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BANKERS PLUS
Volume IV, Issue 11 February 2024

Domestic Systemically
Important Banks

Bankers Plus-Monthly e magazine by Ramya Education Enterprise

 BANKERS PLUS
Volume IV, Issue 11, February 2024

COVER PAGE ARTICLES 6

Key highlights of
US Debt Ceiling Crisis
Interim Budget for
FY 2024-2025

1 Domestic
Systemically
Important Banks
…Page 1-4
26
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9 Published by,
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39 the publisher.
 Bankers Plus
BANKERSJune
PLUS2021
Volume IV, Issue 11, Feb 2024

Welcome to February 2024 edition of ‘Bankers Plus‟.

Thanks for accepting Bankers Plus as your „trusted
source‟ to update your professional Knowledge. I am
happy to share the fact that today „Bankers Plus‟ is the
most accepted magazine among banking professionals.
Presently RBI is more concerned on aggressive growth in unsecured
loans and over reliance on Model based, algorithm lending
adopted by Financial institutions. Many banks are investing huge
money to build robust credit tools and models with the use of
modern technologies such as Artificial Intelligence.
The model based lending may substantially reduce human errors
and save significant time in processing credit proposals. These
models use innovative approaches to assess credit needs of
customers majorly based on available cash flow data. These models
trying to be more innovative and designed to lend more amount than
normal credit assessment methods.
As a business person and previously worked in credit I believe, use of
best models or assessment methods cannot replace ‘human factor‟
in decision making. No model can replace „basic principles‟ of credit
such as „ensuring end use‟, business profitability, significance of
administrative expenditure over bank‟s repayment obligation,
need based credit, business profitability to meet repayment
obligation (One loan should not be repaid by taking other loan),
judging customer beyond the credit score or rating. Excess
funding always leads to fund diversion and causes future defaults.
„Human element‟ in judgment cannot be replaced by any of the
models. A „balanced approach‟ in this is the need of the present day.

This e-magazine is not for free circulation. Shivaprasad K

Be responsible. Click here to subscribe www.ramyaedu.com
Bankers Plus.
 Ramya Education Enterprises
No. 5G-807, Provident Sunworth,
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 Bankers
Cover pagePlus-March
Article 2022 Bankers Plus- Feb 2024

Domestic Systemically
Important Banks
(D-SIBs)
Some banks, due to their size, cross-jurisdictional activities,
complexity, lack of substitutability and interconnectedness, become
systemically important in the banking system. The disorderly
failure of these banks has the potential to cause significant disruption
to the essential services they provide to the banking system, and in
turn, to the overall economic activity. Therefore, the continued
functioning of Systemically Important Banks (SIBs) is critical for the
uninterrupted availability of essential banking services to the real
economy.
Basel III norms specified various risk measurement and
management measures for the banking system. However, these
policy measures are not adequate to deal with risks posed by
SIBs. Additional policy measures for SIBs are necessary to counter
the systemic risks and moral hazard issues posed by these banks,
which other policy reforms do not address adequately. Hence, central
banks of each countries specify various additional criteria’s to
recognise DSIBs under the broad guidelines of Basel III norms.
Systematically Important Banks:
SIBs are perceived as banks that are „Too Big To Fail (TBTF)‟. This
perception of TBTF creates an expectation of government support
for these banks at the time of distress. Due to this perception, they
enjoy certain advantages in the funding markets. However, the
perceived expectation of government support amplifies risk-taking,
reduces market discipline, creates competitive distortions & increases
the probability of distress in the future. These considerations require
that SIBs should be subjected to additional policy measures to deal
with the systemic risks and moral hazard issues.
1
 Bankers
Cover pagePlus-March
Article 2022 Bankers Plus- Feb 2024
In October 2010, the Financial Stability Board (FSB) recommended
that all member countries needed to have in place a framework to
reduce risks attributable to Systemically Important Financial
Institutions (SIFIs) in their jurisdictions. Basel Committee on
Banking Supervision (BCBS) has issued various criteria's for
Global systematically important banks first in November 2011.
BCBS has also finalized its framework for dealing with D-SIBs in
October 2012. The DSIB framework focuses on the impact that the
distress or failure of banks will have on the domestic economy. Based
on these guidelines, RBI has identifies the D-SIBs for our country. D-
SIBs are segregated into different buckets based on their systemic
importance scores, and subject to loss absorbency capital surcharge
i.e. additional CET 1 capital requirement than other banks.
Methodology to be adopted by RBI to identify D-SIBs:
RBI selects the banks for classification as D-SIBs
based on the analysis of their size as a percentage of
GDP. Banks having a size beyond 2% of GDP will be
selected in the sample. The methodology to be used
to assess the systemic importance is largely based
on the indicator-based approach being used by BCBS
to identify G-SIBs. The indicators used are,
(a) Size: There is a greater chance that impairment or failure of a
larger bank would cause greater damage to the financial system and
domestic real economy.
(b) Interconnectedness: Impairment or failure of one bank may have
the potential to increase the probability of impairment or failure of
other banks if there is a high degree of interconnectedness
(contractual obligations) with other banks.
(c) Substitutability: The greater the role of a bank as a service
provider in underlying market infrastructure, e.g., payment systems, it
is difficult to substitute it.
(d) Complexity: The more complex a bank is, the greater are the
costs and time needed to resolve its problems.
2
 Bankers
Cover pagePlus-March
Article 2022 Bankers Plus- Feb 2024
Weightage given for these four parameters and their related
components are as follows,
Sl. Indicator
Indicator Sub-indicator
No. weight
1 Size (total exposure as defined for use in Basel III 40%
Leverage Ratio)
Intra-financial system assets 6.67%
Intra-financial system
2 Interconnectedness 6.67%
liabilities
Securities outstanding 6.67%
Assets Under Custody 6.67%
Digital Payments made in INR 6.67%
3 Substitutability
Underwritten transactions in
6.67%
debt and equity markets
Notional amount of OTC
6.67%
Derivatives
Cross Jurisdictional Liabilities 6.67%
4 Complexity
Securities in Held For Trading
and Available for Sale 6.67%
categories
Assessment frequency:
The computation of systemic importance scores, based on the end-
March data of all the banks in the sample, will be performed annually
in the months of August-October, and names of the banks classified
as D-SIBs will be disclosed in the month of November every year.
Accordingly, banks will be required to be in readiness to submit the
required data to RBI by August 15 of each year.
Higher capital Requirement for D-SIBs:
The quantum of additional capital requirements for D-SIBs has been
based on a mix of quantitative calibration exercise and consideration
of country-specific factors. Based on these assessments, D-SIBs will
be placed under 5 different buckets.
3
 Bankers
Cover pagePlus-March
Article 2022 Bankers Plus- Feb 2024
Additional CET1 requirement (as a
Bucket
percentage of risk weighted assets)
5 (Empty) 1.00%
4 0.80%
3 0.60%
2 0.40%
1 0.20%
The additional CET1 requirements will be applicable at the level of
both solo as well as consolidated level of the D-SIB, in line with extant
capital adequacy provisions.
Interaction with the other elements of Basel III framework:
(a) The higher CET1 requirements will be
made applicable as an extension of capital
conservation buffer. If a D-SIB is not able
to meet the additional CET1 requirement, it
will be subjected to restrictions on distribution
of profits and other restrictions as applicable
under the Basel III framework.
(b) To the extent a D-SIB has incorporated its systemic importance in
its Internal Capital Adequacy Assessment Process (ICAAP); it will not
be required to hold capital twice for the same risk during the
Supervisory Review and Evaluation Process (SREP).
(c) Higher requirement of Leverage Ratio- i.e D-SIBs should maintain
the leverage ratio of 4% as against 3.5% stipulated for other banks.
(d) In case a foreign bank having branch presence in India is a G-
SIB, it has to maintain additional CET1 capital surcharge in India as
applicable to it as G-SIB, proportionate to its Risk Weighted Assets
(RWAs) in India. In case a foreign bank having branch presence in
India is not a G-SIB, but a DSIB in India, it has to maintain D-SIB
additional capital surcharge in India.

4
 Bankers
Cover pagePlus-March
Article 2022 Bankers Plus- Feb 2024
D-SIBs of India:
SBI, HDFC Bank and ICICI Bank continue to be identified as
Domestic Systemically Important Banks (D-SIBs). While ICICI
Bank continues to be in the same bucketing structure as last year,
SBI and HDFC Bank move to higher buckets – SBI shifts from bucket
3 to bucket 4 and HDFC Bank shifts from bucket 1 to bucket 2. For
SBI and HDFC Bank, the higher D-SIB buffer requirements on
account of the bucket increase will be effective from April 1, 2025.
The additional Common Equity Tier 1 (CET1) requirement will be in
addition to the capital conservation buffer.
Additional Common Equity
Tier 1 requirement as a
Bucket Banks
percentage of Risk
Weighted Assets (RWAs)
5 - 1%
4 State Bank of India* 0.80%
3 - 0.60%
2 HDFC Bank* 0.40%
1 ICICI Bank 0.20%
* The higher D-SIB surcharge for SBI and HDFC Bank will be
applicable from April 1, 2025. Hence, up to March 31, 2025, the D-
SIB surcharge applicable to SBI and HDFC Bank will be 0.60% and
0.20% respectively.

Important Notice

The copy of this e-magazine is intended

for the use of Subscribers only.
Unauthorized sharing is prohibited and
liable for appropriate action taken by the
publisher.
5
 Bankers Plus-March 2022
Plus- Feb 2024 Cover page Article
Key highlights of
Interim Budget for
FY 2024-2025
Union finance minister has presented Interim Budget for the financial
year 2024-25. The full fledged budget is not presented due to the
upcoming general elections. The key highlights of the interim budget
presented for FY 2024-25 are,
(a) The focus of the budget is upliftment of four major segments, that
is, „Garib‟ (Poor), „Mahilayen‟ (Women), „Yuva‟ (Youth) and
„Annadata‟(Farmer).
(b) The budget contains a number of announcements and strategies
indicating directions and development approach for making India
„Viksit Bharat‟ by 2047.
(c) Priority to Solar Power: 1 crore households to obtain 300 units
free electricity every month through rooftop solarization. Each
household is expected to save Rs.15000 to Rs.18000 annually.
(d) Healthcare cover under Ayushman Bharat scheme to be
extended to all ASHA workers, Anganwadi Workers and Helpers.
(e) Research and Innovation for catalyzing growth, employment
and development- To give greater focus for this, a corpus of Rs.1
lakh crore will be established with fifty-year interest free loan to
provide long-term financing or refinancing with long tenors and low or
nil interest rates. A new scheme will be launched for strengthening
deep-tech technologies for defence purposes and expediting
„atmanirbharta‟.
(f) Capital expenditure outlay for Infrastructure development and
employment generation to be increased by 11.1 per cent to
Rs.11,11,111 crore, that will be 3.4 per cent of the GDP.

6
 Bankers Plus-March 2022
Plus- Feb 2024 Cover page Article
(g) 3 major economic railway corridor programmes identified under
the PM Gati Shakti to be implemented to improve logistics efficiency
and reduce cost. 40,000 normal rail bogies to be converted to Vande
Bharat standards.
(h) Under Green energy initiative Coal gasification and liquefaction
capacity of 100 MT to be set up by 2030. Phased mandatory
blending of compressed biogas (CBG) in compressed natural gas
(CNG) for transport and piped natural gas (PNG) for domestic
purposes to be mandated.
(i) Central government has proposed to extend Long-term interest
free loans to the States for financing development of Tourism
sector on matching basis.

(j) A provision of Rs.75,000 crore rupees as fifty-year interest free

loan is proposed to support milestone-linked reforms by the State
Governments under „Viksit Bharat‟ initiative.
(k) Government proposes to retain same tax rates for both direct
taxes and indirect taxes.
(l) To improve tax payer services, government has made two
decisions. They are,
i. Outstanding direct tax demands upto Rs 25000 pertaining to the
period upto FY 2009-10 withdrawn
ii. Outstanding direct tax demands upto Rs 10000 for financial years
2010-11 to 2014-15 withdrawn.
(m) Tax benefits to Start-Ups, investments made by Sovereign
wealth funds or pension funds extended till 31.03.2025.
(n) Tax exemption on certain income of IFSC units extended by a
year to 31.03.2025 from 31.03.2024.
7
 Bankers Plus-March 2022
Plus- Feb 2024 Cover page Article
(o) Revised Estimates (RE) 2023-24:
i. RE of the total receipts other than borrowings is Rs.27.56 lakh
crore, of which the tax receipts are Rs.23.24 lakh crore.
ii. RE of the total expenditure is Rs. 44.90 lakh crore.
iii. Revenue receipts at Rs.30.03 lakh crore are expected to be
higher than the Budget Estimate, reflecting strong growth momentum
and formalization in the economy.
iv. RE of the fiscal deficit is 5.8 per cent of GDP for 2023-24.
(p) Budget Estimates 2024-25:
i. Total receipts other than borrowings and the total expenditure are
estimated at Rs.30.80 and Rs.47.66 lakh crore respectively.
ii. Tax receipts are estimated at Rs.26.02 lakh crore.
iii. Scheme of fifty-year interest free loan for capital expenditure to
states to be continued this year with total outlay of Rs.1.3 lakh
crore.
iv. Fiscal deficit in 2024-25 is estimated to be 5.1 per cent of GDP.
v. Gross and net market borrowings through dated securities
during 2024-25 are estimated at Rs.14.13 and Rs.11.75 lakh crore
respectively.

8
 BANKERS PLUS
REGULATORY UPDATES
Volume IV, Issue 11, Feb 2024
JUNE 2023, Volume IV, Issue 3

BANKERS PLUS DEC2023, VOL IV, ISSUE 10

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 Ramya Education Enterprises
No.5G-807,ProvidentSunworth,
MysoreRoad,Bangalore-560060 JUNE 2023, Volume IV, Issue 3
09819952288/080-48141874

Dear Sir/Madam,
We are glad to release the Year 2023 issue of „BANKING INDIA-
CURRENT TRENDS, LATEST RBI GUIDELINES & KEY TOPICS‟.
This is a „Year book‟ which covers all
the latest and current updates of
Banking in a single place in detail for
the period of January 2023 to 31st
December 2023 in detail with simple
language. DEC2023, VOL IV, ISSUE 10
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10
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

Inoperative Accounts
/Unclaimed Deposits
in Banks- RevisedRTGS
Instructions
RBI has recently issued revised instructions on Inoperative
Accounts /Unclaimed Deposits held with the banks. The
key highlights of these revised instructions which will be
effective from April 1, 2024 are as follows,
(a) Transactions in the account initiated by the bank as per its
extant policy such as charges, fees, interest payments,
penalties, taxes etc are considered as ‘Bank induced
transactions‟.
P which is a subsidiary on.
(b) a financial transaction initiated by or done at the behest
of the account holder by the bank/ third party, a non-financial
transaction, or; KYC updation done through any means are
considered as ‘Customer induced transactions‟.
(c) A savings/ current account shall be treated as
„inoperative‟, if there are no „customer induced
transactions‟ in the account for a period of over two years.
(d) The credit balance in any deposit account maintained
with banks, which have not been operated upon for ten years
or more, or any amount remaining unclaimed for ten years
or more as mentioned in “Depositor Education and
Awareness” (DEA) Fund Scheme, 2014 is treated as
Unclaimed Deposits and has to be transferred to DEAF
maintained with RBI with Unclaimed Deposit Reference
Number (UDRN) generated in CBS.
11
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

(e) Banks shall undertake atleast an annual review in respect

of accounts, where there is no customer induced transactions
Regulatory
for more Updates
than a year.
(f) The banks shall inform the account holders in writing
through letters or email or SMS that there has been no
operation in their accounts/deposits in the last one year, as
the case may be. The alert messages shall invariably mention
that the account would become „inoperative‟ if no operations
are carried out during the next one year and, the account
holder would be required to submit KYC documents afresh for
reactivating the account in such case.

P which is a subsidiary on.

(g) In case any response is received from the account holder

giving the reasons for not operating the account, the banks
shall continue to classify the account as operative for one
more year and the account holder shall be advised to operate
the account within a period of one year (This is called
‘extended period‟).
(h) In case the account holder still fails to operate the account
within the extended period, the banks shall classify the said
account as inoperative account after the expiry of the
extended period.
(i) The classification of an account as inoperative shall be for a
particular account only.
12
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

(j) For the purpose of classifying an account as ‘inoperative’,

only customer induced transactions and not bank induced
Regulatory
transactions Updates
shall be considered. Transactions happened on
RTGS
the basis of Standing Instructions (SI)/ auto-renewal
instructions shall also be treated as „customer induced
transactions‟.
(k) The guidelines of inoperative accounts is not applicable for
accounts opened for specific purpose such as to receive
Scholarships/subsidies etc.
(l) The transactions in inoperative accounts, which have been
reactivated, shall be monitored regularly, for at least six
months, at higher levels (i.e. by controlling authorities of the
concerned branch) without the knowledge and notice of the
customers and thePdealing staff.
which is a subsidiary on.
(m) The banks shall ensure that amounts lying in inoperative
accounts/unclaimed deposits and reactivated inoperative
accounts/ unclaimed deposits, are subjected to concurrent
audit.
(n) The bank shall contact the holder(s) of the inoperative
account/ unclaimed deposit through letters, email or SMS (if
the email and mobile number are registered with the bank).
The email/ SMS shall be sent on a quarterly basis. If the
customer is not traceable, banks to contact introducers or
nominee.
(o) Interest on savings accounts shall be credited on a
regular basis irrespective of the fact that the account is in
operation or not.
(p) Inoperative accounts shall be activated only with proper
KYC documents.
13
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES
(q) The banks are not permitted to levy penal charges for
non-maintenance of minimum balances in any account that
is classified as an inoperative
Regulatory Updates account. No charges shall be
levied for activation of inoperative
RTGS accounts.

(r) Banks shall host the details of unclaimed deposits {only

name, address (without pin code) and Unclaimed Deposit
Reference Number (UDRN)}, which have been transferred to
DEA Fund of RBI on their respective websites, which shall be
updated regularly, at least on a monthly basis.
(s) Banks may also consider imposing a cooling-off period
on reactivation, with restrictions on the number and amount of
transactions, as may be applicable for newly opened accounts
with the bank.
P which is a subsidiary on.
Bankers Plus- Feb 2024 Regulatory Updates
Change in limit- Bulk
Deposits for Urban
Co-operative Banks
As per RBI guidelines “Bulk Deposit” means single Rupee
term deposits of Rupees fifteen lakh and above in case of
UCBs. (In commercial banks it is Rs. 2 crore and RRBs it is
Rs. 1 crore).
On a review, RBI has decided to enhance the bulk deposit limit
for Scheduled Primary (Urban) Co-operative Banks, in Tier 3
and 4, to Rupees one crore and above. For other UCBs, the
previous limit of Rs. 15 lakhs remains the same.

14
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

Annual Guarantee
Fee Structure- Credit
Guarantee Scheme RTGS

for Co- Lending

CGTMSE has recently increased the Ceiling on Guarantee
cover offered for Co-lending arrangement from ₹200 lakh to
₹500 lakh for secured facilities and from Rs. 100 lakh to
Rs. 200 lakh to unsecured facilities. In this regard,
CGTMSE has recently updated fee structure for the scheme.
Slab (₹) Standard Rate (SR)* (%pa)
0-10 lakh 0.37
P which
Above 10 lakh upto is a subsidiary on.0.55
50 lakh
Above 50 lakh upto 1 crore 0.60
Above 1 crore upto 2 crore 1.20
Above 2 crore upto 5 crore 1.35
*AGF will be charged on the guaranteed amount for the first
year and on the outstanding amount for the remaining
tenure of the credit facility.

The above fee structure shall be applicable for all the loans
sanctioned by eligible pair of MLIs on or after January 01,
2024. 10% concession in guarantee fee will be provided to
special categories i.e. Women, SC/ST entrepreneurs, Person
with disability (PWD), Agniveers, north eastern entrepreneurs
(upto limit of Rs. 50 lakh), MSEs located in Aspirational
districts and Zed certified MSEs.
15
Bankers Plus
Bankers Plus- Feb 2024 Regulatory
REGULATORY UPDATESUpdates

Second Schedule to
Regulatory Updates the RBI Act, 1934 –
RTGS
Norms for inclusion

Scheduled banks are those banks which are listed under

Schedule II of RBI Act, 1934. RBI has recently released
eligibility norms for inclusion of Urban Co-operative banks in
the Second Schedule to the RBI Act, 1934.
Licensed Tier 3 (UCBs with deposits more than ₹1000 crore
and up to ₹10,000 crore) and Tier 4 (UCBs with deposits
more than ₹10,000 crore) Primary (Urban) Co-operative
Banks, fulfilling the criteria stipulated for Financially Sound
P which is a subsidiary on.
and Well Managed Urban Co-operative Banks by RBI,
subject to maintenance of minimum deposits required for
categorization as a Tier 3 Urban Co-operative Bank for two
consecutive years, would be the eligible financial institutions
for the purpose of such categorization.
Such UCBs with the following criteria's shall be eligible for
inclusion,
(a) CRAR of at least 3 per cent more than the minimum
CRAR requirement applicable to the UCB; and
(b) No major regulatory and supervisory concerns.
Eligible UCBs may submit their application for inclusion in the
Second Schedule to the RBI Act, 1934 to the concerned
Regional Office of Department of Supervision with
specified documents.
16
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

Direct listing ofCIMIndian

cos on international
Regulatory Updates
exchanges of RTGS
GIFT IFSC
The Department of Economic Affairs (DEA) has recently
amended Foreign Exchange Management (Non-debt
Instruments) Rules and notified the „Direct Listing of
Equity Shares of Companies Incorporated in India on
International Exchanges Scheme‟.
As per the notification government has permitted the direct
listing of securities by Indian companies on international
exchanges of GIFT IFSC to boost foreign investments.
International stock P which is a subsidiary
exchanges at on.
GIFT-IFSC- India
International Exchange and NSE International Exchange
have been, currently, prescribed as permitted stock
exchanges. These exchanges are under the regulatory
supervision of the International Financial Services Centres
Authority (IFSCA).
With this amendment, the public Indian companies will have
the flexibility to access both markets i.e. domestic market for
raising capital in INR and the international market at IFSC for
raising capital in foreign currency from the global investors.

Please click here to give

your valuable feed back

17
Bankers Plus
Bankers Plus- Feb 2024 Regulatory
REGULATORY UPDATESUpdates

Companies Listing of
Regulatory Updates
equity shares in
RTGS permissible
jurisdictions Rules
Government of India has recently notified Companies (Listing
of equity shares in permissible jurisdictions) Rules, 2024.
The key highlights of this notification are,
(A) The provisions of these rules shall apply to unlisted
public companies and listed public companies.
(B) An unlisted public company, which has no partly paid-up
shares, may issue equity shares for the purposes of listing on
a stock exchange in a permissible
P which jurisdiction.
is a subsidiary on.
(C) Issue of equity shares shall include, offer for sale of equity
shares by existing shareholders of the unlisted public company
for listing on a stock exchange in a permissible jurisdiction.
(D) The unlisted public company shall file the prospectus in e-
Form LEAP-1 specified in the Second Schedule along with the
fees within a period of seven days after the same has been
finalized and filed in the permitted exchange.
(E) After the listing of the equity shares of a company on any
of the stock exchanges in a permissible jurisdiction, the
company shall comply with Indian Accounting Standards
while preparing financial statements.
(F) Following category of companies are not eligible for listing
under these guidelines.
(a) has been registered under section 8 or declared as Nidhi
under section 406 of the Act.
18
Bankers Plus
Bankers Plus- Feb 2024 Regulatory
REGULATORY UPDATESUpdates

(b) is a company limited by guarantee and also having share

capital.
(c) hasRegulatory Updates
any outstanding deposits accepted from the public as
RTGS
per Chapter V of the Act and rules made there under.
(d) has a negative net worth.
(e) has defaulted in payment of dues to any bank or public
financial institution or non-convertible debenture holder or any
other secured creditor provided that this clause shall not apply
if the company had made good the default and a period of two
years had lapsed since the date of making good the default.
(f) has made any application for winding-up under IBC 2016.
(g) has defaulted in filing of an annual return under section
92 or financial statement under section 137 of the Act within
the specified period.P which is a subsidiary on.

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Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

RBI (Commercial Paper

and NCDs - maturity
Regulatory Updates
upto one year) RTGS
Directions, 2024
RBI has recently reviewed it’s directions on Commercial
Paper and Non-Convertible Debentures of original or initial
maturity upto one year and issued revised master direction in
this regard. The key highlights of these directions which are
effective from April 01, 2024 are,
(a) Commercial Paper (CP) means an unsecured money
market instrument issued in the form of a promissory note.
Non-Convertible Debenture (NCD) means a secured money
P which is a subsidiary on.
market instrument with an original or initial maturity upto one
year.
(b) CPs and NCDs may be issued by Companies, NBFCs,
including HFCs, InvITs & REITs, AIFIs, Any other body
corporate, cooperative societies & LLPs with a minimum
net-worth of ₹100 crore, provided that the body corporate is
statutorily permitted to incur debt or issue debt instruments in
India; and any other entity specifically permitted by the RBI
subject to the condition that all fund-based facilities availed, if
any, by the issuer from banks/ AIFIs / NBFCs are classified as
Standard at the time of issue.
(c) All residents & Non-residents are eligible to invest in
CPs and NCDs. No person, resident or non-resident, can
invest in CPs and NCDs issued by related parties either in
the primary or through the secondary market.
20
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

(d) CPs and NCDs shall be issued in dematerialised form

and held with a depository registered with SEBI.
(e) CPsRegulatory
and NCDsUpdates
shall be issued in minimum denomination
RTGS
of ₹5 lakh and in multiples of ₹5 lakh thereafter.
(f) The tenor of a CP shall not be less than seven days or
more than one year. The tenor of an NCD shall not be less
than ninety days or more than one year.
(g) The primary issuances of CPs and NCDs, including both
payment of funds to the issuer and issue of CPs and NCDs to
the investors, shall be settled within a period not exceeding
T+4 working days.
(h) Total subscription by all individuals, including Hindu
Undivided Families, in any primary issuance of CPs or NCDs
shall not exceed 25P per
which is aofsubsidiary
cent on.
the total amount issued.
(i) CPs shall be issued at a discount to the face value. NCDs
shall be issued at a discount to the face value or with fixed or
floating rate coupon.
(j) Funds raised through CPs and NCDs shall ordinarily be
used to finance current assets and operating expenses.
The end-use of the funds raised through a CP or an NCD
shall be disclosed in the offer document.
(k) The minimum credit rating, assigned by a Credit Rating
Agency (CRA), for the issuance of CPs and NCDs shall be
„A3‟ as per rating symbol and definition prescribed by SEBI.
(l) CPs and NCDs shall be traded either in OTC markets
including on Electronic Trading Platforms (ETPs), or on
stock exchanges approved by RBI. The settlement cycle for
OTC trades in CPs and NCDs shall be either T+0 or T+1.
21
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

(m) The buyback of CPs can be made only after seven days
from the date of issue. The buyback of NCDs can be made
Regulatory
only after ninety daysUpdates
from the date of issue.
RTGS
(n) There will be no grace period for repayment of
CPs/NCDs.
(o) Primary issuance and secondary market trading hours
shall be between 9:00 AM and 5:00 PM on a working day or
as specified by the Reserve Bank from time to time.
(p) Details of all issuances in primary markets of the CPs and
NCDs shall be reported by the Issuing and Paying Agents
(IPAs) on the F-TRAC platform by 5:30 PM on the day of
issuance. All secondary market transactions in CPs and
NCDs, executed in the OTC market and/or on the recognised
stock exchanges, P which
shall be is a subsidiary
reported on. stamp within 15
with time
minutes of execution (the time when price is agreed) on the
F-TRAC platform by each counterparty to the transaction.
(q) Instances of default and repayment of defaulted
obligation shall be reported by the IPA on the F-TRAC
platform by 5:30 PM on the day of default or the day of
repayment of defaulted obligations, as the case may be.

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22
Bankers Plus
Bankers Plus- Feb 2024 Regulatory
REGULATORY UPDATESUpdates

Amendment to the
Master Direction (MD)
RTGS
on KYC
As per RBI’s master directions on KYC AML norms,
Regulated Entities (REs) have to undertake Customer Due
Diligence (CDD), as per the process laid out therein, for their
customers.
As per these guidelines, REs shall have the option of
establishing a relationship with Politically Exposed Persons
(whether as customer or beneficial owner) provided that, apart
from performing normal customer due diligence.
For this purpose, P aswhich
per the
is aamended
subsidiarydefinition,
on. “Politically
exposed persons (PEPs) are individuals who are or have
been entrusted with prominent public functions by a foreign
country, including the Heads of States/Governments, senior
politicians, senior government or judicial or military officers,
senior executives of state-owned corporations and important
political party officials.”

Important Notice
The copy of this e magazine is intended for the use to Subscribers
only. Please stop Unauthorized sharing. If anyone receive the
same from unauthorized sources (Other than from mobile numbers
9819952288/9916049194 or email ramyaedu2@gmail.com, please
desist from downloading. Any unauthorized sharing prompts for an
appropriate action from the publisher.

23
Bankers Plus
Regulatory Updates Bankers Plus-
REGULATORY Feb 2024
UPDATES

APB/ACH credits in
case of in-operative
accounts RTGS

As per the existing practice, banks will return any of the APB
(Aadhaar Payment Bridge )/ACH (Automated Clearing
House) credits to accounts which are inoperative (return
code-53) and Dormant Accounts (return code 54).
NPCI according to latest RBI guidelines on in-operative
accounts has instructed banks not to return the credits to
inoperative and dormant accounts under Direct Benefit
Transfer (DBT) with effect from 01.04.2024 under NACH
system.
P which is a subsidiary on.
Bankers Plus- Feb 2024 Regulatory Updates

Messaging System in
IMPS
transactions
NPCI has issued instructions to member banks under IMPS
system to migrate from ISO 8583 messaging system to API
based XML format before 31st March 2022. The time limit
was further extended till 31st January 2024.
In this regard, NPCI has advised all banks to complete
migration before 31st January 2024 and post which no IMPS
transactions will be allowed with ISO 8583 messaging
system.
24
 Bankers Bankers
Plus-March Plus7
2022
Bankers Plus
REGULATORY
Regulatory Updates UPDATES Bankers
REGULATORY Bankers
Plus- Feb 2024
Volume
UPDATES Plus
II, Issue
June 2021
REGULATORY UPDATES
July 2021
Key policy rates as
on 31.01.2024 RTGS

Key Rate-As on 31.12.2023 31.01.2024

Policy Repo Rate 6.50% 6.50%
Fixed Reverse Repo Rate 3.35% 3.35%
Standing Deposit Facility Rate 6.25% 6.25%
MSF Rate 6.75% 6.75%
Bank Rate 6.75% 6.75%
CRR 4.50% 4.50%
SLR
SBICAP which is a subsidiary of the18.00% 18.00%
State Bank of India has
Base Rate 8.95-10.25% 9.10%
set up a SPV (SLS Trust) to manage this operation. - 10.25%
MCLR (Overnight) 7.95% - 8.50% 8.00% - 8.60%
Savings Deposit Rate 2.70% - 3.00% 2.70% - 3.00%
Term Deposit Rate > 1 Year 6.00% - 7.25% Volume
6.50%
II,-Issue
7.25%7

REGULATORY UPDATES
BANKERS PLUS-MONTHLY E-MAGAZINE
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25
 BANKERS
Volume II,PLUS
Issue 11
INDUSTRY UPDATES
VolumeVolume
IV, Issue II- Issue
11, Feb 8
2024
JUNE 2023, Volume IV, Issue 3
Volume II, Issue 6 December 2021
RTGS Subscribers Copy-
Not for free circulation

REGULATORY UPDATES

SBICAP which is a subsidiary of the State Bank of India has

set up a SPV (SLS Trust) to manage this operation.

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 Industry Updates BankersCover page Article
Plus- Feb 2024

PLI Scheme for

Automobile sector
-Extension
The Ministry of Heavy Industries has recently approved
extension of the tenure of Production Linked Incentive (PLI)
Scheme for Automobile and Auto Components which is
focused on Zero Emission Vehicles (ZEVs) i.e. Battery
Electric Vehicle and Hydrogen Fuel Cell Vehicle by one
year. In addition to extension Ministry of Heavy Industries has
also made partial amendments in the scheme.
As per the amendment, the incentive will be applicable for a
email and financial
total of five consecutive Subscribeyears,
online starting
at from the
financial year 2023-24. The disbursement of the incentive will
take place in the following financial year i.e. 2024-25. The
scheme also specifies that an approved applicant will be
eligible for benefits for five consecutive financial years, but
not beyond the financial year ending on March 31, 2028.
Furthermore, the amendments state that if an approved
company fails to meet the threshold for an increase in
determined sales value over the first year's threshold, it will
not receive any incentive for that year. However, it will still be
eligible for benefits in the next year if it meets the threshold
calculated on the basis of a 10% year-on-year growth over the
first year's threshold.
Government of India has proposed a financial outlay of Rs.
25,938 crore under the scheme.
27
 INDUSTRY UPDATES Cover page Article
Bankers Plus- Feb 2024 Industry Updates
Launch of
PM- Janman Maha
Abhiyan
In line with the Government’s efforts towards the vision of
‘Antyodaya‟ to empower the last person at the last mile, PM-
JANMAN was launched for the socio-economic welfare of
Particularly Vulnerable Tribal Groups (PVTGs) in
November 2023 , on the occasion of Janjatiya Gaurav Diwas.
PM-JANMAN, with a budget of approximately Rs 24,000
crores focuses on 11 critical interventions through 9
Ministries and is aimed to improve socio-economic conditions
of the PVTGs byemailsaturating PVTG households
and Subscribe online at and habitations
with basic facilities such as safe housing, clean drinking water
and sanitation, improved access to education, health and
nutrition, electricity, road and telecom connectivity, and
sustainable livelihood opportunities.
The scheme is implemented by Ministry of Tribal Affairs, in
collaboration with the State governments and the PVTG
communities.

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 Industry Updates BankersCover page Article
Plus- Feb 2024

Issue of Yen
Denominated
Green Bonds by REC
Limited
Rural Electrification Corporation (REC) Limited, a
Maharatna Central Public Sector Enterprise under the
Ministry of Power, has successfully issued its inaugural
Japanese Yen (JPY) 61.1 billion 5-year, 5.25-year and 10-
year Green bonds, under its US$ 10 billion Global Medium
Term Notes Programme. Proceeds from the issue of the
Bonds will be applied to finance the Eligible Green Projects
in accordance with the Company’s Green Finance
Framework, RBI’s email and Subscribe
External online at
Commercial Borrowings
Guidelines and the approvals.
This is the first Yen Green Bonds issuance by any Indian
PSU. This issue is considered as largest ever Euro-Yen
issuance in South and South East Asia & Largest Yen-
denominated issuance from India.
The transaction witnessed interest from both Japanese and
international accounts, with number of orders from each at
50%, international allocation being one of the highest for any
other Indian Yen deal. The notes will be rated Baa3/BBB–
/BBB+ (Moody's/Fitch/JCR) and will be listed exclusively on
Global Securities Market of India International Exchange
(India INX) and NSE IFSC in GIFT City, Gandhinagar, Gujarat.
DBS Bank, Mizuho, MUFG, and SMBC Nikko are the joint
lead managers for the issue.
29
 INDUSTRY UPDATES Cover page Article
Bankers Plus- Feb 2024 Industry Updates

SCOPE Excellence
Awards 2024

REC Limited, a Maharatna Central Public Sector Enterprise

under the Ministry of Power and a leading NBFC, has been
honored with the prestigious ‘Scope Excellence Award‟
under „Special Institutional Category (Digitalization)‟.
Standing Conference of Public Enterprises (SCOPE) was
established in 1973 as an apex body of Public Sector
Enterprises (PSEs), and is dedicated to promoting
competitiveness and excellence within the PSE sector. The
SCOPE Excellence emailAward recognizes
and Subscribe andatcommemorates
online
exemplary performances of Public Sector Enterprises.
NHPC Limited, India’s premier hydropower company, has
been awarded SCOPE's 'Commendation Certificate' in the
category of Effective Implementation of RTI Act.

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magazine
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30
 Industry Updates BankersCover page Article
Plus- Feb 2024

CBDT releases
key Direct Tax
Statistics
The Central Board of Direct Taxes (CBDT) has been
releasing key statistics relating to Direct Tax collections and
administration in public domain from time to time. In
continuation of its efforts to place more and more information
in public domain, the CBDT has further released
Consolidated Time-Series data as updated upto F.Y. 2022-
23. The key highlights of some of these statistics which is
released recently are as under:
(a) Net Direct Tax
emailCollections haveonline
and Subscribe increased
at by 160.52%
from Rs. 6,38,596 crore in F.Y. 2013-14 to Rs. 16,63,686
crore in F.Y. 2022-23.
(b) Gross Direct Tax Collections of Rs. 19,72,248 crore in
F.Y. 2022-23 have registered an increase of over 173.31%
compared to Gross Direct Tax Collections of Rs. 7,21,604
crore in F.Y. 2013-14.
(c) Direct Tax to GDP ratio has increased from 5.62% in F.Y.
2013-14 to 6.11% in F.Y. 2022-23.
(d) The Cost of collection has decreased from 0.57% of total
collection in the F.Y. 2013-14 to 0.51% of total collection in the
F.Y. 2022-23.
(e) The total number of ITRs filed in FY 2022-23 stands at
7.78 crore showing an increase of 104.91% as compared to
total number of ITRs of 3.80 crore filed in FY 2013-14.
31
 INDUSTRY UPDATES Cover page Article
Bankers Plus- Feb 2024 Industry Updates

Supply of Green
Ammonia from India
to Japan
ACME Group, a leading renewable energy company in India,
and IHI Corporation, a Japanese integrated heavy industry
group, have recently signed an off take term sheet for supply
of green ammonia from Odisha, India to Japan.
The Green Ammonia will be produced at ACME’s 1.2
MMTPA Green Ammonia project being developed at Gopalpur
in the state of Odisha. Total investment for 1.2 MMT per
annum plant will be 5 billion USD. The term sheet between
IHI and Acme covers
email the
andsupply of 0.4online
Subscribe MMTPA at (million metric
tons per annum) of green ammonia from Phase-1 of Odisha
project in Gopalpur on a long-term basis.
This is one of the first and largest agreements in the world
in the field of green hydrogen and green ammonia. India is
going to emerge as one of the largest manufacturers of green
hydrogen and green ammonia in the world.

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32
 Industry Updates BankersCover
INDUSTRY UPDATES page Article
Plus- Feb 2024

Launch of three
sub-schemes under
the RAMP programme

For supporting various Covid-19, Resilience and Recovery

Interventions of the MoMSME, Raising and Accelerating
MSME performance (RAMP) Programme with an outlay of
Rs. 6000 crore was initiated by Government of India with
the financial support obtained from World Bank from FY
2022-23. The National MSME Council has been set up by
the Ministry to work as an administrative and functional body
of the RAMP Programme.
To give further email
boost and
to the RAMP online
Subscribe programme,
at ministry of
MSME has recently launched three sub-schemes under it.
These are,
(a) MSME Green Investment and Financing for
Transformation Scheme (MSE GIFT Scheme) - This sub
scheme intends to help MSMEs to adopt green technology
with interest subvention and credit guarantee support.
(b) MSE Scheme for Promotion and Investment in
Circular Economy (MSE SPICE Scheme)- This is the first
ever scheme in the Government to support circular economy
projects which will be done through credit subsidy and will
lead to realising the dream of MSME sector towards zero
emissions by 2070.
(c) The MSE Scheme on Online Dispute Resolution for
Delayed Payments – This is a first of its kind scheme to
synergise legal support with modern IT tools and Artificial -
33
 Industry Updates BankersCover page Article
Plus- Feb 2024
-Intelligence to address the incidences of delayed payments
for Micro and Small Enterprises.
The Ministry is also taking new initiatives under the existing
schemes to provide enhanced support to the MSMEs. The
Support for Commercialisation of IP Programme (MSME –
SCIP Programme) will enable the innovators in the MSME
sector to commercialize their IPR (Intellectual property
rights). In addition, the ZED Scheme of the Ministry has now
been made completely free for women led MSMEs. The
government guarantees payment of 100 % financial support
for the certification cost.

Bankers Plus- Feb 2024 Industry Updates

email and Subscribe online at
Development of
Green Hydrogen
Projects
NTPC Green Energy Limited (NGEL) has recently signed a
Memorandum of Understanding (MoU) with Government
of Maharashtra for development of Green Hydrogen and
derivatives (Green Ammonia, Green Methanol) of up to 1
million Ton capacity per annum, including Pumped Storage
Projects of 2 GW and development of renewable energy
projects with or without storage up to 5 GW in the state.
The agreement envisages a potential investment of
approximately ₹80,000 crores. NTPC is in the path of building
renewable energy capacity of 60 GW by 2032.
34
 Industry Updates BankersCover page Article
Plus- Feb 2024

CCI Approval for

Merger of Fincare
SFB with AU SFB
The Competition Commission of India (CCI) has recently
approved the merger of Fincare Small Finance Bank
Limited (Fincare) and AU Small Finance Bank Limited
(AU). The Proposed Combination involves the merger of
Fincare and AU, with AU being the surviving entity (merged
entity). The shareholders of Fincare will be allotted shares in
the merged entity, post the Proposed Combination.
Fincare SFB is a small finance bank licensed from RBI in
2017 and head quartered
email and atSubscribe
Bangalore. Whereas,
online at AU Small
Finance Bank was obtained SFB license in the year 2015
and head quartered in Jaipur, Rajasthan.

Two Best and simplified books to practically learn and understand

Balance sheet, financial statements analysis & Credit
If both books ordered
together price is
Rs. 660/-

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order with single
click

Rs. 350/- Rs. 360/-

35
 INDUSTRY UPDATES Cover page Article
Bankers Plus- Feb 2024 Industry Updates
Memorandum of
Understanding
between NPCI and
Google Pay
Google India Digital Services (P) Limited (Google Pay)
and NPCI International Payments Ltd (NIPL), a wholly-
owned subsidiary of the National Payments Corporation of
India (NPCI) have signed a Memorandum of Understanding
to expand the transformative impact of UPI to countries
beyond India.
The MoU has three key objectives.
(a) It seeks to broaden the use of UPI payments for travelers
email and Subscribe online at
outside of India, enabling them to conveniently make
transactions abroad.
(b) The MoU intends to assist in establishing UPI-like digital
payment systems in other countries, providing a model for
seamless financial transactions.
(c) It focuses on easing the process of remittances between
countries by utilizing the UPI infrastructure, thereby
simplifying cross-border financial exchanges.
The outlined objectives will help accelerate UPI's global
acceptance, providing foreign merchants access to Indian
customers who will no longer have to rely only on foreign
currency and/or, credit or forex cards for making digital
payments and will have the option using UPI powered Apps
from India including Google Pay.

36
 Industry Updates BankersCover
INDUSTRY UPDATES page Article
Plus- Feb 2024
Appointment of
Members of the
Sixteenth Finance
Commission
The Sixteenth Finance Commission was constituted on
31.12.2023 by Government of India with Shri Arvind
Panagariya, former Vice-Chairman, NITI Aayog as its
Chairman. Recently Government has appointed following
members to the Commission with the approval of the
President of India. The appointed members are,
Shri. Ajay Narayan Jha (Full time Member), Smt. Annie
George Mathew (Full time Member), Dr. Niranjan
Rajadhyaksha email(Full and
time Subscribe
Member) online
& Dr.atSoumya Kanti
Ghosh (Part time Member). The Sixteenth Finance
Commission is expected to make its recommendations
available by October, 31, 2025, covering an award period of 5
years commencing 1st April, 2026.
Finance Commission is a constitutional body for the purpose
of allocation of certain revenue resources between the Union
and the States. It was established under Article 280 of the
Indian Constitution by the Indian President. Formed in the
year 1951, it defines the financial relations between the
Centre and the states. Finance commission acts like an
executor to split the process of divisible taxes between the
State and Union Government or in the case of taxes that are
collected by the center, but the proceeds of which are
distributed between the states.

37
 INDUSTRY UPDATES Cover page Article
Bankers Plus- Feb 2024 Industry Updates

RBI-Digital Payments
Index for
September 2023

RBI has been publishing a composite Reserve Bank of India

– Digital Payments Index (RBI-DPI) since January 1,
2021 with March 2018 as base year to capture the extent of
digitisation of payments across the country. The index for
September 2023 which was recently released by RBI stands
at 418.77 as against 395.57 for March 2023.
The RBI-DPI index has increased across all parameters and
was driven particularly by growth in payment enablers,
email and Subscribe online at
payment performance & consumer centricity across the
country. The index series since its inception is as under:
Period RBI - DPI Index
March 2018 (Base) 100
March 2019 153.47
September 2019 173.49
March 2020 207.84
September 2020 217.74
March 2021 270.59
September 2021 304.06
March 2022 349.30
September 2022 377.46
March 2023 395.57
September 2023 418.77

38
 Cover page
Volume II, Article
Issue 7
BANKERS PLUS
KNOWLEDGE HUB Volume IV, Issue 11, Feb 2024 3
JUNE 2023, Volume IV, Issue

Subscribers Copy-
Not for free circulation

ANNUAL SUBSCRIPTION CHARGES-RS. 300/-

Published in e-version only and shared through email and
Subscribe online at

LIST OF ARTICLES
Sl.No Name of the Article Author Page no.
1 An introduction to Insurance Shri. Piyush 40-42
Surety Bonds Kumar Jha
2 RBI Must Amend the CTS to Shri. Hargovind 43-46
Curb Fund Diversion Sachdev
3 Unveiling the Future: A Deep Shri. Himanshu 47-49
Drive into the significance of Patkar
Digital Banking

39
 Cover Bankers Plus
page Article
Bankers Plus- Feb 2024
INDUSTRY UPDATES Bankers Plus-March
Bankers2022
Knowledge Plus
Hub
Bankers
Volume II,Plus
Issue
An introduction to
June 2021
7
Volume II, Issue 6 Insurance Surety
Bonds
- Shri. Piyush Kumar Jha
A „Surety Bond‟ is a risk transfer mechanism wherein an „Insurer/
Surety‟ provide a guarantee to a Beneficiary that the Contractor will
meet his contractual obligations. In case the Contractor fails to deliver
his promise, a monetary compensation is paid to the Beneficiary by
the Insurer. This product is offered by General Insurance companies
and is expected to reduce dependency on Bank guarantees by the
contractors.
A contractor who has been awarded with a contract to execute a
project ANNUAL
/ supply machinery and required
SUBSCRIPTION to provide security
CHARGES-RS. 300/- to the
Beneficiary
Published in / project owners at bidding and performance stages of
contract, can obtain this policy instead of offering bank guarantees.
These products provide protection against breach of terms &
conditions by the contractors either during the bidding stage or during
the performance stage of a project. At present Insurance companies
are offering surety bonds of tenure upto 60 months.
Recently NHAI has accepted Insurance Surety Bond for the
monetization program of the upcoming bid of Toll Operate Transfer
(TOT) project. This was for the first time this innovative instrument is
being utilized as a Bank Guarantee (BG) in the road infrastructure
sector for monetization of bids. NHAI has been working closely with
Highway Operators Association of India (HOAI), SBI General
Insurance and AON India Insurance to implement this initiative.
Types of Surety Bonds:
There are two broad categories of surety bonds: (1) contract surety
bonds; and (2) commercial (also called miscellaneous) surety
bonds.
40
 Cover Bankers Plus
page Article
Bankers Plus- Feb 2024
INDUSTRY UPDATES Bankers Plus-March
Bankers2022
Knowledge Plus
Hub
Bankers
(1) Contract II,Plus
VolumeSuretyIssue
Bonds:
June 2021
Surety bonds that are written for
7
construction projects are called contract surety bonds. A project
Volume
owner II, Issue
(the 6
obligee) seeks a contractor (the principal) to fulfill a
contract. The contractor, through a surety bond producer, obtains a
surety bond from a surety company. If the contractor defaults, the
surety company is obligated to find another contractor to complete the
contract or compensate the project owner for the financial loss
incurred.
There are four types of contract surety bonds:
(a) Bid Bond: Provides financial protection
to the owner if a bidder is awarded a
contract but fails to sign the contract or
provide the required performance and
payment bonds.
ANNUAL SUBSCRIPTION(b) Performance Bond: Provides
CHARGES-RS. 300/-an owner
with a guarantee that, in the event of a
Published in
contractor’s default, the surety will complete
or cause to be completed the contract.
(c) Payment Bond: Ensures that certain
subcontractors and suppliers will be paid for
labor and materials incorporated into a
construction contract.
(d)Warranty Bond (also called a
Maintenance Bond): Guarantees the
owner that any workmanship and material
defects found in the original construction will
be repaired during the warranty period.
(2) Commercial Surety Bonds: Commercial surety bonds cover a
very broad range of surety bonds that guarantee performance by the
principal of the obligation or undertaking described in the bond. They
are required of individuals and businesses by the central, state, and
local governments; various statutes, regulations, ordinances; or by
other entities.
41
 Cover Bankers Plus
page Article
Bankers Plus- Feb 2024
INDUSTRY UPDATES Bankers Plus-March
Bankers2022
Knowledge Plus
Hub
Bankers Plus
Commercial
Volume surety Junetypes
bonds can generally be divided into five
II, Issue
2021 of
bonds: 7
(a) Volume
License and
II, Issue 6 Permit Bonds: Required by central, state, or local
governments as a condition for obtaining a license or permit for
various occupations and professions.
(b) Court Bonds (also called judicial bonds): Required of a plaintiff
or defendant in judicial proceedings to reserve the rights of the
opposing litigant or other interested parties.
(c) Fiduciary Bond (also called probate bonds): Required of those
who administer a trust under court supervision.
(d) Public Official Bonds: Required by statute for certain holders of
public office, to protect the public from malfeasance by an official or
from an official’s failure to faithfully perform duties.
(e) Miscellaneous Bonds: These are commercial surety bonds that
do not fit into any of the types above.
ANNUAL
The introduction andSUBSCRIPTION CHARGES-RS.
utilization of bonds in Indian market 300/-
is still in the
Published
nascent stages. in Only contract surety bonds are offered by
insurance companies.
Advantages of Surety Bonds: For availing bank guarantees
contractors need to maintain cash margins which block their working
capital funds. These bonds will address this issue as no cash margin
is required to avail this bond. These bonds are easy to purchase with
less underwriting formalities.
Disadvantages: The bonds are issued for short periods and if the
contract is for a longer period, the contractor needs to renew this with
fresh premium which is market decided. A lapse in bond coverage can
invalidate a license or contract.

About the Author

Shri. Piyush Kumar Jha is working as Chief
Manager (Faculty) at Union Bank of India posted at
Mangalore.

42
 Cover Bankers Plus
page Article
Knowledge Hub
INDUSTRY UPDATES Bankers
Bankers Plus-March
Plus- Feb 20242022
Bankers Plus
Bankers
Volume II,Plus
Issue
RBI Must Amend the
June 2021
7
CTS
Volume to 6Curb
II, IssueFund
Diversion
- Shri. Hargovind Sachdev

"Anywhere Clearing Payment Mechanism has been

surreptitiously misused to divert funds by the borrowers.“
Cheque truncation is the process of stopping the flow of the physical
cheque issued by a drawer by the presenting bank en route to the
paying bank branch. In its place, an electronic image of the cheque is
transmitted to the paying branch through the clearing house, along
with relevant information like data on the MICR band, date of
presentation, and address of the presenting bank.
The Cheque
ANNUAL truncation system (CTS)
SUBSCRIPTION obviates the need
CHARGES-RS. to move
300/-
the physical
Published in instruments across bank branches for clearing
purposes. The step effectively eliminates the associated cost of
movement of the physical cheques, reduces the time required for
their collection and brings elegance to the entire activity of cheque
processing.
Compared to traditional mechanisms, CTS enables fast and
cheap realisation of funds to customers. Under grid-based CTS
clearing, all cheques drawn on bank branches falling within the grid
jurisdiction are treated and cleared as local cheques. No outstation
cheque collection charges accrue if the collecting and paying banks
are within the jurisdiction of the same CTS grid, even though they are
in different cities.
CTS also benefits issuers of cheques. The Corporates, if needed, can
be provided with images of cheques by their bankers for internal
requirements audit and verification. If a customer desires to see/get
the physical cheque, it would be with the presenting bank for
verification at a fee.
43
 Cover Bankers Plus
page Article
Knowledge Hub
INDUSTRY UPDATES Bankers
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Plus- Feb 20242022
Bankers Plus
Bankers Plus
The presenting
Volume II, banks June 2021the
that truncate the cheques must preserve
Issue
physical instruments
7 for ten years to meet legal requirements. In
CTS, the II,presenting
Volume Issue 6 bank captures the data on the MICR band and
the cheque images using its Capture System (comprising a scanner,
core banking, or other application), which is internal to them.
End-to-end Public Key Infrastructure has
been implemented in CTS to ensure
security, safety and non-repudiation of
data/images.
As part of the requirement, the presenting bank sends the data and
captured images duly signed digitally and encrypted to the Clearing
House for onward transmission to the paying bank. For participating
in the clearing process under CTS, the presenting and paying banks
use either the Clearing House Interface (CHI) or Data Exchange
Module (DEM) that enables them to connect and transmit data and
ANNUAL SUBSCRIPTION CHARGES-RS. 300/-
images securely and safely to the Centralised Clearing House (CCH).
Published in
The Clearing House processes the data, arrives at the settlement,
and routes the images and requisite data to the paying banks. The
process is called presentation clearing. Through their CHI / DEM, the
paying banks receive the photos and data from the CCH for further
processing. The paying bank's CHI / DEM generates the return file for
unpaid instruments. The paying banks send the return file/data to the
Clearing House in the same way as presentation clearing, and the
presenting bank gets the Return Data.
The clearing cycle is complete once the presentation clearing and the
associated return-clearing sessions are successfully processed. The
entire essence of CTS technology lies in using images of cheques
instead of physical cheques for payment processing.
The CTS process is an excellent customer service initiative,
saving time and collection charges for branches operating
within a wide grid covering many states. Faster realisation of
funds adds to productivity through a quick rotation and rollover.
44
 Cover Bankers Plus
page Article
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INDUSTRY UPDATES Bankers
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Bankers Plus
Bankers Plus
Unfortunately,
Volumethe CTS has become a weapon of destruction
II, Issue
June 2021by
scheming borrowers 7 who divert funds by encashing cheques from
theirVolume
loan II,account
Issue 6 in one city through the CTS facility in another town.
The images of such cheques arrive at the Service branches of the
bank at odd hours. The banker passes the same after seeing the
signatures. No beneficiary verification happens, and the money easily
flows from loan accounts into the third-party accounts of unwarranted
beneficiaries created by the borrower for diversion. The loan officer
responsible for monitoring the withdrawals from the Cash Credit
facility needs to notice such a debit. He must have a prerogative to
review such a withdrawal. Unfortunately, the payment happens
seamlessly through the CTS miles away from the loan-giving branch.
Huge funds are diverted from loan accounts every day through this
mechanism. Unwittingly, this revolutionary customer service reform
has escalated NPAs.
CTS hasANNUAL SUBSCRIPTION
been implemented in New CHARGES-RS. 300/-
Delhi, Chennai, and Mumbai
Published in 1, 2008, September 24, 2011, and April 27, 2013
from February
respectively.
After migrating the entire cheque volume to CTS, the traditional
mechanisms of cheque clearing have been discontinued across the
country. Further, banks must connect all branches to CTS. There has
been explosive growth in sub-standard assets across the country
since then due to the payment of loan account cheques in outstation
Service branches and Online transactions.
Under CTS, cheque processing locations in India are part of the
three grids in Chennai, Mumbai and New Delhi. Each grid provides
processing and clearing services to all the banks under its jurisdiction.
Each grid provides processing and clearing services to all the
banks under its jurisdiction. Banks, branches, and customers
based at small/remote locations fall under the jurisdiction of a grid,
irrespective of whether a formal arrangement for cheque clearing
exists or otherwise.
45
 Cover Bankers Plus
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INDUSTRY UPDATES Bankers
Bankers Plus-March
Plus- Feb 20242022
Bankers Plus
Bankers Plus
The Volume
jurisdictionII, of June Andhra
the three grids is: (1) Chennai Grid:
Issue
2021
Pradesh, Telangana, 7 Karnataka, Kerala, Tamil Nādu, Odisha, West
Bengal,
VolumeAssam
II, Issue 6and the Union Territory of Puducherry. (2) Mumbai
Grid: Maharashtra, Goa, Gujarat, Madhya Pradesh and Chhattisgarh.
(c) New Delhi Grid: National Capital Region of New Delhi, Haryana,
Punjab, Uttar Pradesh, Uttarakhand, Bihar, Jharkhand, Rajasthan and
the Union Territory of Chandigarh.
RBI must constitute a dedicated Loan Grid to process and monitor
the payment of all Cash Credit, Overdraft and Term Loan cheques/
withdrawals through RTGS, NEFT, and CTS. This grid should be pre-
fed with the names of beneficiaries identified by the borrower
occasionally for their raw material/ machinery purchases post-
sanction of the loans. Experienced credit officers should manage
these offices. The Clearing cheque operating system must
identify preferred and round amount payments with the help of
Forensic ANNUAL
ArtificialSUBSCRIPTION CHARGES-RS.
Intelligence loaded on the Cheque300/-
Truncation
Published in
System.
India has been spearheading the revolution in Information technology
worldwide. RBI is a highly revered regulator worldwide. The Indian
economy is a destination for FDI, FII and FPI investments. Out of
every $100 invested worldwide, $ 20 comes to India. To sustain the
momentum, Indian banks must ensure transparency and discipline in
bank lending and its end use. RBI must amend the Cheque
Truncation System as soon as possible. Banks must monitor the end
use of borrowed funds through an empowered Loan Grid on the CTS
to curb money laundering and undue enrichment.
About the Author
Shri. Hargovind Sachdev is Ex-General Manager,
with State Bank of India, Former CVO UCO Bank
and United Bank of India and currently an
independent director at HPL Electric & Energy
Limited.
46
 Cover Bankers Plus
page Article
Bankers Plus- Feb 2024
INDUSTRY UPDATES Bankers Plus-March
Bankers2022
Knowledge Plus
Hub
Bankers
Volume II,Plus
Issue Unveiling the Future:
June 2021
7
Volume II, Issue 6 A Deep Drive into the
significance of Digital
Banking
- Shri. Himanshu Patkar
Digital products are financial services and offerings that can be
accessed through the internet and other digital mediums. These
include digital accounts, internet banking, mobile banking apps,
financial advice, electronic transactions, and other online financial
services. The advent of digitalization in the banking sector has
brought about a significant transformation in the industry.
The importance of digital products offered by banks has significantly
increased, and thisSUBSCRIPTION
ANNUAL is due to several reasons such as Convenience,
CHARGES-RS. 300/-
Time saving, security, low cost of operations etc.
Published in
The adoptability to digital banking is mainly attributed to
„convenience‟ for the users. Banks have added various features to it
for offering greater convenience to the end users. The major
initiatives from the banks to make the digital products popular among
the public are,
(a) Security: The security of digital products of banks is a crucial part
of their significance. These products are secure, confidential, and
self-protecting. Unless the customers share confidential information,
the security systems in digital banking products are more robust.
(b) Technological Measures for Security: Digital banking products
are specifically designed to prioritize security. They incorporate
advanced technologies such as encryption, two-factor authentication,
biometric authentication, and fraud prevention.
(c) User Security: These products pay significant attention to user
security. Stringent privacy and confidentiality policies are followed to
ensure the security of users' accounts.
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 Cover Bankers Plus
page Article
Bankers Plus- Feb 2024
INDUSTRY UPDATES Bankers Plus-March
Bankers2022
Knowledge Plus
Hub
Bankers
Volume Plus
II, Issue
June 2021
(d) Secure Transactions: Digital products ensure the security of
cash transactions.7 All financial transactions are conducted in a secure
Volumepreventing
manner, II, Issue 6 unauthorized access.
(e) Protection against Errors and Theft: Protection against errors
and theft is also crucial in these products. Specialized security
measures are implemented, particularly for the protection of
commercial users.
(f) Data Security: Banks' digital products focus on the security of
users' personal data. They include special security measures to
protect the privacy of users' data.
(g) Network Security: Digital products prioritize the security of the
network. They ensure that hacking and unauthorized access are
prevented, safeguarding the integrity of the digital network.
(h) Self-Interest: Through the use of digital banking, individuals can
ANNUAL SUBSCRIPTION
avoid self-interest. They can conduct CHARGES-RS.
their financial 300/-
transactions
Published
securely, in
eliminating the need to visit bank branches for large-scale
financial transactions.
(i) Independence: Digital banking enables people to manage their
financial affairs independently. They can check the status of their
accounts at any time, make transactions as needed, and exercise
financial independence. Financial independence is a crucial aspect
that forms the basis of the importance of digital banking products.
(j) Account Management: Through digital products, users can
manage their bank accounts from anywhere and at any time. This
allows them to view transaction history, make transactions, and
monitor their financial status, facilitating better financial decision-
making.
(k) Financial Education: Digital banking provides an opportunity for
users to receive financial education. Users can learn about financial
transactions, understand various investment options, and create
financial plans, leading to improvements in their financial situation.

48
 Cover Bankers Plus
page Article
Bankers Plus- Feb 2024
INDUSTRY UPDATES Bankers Plus-March
Bankers2022
Knowledge Plus
Hub
Bankers Plus
Volume II,Financial
(l) Paperless Issue
June 2021
Transactions: Digital platforms offer
independence 7 by providing the convenience of paperless
Volume II, IssueThis
transactions. 6 reduces paper waste and contributes to
conservation of natural resources.
(m) Business Expansion: Business
expansion is a crucial aspect emphasized in
the promotion of digital banking products by
banks. Assisting or providing features through
digital products can help banks grow their
business by increasing their customer base
and attracting new customers.
(n) Attraction of New Customers: Proper promotion of digital
products can attract new customers to the bank. Introducing them to
digital services and presenting attractive offers can stimulate interest
in new customers,
ANNUAL encouraging
SUBSCRIPTION them toCHARGES-RS.
engage with the bank.
300/-
Published
(o) Incentivein for Long-Term Engagement of Current Customers:
Through business expansion, existing customers can be incentivized
to stay engaged with the bank for an extended period. Banks, through
their digital products, can strengthen their relationship with customers
by presenting attractive opportunities for them.
Digital banking offers advantages such as convenience with 24/7
access, faster transactions, cost-effectiveness, and the ability to
manage finances remotely. To conclude, the importance of digital
banking products has increased due to these reasons, and the
significance of their promotion has also grown. These products not
only provide convenience to users but also represent a significant
step towards financial empowerment.

About the Author

Shri. Himanshu Patkar is working as Senior Manager
at Union Learning Academy, Bhopal.

49
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