Recent Important Changes in Banking & Finance Affairs 2021

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Recent Important Changes in Banking & Finance Affairs 2021

1. Pension Fund Regulatory and Development Authority (PFRDA) increased the maximum age
for joining the National Pension System (NPS) from 65 years to 70 years of age. Following the
change in age, the NPS has revised the guidelines on entry and exit options. The existing age of
entry which is 18-65 years were revised to 18-70 years.
• Any Indian Citizen, resident or non-resident and Overseas Citizen of India (OCI) between
the age of 65-70 years are eligible to join NPS and continue their NPS Account up to the
age of 75 years.

2. SEBI allows Payments Banks to act as Investment Bankers

Securities and Exchange Board of India (SEBI) allowed payments banks to carry out the
activities of investment bankers in order to ease the access for investors to participate in public
and rights issues by using various payment avenues.
• Also, Non-scheduled payments banks, which have prior approval from the Reserve Bank
of India (RBI), will be eligible to act as Bankers to an Issue (BTI) with regard to the
conditions stipulated in the BTI rules.

3. RBI Issued Master Direction on PPIs

Reserve Bank of India (RBI) issued Master Directions on Prepaid Payment Instruments, 2021
(MD-PPIs, 2021), which are applicable to all Prepaid Payment Instrument (PPI) Issuers and
System Participants. The MD-PPIs, 2021 involves the eligibility criteria and the conditions of
use for Payment System Operators (PSOs) involved in the issuance and operation of PPIs in
India.
• Objective: To provide a framework for authorisation, regulation, and supervision of
entities issuing and operating PPIs in India.

4. RBI Issued Revised Guidelines for Locker in Bank

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Recent Important Changes in Banking & Finance Affairs 2021
Reserve Bank of India (RBI) has issued revised guidelines for both new and existing Safe
Deposit Locker and Safe Custody Article Facility with the banks. At present, banks do not have
any liability towards lockers. The guidelines would come into effect from January 1, 2022. The
banks are directed to incorporate a clause in the ‘locker agreement’ for prohibiting the hirer
from keeping anything illegal or hazardous in lockers.

5. RBI Introduced Financial Inclusion Index

Reserve Bank of India (RBI) introduced the ‘Financial Inclusion Index’ (FI-Index) to measure the
extent of financial inclusion across India. The FI-Index will be published annually in July month
(for the financial year (FY) ending previous March). The annual FI-Index for the FY21 (period
ending March 2021) is 53.9 as against 43.4 of FY17.

6. RBI Introduced Scheme to Penalize Banks for Cash Out in ATMs

Reserve Bank of India (RBI) introduced a scheme named ‘Scheme of Penalty for non-
replenishment of ATMs’ to levy monetary charges/Penalty on Banks & White Label ATM
Operators (WLAOs) for cash-out (i.e., the non-availability of cash) in Automated Teller
Machines (ATMs) due to non-replenishment of cash.
• Effective from: The scheme will be effective from 1st October 2021
• Penalty: RBI will issue a penalty of Rs.10,000 per ATM/WLAs for bank for cash out for
more than 10 hrs in a month.

7. RBI enhanced Collateral Free Loans to SHGs under DAY-NRLM to Rs 20 lakh from Rs 10
Lakh
The collateral free loans to self-help groups (SHGs) provided under Deendayal Antyodaya
Yojana – National Rural Livelihoods Mission (DAY-NRLM) have been enhanced to Rs 20 lakh
from Rs 10 lakh by Reserve Bank of India (RBI). Under this enhancement, for loans to SHGs up

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Recent Important Changes in Banking & Finance Affairs 2021
to Rs 10 lakh there will be no collateral and no margin will be charged, also, no lien should be
marked against savings bank account of SHGs and no deposits should be insisted upon while
sanctioning loans.

8. Govt Extended Retirement Age of LIC Chairman from 60 to 62 Years

Government (govt) has amended the Life Insurance Corporation (LIC) of India (Staff)
Regulations, 1960 to extend the superannuation (retirement) age of Initial Public Offer (IPO)-
bound LIC Chairman to 62 years from 60 years.The changes made in the rules will be called the
Life Insurance Corporation of India (Staff) Amendment Rules, 2021.

9. RBI Allowed Loan of up to Rs 5 Crore to Other Bank’s Directors Without Board Approval
Reserve Bank of India (RBI) has amended the regulatory restrictions on personal loans and
advances that are granted to bank directors and their relatives after 26 years.
• RBI has increased the threshold of ‘personal loans’ that could be granted to any
directors and their relatives of other banks to Rs 5 crore from Rs 25 lakh (which was
fixed by RBI in 1996).
• The revised threshold regulations were applicable only for the personal loans of the
directors (not for business loans), whereas the limit of Rs 25 lakh was allowed to
continue for business loans.

10. RBI Extended the Implementation Timeline of ATM Cassette Swap till March 2022
Reserve Bank of India (RBI) has extended the implementation deadline for banks to use only
lockable cassettes, which could be swapped at the time of cash replenishment (filling up cash)
in ATMs (Automated Teller Machines) till March 2022.
11. RBI Announced Changes in G-Sec Auction Methodology

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Recent Important Changes in Banking & Finance Affairs 2021
By reviewing the market conditions and market borrowing program of the government, the
Reserve Bank of India (RBI) has modified the auction methodology of the benchmark securities
of tenor 2-year, 3-year, 5-year, 10-year, 14-year tenor and Floating Rate Bonds (FRBs) to
uniform price auction method (earlier it was based on multiple price-based auctions).
• The auction of other benchmark securities such as 30-year and 40-year were unchanged
and made to continue as multiple price-based auctions.

12. RBI Modified Norms for Interest on Unclaimed Amount After TD Matures
Reserve Bank of India (RBI) modified the rules on applicable interest on unclaimed term
deposits (TDs) after maturity in all commercial banks, small finance banks, local area banks,
and cooperative banks. Now, unclaimed TDs will attract rates of interest applicable to savings
accounts or the contracted interest on the matured deposit, whichever is lower.

13. RBI Issued Directions for Appointment of MD/WTD in UCBs

Reserve Bank of India (RBI) has issued directions relating to ‘Appointment of Managing Director
(MD) / Whole-Time Director (WTD)’ in all Primary (Urban) Co-operative Banks (UCBs).

Tenure of MD/ WTD:

Minimum period to hold the post after 1st 3 years

appointment

Maximum period to hold the post at a time 5 years

Re-appointment (in the same bank) After a minimum gap of 3 years (In that 3 years
they should not be appointed or associated
with a bank (directly/indirectly))

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Recent Important Changes in Banking & Finance Affairs 2021
Maximum Tenure to hold the post in the same 15 years
bank

14. RBI increases limit under Indo-Nepal Remittance Facility to Rs 2 lakh

The Reserve Bank hiked the ceiling on remittances per transaction from India to Nepal to Rs.2
lakh from Rs.50, 000, a move that will help facilitate retirement and pension-related payments
to ex-servicemen settled in the neighbouring country.
• Besides, the central bank has removed the cap of 12 remittances in a year per remitter.

15. RBI increases the incentive for distribution of coins over the counter by banks to Rs 65
The Reserve Bank of India (RBI) has increased incentives for banks for the distribution of coins
to the general public to Rs 65 per bag with effect from September 1.
Currently, the incentive is Rs 25 per bag.
• An additional incentive of Rs 10 per bag would be paid for coin distribution in rural and
semi-urban areas on the submission of a auditor certificate to this effect.

16. RBI now increased ATM Interchange Fee from Rs 15 To Rs 17

The Reserve Bank of India (RBI) on June 10 raised the interchange fee on each financial
transaction at an Automated Teller Machine or ATM.
• The bank noted that the last change in interchange fee structure for ATM transactions
was in August 2012, while the charges payable by customers were last revised in August
2014.The RBI has decided to allow an increase in interchange fee per transaction from
Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial
transactions in all centres.

17. Second Bi-Monthly Monetary Policy of FY22

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Recent Important Changes in Banking & Finance Affairs 2021
Policy Rates June April Changes
Repo rate 4% 4% No Change
Reverse Repo Rate 3.35% 3.35% No Change
Bank Rate 4.25% 4.25% No Change
Cash Reserve Ratio 4% 3.5% Increased by 0.5%
Statuatory Liquidity 18% 18% No Change
Ratio
Marginal Standing 4.25% 4.25% No Change
Facility

18. RBI increases the limit for Full-KYC PPIs to Rs 2 lakh from Rs 1 lakh
The Reserve Bank of India has increased the maximum amount outstanding in respect of full-
KYC PPIs (KYC-compliant PPIs) from Rs. 1 lakh to Rs. 2 lakh. Apart from this, The Reserve
Bank of India (RBI) has mandated that all prepaid payment instruments (PPIs) or mobile
wallets such as Paytm, PhonePe and Mobikwik are fully KYC-compliant be made interoperable
by March 31, 2022.

19. Kisan Vikas Patra Interest Rate and Tenure

The current interest rate was reduced from 7.6% to 6.9%. The maturity period was also
increased from 113 months to 124 months. The principal amount can be withdrawn after this
period only.

20. T Rabi Sankar appointed deputy RBI Governor, to succeed BP Kanungo

The appointments committee of the Union Cabinet on Sunday confirmed T. Rabi Sankar for the
post of deputy governor of the Reserve Bank of India (RBI). Sankar currently serves as the
executive director in charge of payments and settlement.
• Sankar has been appointed to the post of deputy governor of the RBI for a period of three
years, according to a note circulated by the Department of Personnel and Training.
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Recent Important Changes in Banking & Finance Affairs 2021

21. M K Jain re-appointed as RBI Deputy Governor for a period of two years

22. Airtel Payments Bank becomes first to enable ₹2 lakh of day-end balance account limit
First payments bank in the country - As per the Reserve Bank of India’s (RBI’s) guidelines,
Airtel Payments Bank has increased the day-end account balance limit for customers from ₹ 1
lakh to ₹ 2 lakh and become the first payments bank in the country to do so.

23. NPCI set 30% market cap on UPI Transactions for TPAPs with Exemptions
National Payments Corporation of India (NPCI) had headquartered at Mumbai, Maharashtra
has framed a new rule that limit digital payment apps’ share in the overall volume of
transactions on the unified payment interface (UPI) at 30 per cent in a bid to end the monopoly
of Big Tech firms on the growing payments market in India. The limit of 30% will be calculated
based on the total volume of transactions processed on UPI by the payment apps during the
preceding three months.

24. RBI Fixed the Bank’s MD&CEOs Tenure at 15 years; Upper age limit at 70 years
Reserve Bank of India (RBI) through its circular – “Corporate Governance in Banks –
Appointment of Directors and Constitution of Committees of the Board”, has fixed 15 years
tenure for the MD & CEOs or whole-time directors (WTDs) to hold their post in a bank and
upper age limit is at 70 years. RBI’s instructions are meant for private sector banks, small
finance banks (SFBs) and wholly-owned subsidiaries of foreign banks.

25. Jan Dhan accounts rise to 43 cr, amount to deposits over Rs 1.46 lakh cr

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 Recent Important Changes in Banking & Finance Affairs 2021
Number of banks accounts under Pradhan Mantri Jan Dhan Yojna (PMJDY) have risen to 43
crore amounting to over 1.46 lakh crore, the finance ministry reported as the financial
inclusion scheme of the government completes seven years.

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