Regulatory Body Releases

RBI | SEBI | NABARD | PFRDA | IRDAI

March, 2023

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 RBI Circulars
Deposits by ● Backed by robust demand and healthy financials, public sector banks
(PSBs) improved their business — advances and deposits — during
public sector the third quarter ended December 2022 (Q3), according to RBI data.
banks up 8.8% in ● State-owned banks increased their credit portfolio by 15.7 %
during the calendar year 2022 (4.7 % in the year 2021).
December ○ The corresponding growth for private sector banks, however,
quarter: RBI data remained higher at 19.1 % (13.1 % a year ago).
● The deposit mobilisation by PSBs improved to 8.8 % (year-on-year
or YoY) in December quarter 2022 (6.9 % a year ago),
○ 13.2 % growth in deposits with private sector banks.
● Overall growth of advances , bank credit growth (YoY) stood at 16.8
% in December 2022 quarter as compared with 17.2 % a quarter ago
(Q2) and 8.4 % a year ago.
○ Growth in credit was led by bank branches in metropolitan
centres, which account for nearly 60 % of the total credit by
scheduled commercial banks (SCBs).

● Aggregate deposits of the system increased by 10.3 % (YoY) in

December 2022 quarter (9.6 % a year ago).
○ 13.2 % growth in term deposits.
○ The current account growth of 4.6 % and
○ savings account deposits growth of 7.3 %.

● The all-India credit-deposit (C-D) ratio increased further to 75.9 %

in December 2022 quarter (74.8 % in the previous quarter and 71.6
% in December 2021).
● The C-D ratio remained above 100 % for Andhra Pradesh,
Maharashtra, Tamil Nadu, and Telangana.

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Explained: How ● This is the first time that the RBI put out the details of measures
carried out during the pandemic.
RBI ensured ● The idea behind the measures was to
payment system ○ insulate the economy and the financial sector;
○ ensuring uninterrupted conduct of its crucial functions and
stayed maintaining business continuity;
Covid-proof ○ supporting its employees, service providers and other
stakeholders..
● According to the documents released, 200 staffers, consisting of
RBI officials and support teams, who are essential to perform
critical functions, were isolated at a separate facility in a
dedicated quarantined environment near all three RBI data
centres.
● The Reserve Bank of India (RBI) went on a war footing and created a
“bio-bubble” arrangement across its data centres to ensure all its
critical functions ran with zero downtime and full efficacy during the
pandemic.
● The crisis management team (CMT) approved the setting up of
the bio bubble on March 17, 2020, a week before the nationwide
lockdown was announced.
● To ensure adequate supply of currency to the public, bank notes and
coins in various denominations were transported by arranging
dedicated trains and airlifting of currency.

● The staff were rotated every fortnight, after thorough screening by

the RBI’s in-house doctors.
○ The rotation was done for 538 days, ensuring employee
welfare and business continuity through unhindered operations.
● As a result of this, the entire operations of the RBI’s centralised
payment systems, treasury, core banking solutions (eKuber),
transactions in government accounts, and the RBI’s internal accounts
and systems relating to currency management ran uninterrupted from
these data centres.
● The central bank monitored the availability of cash in ATMs across
the country daily.
● In order to fulfil its supervision role, the RBI adopted a balanced
approach for deployment of resources for off-site assessment
and on-site inspection of banks.
○ In virtual mode, senior supervisory manager (SSM) teams
engaged with the senior management of banks on a continuous
basis on issues emanating from off-site surveillance and
monitoring.
○ Data was obtained from banks for conducting off-site
examination so that on-site visits could be minimised.

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Self-regulation ● The country's fintech sector should attempt to organise itself under a
self-regulatory organisation (SRO) that monitors the conduct of
useful tool for member fintech entities.
setting rules for ● This approach can help protect consumer interest and improve
governance standards in fintech entities, said M K Jain, Deputy
fintechs: RBI's M Governor, Reserve Bank of India.
K Jain (Use for ● The role of an SRO can include setting the standards for conduct as
well as acting as a bridge between the sector and the regulators.
Descriptive) Regulation is merely a guard rail to keep the sector on the right path.
● The RBI had, in its digital lending guidelines, mooted the idea of
setting up an SRO covering regulated entities and digital lending
applications (DLAs)/loan service providers (LSPs) in framing a code of
conduct for recovery and a model standardised LSP agreement for
balance sheet lenders, among other things.
● Currently, there are two bodies – Digital Lenders Association of
India (DLAI) and Fintech Association for Consumer
Empowerment (FACE) – that are eyeing the SRO tag in this
segment.
● India has the world's third largest fintech ecosystem.
● Any approach to regulate the fintech sector will invariably be
based on five fundamental objectives –
○ financial stability,
○ consumer protection,
○ financial system integrity,
○ competition, and
○ orderly development.
● According to Jain, at one end of the spectrum, there is the hands-off
approach that advocates allowing the sector to develop freely and
develop without any regulatory intervention.
○ While this harnesses innovation, it risks the possibility of failing
to protect the financial system and customers from adverse
outcomes.
● At the other end of the spectrum, there is a status quo approach that
aims to maintain the existing framework, without any relaxations
to cater for new developments.
○ Under this approach, fintech products and services are
regulated in the same way as traditional financial products or
services.
○ However, the benefits of innovation may be lost.
● There are risks associated with financial stability, market
integrity, and customer protection.
● Fintechs need to be conscious of customer protection and that is
where RBI is finding gaps in the Indian operating space.
○ Mis-selling, frauds, or misconduct by fintechs may harm the
very consumers they wish to serve.
○ The careful management of this risk is crucial for the
sustainable development of the fintech sector.

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Digital Payments ● The Governor, Reserve Bank of India (RBI) launched the Mission
‘Har Payment Digital’ on the occasion of the Digital Payments
Awareness Week Awareness Week (DPAW) 2023.
2023 – Launch of ○ DPAW 2023 will be observed from March 6 to 12, 2023.
○ The campaign theme is “Digital Payment Apnao, Auron ko
Mission “Har bhi Sikhao” (Adopt digital payments and Also teach others).
Payment Digital” ● During the DPAW 2023, Regional Offices of the RBI will be conducting
awareness and outreach programmes which will also form part of ‘Jan
Bhagidari’ events under the Indian G20 presidency.

● Similar initiatives will be undertaken by the bank and non-bank

payment system operators.
● The Reserve Bank will also initiate a ‘75 Digital Villages’ programme
in observance of 75 years of Independence.
● Under this programme, Payment System Operators (PSOs) will
adopt 75 villages across the country and convert them into digital
payment enabled villages.

Governor's Address

● The Department of Payment and Settlement Systems (DPSS) of

the RBI is celebrating its 18th anniversary (it was formed on March
7, 2005).
● Payment systems in India have witnessed over 1000 crore
transactions every month since December 2022.
● A recent pan-India digital payments survey (covering 90,000
respondents) revealed that 42% of respondents have used digital
payments.
● Launched in 2016, UPI has emerged as the most popular and
preferred payment mode in India accounting for 75% of the total
digital payments
○ Bharat Bill Payment System (BBPS) has ensured migration of
bill payments from cash / cheques to digital mode with a
hassle-free and streamlined digital bill payment experience.
○ The National Electronic Toll Collection (NETC) System has
helped in migration of the toll payments to digital mode with
enhancing efficiency in terms of reduced waiting time at toll
plazas.
○ The National Automated Clearing House (NACH) system
has also facilitated Government Direct Benefit Transfers
(DBT) payments digitally and eliminated leakages in the
system.
● Internationalisation of payment systems and cross border linkage of
fast payment systems of India and Singapore i.e. UPI-PayNow.
○ This linkage is in addition to the QR code based and UPI
enabled P2M payments already happening in Bhutan,
Singapore and UAE.

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 ● The Payments Vision 2025 of the RBI, i.e. “E-Payments for
Everyone, Everywhere, Everytime”.

Reserve Bank of ● The Reserve Bank of India (RBI) and the Central Bank of the
United Arab Emirates (CBUAE) signed a Memorandum of
India and Central Understanding (MoU) in Abu Dhabi, to enhance cooperation and
Bank of the UAE jointly enable innovation in financial products and services.
● Under the MoU, the two central banks will collaborate on various
sign MoU to emerging areas of FinTech, especially Central Bank Digital
promote Currencies (CBDCs) and explore interoperability between the
CBDCs of CBUAE and RBI.
innovation in ● CBUAE and RBI will jointly conduct proof-of-concept (PoC) and pilot(s)
financial of bilateral CBDC bridge to facilitate cross-border CBDC transactions
of remittances and trade.
products and ○ This bilateral engagement of testing cross-border use case of
services CBDCs is expected to reduce costs, increase efficiency of cross
border transactions and further the economic ties between India
and UAE.
● The MoU also provides for technical collaboration and knowledge
sharing on matters related to Fintech and financial products and
services.

RBI to start new ● Reserve Bank of India governor Shaktikanta Das laid the foundation
stone of a new greenfield data centre and enterprise computing
data centre, and cybersecurity training institute of the central bank in
governor Bhubaneshwar.
● The new centre, spread over 18.55 acres, will look after the emerging
stresses on tech, requirements of the RBI and the financial sector.
cybersecurity
role

RBI Bulletin – March 2023

I. State of the ● India has emerged from the pandemic years stronger than initially
Economy thought, with a steady gathering of momentum since the second
quarter of the current financial year.
● On the supply side, agriculture is into a seasonal uptick, industry is
emerging out of contraction and services have maintained
momentum.
● Consumer price inflation remains high and core inflation
continues to defy the distinct softening of input costs.

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II. Consumer Price The present method of consumer price index (CPI) compilation involves an
Index: Aggregation aggregation of indices across States/UTs and sectors to arrive at the
Method Matters all-India overall index.
Highlights:

● The extent of divergence in inflation between the published indices

and the user derived indices before 2021 was small and bidirectional.
Since 2021, however, this divergence has become large and recurrent,
emanating primarily from the fuel group and recently from the
cereals sub-group.
● The current CPI base of 2012 is derived from the consumption
expenditure survey (CES) conducted during 2011-2012 and the
market survey to identify shops for collecting prices is even older.
● Efforts to conduct new CES for rebasing CPI to a recent period may be
expedited to make the CPI consumption basket relevant to the present
consumption behaviour.

III. Financial Stocks ● The overall domestic financial resource balance – measured by the
and Flow of Funds of net acquisition of financial assets less net increase in liabilities –
the Indian Economy continued to improve, turning marginally positive at 0.3 per cent of
2020-21 GDP in 2020-21.
● The household financial savings spiked significantly during
2020-21 from its long-term trend reflecting an elevated stock of both
currency and deposits and increased savings in insurance products.
● With a relatively reduced dependence on external financing,
particularly by the Indian corporates, the growth in both financial
assets and liabilities of rest of the world decelerated in 2020-21.

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IV. Application of This article analyses the role of domestic and international macro-financial
Growth-at-Risk conditions in influencing the future distribution of GDP growth for India
(GaR) Framework for using a Growth-at-Risk (GaR) framework.
Indian GDP It helps to shed light on low probability extreme events and in
quantifying the likelihood of tail risk scenarios.
It is important to note that GaR relates to the lower quantiles of GDP growth
rather than the baseline mean growth forecast.

● GaR estimates indicate that in the short-term, domestic financial

conditions, global conditions, and domestic credit assume
importance, while in the medium-term domestic credit conditions
tend to be a significant determinant of lower tails of future GDP
growth.

V. Subnational The article outlines the impact of the pandemic and policy measures
Borrowings in India undertaken by the Reserve Bank on the primary and secondary markets for
–Volatilities and State Government Securities (SGS). It studies the linkages between G-Sec
Determinants of State
and SGS yields and factors driving the pricing of SGS in primary markets.
Government
Securities (SGS)
Spread Highlights:
● The Reserve Bank’s special Open Market Operations (OMO) in
SGS during the pandemic was effective in stabilizing the yields.
● Developments that have a bearing on the benchmark G-sec yield
eventually weigh on SGS yields.
● It highlights the need for improved fiscal marksmanship in cash
management by States.

WMA Limit for ● The limit for Ways and Means Advances (WMA) for the first half of the
Government of financial year 2023-24 (April 2023 to September 2023) will be
₹1,50,000 crore.
India for the first
● The Reserve Bank of India may trigger fresh floatation of market
half of the loans when the Government of India utilises 75 % of the WMA
Financial Year limit.
2023-24 (April ● The Reserve Bank of India retains the flexibility to revise the limit at
any time, in consultation with the Government of India, taking into
2023 to
consideration the prevailing circumstances.
September 2023) ● The interest rate on WMA/Overdraft will be:
○ WMA: Repo Rate
○ Overdraft: Two percent above the Repo Rate

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As liquidity ● As liquidity in the banking system slipped into deficit, the Reserve
Bank of India (RBI) infused Rs 7.89 lakh crore of funds during March
tightens, RBI
15-23, to meet higher capital requirements of banks.
infuses Rs 7.89 ● The tightness in liquidity condition was mainly due to the outflows
lakh cr between related to payment of advance tax, the last date for which was March
15.
March 15 and 23
○ The payment of goods and services tax (GST) before March 20
also weighed on the liquidity situation of banks.
● On March 17, the net liquidity infusion was Rs 1.24 lakh crore, the
highest daily infusion by the central bank in almost three-years.

SEBI Circulars
Sebi puts in place ● Sebi came out with operational guidelines on green bonds asking
issuers to make additional disclosure, pertaining to environmental
operational sustainability objectives of such debt securities in the offer
guidelines on document.
● The guidelines, to be effective from April 1, 2023, with a view to
green bonds aligning the framework for green debt securities with the updated
Green Bond Principles (GBP) recognised by IOSCO.

● Responsibilities of the issuer-

○ An issuer of green debt securities will have to maintain a
decision-making process which it uses to determine the
continuing eligibility of the project.

○ This includes, without limitation, statements on the

environmental objectives of the green debt securities and a
process to determine whether the project meets the
eligibility requirements.

● The regulatory framework defines Green Debt Securities as debt

securities issued for raising funds that are to be utilised for
projects or assets falling under certain categories.

● Disclosure in the offer document-

○ Issuers will be required to apprised about details of the
procedures to be employed for tracking the deployment of
the proceeds.

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 ○ Details related to the perceived social and environmental risks
and
○ proposed mitigation plan associated with the project.
○ In respect of continuous disclosure requirements, need to
inform about the utilisation of the proceeds of the issue, as
per the tracking done by the issuer using the internal
process as disclosed in the offer document.
○ Such utilisation of the proceeds will be verified by the report
of an external auditor, to verify the internal tracking method
and the allocation of funds towards the project from the
proceeds of green debt securities.
○ Will have to make a disclosure about details of unutilized
proceeds.
● With regard to disclosure in the annual report, Sebi said that issuer
will have to apprise about methods and the key underlying
assumptions used in preparation of the performance indicators and
metrics and details of the deployment of the mitigation plan for the
perceived social and environmental risks
● The issuer will have to appoint a third-party reviewer for green
debt security for the post-issue management of the use of proceeds
from the green debt security, and verification of the internal tracking
and impact reporting.

Amendment to ● The following restrictions have been set-out for the companies
undertaking buy-back through stock exchange route: -
SEBI (Buy-back ○ The company shall not purchase more than 25% of the
of Securities) average daily trading volume (in value) of its shares or
other specified securities in the ten trading days preceding
Regulations, 2018 the day in which such purchases are made.
○ The company shall not place bids in the pre-open market,
first thirty minutes and the last thirty minutes of the regular
trading session.
○ The company’s purchase order price should be within the
range of ±1% from the last traded price.

Margin Requirement for deposits in Escrow Account

● The escrow account shall consist of cash and/or other than the cash.
● The portion of escrow account in the form of other than the cash shall
be subject to appropriate haircut
● Merchant Banker to buy-back offer is advised to ensure that the
adequate amount after the applicable haircut is available in
escrow account till the completion of all formalities of buy-back.

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 Others
● In its latest circular, Irdai said all general and stand-alone health
Irdai mandates insurers who have been issued a certificate of registration to transact
general insurers general and health insurance business should mandatorily launch
and offer their respective products immediately.
to cover mental ○ Around a year back, the regulator had asked health insurers to
illness, HIV add mental illnesses to regular health insurance coverage.
○ Hence, the provisions have been incorporated in respective
Acts to make such policies available to people.
○ Health insurance policies will now have to cover persons
with disabilities (PWD), persons who have HIV/AIDS, and
those with mental illness.

Irdai to bring in ● The Insurance Regulatory and Development Authority of India (Irdai)
is emphasising in bringing in “Enhanced Access and Service
'EASE' in Excellence (EASE)” in delivery of insurance services in line with
delivering entire the banking industry.
● At the third Bima Manthan session, Irdai said it wants to create an
suite of insurance environment that makes it easy for the policyholder to approach the
services insurance company, be it for buying, servicing or receiving claims or
lodging any complaint or grievance. Insurance companies, on their
part, have to aim for excellence in their service delivery.
○ Bima Manthan is a bi-monthly event hosted by the
insurance regulator where it engages with the insurance
industry officials and other stakeholders.
● Among other things, all stakeholders engaged in the discussion
reached a common consensus in prioritizing term insurance,
pension and annuity segments in life and health, motor, property
in general insurance.
● There was consensus on the formulation of a five-year plan to
expand footprints of lead insurers in their respective states.

PFRDA increases ● Pension Fund Regulatory and Development Authority (PFRDA) has
increased the upper age limit by 5 years for Ombudsman to 70 years.
Ombudsman's
● As per the Pension Fund Regulatory and Development Authority
upper age limit to (Redressal of Subscriber Grievance) Regulations 2015, the upper
70 years from 65 age limit was 65 years.
years

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Irdai permits ● This means the regulator has replaced the earlier cap on different
commission payments to various types of intermediaries with an
insurers to frame
overall board approved cap which should be within the allowed
commissions for expenses.
agents and ● The IRDAI (Payment of Commission) Regulations, 2023 is expected
to provide more flexibility in product innovation and insurance
brokers
penetration.
● The regulation will come into force from April 1, 2023, and will
remain in force for a period of three years thereafter.

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