value.  Group has also recommended that the other types of surety bonds such as customs or tax bonds, court bonds may be permitted with counter guarantee of the parties with additional liquid securities with a  margin of 30 percent and above. The insurer shall consider issuing the other types of bonds on case to case basis, depending on the available tangible securities for the
parties to ensure that at least partial recovery is protected. It is felt that the surety bonds in favour of Central Board of Indirect Taxes and Customs (CBIC) will facilitate trade  considerably by substituting Bank Guarantees.

Further the Group has recommended that IRDAI may formulate detailed guidelines to the insurance companies with regard to Capital requirement , exposure limit and risk assessment mechanism .

Presently banks are undertaking the business of issuing guarantees and bonds and entry of insurance companies will hot up the market .

The report makes an interesting reading with detailed information on the nature of different kinds of bonds , sureties and guarantees with International practices followed . Interested may read the report by CLICKING HERE

RTGS WILL BE AVAILABLE 24 X 7 FROM DECEMBER 2020

Dated 12.10.2020 : National Electronic Fund Transfer ( NEFT ) was made available round the clock , 7 days a week from 15th , December 2019 . Now Reserve Bank of India has announced that Real Time Gross Settlement ( RTGS ) will also be made available round the clock from December 2020 . The large-value RTGS system is currently available for customers from 7.00 am to 6.00 pm on all working days of a week (except 2nd and 4th Saturdays of the month). Funds transfers above Rs 2,00,000 are being made using RTGS facility .

RBI is undertaking the above facility to support the ongoing efforts aimed at global integration of Indian financial markets, facilitate India’s efforts to develop international financial centers and to provide wider payment flexibility to domestic corporates and institutions .

EXPERT COMMITTEE ON INTEREST WAIVER FORMED

EXPERT COMMITTEE TO LOOK IN TO THE MATTER OF INTEREST WAIVER

Dated 11.09.2020 : During the proceedings of the ongoing hearing in Hon’ble Supreme Court of India, in the matter of Gajendra Sharma Vs. UoI and Others, the bench had asked the government to look in to the issue of the relief for the borrowers in terms of waiver of interest and waiver of interest on interest and other related issues.

Now Government has constituted an Expert Committee for making an overall assessment of the situation and submit a report within one week .The Expert Committee members are as under as under:

(i) Shri Rajiv Mehrishi, former CAG of India - Chairperson

(ii) Dr. Ravindra H. Dholakia, former Professor, IIM Ahmedabad & ex- Member, Monetary Policy Committee of Reserve Bank of India

(iii) Shri B. Sriram, Former Managing Director, State Bank of India & IDBI Bank .

The terms of reference of the committee are :

(i) Measuring the impact on the national economy and financial stability of waiving of interest and waiving of interest on interest on the COVID-19 related moratorium

(ii) Suggestions to mitigate financial constraints of various sections of society in this respect and measures to be adopted in this regard

(iii) Any other suggestions/observations that may be necessary given the current situation.

The committee is authorized to consult the banks in the matter for their opinions

For the press release dated 10.09.2020 in this regard , CLICK HERE

DOORSTEP BANKING SERVICES OF PSB

Dated 10.09.2020 : Union Minister of Finance & Corporate Affairs Smt. Nirmala Sitharaman yesterday inaugurated Doorstep Banking Services by PSBs while participating in the awards ceremony to felicitate best performing banks on EASE Banking Reforms Index.

Door Step Banking is an initiative taken by PSB Alliance ,  an umbrella setup of all Public Sector Banks , through which customers can avail major Banking transaction services at their Door Step. It shall be implemented by Door Step Banking(DSB) agents in 100 major Centers across the Country for offering different financial as well as non financial services.

As part of the EASE Reforms of Government of India , Doorstep Banking Services is envisaged to provide convenience of banking services to the customers at their door step through the universal touch points of Call Centre, Web Portal or Mobile App. Customers can also track their service request through these channels.

At present only non-financial services viz. Pick up of negotiable instruments (cheque / demand draft / pay order, etc.), Pick up new cheque book requisition slip, Pick up of 15G / 15H forms, Pick up of IT / GST challan, Issue request for standing instructions, Request for account statement, Delivery of non-personalised cheque book, demand draft, pay order, Delivery of term deposit receipt, acknowledgement, etc., Delivery of TDS / Form 16 certificate issuance, Delivery of pre-paid instrument / gift card are available to customers. Financial services shall be made available from October 2020.

The services can be availed by customers of Public Sector Banks at nominal charges. The services shall benefit all customers, particularly Senior Citizens and Divyangs who would find it at ease to avail these services.

To read Press Release dated 09.09.2020 in this regard , CLICK HERE

NOW STARTUPS ARE IN PRIORITY SECTOR

RBI BRINGS LENDING TO STARTUPS UNDER PRIORITY SECTOR

Dated 05.09.2020 : Reserve Bank of India has brought  finance to start-ups (up to ₹50 crore) , loans to farmers for installation of solar power plants for solarisation of grid connected agriculture pumps and loans for setting up Compressed Bio advances to Micro , Small Medium Enterprises ( MSME ) sector . The announcement has been made by RBI in the new guidelines issued to the banks .

Now loans to startups , which come under definition of MSME sector and limits up to Rs 50 crores will come under Priority sector .

The priority sector wherein banks have to lend up to 40% of their advances ( 75 % for Small finance Banks ) include Agriculture , MSME sector , Khadi & Village industry , Export , Education and Housing . Within the above target , agriculture finance should not be less than 18 % of total credit .

Rate of interest for Priority sector lending : The rates of interest on bank loans will be as per directives issued by Department of Regulation (DoR), RBI from time to time.

To read the RBI press release dated 04.09.2020 , CLICK HERE

NO NEW NPA ACCOUNTS TILL FURTHER SUPREME COURT ORDER

04.09.2020 : Supreme court has ,through an interim order ,  instructed banks not to declare any account as Non-performing Asset ( NPA ) if they were not declared as NPA as on 31.08.2020 till further orders .

We may recall here that RBI that, in the month of May , had permitted lending institutions to extend the moratorium on term loan instalments by another three months, i.e., from June 1, 2020 to 4 August 31, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, was allowed to be shifted across the board by another three months. The decision was taken  in view of the extension of the lockdown and continuing disruptions on account of COVID-19 .

Now some borrowers who were not satisfied with the just moratorium are seeking total waiver of interest for the period of moratorium on the loan taken by them . The Supreme Court (SC) was hearing yesterday such petitions seeking interest waiver on loan moratorium granted by Reserve Bank of India (RBI) earlier. It is reported that  Justice Bhushan , one of the judges hearing the case , observed that banks should not declare accounts as a non-performing assets (NPA) for two months and banks must not take coercive action against borrowers.

The court will continue to hear the matter on 10.09.2020 .

Source : Media Reports

GUIDELINES FOR UNLOCK 4.0 : METRO RAILS TO OPEN

30.08.2020 : Ministry of Home Affairs , Government of India ( MHA ) yesterday issued guidelines for Unlock 4.0 which will be effective till 30.09.2020 .
As per the guidelines ,

1. In all areas except containment zones , all activities will be permitted except the following
a. International Air travel
b. Cinema Halls , swimming pools , theaters and entertainment parks which will be allowed to open on 21.09.2020
c. Educational Institutions will be closed till 30.09.2020 , but  Higher Education Institutions will be open only for research scholars (Ph.D.) and post-graduate students of technical and professional programmes requiring laboratory/ experimental works.
d. Religious , social and other functions will be only be allowed after 21.09.2020 subject to a ceiling of 100 persons gathering with social distancing , mask wearing conditions
e. Metro trains will be allowed to operate after 07.09.2020

2.  Lockdown measures would continue to be implemented strictly in the containment zones. These will be demarcated by the District Authorities . In containment zones , only essential activities will be permitted .

3. State Governments / UTs cannot impose any local lock-down outside the containment zones .

4. Persons of age above 65 years , children below 10 years , pregnant women and other persons with co- morbidities  are advised to stay home .
For complete details of the guidelines , CLICK HERE

SCHEME FOR RESTRUCTURING OF ADVANCES TO MSME EXTENDED : RBI

Dated 07.08.2020 : Reserve Bank of India has extended the scheme for restructuring advances to Micro , Small Medium Enterprises ( MSME ) sector and now it will be operative till 31.03.2021 . RBI has noted the continued need to support the viable MSME entities on account of the fallout of Covid19 and hence decided to align the guidelines with the Resolution Framework for COVID 19 – related Stress announced for other advances,. Accordingly, existing loans to MSMEs classified as 'standard' may be restructured without a downgrade in the asset classification, subject to the following conditions:

1. The aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower does not exceed ₹25 crore as on March 1, 2020.

2. The borrower’s account was a ‘standard asset’ as on March 1, 2020.

3. The restructuring of the borrower account is implemented by March 31, 2021.

4. The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration. This shall be determined on the basis of exemption limit obtaining as on March 1, 2020.

5. Asset classification of borrowers classified as standard may be retained as such, whereas the accounts which may have slipped into NPA category between March 2, 2020 and date of implementation may be upgraded as ‘standard asset’, as on the date of implementation of the restructuring plan. The asset classification benefit will be available only if the restructuring is done as per provisions of this circular.

Further banks are asked to maintain additional provision of 5% over and above the provision already held by them.

To read RBI Notification , CLICK HERE

BANKS CAN GIVE LOAN UP TO 90 % OF GOLD VALUE : RBI GOVERNOR

Dated 06.08.2020 : Mr Shaktikantha Das , Governor of Reserve Bank of India , has announced that banks will be permitted to grant loans up to 90 % of the value while granting gold loans .

As per extant guidelines, loans sanctioned by banks against pledge of gold ornaments and jewellery for non-agricultural purposes should not exceed 75 per cent of the value of gold ornaments and jewellery. With a view to mitigating the impact of COVID-19 on households, it has been decided by RBI to increase the permissible loan to value ratio (LTV) for such loans to 90 per cent. This relaxation shall be available till March 31, 2021.

To read the RBI Statement on the subject , CLICK HERE

GUIDELINES FOR UNLOCK 3.0 : NO NIGHT CURFEW

29.07.2020 : Ministry of Home Affairs , Government of India ( MHA ) today issued guidelines for Unlock 3.0 5.0 effective till 30.08.2020 .

As per the guidelines ,

1. In all areas except containment zones , all activities will be permitted except the following
a. Educational Institutions
b. Cinema Halls, Swimming pools , Entertainment parks, Theaters , bars ,
c. International Air Travel
d. Metro Rail
e. Religious , social and other functions

2.  Lockdown measures would continue to be implemented strictly in the containment zones. These will be demarcated by the District Authorities . In containment zones , only essential activities will be permitted .

3. State Governments may impose restrictions outside containment zones on assessment of situation in a particular place .

4. Persons of age above 65 years , children below 10 years , pregnant women and other persons with co- morbidities  are advised to stay home .
5 . Independence celebrations to be held keeping social distancing .

The guideline hence suggests that there will be no night curfew and there will be no restriction of movement during the night times .

For complete details of the guidelines , CLICK HERE

YET TO DECIDE ON FRDI BILL : FINANCE MINISTRY

28.07.2020 : Ministry of Finance has clarified that the government  has not taken any decision to reintroduce the FRDI Bill.

The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) was introduced in Lok Sabha on 10th August, 2017 and, thereafter, was referred to the Joint Committee of Parliament for examination and report thereon.  The Government had withdrawn the FRDI Bill in August, 2018 for further comprehensive examination and reconsideration of the subject. The press release is in response to social media postings in circulation now on the FRDI bill .

The FRDI bill which contains contentious clauses on bail out / bail in of financial institutions was of debate earlier and had spread scare among the bank depositors about the safety of their deposits in banks .

Though the bill was withdrawn in August 2018 , The finance minister  Nirmala Sitharaman had said in February 2020 that the department was still working on the contentious Financial Resolution and Deposit Insurance (FRDI) . However she was not sure when it would be tabled in the house . Now again ministry has given clarification that the matter is not yet decided .

To read PIB notification dated 27.07.2020 , CLICK HERE

CO-OP BANKS NOW UNDER PURVIEW OF RBI

29.06.2020 : The Government of India has issued extra-ordinary ordinance dated 26.06.2020 through which banking regulations are amended to bring co -operative banks under the purview of RBI .

The ordinance extends powers already available with RBI in respect of other banks to Co-operative Banks . The government hopes the move will bring sound banking regulation to the co-operative banks and ensure professionalism and access to capital.

The amendments do not affect existing powers of the State Registrars of Co-operative Societies under state co-operative laws. The amendments do not apply to Primary Agricultural Credit Societies (PACS) or co-operative societies whose primary object and principal business is long-term finance for agricultural development, and which do not use the word “bank” or “banker” or “banking” and do not act as drawees of cheques. .

For Gazette Notification , CLICK HERE

RBI ALLOWS WITHDRAWAL ENHANCEMENT IN VARIOUS BANKS PLACED UNDER RESTRICTIONS

20.06.2020 : Reserve Bank of India ( RBI ) yesterday has allowed higher withdrawal limits for customers   various banks listed below which were placed   under section 35A of Banking Regulations Act . Further RBI has also extended restrictions ON PMC Bank .

1. Youth Development Cooperative Bank Ltd., Kolhapur, Maharashtra  : NEW WITHDRAWAL LIMIT RS 20,000
2. Hindu Cooperative Bank Ltd., Pathankot, Punjab   :  NEW WITHDRAWAL LIMIT RS 50,000
3. Kerala Mercantile Co-operative Bank Limited, Kozhikode : NEW WITHDRAWAL LIMIT RS 50,000
4. Sri Guru Raghavendra Sahakara Bank Niyamitha, Bengaluru :   NEW WITHDRAWAL LIMIT RS 1,00,000
5.  Punjab and Maharashtra Cooperative Bank Limited, Mumbai :  NEW WITHDRAWAL LIMIT RS 1,00,000

. Now RBI has extended the restrictions on Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra ( PMC Bank ) for a period of 6 months   up to 22.12.2020 .

GUIDELINES FOR LOCK DOWN 5.0

30.05.2020 : Ministry of Home Affairs , Government of India ( MHA ) today issued guidelines for National Lock down 5.0 effective from 01st, June 2020 till 30.06.2020 .

As per the guidelines , Lockdown measures would continue to be implemented strictly in the containment zones. These will be demarcated by the State/ UT Governments, after taking into consideration the guidelines issued by the Health Ministry. Within the containment zones, strict perimeter control shall be maintained and only essential activities allowed.   . All activities that were prohibited earlier would be opened up in areas outside Containment Zones in a phased manner, with the stipulation of following Standard Operating Procedures (SOPs), to be prescribed by the Health Ministry:

PHASED UNLOCKING : As the guidelines contain plans for opening up the so far closed services in a phased manner , the guidelines are also called UNLOCK INDIA 1.0 .

PHASE -1 :  (permitted to open from June 8, 2020)

Religious places and places of worship for public;  Hotels, restaurants and other hospitality services; and  Shopping malls.

PHASE -2 : Schools, colleges, educational/ training/ coaching institutions etc., will be opened after consultations with States and UTs. State Governments/ UT administrations are being advised to hold consultations at the institution level with parents and other stakeholders. Based on the feedback, a decision on the re-opening of these institutions will be taken in the month of July, 2020. MoHFW will prepare SOP for these institutions.

Following activities will continue to be prohibited during lockdown 5.0 :

International air travel of passengers; Operation of Metro Rail; Cinema halls, gymnasiums, swimming pools, entertainment parks, theatres, bars and auditoriums, assembly halls and similar places; and, Social/ political/ sports/ entertainment/ academic/ cultural/ religious functions/ and other large congregations.

( Dates for the opening of above activities would be decided in Phase III, based on assessment of the situation. )
But the night curfew  will be between 9.00 pm to 5..am

Unrestricted Movement of Persons and Goods

No restriction on inter-State and intra-State movement of persons and goods. No separate permission/ approval/ e-permit would be required for such movements.  However, if a State/ UT, based on reasons of public health and its assessment of the situation, proposes to regulate movement of persons, it would give wide publicity in advance regarding the restrictions to be placed on such movement, and the related procedures to be followed.

Night curfew would continue to remain in force, on the movement of individuals, for all non-essential activities. However, the revised timings of the curfew will be from 9 pm to 5 am.

Protection for vulnerable persons
Vulnerable persons, i.e., persons above 65 years of age, persons with co-morbidities, pregnant women, and children below the age of 10 years, are advised to stay at home, except for meeting essential requirements and for health purposes.

For detailed guidelines , CLICK HERE

RBI EXTENDS MORATORIUM BY ANOTHER 3 MONTHS ON LOAN INSTALLMENTS

Dated 22.05.2020 : On March 27, 2020, the RBI permitted all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020.

In view of the extension of the lockdown and continuing disruptions on account of COVID-19, RBI has decided to permit lending institutions to extend the moratorium on term loan instalments by another three months, i.e., from June 1, 2020 to 4 August 31, 2020. Accordingly, the repayment schedule and all subsequent due dates, as also the tenor for such loans, may be shifted across the board by another three months.

Deferment of Interest on Working Capital Facilities

In respect of working capital facilities sanctioned in the form of cash credit/overdraft, lending institutions are being permitted to allow a deferment of another three months, from June1, 2020 to August 31, 2020, in addition to the three months allowed on March 27, 2020 on payment of interest in respect of all such facilities outstanding as on March 1, 2020.

Payment of Interest on Working Capital Facilities for the Deferment Period

In order to address the issue of the difficulties faced by borrowers in repaying the accumulated interest for the deferment period on working capital facilities in one shot, banks are permitted to convert the accumulated interest on working capital facilities over the deferment period (up to August 31, 2020) into a funded interest term loan which shall be repayable by March 31, 2021 . The same will not result in asset classification downgrade.

Whether one should utilize the moratorium ?

The rescheduling of payments, including interest, will not qualify as a default . It will also not adversely impact the credit history of the beneficiaries. . Hence if you are unable to pay the installment due to financial constraint during the three months , it will be useful to avail the benefit and defer the payment . But the deferred installments will have to be paid along with the accrued interest at the end of repayment and it may increase your total liability and compounded interest on the deferred EMI for a long term loan can be substantial . Hence if you are in a financial position to pay , it may be worth just continuing with the schedule .

For RBI Press Release dated 22.05.2020 , CLICK HERE

LOCK DOWN EXTENDED TILL MAY 31st : MHA

17.05.2020 : Ministry of Home Affairs , Government of India ( MHA ) has extended the ongoing national lock down up to 31st, May 2020 .

As per guidelines issued by Ministry of Home Affairs ( MHA ) today , the following services / office are prohibited during the lock down 4.0 period staring from 18.05.2020 till 3105 2020 :

PROHIBITED ACTIVITIES :

1.Domestic and international Air travel
2. Metro rail services
3. School , colleges and Educational institutions
4. Hotels , restaurants and other hospitality services ( Home Delivery is permitted )
5. Cinema Halls , Shopping Malls , Gyms and swimming pools
6. Religious , political and social functions
7. Religious places are not open to public

RESTRICTED ACTIVITIES : Interstate movement of vehicles with mutual agreement between the states

CLASSIFICATION OF ZONES : States and union Territories will decide classification of Green , Orange , Red and containment zones

NIGHT CURFEW : will continue between 7.00 pm to 7..am

SENIOR CITIZENS AND CHILDREN : Persons aged above 65 year and below 10 year will have to stay at home except for essential purposes

CONTAINMENT ZONES : Only essential services are permitted

ALL OTHER ACTIVITIES ARE PERMITTED

To read complete guidelines of MHA dated 17.05.2020 , CLICK HERE

RBI CANCELS LICENCE OF THE CKP CO-OPERATIVE BANK , MUMBAI

Dated 04.05.2020 : Reserve Bank of India ( RBI ) , on 02.052020 has cancelled the licence of The CKP Co-operative Bank Ltd., Mumbai, to carry on banking business, with effect from the close of business on April 30, 2020. The Registrar of Co-operative Societies, Pune, Maharashtra, has also been requested by RBI to issue an order for winding up the affairs of The CKP Co-operative Bank Ltd., Mumbai and appoint a liquidator for the bank.

On liquidation, every depositor is entitled to repayment of his/her deposits up to a monetary ceiling of ₹ 5,00,000/- (Rupees Five lakh only) from the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per usual terms and conditions.

As per the website of CKP Bank , the bank had total deposit of Rs 485 crores and advance of Rs 161 crores in November 2019 .

For RBI Press Release , CLICK HERE

LOCK DOWN EXTENDED TILL MAY 17th : MHA

02.05.2020 : Ministry of Home Affairs , Government of India ( MHA ) has extended the ongoing national lock down by another two weeks effective from 4th, May 2020 .

MHA also issued new guidelines to regulate different activities in this period, based on the risk profiling of the districts of the country into Red (hotspot), Green and Orange Zones. The guidelines have permitted considerable relaxations in the districts falling in the Green and Orange Zones. . The green zones get most of the relaxations , However there are relaxations even in Red zones .

Red Zones :
Movement of individuals and vehicles is allowed only for permitted activities, with a maximum of 2 persons (besides the driver) in four-wheeler vehicles, and with no pillion rider in the case of two-wheelers. Industrial establishments in urban areas, viz., Special Economic Zones (SEZs), Export Oriented Units (EOUs), industrial estates and industrial townships with access control have been permitted. The other industrial activities permitted are manufacturing units of essential goods, including drugs, pharmaceuticals, medical devices, their raw material and intermediates; production units, which require continuous process, and their supply chain; manufacturing of IT hardware; jute industry with staggered shifts and social distancing; and, manufacturing units of packaging material. Construction activities in urban areas have been limited to in-site construction (where workers are available on site and no workers are required to be brought in from outside) and construction of renewable energy projects. Shops in urban areas, for non-essential goods, are not allowed in malls, markets and market complexes. However, all standalone (single) shops, neighborhood (colony) shops and shops in residential complexes are permitted to remain open in urban areas, without any distinction of essential and non-essential. E-Commerce activities, in the Red Zones, are permitted only in respect of essential goods. Private offices can operate with upto 33% strength as per requirement, with the remaining persons working from home. All Government offices shall function with senior officers of the level of Deputy Secretary and above at full strength, and the remaining staff attending upto 33% as per requirement. However, Defense and Security services, Health and Family Welfare, Police, Prisons, Home Guards, Civil Defence, Fire and Emergency Services, Disaster management and related services, National Informatics Centre (NIC), Customs, Food Corporation of India (FCI), National Cadet Corps (NCC), Nehru Yuvak Kendra (NYK) and Municipal services shall function without any restrictions; delivery of public services shall be ensured and necessary staff will be deployed for such purpose.

All industrial and construction activities in rural areas, including MNREGA works, food-processing units and brick-kilns are permitted; besides, in rural areas, without distinction to the nature of goods, all shops, except in shopping malls are permitted. All agriculture activities, e.g., sowing, harvesting, procurement and marketing operations in the agricultural supply chain are permitted. Animal husbandry activities are fully permitted, including inland and marine fisheries. All plantation activities are allowed, including their processing and marketing. All health services (including AYUSH) are to remain functional, including transport of medical personnel and patients through air ambulances. A large part of the financial sector remains open, which includes banks, non-banking finance companies (NBFCs), insurance and capital market activities, and credit co-operative societies. Operation of homes for children, senior citizens, destitutes, women and widows etc.; and operation of Anganwadis has also been permitted. Public utilities, e.g., utilities in power, water, sanitation, waste management, telecommunications and internet will remain open, and courier and postal services will be allowed to operate.

Most of the commercial and private establishments have been allowed in the Red Zones. These include print and electronic media, IT and IT enabled services, data and call centres, cold storage and warehousing services, private security and facility management services, and services provided by self-employed persons, except for barbers etc., as mentioned earlier. Manufacturing units of essential goods, including drugs, pharmaceuticals, medical devices, their raw material and intermediates; production units, which require continuous process, and their supply chain; Jute industry with staggered shifts and social distancing; and manufacturing of IT hardware and manufacturing units of packaging material will continue to be permitted.

ORANGE ZONES :

In the Orange Zones, in addition to activities permitted in Red Zone, taxis and cab aggregators will be permitted with 1 driver and 2 passengers only. Inter-district movement of individuals and vehicles will be allowed for permitted activities only. Four wheeler vehicles will have maximum two passengers besides the driver and pillion riding will be allowed on two-wheelers.

GREEN ZONES :

In the Green Zones, all activities are permitted except the limited number of activities which are prohibited throughout the country, irrespective of the Zone. However buses can operate with upto 50% seating capacity and bus depots can operate with upto 50% capacity.

All goods traffic is to be permitted. No State/ UT shall stop the movement of cargo for cross land-border trade under Treaties with neighbouring countries. No separate pass of any sort is needed for such movement, which is essential for maintaining the supply chain of goods and services across the country during the lockdown period.

All other activities will be permitted activities, which are not specifically prohibited, or which are permitted with restrictions in the various Zones, under these guidelines. However, States/ UTs, based on their assessment of the situation, and with the primary objective of keeping the spread of COVID-19 in check, may allow only select activities from out of the permitted activities, with such restrictions as felt necessary.

For Detailed guidelines of MHA , click here   MHA clarification dated 04.05.2020 , CLICK HERE

WHAT SERVICES ARE OPEN DURING THE LOCK DOWN 2.0 ?

Dated 15.04.2020 : As per guidelines issued by Ministry of Home Affairs ( MHA ) today , the following services / office are allowed to operate during the lock down period staring from 20.04.2020 till 03.05 2020 :

1. Hospitals and related medical establishments including pharmacies , nursing homes , clinics & ambulance services .
2. All agricultural activities including Fisheries , Plantations and Animal husbandry .
3. Financial Institutions including RBI , Bank branches , ATMS , Insurance companies , SEBI , IRDAI etc
4. MNERGA work
5. Social welfare sector like Old age homes , homes for disabled etc
6. Public Utilities like postal service , electric supply , water supply , telecommunications , Petrol & LNG service etc
7. Goods & cargo movement
8.  Print & Electronic Media
9. Delivery of essential goods .
10 Some of the commercial services like courier service , Print media , IT services with restrictions .
11. Certain industries like manufacturing of essential goods , drugs , and industries in Rural areas , SEZs etc .
12. Construction activities outside municipal limits .
( However permissions given above will not apply in containment zones and hotspots )

. Hotels , cinema halls , malls , educational institutes , schools & colleges , transport services including air service , trains , buses , taxis , metros etc . all places of worships will continue to be closed with certain exceptions till 03.05.2020 . Any social , cultural , sports or any other functions are barred .

The above list is not exhaustive list of activities permitted / barred . For   original guidelines with authentic exhaustive list issued by MHA ,  CLICK HERE

LOCK DOWN EXTENDED TILL MAY 3RD : PM

14.04.2020 : Prime Minister Shri Narendra Modi announced , in a televised speech , extension of total lock down in India till May 3, 2020 . The lock-down may be relaxed after 20th , April in some areas after a review .

MEGA MERGER OF PSBS AS SCHEDULED ON 01.04.2020 : RBI

DATED 30.03.2020 : Reserve Bank of India ( RBI ) confirmed that the consolidation of 10 Public Sector Bank in to four banks is on schedule and the merger will be effective from 1st, April 2020 .

From 1st, April 2020 , branches of Oriental Bank of Commerce and United Bank of India will act as branches of Punjab National Bank while branches of Syndicate bank will be of Canara Bank . Further branches of Andhra Bank and Corporation Bank will act as branches of Union Bank of Bank . The branches of Allahabad Bank will be branches of Indian Bank .

Finance Minister Mrs Nirmala Sitharaman had announced in August 2019 the intention of the government to merge several PSBS into few banks .

RBI PERMITS 3 MONTHS MORATORIUM ON LOAN INSTALLMENTS

Dated 28.03.2020 : Reserve Bank of India ( RBI ) announced yesterday various measures to mitigate the burden of debt servicing brought about by disruptions on account of COVID-19 pandemic and to ensure the continuity of viable businesses. It also permitted all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies ) to grant a moratorium of three months on payment of all installments falling due between March 1, 2020 and May 31, 2020. The repayment schedule for such loans as also the residual tenor, will be shifted across the board by three months after the moratorium period. But Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.

Further in respect of working capital facilities sanctioned in the form of cash credit/overdraft (“CC/OD”), lending institutions are permitted to defer the recovery of interest applied in respect of all such facilities during the period from March 1, 2020 up to May 31, 2020 . The accumulated accrued interest shall be recovered immediately after the completion of this period.

Whether one should utilize the moratorium ?

The rescheduling of payments, including interest, will not qualify as a default . It will also not adversely impact the credit history of the beneficiaries. . Hence if you are unable to pay the installment due to financial constraint during the three months , it will be useful to avail the benefit and defer the payment . But the deferred installments will have to be paid along with the accrued interest at the end of repayment and it may increase your total liability and compounded interest on the deferred EMI for a long term loan can be substantial . Hence if you are in a financial position to pay , it may be worth just continuing with the schedule .

For RBI Notification dated 27.03.2020 , CLICK HERE

WHAT SERVICES ARE OPEN DURING THE LOCK DOWN ?

Dated 25.03.2020 : As per guidelines issued by Ministry of Home Affairs ( MHA ) on 24.03.2020 , the following services / office are allowed to operate during the lock down period of 21 days staring from today :

1. Shops dealing in Food , Groceries , fruits & vegetables , dairy & milk booths , meat , fish and animal fodder .
2. Banks , insurance companies and ATMs
3. Hospitals and related medical establishments including pharmacies , nursing homes , clinics & ambulance services .
4. Print & Electronic Media
5. Telecommunication and IT enabled services
6. Delivery of essential goods
7. Petrol Pumps
8. Stock exchanges
9. Cold storages
10 . Private security services .
All other establishments may work from home only .

Industrial establishments , hotels , educational institutes , schools & colleges , transport services all places of worships will be closed with certain exceptions . Any social , cultural , sports or any other functions are barred .

To read original guidelines issued by MHA , CLICK HERE

TOTAL LOCK DOWN FROM TONIGHT FOR 21 DAYS : PM

24.03.2020 : Prime Minister Shri Narendra Modi announced , in a televised speech , total lock down of India for next 21 days . The lock-down starts at 12.00 clock today night . He requested all Indians not to step out of their homes and to follow the government orders issued time to time from concerned authorities to save India from spread of the pandemic Covid -19 .
It is reported that Government of India has invoked National Disaster Management Act now .
For Government of India Notification , CLICK HERE

FM ANNOUNCES VARIOUS MEASURES IN THE WAKE OF LOCK DOWN ACROSS THE COUNTRY

Dated 24.03.2020 : In view of the present scenario unfolding in India in the wake of spread of pandemic , Finance Minister Ms Nirmala Sitharaman announced various measures helping tax payers and other citizens . Some of the important announcements are :
1. MATTERS RELATING TO INCOME TAX :

Due dates for issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer including investment in saving instruments or investments for roll over benefit of capital gains under Income Tax Act, Wealth Tax Act, Prohibition of Benami Property Transaction Act, Black Money Act, STT law, CTT Law, Equalization Levy law, Vivad Se Vishwas law where the time limit is expiring between 20th March 2020 to 29th June 2020 shall be extended to 30th June 2020

2. PAN AADHAAR LINK :

Last date for linking PAN Card to Aadhaar number is extended up to 30.06.2020

3. BANK TRANSACTIONS :

Charges on usage of Debit cards in any ATMS and charges for Non-maintenance of Minimum Balance in Savings Bank account will be waived for next three months .

RBI EXTENDS RESTRICTIONS ON OPERATIONS OF PMC BANK

Dated 23.03.2020 : Reserve Bank of India ( RBI ) , on 23.09.2019 had put restrictions on operations of Punjab and Maharashtra Cooperative Bank Limited, Mumbai, Maharashtra ( PMC Bank ) under section 35A of Banking Regulations Act for a period of 6 months . Now RBI has extended the restrictions for 3 more months up to 22.06.2020 .

As per Press release dated 24,09,2019 , customers of PMC bank were not able to withdraw more than Rs 1,000 from their all accounts including savings Bank , Current A/C or any other deposit account which was subsequently enhanced up to Rs 50,000 .

PMC Bank is one of the large interstate co-operative banks with network in seven states with 137 branches and customer deposit size of more than Rs 11,000 crores . It is one of the top ten co-operative banks in the country . The bank founded in 1984 has branches in Maharashtra , Karnataka , Delhi , Goa , Andhra Pradesh and Madhya Pradesh .

For RBI Press Release , CLICK HERE

JANATA CURFEW ON MARCH 22 : PM MODI

Dated 19.03.2020 : Today , in a televised speech , Prime Minister Mr Narendra Modi urged all Indians to observe voluntary Curfew on the Sunday 22nd , March 2020 from 7.00 am to 9.00 pm for 14 hours . The call is given on the backdrop of spread of Corona virus disease across the globe and across India .

He called up on the citizens not to leave their homes or nor getting in to the streets . Only people associated with emergency and essential services are exempted from the appeal .

He further requested the people to clap for 5 minutes at 5.00 pm on the day to show respect and solidarity with hard working medical and emergency professionals .

Though no economic measures were announced during the speech , he indicated formation of a task force to deal with the economic calamity facing the country .

As people are expected to follow the call of the PM , people may be prepared for the close down on the day and store emergency requirements like medicine , milk etc well in advance .

MORATORIUM LIFTED AND YES BANK IS NOW OPEN FOR BUSINESS

Dated 19.03.2020 : The beleaguered Yes Bank is open for business since yesterday evening . The bank was under moratorium since 05th, March 2020 .

Finance Ministry and Reserve Bank of India drew a scheme titled " YES BANK LIMITED RESTRUCTURE SCHEME 2020" under which fresh capital was induced from leading financial institutions of India with a lock in period for existing share holders . A new board was appointed to manage the affairs of the bank under shri Prashant Kumar, former Chief Financial Officer and Deputy Managing Director of State Bank of India, who was appointed as Chief Executive Officer and Managing Director of the bank .

Under the restructure scheme , the commitment made to depositors will be honored by the restructured bank .

For the details of the scheme , read the news item dated 14.03.2020

RBI ASKS BANKS TO STRATEGIES CONTINGENCY PLANS IN THE WAKE OF COVID-19

Dated 17.03 .2020 : In light of World health Organization ( WHO ) declaring Coronavirus disease ( COVID-19 ) s pandemic , Reserve Bank of India ( RBI ) has asked all the banks under in its control to devise strategies and monitoring mechanism to prevent spread of the disease among their employees . RBI has asked banks to make  timely interventions for preventing further spread in case of detection of infected employees including travel plans and quarantine requirements as well as avoiding spread of panic among staff and members of the public;

RBI has asked banks to revisit their Business Continuity Plans ( BCP ) to face emergent situations and take safeguards for preventing any disruption of services, due to absenteeism either driven by the individual cases of infections or preventive measures.

Further banks have been asked to encourage their customers to use digital banking facilities as far as possible . RBI notification says "    Besides taking steps as above for ensuring business process resilience, supervised entities should also assess the impact on their balance sheet, asset quality, liquidity, etc. arising out of potential scenarios such as further spread of COVID-19 in India and its effect on the economy, contagion from wider disruption in the global economy and the global financial system, etc. Based on the above studies, they should take immediate contingency measures to manage the risks under intimation to us. "

The notification from RBI is more of precautionary guidance and do not appear to have enumerated any specific steps to be taken by the banks .

For RBI Notification ,        CLICK HERE

YES BANK RESTRUCTURE SCHEME IS APPROVED BY THE GOVT AND MORATORIUM TO BE LIFTED

14.03.2020 : The Government of India has issued Gazette Notification dated 13.03.2020 approving " YES BANK LIMITED RESTRUCTURE SCHEME 2020" and the moratorium placed on the bank is expected to be lifted on 18th of this month . It is expected that all restrictions placed on bank transactions will also be lifted there on .
According to the scheme , Yes Bank limited will be reconstructed with the investment of investor banks with following conditions :

CAPITAL
1.  ) The authorised capital of the reconstructed bank shall  stand altered to Rs.6,200 crore and number of
equity shares to 3,000 crore of rupees two only each .
(2) The authorised preference share capital shall continue to be Rs. 200 crore .
(3) The investor bank and other investors, shall invest in the reconstructed bank and the reconstructed  bank shall allot equity shares of the reconstructed bank, at a price of rupees ten only with face value of  rupees two only and premium of rupees eight only, subject to the condition that post infusion of equity capital, the equity shareholding of the investor bank shall not be less than 26 %.
and not more than 49%
(4) The investor bank shall not reduce its equity shareholding below 26 % before 3 years .

LOCK IN PERIOD :

There shall be a lock-in period of three years from the commencement of this Scheme to the extent  of 75 % in respect of

(a) shares held by existing shareholders on the date of such commencement;
(b) shares allotted to the investors under this Scheme:
Provided that the said lock-in period shall not apply to any shareholder holding less than 100  shares.

Board of Directors :
The new board of Directors will be constituted with :
(i) Shri Prashant Kumar, former Chief Financial Officer and Deputy Managing Director of  State Bank of India, as Chief Executive Officer and Managing Director;
(ii) Shri Sunil Mehta, former Non-Executive Chairman of Punjab National Bank, as NonExecutive Chairman;
(iii) Shri Mahesh Krishnamurthy as Non-Executive Director;
(iv) Shri Atul Bheda as Non-Executive Director.

Further the investor bank shall nominate two officers as Directors in addition to the members appointed above
and The Reserve Bank of India may appoint one or more persons as additional directors as it may  consider necessary.

Public Deposits and Liabilities

All the deposits with and liabilities of the reconstructed bank and the rights, liabilities and obligations of its creditors, shall continue in the same manner and with  the same terms and conditions, completely unaffected by this Scheme.

EMPLOYEES :

All employees of the bank shall continue to be employees of the reconstructed bank with the same remuneration and on the same terms and  conditions of service, including terms of determination of service and retirement  for a minimum period of  one year:

To read Gazette notification dated 13.03.2020 , CLICK HERE

YES BANK CUSTOMERS CAN DRAW FROM ATMS NOW
Dated 08.03.2020 : The customers of Yes Bank Limited can now withdraw up to Rs 50,000 from any of the ATMs of the bank or any other bank's ATM using bank's debit card , as per bank's notification on their website . However on-line banking is not yet operational .

The amount allowed would be under the overall limit imposed by Reserve Bank of India on 05.03.2020

YES BANK TO BE RESTRUCTURED WITH SBI INVESTMENT : RBI

Dated 07.03.2020 : Reserve Bank of India ( RBI ) HAD placed Yes Bank Limited under moratorium for a period of 30 days two days back quoting bank's   decline in its ability to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. RBI    had put restrictions on operations of the bank   under section 35A of Banking Regulations Act and restricted customer withdrawal to Rs 50,000 per customer .

Now on 6th, March , RBI has drawn out a restructure plan in which leading public sector Bank State Bank of India ( SBI ) will invest in the beleaguered bank to rescue the bank . The salient features of the scheme are :

1. SBI has  to invest in the equity of the Reconstructed bank to the extent that post infusion it holds 49% shareholding in the Reconstructed Yes Bank at a price not less than Rs.10/- (Rupees ten only) [Face value of Rs.2 and premium of Rs.8. The SBI will not reduce its holding below 26% before completion of three years from the date of infusion of the capital.
2. The restructured bank will honor all the commitments made by the bank so far including liabilities to the depositors .
3. Contract with its employees at the existing salary and perks will continue for at least one year .
4. Branch network of the bank will continue .
5. Reconstructed bank will have the Authorised Capital shall stand altered to Rs 5,000 crore only and number of equity shares will stand altered to 2,400crore only of Rs.2 each aggregating to Rs.4,800 crores

To read RBI Press release on the subject , CLICK HERE

SHARE SWAP RATIO OF PSBS ANNOUNCED

DATED 06.03.2020 : The Union Cabinet had approved on 04.03.2020 for the the merger of  Oriental Bank of Commerce and United Bank of India into Punjab National Bank  effective from 1st, April 2020 .

Now Punjab National bank has approved and announced the share swap ratio which will be subject to statutory / regulatory approvals as follows :

a) 1150 equity shares of Rs. 2/- each of PNB for every 1000 equity shares of Rs. 10/- each of
Oriental Bank of Commerce.
b) 121 equity shares of Rs. 2/- each of PNB for every 1000 equity shares of Rs. 10/- each of United
Bank of India.

Similarly the share swap ratio for  Andhra Bank and Corporation Bank to merge into Union Bank of India is approved as follows :

a) 325 equity shares of the face value of Rs.10 each fully paid up in Union Bank of India for every 1,000 equity shares of the face value of Rs.10 each fully paid up held in the Andhra Bank as on the record date. b) 330 equity shares of the face value of Rs.10 each fully paid up in Union Bank of India for every 1,000 equity shares of the face value of Rs.2 each fully paid up held in the Corporation Bank as on the record date.

While Syndicate bank will merge in to Canara Bank , share swap ratio between the share holders of the two banks are 158 equity shares of Canara Bank to the 1000 equity shares of Syndicate Bank .

To read PNB notice to BSE , CLICK HERE To read Union Bank of India notice , CLICK HERE
To read Canara Bank notice to NSE , CLICK HERE

RBI PLACES YES BANK UNDER MORATORIUM

Dated 05.03.2020 : Reserve Bank of India ( RBI ) today placed beleaguered Private bank Yes Bank Limited under moratorium for a period of 30 days on account of bank's   decline in its ability to raise capital to address potential loan losses and resultant downgrades, triggering invocation of bond covenants by investors, and withdrawal of deposits. RBI    has put restrictions on operations of the bank   under section 35A of Banking Regulations Act .

The customers of the bank will not be able to draw more than Rs 50,000 from their all accounts including savings Bank , Current A/C or any other deposit account . Further the Bank will not be not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal  of funds and acceptance of fresh deposits,. It will also not permitted to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated March 5, 2020 . Further RBI may permit customers to wIthdraw up to Rs 5.00 lakhs in emergency conditions laid below : .

As per Gazette notification issued by the Government of India today ,
"  .  The Central Government hereby also directs that during the period of moratorium, the Yes Bank
Limited, Mumbai, Maharashtra (the said banking company) shall not, without the permission in writing of
the Reserve Bank of India,--
(a) make, in the aggregate, payment to a depositor of a sum exceeding Rs. 50,000/- (Rupees fifty
thousand only) lying to his credit, in any savings, current or any other deposit account, by
whatever name called:
Provided that if a depositor maintains more than one account in the same capacity and in the
same right, the total amount payable from all the accounts together shall not exceed the limit
indicated above:
Provided further that wherever such depositor is having dues payable to the bank in any manner,
either as a borrower or surety, the amount payable to such depositor shall be made after
adjusting the relevant borrowal accounts;
(b) make, in the aggregate, payment to any creditor exceeding a sum of Rs. 50,000/- (Rupees fifty
thousand only) if not otherwise provided in this order, so however that this shall not affect
making of payment of amounts towards any drafts or pay orders issued by the said banking
company and remaining unpaid on the date on which the order of moratorium comes into force,
or in paying the proceeds of the bills received for collection on or before the 5th March, 2020.
3. Without prejudice to the conditions stipulated in paragraph 2(a) of this Order in relation to

Without prejudice to the conditions stipulated in paragraph 2(a) of this Order in relation to
payment to any depositor of the said banking company, the Reserve Bank may by a general or special
order, permit the said banking company to allow payment to its depositors an amount in excess of
Rs. 50,000/- (Rupees fifty thousand only) to meet unforeseen expenses, as under:
(i) in connection with the medical treatment of the depositor or any person actually dependent on
him;
(ii) towards the cost of higher education of the depositor or any person actually dependent on him
for education in India or outside India;
(iii) to pay obligatory expenses in connection with marriage or other ceremonies of the depositor or
his children or of any other person actually dependent upon him;
(iv) in connection with any other unavoidable emergency:
Provided that the amount so allowed to be paid out of the balance lying to the credit of the depositor--
(a) shall be reckoned towards the payment due to him under any scheme of reconstruction or
amalgamation as may be sanctioned by any competent authority in relation to the said
banking company and subject to such conditions as may be provided under such scheme
about appropriation of any payment made to a depositor of the said banking company before
or on the coming into force of the scheme; and
(b) shall not exceed the sum of Rs. 5,00,000/- (Rupees five lakh only) or the actual balance
lying to the credit of the account of such depositor, whichever is less.

Reserve Bank of India , under 36ACA of the Banking Regulation Act 1949, in consultation with Central Government, superseded the Board of Directors of Yes Bank Ltd. for a period of 30 days owing to serious deterioration in the financial position of the Bank. This has been done to quickly restore depositors’ confidence in the bank, including by putting in place a scheme for reconstruction or amalgamation.

Shri Prashant Kumar, ex-DMD and CFO of State Bank of India has been appointed as the administrator under Section 36ACA (2) of the Act.

For RBI Press Release ,        CLICK HERE   For Gazette notification , CLICK HERE

UNION CABINET APPROVES CONSOLIDATION OF 10 PSBS INTO 4 BANKS

DATED 04.03.2020 : According to Press Information Bureau ( PIB ) , the Union Cabinet under the chairmanship of Prime Minister Mr Narendra Modi approved today for the consolidation of 10 Public Sector Bank in to four banks . The merger will be effective from 1st, April 2020 .

As per the cabinet approval , Oriental Bank of Commerce and United Bank of India will merge into Punjab National Bank while Syndicate bank will merge in to Canara Bank . Further Andhra Bank and Corporation Bank will merge into Union Bank of India while Allahabad Bank will merge in to Indian Bank .

According to the government , The Mega consolidation would help create banks with scale comparable to global banks and capable of competing effectively in India and globally. Government hopes that the Greater scale and synergy through consolidation would lead to cost benefits which should enable the PSBs enhance their competitiveness and positively impact the Indian banking system.

Finance Minister Mrs Nirmala Sitharaman had announced in August 2019 the intention of the government to merge several PSBS into few banks .

To read PIB Press Release , CLICK HERE

NON RESIDENT INDIAN ( NRI ) - NEW DEFINITION IN THE OFFING

Dated 08.02.2020 : Finance bill 2020 , which was introduced by FM Ms Nirmala Sitharaman on 01st , February 2020 , has proposed to alter the definition of Non - Resident Indians effective from FY 2020 -21 ( AY 2021-22 ) .

Hitherto , as per FEMA act 1999 , An Indian citizen who has resided in India for 182 days in a financial year was considered as Resident Indian and others NRI ( Non - Resident Indian ) . Further any Indian citizen who has gone out of India to pursue employment , trading or vocation for an indefinite period was also considered NRI .

Now the newly introduced Finance bill envisages to replace requirement 182 days to 120 days in the above definition .
Hence Indian Citizens residing in India for 120 days or more in a financial year India will be Resident India and others will be NRI . But the bill states that Indian citizen shall be deemed to be resident in India in any previous year, if he is not liable to tax in any other country or territory by reason of his domicile or residence or any other criteria of similar nature .

The bill created confusion in NRIs about their tax liability in India if their income in foreign countries are not taxed there on account of tax exemptions there . Now Government has come with a clarification that NRI s will not be taxed for any income generated outside India and will only be taxed for their Indian income .

For Press Release dated 02.02.2020 of CBDT , CLICK HERE

RBI PUTS RESTRICTION ON BENGALURU BASED CO-OP BANK

Dated 13.01.2020 : Reserve Bank of India ( RBI ) has put restrictions on operations of Bangalore based Sri Gururahavendra Sahakari Bank    under section 35A of Banking Regulations Act .

As per Press release dated 10,01,2020 , customers of the bank will not be able to draw more than Rs 35,000 from their all accounts including savings Bank , Current A/C or any other deposit account . Further the Bank will not be not be able to grant or renew any loans and advances, make any investment, incur any liability including borrowal  of funds and acceptance of fresh deposits,. It will also not permitted to disburse or agree to disburse any payment whether in discharge of its liabilities and obligations or otherwise, enter into any compromise or arrangement and sell, transfer or otherwise dispose of any of its properties or assets except as notified in the RBI directions dated September 23, 2019. The restrictions will remain operative for next six months .

As per bank's website the Bank is head quartered in Basavanagudi area of Bengaluru . It has a network of 9 branches in Bengaluru and customer deposit size of more than Rs 1,565 crores . The bank website also states that the bank has been classified as " A " continuously for more than 10 years and its NPA is just around 0.45 % .

For RBI Press Release ,        CLICK HERE

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BAD BANK ( NARCL ) TO BE GUARANTEED BY THE GOVERNMENT

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GUIDELINES FOR UNLOCK 5.0 : CINEMAS TO OPEN

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