JULY-SEP, RBI & SEBI-2024

1. Sebi cuts face value of debt securities to boost retail participation

 Markets regulator Sebi drastically cut the face value of debt securities to Rs
10,000 from Rs 100,000 at present to boost participation of retail investors
in the corporate bond market.
 The issuer may issue debt security or non-convertible redeemable
preference shares on private placement basis at a face value of Rs 10,000
2. Sebi has notified changes to include ‘mule accounts’ in its Prohibition of
Fraudulent and Unfair Trade Practices (PFUTP) Regulations.
 “Mule account includes a trading account maintained with a stock broker
or a demat account or bank account linked with such trading account in the
name(s) of a person, where the account is effectively controlled by another
person, whether or not the consideration for transactions in the account
are paid by such other person
 The amendment follows several instances where the market regulator
found use of such accounts for fund diversion, siphoning off of assets of a
company, manipulation of financial statements, and other fraudulent
transactions.
3. Sebi forms 15-member working group to review derivative trading norms
 The Securities and Exchange Board of India (Sebi) has formed a working
group to review derivatives trading norms with an aim of enhancing
investor protection and risk management
 The 15-member panel will be headed by G Padmanabhan, former
executive director of Reserve Bank of India (RBI). It will be tasked with
market development and regulation to enhance risk architecture of
exchange-traded derivatives and investor protection.

4. SEBI recognises BSE as supervisory body for research analysts, investment

advisors for 5 years

 As part of its new role, BSE will establish bylaws, standard operating
procedures (SOPs), and frequently asked questions (FAQs) to guide and
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facilitate the seamless adoption of the RAASB and IAASB frameworks by RAs
and IAs.
 applicants seeking registration or renewal as research analysts or
investment advisers will need to pay administrative fees specified by the
Research Analyst Administration and Supervisory Body (RAASB) and
Investment Adviser Administration and Supervisory Body (IAASB).
5. The markets regulator has proposed a new asset class that will offer
investment products positioned between mutual funds (MFs) and portfolio
management services (PMS) to fill an opportunity gap for investors and
offer flexibility in portfolio construction.
 The new category of products, which would be introduced under the
mutual fund structure, would have a minimum investment of Rs 10 lakh.
The new asset class will have a risk-return profile between that of MFs and
PMS, which means it will be aimed at investors who have greater risk-taking
capabilities and higher investment amounts than in MFs, but lower than in
PMS.
 PMS are a category of professional financial services in which a skilled
portfolio manager and stock market manager provides customised
investment solutions to high net-worth individuals (HNIs) who are looking
to invest in instruments such as equity, debt, gold, etc. The minimum
investment limit in PMS is Rs 50 lakh.
 PMS are different from MFs, where the minimum investment limit is just Rs
100, and a pool of money is managed by a professional fund manager.
 alternative investment funds (AIF), a privately pooled investment vehicle
that collects funds from sophisticated investors, whether Indian or foreign,
to make investments in accordance with a defined investment policy for the
benefit of the investors. The floor investment in AIF is Rs 1 crore.

 The minimum investment amount for the new asset class has been
proposed at Rs 10 lakh per investor within the asset management company
(AMC)/ MF. An AMC is an institution which manages and oversees
operations of mutual funds.
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 This means that an investor must invest a minimum of Rs 10 lakh, across
one or more investment strategies, under the new asset class offered by an
AMC/MF. “This threshold shall deter retail investors from investing in this
product, while attracting investors with investible funds between Rs 10 lakh
and Rs 50 lakh
 Like MF schemes, the new asset class will provide investors with an option
of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), and
Systematic Transfer Plan (STP).
6. The Reserve Bank of India (RBI) has cancelled the licenses of 78 Urban
Cooperative Banks (UCBs) since calendar year 2014, of which 46 percent are
from Maharashtra
 since 2014 is taken into account, then Maharashtra leads with 36 co-
operative banks losing their licenses, followed by Uttar Pradesh (14 banks)
and Karnataka (8 banks). Two UCBs in Gujarat have also lost their licences
during this period with the latest being Shree Mahalaxmi Mercantile Co-
operative Bank Ltd., Dabhoi, which lost its licence in January 2024.
7. RBI issues Master Direction on treatment of Wilful Defaulters and Large
Defaulters
 The central bank noted that wilful defaulter' means a borrower or a
guarantor who has committed wilful default, and the outstanding amount is
Rs 25 lakh and above. Large defaulter" means a defaulter with an
outstanding amount of Rs 1 crore and above, and where suit has been filed;
or whose account has been classified as doubtful or loss (in accordance with
the instructions issued by the Reserve Bank from time to time).
 The provisions regarding reporting and dissemination of credit information
pertaining to large defaulters shall apply to all entities regulated by the
Reserve Bank, irrespective of whether they fall within the definition of
'lender' as provided in these Directions or not. All entities regulated by the
Reserve Bank, including 'lenders', shall submit information to all credit
information companies (CICs) in respect of the large defaulters at monthly
intervals - a list of suit filed accounts of large defaulters; and a list of non-
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suit filed accounts of large defaulters whose account has been classified as
doubtful or loss (in accordance with the instructions issued by the Reserve
Bank from time to time).
8. UCBs were mandated to ensure that at least 50% of their aggregate loans
and advances are composed of Small Value Loans. These loans are defined
as loans of a value not exceeding ₹25 lakh or 0.2% of the bank’s Tier I
capital, whichever is higher, with a maximum cap of ₹1 crore per borrower.
 The revised deadlines and percentage targets are now as follows:
 By March 31, 2025, at least 40% of aggregate loans and advances must be
Small Value Loans.
 By March 31, 2026, the target of 50% must be met.
9. Informal finance still thriving in rural India: RBI report

 RBI report highlights thriving informal finance in rural India, with 31% of
loans sourced informally, impacting financial inclusion

10.the Reserve Bank of India issued a directive altering the ceiling on loans
against shares and debentures for Urban Co-operative Banks (UCBs).
Previously set at 20% of owned funds, the new regulation will link this
ceiling to the Tier I capital of UCBs as of March 31 of the preceding financial
year. This change, effective January 1, 2025, aligns with the guidelines
outlined in the Master Circular on Prudential Norms for UCBs. The updated
ceiling is aimed at enhancing financial stability by correlating the loan limits
with the bank’s Tier I capital, while all other provisions from the previous
circulars remain unchanged.
11.Reserve Bank of India tightens HFC norms to bring them on a par with
NBFCs
 RBI has reduced the ceiling on the quantum of public deposits that a
deposit-taking HFC, which is in compliance with all prudential norms and
minimum investment grade credit rating, can hold — from 3 times to 1.5
times its net owned fund (NoF).
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 As a result, deposit-taking HFCs holding deposits in excess of the revised
limit will not accept fresh public deposits or renew existing deposits till they
conform to the revised limit. However, the existing excess deposits will be
allowed to run off till maturity
 LIC Housing Finance and PNB Housing Finance are some of the deposit-
taking HFCs.
 Additionally, the RBI has directed deposit-taking HFCs – which are currently
required to maintain 13 per cent liquid assets against public deposits held –
to maintain, on an ongoing basis, liquid assets to the extent of 15 per cent
of public deposits held by them, in a phased manner.
 Accordingly, by January 1, 2025, these HFCs have to maintain 14 per cent
liquid assets, which include unencumbered approved securities. And, by
July 2025, they have to hold 15 per cent of total liquid assets as per cent of
public deposits.
 The RBI has also said that public deposits accepted or renewed by HFCs
have to be repayable after a period of 12 months or more but not later than
60 months. But, existing deposits with maturities above 60 months can be
repaid as per their repayment profile. Currently, HFCs are allowed to accept
or renew public deposits repayable after a period of 12 months or more but
not later than 120 months from the date of acceptance or renewal of such
deposits.
 HFCs shall ensure that full asset cover is available for public deposits
accepted by them at all times, and ensure that they get the 'investment
grade' rating by credit rating agencies at least once a year
 The asset coverage ratio is a financial metric that helps assess a company's
ability to pay off its debts using its tangible assets. It's calculated by dividing
a company's total assets minus intangible assets and current liabilities by its
total debt.
 The formula is:
 Asset coverage ratio = ((Total Assets – Intangible Assets) – (Current
Liabilities – Short-term Debt)) / Total Debt
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 A higher asset coverage ratio indicates a lower financial risk for the
company. It can also be used to compare companies within the same
industry.
 The Securities and Exchange Board of India (SEBI) replaced the term "asset
cover" with "security cover" for listed debt in April 2022.


12.The Reserve Bank said non-banking financial companies (NBFCs) will pay
100 per cent of deposit amount within the first three months of accepting
the fund, if the depositor seeks an withdrawal citing an emergency.
 In its review of regulations governing NBFCs, the central bank said no
interest will be paid for such premature withdrawals and added that these
changes will be in force from January 1, 2025.
 If the money is not sought for an emergency and a premature withdrawal is
sought within three months, NBFCs can pay up to 50 per cent of the deposit
without paying any interest.
 However, not more than 50 per cent of the amount of the principal sum of
deposit or Rs 5 lakh, whichever is lower, may be prematurely paid
 The RBI has also asked NBFCs to intimate depositors about a maturity 14
days ahead as against the present regulations stipulating it at two months.
13.India Inflation Falls to 5-Year LowThe annual consumer inflation rate in India
fell sharply to 3.54% in July of 2024 from 5.08% in the earlier month, well
below market expectations of 3.65%, to mark the softest rise in consumer
prices since August 2019.
14.RBI forms expert panel to benchmark its statistics with global standards
 JULY-SEP, RBI & SEBI-2024
 The Reserve Bank of India (RBI) has set up an expert committee to
benchmark its regularly disseminated statistics against global standards and
best practices, assess the quality of other routine data in sectors where
such benchmarks are absent, and provide guidance on potential areas for
further data refinement
 The expert committee, chaired by the RBI Deputy Governor Michael
Debabrata Patra, will consist of 10 members. The panel will submit its
report by the end of November 2024.
15.The Reserve Bank of India (RBI) has raised the upper limit for tax payments
through the Unified Payments Interface (UPI) from Rs 1 lakh to Rs 5 lakh per
transaction.
16.The Reserve Bank of India (RBI) has extended the Modified Interest
Subvention Scheme (MISS) for short-term loans for agriculture and allied
activities available through Kisan Credit Card (KCC) for the financial year
2024-25.
17.The Reserve Bank of India (RBI) has decided to increase the frequency of
reporting of credit information by lenders, including Banks and Non Banking
Finance Companies (NBFCs), to Credit Information Companies (CICs) from
monthly intervals to fortnightly basis or shorter intervals.This will be
effective from January 1, 2025.
18.The Reserve Bank of India (RBI) has proposed continuous clearing of
cheques under the Cheque Truncation System (CTS) with 'on-realisation-
settlement', replacing the current two-working-day clearing cycle.
19.According to the Sovereign Wealth Fund Institute (SWFI), the Reserve Bank
of India (RBI), India’s central banking institution, ranks 12th among the
world’s central banks by total assets.
 These assets typically include foreign exchange reserves, gold reserves, and
government bonds, among others. The top 10 wealthiest central banks
globally are noted for their substantial asset bases, reflecting their
significant influence on global economics and finance.
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 the Federal Reserve System of the United States of America ranks as the
world’s richest central bank, with assets worth $7.84 trillion. Notably,
European central banks dominate the list of the world’s richest central
banks, occupying seven of the top ten spots. Collectively, these European
institutions have a combined worth of $11.09 trillion.

 In the list which comprises names of 100 central banks, the Bank of Ghana
and Central Bank of Paraguay are ranked 99th and 100 respectively.

20.The Reserve Bank of India (RBI) has cautioned non-banking financial

companies – peer-to-peer (NBFC-P2P) lending platforms that they cannot
promote P2P lending as an investment product with features such as
tenure-linked assured minimum returns, and liquidity options. 152. An
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NBFC-P2P cannot utilisefunds of a lender for replacement of any other
lender(s). 153. Currently, there are 26 NBFC-P2P lending platforms in India.
154. Lending Exposure Cap: The total exposure of a lender to all borrowers
across P2P platforms is capped at ₹50 lakhs, and if a lender’s exposure
exceeds ₹10 lakhs, a certificate of minimum ₹50 lakhs net worth from a
practising Chartered Accountant is required.
21.Reserve Bank of India (RBI) Governor Shaktikanta Das has been ranked the
top central banker globally for the second consecutive year by US-based
Global Finance magazine. 160. An 'A' represents excellent performance,
while an 'F' for outright failure. i. IBPS RRB PO/CLERK GK POWER CAPSULE
2024 (JULY TO SEPT) b. Denmark's Christian Kettel Thomsen, India's
Shaktikanta Das and Switzerland's Thomas Jordan have been ranked under
the 'A+' category of central bankers.
22.The Reserve Bank had issued ‘Omnibus Framework for recognition of Self-
Regulatory Organisations for Regulated Entities of the Reserve Bank’ dated
March 21, 2024, wherein broad parameters, viz., objectives, responsibilities,
eligibility criteria, governance standards, application process, etc., were
specified. It was also stated that other sector-specific guidelines like
number of SROs, membership, etc., shall be issued separately whenever a
sectoral SRO is intended to be set up.
 It has now been decided to invite applications for recognition of SROs for
the NBFC sector under the aegis of the aforesaid omnibus framework. The
applicant entity shall fulfil the eligibility criteria and guidelines mentioned
under the omnibus framework, along with specific instructions specified
hereunder:
 A. Membership Criteria for the SRO for NBFCs
 The SRO for NBFC sector is primarily envisaged for NBFCs in the categories
of Investment and Credit Companies (NBFC-ICCs), Housing Finance
Companies (HFCs) and Factors (NBFC-Factors). However, the SRO may also
have other categories of NBFCs as its members.
 The recognized SRO shall have a good mix of NBFC-ICCs, HFCs and NBFC-
Factors as its members. To ensure fair representation to smaller NBFCs, the
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SRO shall have at least 10% of the total number of NBFCs in the Base Layer
as per Scale Based Regulatory Framework and categorised as NBFC-ICC and
NBFC-Factor, as its members. Failure to achieve the aforesaid membership,
within two years of the grant of recognition as SRO, would render the SRO
liable for revocation of the recognition granted.
 B. Other terms of recognition of SRO
 The applicant should achieve a minimum net worth of Rupees 2 crore
within a period of one year after recognition as an SRO by Reserve Bank, or
before commencement of operations as an SRO, whichever is earlier.
Thereafter, the SRO shall maintain this on an ongoing basis.
 A maximum of two SROs for the NBFC sector will be recognised, subject to
the applicants fulfilling the prescribed criteria to the satisfaction of the
Reserve Bank.
23.RBI to launch Unified Lending Interface to transform lending space: Das

 The Reserve Bank of India (RBI) is set to launch Unified Lending Interface
(ULI), Governor Shaktikanta Das said while stressing that the new platform
will provide lenders digital access to customer’s financial and non-financial
data -- including land records -- stored in various silos to help them extend
frictionless credit, especially to farmers and MSMEs.
 Governor Das claimed that ULI will transform the lending sector in India
much like the united payment interface (UPI) transformed the payments
ecosystem.
24.Recent data from the Reserve Bank of India (RBI) indicate that people are
continuing to repose faith in small savings schemes with the corpus clocking
a decent annual growth of 13.8 per cent up to February 2024 reaching
₹18.1 lakh crore.
 Historical data show that in February 2015, the outstanding balance on
small savings was ₹6.2 lakh crore, which rose to ₹10.4 lakh crore in
February 2019. The trend continued with the outstanding amount reaching
₹15.9 lakh crore in February 2023, a 12.1 per cent y-o-y growth and finally
achieving ₹18.1 lakh crore in February 2024 at 13.8 per cent growth.
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25.Exclusion of “Krung Thai Bank Public Company Limited” from the Second
Schedule of the Reserve Bank of India Act, 1934 It is advised that “Krung
Thai Bank Public Company Limited” has been excluded from the Second
Schedule of the Reserve Bank of India Act, 1934 vide Notification
DoR.LIC.No.S1998/23.13.066/2024-25 dated July 3, 2024, which is
published in the Gazette of India (Part III - Section 4) dated August 17-
August 23, 2024
 Headquarters: Watthana, Bangkok, Thailand
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 Exclusion of “Credit Suisse AG” from the Second Schedule of the Reserve
Bank of India Act, 1934
 Headquarters: Zürich, Switzerland
26.Inclusion of “UBS AG” in the Second Schedule of the Reserve Bank of India
Act, 1934
 Headquarters: Zürich, Switzerland
27.The Reserve Bank of India (RBI) has officially recognised the Fintech
Association for Consumer Empowerment (FACE) as the first Self-Regulatory
Organization in the FinTech sector (SRO-FT).
 Not-for-Profit Requirement: The SRO-FT must be a not-for-profit company
under Section 8 of the Companies Act, 2013.
 Definition: A Self-Regulatory Organization in FinTech (SRO-FT) must be a
registered not-for- profit company.
 Net Worth Requirement: The applicant should have a minimum net worth
of INR 2 Crores within one year of recognition or before commencing
operations, whichever is earlier.
28.As a measure for investor protection, the Securities and Exchange Board of
India (SEBI), the market regulator, has introduced SEBI’s Virtual Assistant
(SEVA), an artificial intelligence-enabled chatbot that addresses investor
questions.

29.Application Supported by Blocked Amount (ASBA) is a process that lets

investors apply for public issues by authorizing a Self-Certified Syndicate
Bank (SCSB) to block funds in their account. ASBA is available for Initial
Public Offers (IPOs), Follow-on Public Offers (FPOs), Debts, and Right Issues.
 Here are some benefits of ASBA:
 Interest earning
 The money blocked in the account earns interest until the allotment is
finalized.
 No need for refunds
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 The money remains in the account and is paid to the company or issuer
once the allotment is made.
30.The Markets regulator Securities and Exchange Board of India (SEBI) has
proposed the expansion of the sustainable finance framework in the
securities market by introducing a new category of financial instruments.
The new categories include Green Debt Securities, Social Bonds, Sustainable
Bonds, and Sustainability-Linked Bonds, collectively referred to as ESG Debt
Securities.
31.the Reserve Bank of India (RBI) introduced a scheme on August 29, 2024 to
allow foreign investors in the International Financial Services Centre (IFSC)
to invest in sovereign green bonds (SGrBs). The scheme aims to increase
non-resident participation in these sustainable instruments.
 The scheme's objectives include:
 Increasing the pool of investors: The government aims to expand the pool
of investors interested in green bonds by allowing foreign investors to
participate through the IFSC.
 Facilitating wider non-resident participation: The scheme aims to facilitate
wider non-resident participation in SGrBs.
32.SEBI has indeed established a 22-member advisory committee to
streamline the rules for listing obligations and disclosures. This committee,
chaired by R Gandhi, former Deputy Governor of the Reserve Bank of India
(RBI), aims to enhance corporate governance and harmonize listing and
post-listing obligations
 The committee will provide recommendations on various aspects, including
disclosure requirements, to ensure better compliance and transparency for
listed companies. This initiative is part of SEBI’s ongoing efforts to adapt to
the evolving market landscape and address the needs of investors and
other stakeholders.