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Regulatory body RBI imposes fines on Shriram Finance, Ujjivan Small Finance Bank, and Nainital Bank for lapses in compliance.

The Reserve Bank of India (RBI) has imposed penalties on three financial institutions, Shriram Finance, Ujjivan Small Finance Bank, and The Nainital Bank Limited, for non-compliance with regulatory norms. The penalties were imposed following the RBI’s Inspection for Supervisory Evaluation (ISE 2023), which assessed the financial health of these institutions as of March 31, 2023. The violators were found to have not adhered to interest rate directives, loan documentation irregularities, and risk categorization lapses.

Shriram Finance was fined ₹5.80 lakh for not setting up a system to review risk categorization of accounts periodically, while Ujjivan Small Finance Bank was penalized ₹6.70 lakh for not issuing loan agreements to some borrowers at the time of loan disbursement. The Nainital Bank Limited faced a penalty of ₹61.40 lakh for failing to follow RBI’s norms on ‘Interest Rate on Advances’ and ‘Customer Service in Banks’.

The RBI’s actions are aimed at maintaining financial discipline and ensuring transparency, consumer rights, and financial stability. The penalties reflect the central bank’s strict regulatory oversight over the banking sector and send a clear message that regulatory violations will not be tolerated. The move is seen as crucial in maintaining trust in the banking system and promoting a stable financial environment.

The implications of these penalties are broader, as they come at a time when financial institutions are under increasing scrutiny. The RBI’s enforcement actions demonstrate its commitment to maintaining financial discipline and ensuring that financial institutions operate in compliance with regulatory norms. The move is expected to promote a healthier financial system, better risk management, and increased transparency in financial transactions.

Karnataka Bank Seeks RBI Intervention to Reverse Suspicious Cross-Border UPI Transaction of ₹18.87 Crore

Karnataka Bank has recently reported to the Reserve Bank of India (RBI) a suspicious cross-border Unified Payments Interface (UPI) transaction worth Rs 18.87 crore. The bank claims that it has suffered a loss of Rs 18.57 crore due to an UPI reconciliation issue, which resulted in the irregular transaction.

According to reports, the transaction in question was observed on June 12, 2022, where an amount of Rs 18.87 crore was debited from the bank’s account and credited to an unknown entity. The bank’s internal investigation revealed that the transaction was suspected to be a cross-border payment, which is prohibited under the RBI’s guidelines.

The bank has requested the RBI to reverse this transaction, as it was made without its consent. The RBI has been informed that the bank is yet to receive the required information and confirmation from the Reserve Bank of India (RBI) to proceed with the reversal of the transaction.

This incident highlights the potential risks associated with the UPI platform, which has been growing in popularity in India. With the rapid growth of digital payments in the country, the RBI has been working to strengthen the security measures to prevent such incidents from occurring. However, it is essential for banks and financial institutions to be vigilant and take necessary steps to protect themselves from such threats.

The Karnataka Bank’s experience serves as a wake-up call for other banks and financial institutions to be cautious and proactive in monitoring their transactions to prevent similar incidents. The RBI needs to take this incident as an opportunity to revisit and strengthen its guidelines and regulations to ensure the security and integrity of the UPI platform.

In conclusion, the Karnataka Bank’s report to the RBI regarding the suspicious cross-border UPI transaction of Rs 18.87 crore is a matter of concern and a reminder of the importance of robust security measures in the digital payment landscape. The RBI needs to take concrete steps to mitigate such risks and ensure the safety and security of transactions on the UPI platform.

Karnataka Bank alerts RBI to a suspicious cross-border UPI transaction totalling Rs 18.87 crore.

Karnataka Bank has reported a suspicious cross-border UPI (Unified Payments Interface) transaction of Rs 18.87 crore to the Reserve Bank of India (RBI). According to reports, the bank has requested the RBI to reverse the transaction, which is suspected to be an illegal act.

The transaction in question is believed to have taken place on an international payment gateway, which is not a valid or authorized platform for UPI transactions. Karnataka Bank has alleged that the transaction was initiated from a foreign IP address, which is not a legitimate user of the platform.

The bank has claimed a loss of Rs 18.57 crore due to this reconciliation issue, which has resulted in the bank’s balance becoming negative. The bank has requested the RBI to investigate the matter and take necessary action to recover the loss.

This incident highlights the vulnerability of the UPI system, which is widely used for online transactions in India. The RBI’s oversight and regulations are being questioned, as such a large-scale irregularity could have gone unnoticed.

The bank has also requested the RBI to take necessary steps to prevent such incidents in the future, particularly in the case of cross-border transactions. This is a concern, as UPI transactions are becoming increasingly popular, and such incidents can have serious consequences, including financial and reputational damage to the bank.

The RBI has not yet commented on the matter, but the Karnataka Bank’s action is a wake-up call for the regulator and the banking industry as a whole. The incident highlights the need for greater vigilance and stricter regulations to ensure the security and integrity of the UPI system.

Crafting a Winning Preparation Strategy for the Central Bank ZBO 2025: Essential Tips and Expert InsightsI changed the original title to make it more concise and attention-grabbing, while also emphasizing the importance of expert insights and essentials to make it sound more authoritative and informative. Let me know if you’d like me to make any further changes!

Preparing for the Central Bank of India Zone Based Officer (ZBO) Exam 2025 requires a well-structured plan and a clear understanding of the exam. With intense competition, simply studying from various sources is not enough. Candidates need a smart strategy to stay ahead. This article provides effective preparation techniques, subject-wise strategy, and practical learning approaches to help candidates maximize their scores.

The ZBO Exam 2025 is an important recruitment test for banking officer positions, evaluating candidates on banking knowledge, English language, computer knowledge, and present economic scenario and general awareness. A clear overview of the exam and key subjects is essential for effective preparation.

To succeed, candidates must:

1. Analyze the exam syllabus and pattern to identify priorities and allocate study time accordingly.
2. Build strong fundamentals, especially in subjects like Quantitative Aptitude, Reasoning Ability, and Banking Awareness, by focusing on understanding the logic behind problem-solving techniques.
3. Regularly practice with mock tests and previous year papers to improve time management and accuracy.
4. Focus on developing speed and accuracy, setting time limits for each section and avoiding over-spending on a single question.
5. Stay updated with banking and financial awareness, reading business newspapers, financial magazines, and RBI circulars.

In terms of subject-wise strategy, candidates should:

1. Master the core subjects, such as banking knowledge, English language, computer knowledge, and present economic scenario and general awareness, by focusing on concept clarity, practice, and revision.
2. Analyze each section (banking knowledge, English language, computer knowledge, and present economic scenario and general awareness) separately, identifying areas requiring more attention and allocating study time accordingly.
3. Focus on building strong foundations, understanding the basics, and practicing regularly to improve skills and confidence.

In the final weeks leading up to the exam, candidates should:

1. Revise important topics and notes, instead of reading from multiple sources, to retain key information.
2. Take full-length mock tests daily to analyze time management and improve accuracy.
3. Focus on time management and accuracy, avoiding last-minute cramming, and staying updated with current affairs.
4. Practice quick decision-making and accuracy, attempting easier questions first and marking tricky ones for review later.
5. Stay positive, avoid stress, and maintain a calm and confident approach on the exam day.

By following these tips and strategies, candidates can be well-prepared for the Central Bank ZBO Exam 2025 and maximize their scores.

Senior Citizens Can Earn a Competitive Return: 9.1% FD Rate for 5-year Tenure

For senior citizens looking to invest in a Fixed Deposit (FD), this may be a good opportunity to do so, as some banks are still offering attractive interest rates. Although the Reserve Bank of India (RBI) recently cut its repo rate by 25 basis points, some banks are still offering interest rates as high as 9.1% on 5-year FDs. Here are some banks that are currently offering high interest rates to senior citizens:

* Suryoday Small Finance Bank: 9.1% interest rate on 5-year FDs
* Unity Small Finance Bank: 8.65% interest rate on 5-year term FDs
* Northeast Small Finance Bank: 8.5% interest rate on 5-year FDs
* Utkarsh Small Finance Bank: 8.35% interest rate on 5-year fixed deposits
* Jana Small Finance Bank: 8.2% interest rate on 5-year FDs

In addition to earning interest on their FDs, senior citizens can also take advantage of tax benefits. Under the old tax regime, investing in 5-year FDs can provide a tax exemption of up to Rs 1.5 lakh under Section 80C. However, under the new tax regime, this exemption is not available. Senior citizens can also avail an exemption on interest income of up to Rs 50,000 every financial year under Section 80TTB.

It is important to note that deposits in small finance banks are insured up to Rs 5 lakh by the Deposit Insurance Credit Guarantee Corporation (DICGC). However, experts advise investors to carefully consider the risks and decide on the limit of their investment accordingly, as the business model of these banks may differ from traditional banks.

Overall, for senior citizens, investing in FDs can be a good way to earn a steady return, while also taking advantage of tax benefits. However, it is essential to carefully review the terms and conditions of the FD and assess the risks involved before making a decision.

Finidi bags a whopping ₹500 crore deal with Union Bank of India, paving the way for the rollout of 900 ATMs across India.

Findi, a cash and payment services provider, has partnered with Union Bank of India to install 900 ATMs across India. The deal is valued at approximately ₹500 crore in revenue and ₹200 crore in EBITDA over a 7+1 year period. This partnership is a significant milestone for Findi, as it expands its reach to underserved urban and rural areas, aligning with its mission to enhance banking infrastructure and improve financial accessibility. Findi, through its majority-owned subsidiary, Transaction Solutions International (TSI), currently operates over 9,000 Brown Label ATMs across India, serving 13 major banks, including SBI, HDFC Bank, and Central Bank of India.

This partnership follows recent developments, including Findi’s acquisition of BankIT, a digital payments provider with over 129,000+ merchant touchpoints, and approval from the Reserve Bank of India (RBI) for the full acquisition of Tata Communications Payment Solutions Ltd. This solidifies Findi’s leadership in India’s financial services sector.

Findi’s Managing Director and CEO, Deepak Verma, emphasized the importance of expanding access to financial services, stating that the company is “strengthening financial inclusion and supporting India’s vision of a more digitally connected economy.” With this partnership, Findi is poised to play a significant role in bridging the financial divide, connecting millions of individuals and businesses to essential banking services.

Here’s a rewritten version of the line without additional responses:Indian Overseas Bank introduces a seamless account opening experience with Aadhaar-enabled OTP-based services, also offering API-based banking solutions as a Public Sector Undertaking.

Here is a 400-word summary of the content:

Indian Overseas Bank (IOB) is celebrating its 89th Foundation Day by introducing new digital solutions to enhance customer experience and financial efficiency. The two key innovations introduced are Aadhaar OTP-Based Account Opening and API Banking for Seamless Transactions.

The Aadhaar OTP-Based Account Opening process is a digital onboarding facility that allows customers to open a savings account effortlessly via the bank’s web portal. This process adheres to RBI guidelines, ensuring a secure and hassle-free experience. With minimal documentation, customers can open an account, subject to transaction limits. Additionally, customers can convert their limited account to a full-fledged savings account by completing full KYC verification through a face-to-face interaction with banking representatives.

The second innovation, API Banking, is designed for corporate customers, enabling seamless transaction processing. This service allows companies to conduct transactions, including RTGS, NEFT, and intra-bank transfers, directly from their ERP or accounting systems in real-time. IOB provides a secure API gateway, enabling corporates to automate, optimize, and enhance financial workflows, eliminating manual intervention and errors.

The benefits of API Banking include faster transaction processing, reduced manual efforts and errors, and enhanced security and efficiency. IOB is also open to innovative use cases by offering bespoke APIs. According to Ajay Kumar Srivastava, MD & CEO, IOB, the focus remains on delivering seamless, secure, and customer-centric banking solutions, aligning with the commitment to digital transformation.

The introduction of these two services marks a significant step towards a more digital, efficient, and inclusive banking ecosystem. IOB’s continued focus on customer-centric digital solutions reinforces its vision of a digitally advanced and customer-friendly banking ecosystem. The innovations commemorate IOB’s Foundation Day milestone, representing a major step towards a more efficient and customer-centric banking system.

Earn attractive returns with our fixed deposit products: 9% interest rate for all depositors, with a special offer of 9.5% for senior citizens.

The Reserve Bank of India (RBI) has cut its repo rate by 25 basis points, which is likely to lead to a decrease in bank interest rates in the future. This is a concern for investors in fixed deposits (FDs), particularly senior citizens, as they may not be able to benefit from higher interest rates in the long run. Small finance banks, which focus on serving underserved sectors, often offer attractive FD rates to attract deposits. These banks may offer better rates for senior citizens, exceeding 9% in some cases.

According to recent updates, the following small finance banks are offering the following FD rates:

* Unity Small Finance Bank: 4.50% to 9.50% for general public and 4.50% to 9.50% for senior citizens, with rates ranging from 7 days to 10 years
* Suryoday Small Finance Bank: 4.00% to 9.10% for general depositors and 4.50% to 9.10% for senior citizens, with rates ranging from 7 days to 10 years
* Utkarsh Small Finance Bank: 4.00% to 8.50% for general depositors and 4.60% to 9.10% for senior citizens, with rates ranging from 7 days to 10 years

Investors should compare the rates and terms offered by these small finance banks and consider the bank’s credibility and financial stability before investing. It’s essential to lock in higher interest rates before they decrease, as the RBI’s rate cut may lead to a decrease in bank interest rates in the future. Senior citizens, in particular, can benefit from the higher rates offered by these small finance banks.

Standard Chartered secures RBI approval to appoint PD Singh as CEO for India operations

The Reserve Bank of India (RBI) has approved the appointment of Prabdev (PD) Singh, a corporate banking veteran and former CEO of JP Morgan India, as the new CEO of Standard Chartered (StanC) in India and South Asia. Singh will take over from current CEO Zarin Daruwala, who has completed her third three-year term and will retire at the end of March. This development comes after a series of interviews held in October, during which Singh was identified as the top choice among three candidates to succeed Daruwala.

Singh has more than 30 years of experience in corporate banking and has worked with prominent institutions such as JP Morgan and HSBC. He has played a key role in several significant deals, including foreign currency funding, credit facilities, and structured deals for Indian corporates and domestic banks.

StanC is undergoing a transformation, shifting its focus towards wealth management in India, capitalizing on the country’s growing affluence and higher income potential. To this end, the bank sold its personal loan portfolio to Kotak Mahindra Bank last October.

With Singh at the helm, the bank is poised to leverage his expertise to drive its growth strategy. His appointment is expected to be announced formally this week. The soft-spoken banker takes over from Daruwala, who has led StanC since 2016 and previously spent 26 years at ICICI Bank. StanC reported a net profit of $204 million in the first half of 2024, and its full-year 2024 results are set to be announced this Friday.

Three banks slapped with hefty fines by RBI, accused of [briefly describe the reason for the fine].

The Reserve Bank of India (RBI) has imposed fines on three banks, including Nainital Bank, Ujjivan Small Finance Bank, and Shriram Finance, for non-compliance with regulatory guidelines. Nainital Bank was fined ₹61.40 lakh for not linking some floating rate loans given to micro, small, and medium enterprises (MSMEs) to external benchmark rates. The bank also failed to charge a proportionate penalty for non-maintenance of minimum balance in savings accounts. Additionally, the bank’s customer service standards were not up to the mark.

Ujjivan Small Finance Bank was fined ₹6.70 lakh for not providing loan agreements to some borrowers at the time of loan approval or disbursement. Shriram Finance was fined ₹5.80 lakh for not making regular reviews of risk categorization of its accounts, as well as for other irregularities.

The RBI stated that the imposition of these fines is based on deficiencies in compliance with regulatory rules and is not intended to comment on the validity of any transactions or agreements made by the banks with their customers. The regulator also clarified that the decision of monetary penalty is separate from any other actions that may be initiated against the banks.

The fines are aimed at ensuring that banks comply with regulatory guidelines and provide better services to their customers. The RBI’s action is a move to maintain financial stability and ensure that banks operate in a transparent and fair manner. The fines serve as a reminder to banks to be more vigilant in adhering to regulatory norms and to prioritize customer satisfaction and interest rates on advances. Overall, the RBI’s action demonstrates its commitment to maintaining high standards of governance and accountability in the banking sector.

The cherry on top of the budget’s tax relaxation is the consumption-boosting RBI rate cut, making for a sweet combination for economic stimulus.Let me know if you’d like me to make any changes!

The key takeaway from the Union Budget 2025, presented by Finance Minister Nirmala Sitharaman and the Reserve Bank of India’s (RBI) Monetary Policy Committee, is a shared focus on boosting household consumption across rural and urban India to drive economic growth. This is a significant shift from the previous approach, which aimed to boost private investments by increasing public expenditure on infrastructure projects, hoping to stimulate demand. The budget has directly addressed the slowdown in consumption by increasing the zero-income tax threshold to Rs 12 lakh, which can boost disposable income by nearly Rs 1 lakh. This move is a timely intervention, given the urban slowdown and can boost sentiments and demand for discretionary consumption. The RBI has also cut the repo rate by 25 basis points, bringing it down to 6.25%, which should lead to lower interest rates and EMIs for borrowers. The budget aims to strike a balance between propping up consumption, maintaining investment momentum, and maintaining fiscal discipline. The government has projected a fiscal deficit of 4.4% of GDP in FY26, close to the target of 4%. Overall, the budget is a “consumption bazooka” that aims to boost household spending to drive growth.

Don’t bother opening a bank account, get 9.5% interest on your funds instead!

Here is a 400-word summary:

The Reserve Bank of India (RBI) has recently cut the policy interest rate, which will lead to a reduction in loan interest rates and fixed deposit (FD) rates. This is good news for borrowers and savers alike. If you want to invest in FD and earn good returns, you can do so through various apps that offer interest rates up to 9.5%. Some of these apps allow you to book FDs without having to open an account with the bank.

The following apps offer FDs with high interest rates:

* Stable Money app: offers up to 9.5% interest on FDs, including Unity Small Finance Bank’s 1001-day FD.
* Super.Money app: offers up to 9.3% interest on FDs, including Shivalik Small Finance Bank’s 1-year 6-month FD.
* Tata Neu app: offers up to 9.1% interest on FDs, including Suryoday Small Finance Bank’s 5-year FD.

The Reserve Bank’s decision to cut the repo rate also means that FD interest rates will be reduced. This is a good time to invest in FDs, especially through these apps. However, it’s essential to note that FDs come with risks, including the risk of bank failure. In the event of a bank collapse, the Deposit Insurance and Credit Guarantee Corporation (DICGC) provides an insurance cover of up to Rs 5 lakh. This cover includes both the principal and interest amount.

In conclusion, if you want to earn good interest on your savings, it’s a good time to invest in FDs through these apps. Just remember to carefully review the terms and conditions, and consider the risk of bank failure before investing.

In response to the recent RBI rate cut, the bank has cuts its fixed deposit (FD) interest rates by up to 65 basis points.

DCB Bank, a private sector lender, has reduced its interest rates on fixed deposits (FDs) below Rs 3 crore for select tenures. The revised rates will come into effect on February 14, 2025. This move follows the Reserve Bank of India’s (RBI) recent reduction of the repo rate from 6.50% to 6.25%, the first such reduction since 2020. The decreased repo rate will lead to lower FD interest rates, and vice versa.

The revised FD interest rates range between 3.75% and 8.05% for general citizens and 4.25% and 8.55% for senior citizens, depending on the tenure. The highest interest rate, 8.05%, is offered for a tenure of 19 months to 20 months for both general citizens and senior citizens.

DCB Bank has reduced its FD interest rates by up to 65 basis points (bps) for select tenures. For general citizens, the bank has reduced the FD interest rate by 55 bps for tenures above 26 months but less than 37 months, and by 65 bps for tenures exceeding 38 months but less than 61 months. For senior citizens, the bank has cut the FD interest rate by 55 bps for tenures above 26 months but less than 37 months, and by 65 bps for tenures exceeding 38 months but less than 61 months.

The revised FD interest rates are as follows:

* For general citizens: 3.75% to 8.05% for tenures ranging from 7 days to 10 years.
* For senior citizens: 4.25% to 8.55% for tenures ranging from 7 days to 10 years.

Overall, the revised FD interest rates will affect individuals who are planning to invest in FDs below Rs 3 crore with DCB Bank. The reduced interest rates may lead to a decrease in the returns on investment, but they may also be more attractive to investors who are looking for a low-risk investment option with a fixed return.

The Reserve Bank of India (RBI) levies a penalty of Rs.68 lakh on Nainital Bank and Ujjivan Bank.

The Reserve Bank of India (RBI) has imposed penalties on several financial institutions for failing to comply with regulatory norms. Nainital Bank Ltd and Ujjivan Small Finance Bank were penalized for specific non-compliances. Nainital Bank was fined ₹61.40 lakh for not adhering to guidelines related to “Interest Rate on Advances” and “Customer Service in Banks”, while Ujjivan Small Finance Bank was fined ₹6.70 lakh for not following directives on “Loans and Advances – Statutory and Other Restrictions”.

Additionally, Shriram Finance, a non-banking financial entity, was fined ₹5.80 lakh for violating Know Your Customer (KYC) guidelines and failing to comply with requirements related to “Data Format for Furnishing of Credit Information to Credit Information Companies”. The RBI emphasized that these penalties are solely due to regulatory compliance deficiencies and do not affect the validity of transactions or agreements made by these institutions with their customers.

The RBI also indicated that further action could be taken if deemed necessary. These penalties serve as a reminder to financial institutions to adhere to regulatory guidelines and maintain high standards of compliance to ensure the stability and trust of the financial system in India. The RBI’s actions demonstrate its commitment to ensuring the integrity and accountability of the financial sector.

In a separate context, Indian Masterminds Stories seems to be a collection of real-life stories, which could be stories of entrepreneurs, business leaders, or innovators who have made significant contributions to the Indian economy. However, the connection between the RBI’s penalties and Indian Masterminds Stories is unclear, as they appear to be unrelated. Overall, the RBI’s actions aim to maintain a healthy and robust financial system, which is essential for the overall economic growth and development of the country.

RBI imposes Rs 68 lakh penalty on two errant banks, cracking the whip on regulatory non-compliance.

The Reserve Bank of India (RBI) has imposed penalties on three banks and a non-banking entity for non-compliance with regulatory norms. Nainital Bank, Ujjivan Small Finance Bank, and Shriram Finance have been slapped with fines totaling Rs. 68.1 lakh.

Nainital Bank was penalized Rs. 61.40 lakh for violating directions on interest rates and customer service. Ujjivan Small Finance Bank was fined Rs. 6.70 lakh for failing to comply with restrictions on loans and advances. Shriram Finance was penalized Rs. 5.80 lakh for non-compliance with Know Your Customer (KYC) and data format guidelines for furnishing credit information to credit information companies.

The penalties are intended to address deficiencies in regulatory compliance and do not imply that any transactions or agreements between the lenders and their customers are invalid. The RBI has also clarified that the imposition of these penalties is not a bar to initiating further action against the companies if necessary. The monetary penalties are a way for the RBI to ensure that financial institutions adhere to the required norms and maintain the integrity of the financial system.

The Reserve Bank of India has levied a total penalty of Rs 68 lakh against Nainital Bank and Ujjivan Small Finance Bank.

The Reserve Bank of India (RBI) has imposed a penalty of Rs 5.80 lakh on Shriram Finance, a non-banking financial company (NBFC), for non-compliance with certain regulatory guidelines and directions. The violations include failure to follow Know Your Customer (KYC) guidelines and directions on furnishing credit information to credit information companies in the specified data format.

The RBI’s penalty is a result of the company’s non-compliance with these norms, which are in place to maintain financial stability and ensure orderly functioning of the financial system. The KYC guidelines are critical in preventing money laundering, terrorist financing, and other financial crimes, as well as to ensure that financial institutions have accurate and useful information about their customers.

The data format guidelines for furnishing credit information to credit information companies, on the other hand, are intended to ensure that credit information is disseminated in a standardized and comparable manner, allowing credit information companies to accurately assess creditworthiness of individuals and businesses.

Shriram Finance’s non-compliance with these guidelines and directions has not only put the company in violation of regulatory requirements but also undermined the integrity of the financial system. The RBI’s penalty serves as a warning to other financial institutions to take immediate corrective measures to ensure compliance with regulatory guidelines and maintain the trust and confidence of customers.

The penalty imposed on Shriram Finance is also a demonstration of the RBI’s resolve to maintain a level playing field and ensure that all financial institutions, including NBFCs, are held to the same standards of compliance and accountability. The penalty is a reminder that non-compliance with regulatory requirements can result in significant financial and reputational costs, and that it is essential for financial institutions to prioritize compliance and adhere to regulatory guidelines to maintain the stability and integrity of the financial system.

Chaos erupts as panicked customers swarm the branches of New India Co-operative Bank

The Reserve Bank of India (RBI) has imposed restrictions on the Mumbai-based New India Co-operative Bank, banning it from issuing new loans and allowing withdrawals of deposits for a period of six months. The decision was made due to supervisory concerns and the bank’s liquidity position. As a result, customers are eagerly waiting in queues outside the bank, seeking clarity on their savings and unsure of how they will manage to make ends meet.

One customer, Seema Waghmare, expressed her frustration, saying, “We deposited money just yesterday, but no one warned us about this. Now, they say we’ll get our money in three months, but we have EMIs and bills to pay. How are we supposed to manage?” Another customer, Varsha, is worried about her jewelry and savings, fearing she may have to mortgage her jewelry or rely on friends and family.

The RBI has allowed eligible depositors to receive deposit insurance claim amounts up to Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) if they submit a willingness to claim and undergo verification. The restrictions are aimed at protecting the interests of depositors and ensuring the bank’s stability. Veteran banker Keki Mistry believes that depositors in Indian banks rarely suffer losses, citing the RBI’s strong supervisory framework and regulations in place to protect depositors. However, the situation is causing uncertainty and frustration among customers, with many expressing concerns about their financial well-being.

Indian Overseas Bank slashes Repo Linked Lending Rate by 25 basis points

India’s Chennai-based Indian Overseas Bank (IOB) has made a decision to reduce its Repo Linked Lending Rate (RLLR) by 25 basis points (bps). The reduction brings the RLLR down from 9.35% to 9.10%. This move is a follow-up to the Reserve Bank of India’s (RBI) recent Monetary Policy Committee (MPC) meeting, where the Repo rate was also reduced by 25 bps from February 5th to 7th, 2025.

The revised RLLR will be effective from February 11th, 2025. This development is likely to have a positive impact on borrowers, particularly in the housing and personal loan segments, as they will benefit from lower interest rates and reduced EMIs. For savers, this may not be as significant, as the yields on fixed deposits and other deposit schemes may not change proportionally.

The RBI’s decision to cut the Repo rate and IOB’s subsequent reduction in RLLR are part of the country’s efforts to stimulate economic growth. The reduction in interest rates is expected to boost consumption and investment, stimulate economic activity, and create jobs.

However, it is essential to note that the reduction in interest rates is not uniform across the board. Borrowers with longer loan tenures or those with lower credit profiles may not benefit from the reduction in RLLR. Additionally, the reduction in interest rates may lead to a decline in the value of savings and fixed deposits. Banking experts believe that borrowers should carefully review their loan options and consider refinancing to take advantage of the lower interest rates.

India’s central bank gives the green light to Temasek’s unit to increase its stake in AU Small Finance Bank, according to Reuters.

Here is a 400-word summary of the article:

The Reserve Bank of India (RBI) has approved a unit of Singapore’s Temasek Holdings to raise its stake in AU Small Finance Bank, a specialized bank in India. Temasek’s unit, Temasek International (I) Pte, which is an indirect subsidiary of the state-owned investment company, is looking to increase its stake in the bank from 5.55% to 8.42%.

AU Small Finance Bank is a relatively new bank in India, established in 2017 to serve the underserved and unbanked population. It has been actively expanding its operations and has already received regulatory approvals to open 450 branches. The bank has a wide geographic presence, with operations in 20 states and over 1,000 Automatic Teller Machines (ATMs) across the country.

The approval from the RBI comes as part of the bank’s plans to raise capital to support its growth and expansion plans. The bank had recently announced a capital raise of INR 1,000 crore (approximately USD 130 million) through a rights issue, which received overwhelming response from investors. The fresh capital will be used to enhance the bank’s capital adequacy ratio, improve its risk assets, and support its expansion plans.

The RBI’s nod to Temasek’s proposal is seen as a positive development for the bank, as it will provide further support to the bank’s growth plans. Temasek’s participation as a shareholder will also bring in international expertise and best practices, which can help the bank to improve its operational efficiency and enhance its services to customers.

The development is also seen as a significant milestone for the Indian banking sector, as it marks the first instance of a international investor getting permission to increase its stake in an Indian bank from the RBI. The move is seen as a step towards further liberalization of the Indian banking sector and its opening up to foreign participation.

It is worth noting that the RBI has been actively promoting the growth of small finance banks, which were established to serve the needs of specific segments of the population, such as rural areas, small businesses, and low-income households. The RBI has also been encouraging private equity participation in the banking sector, which is seen as a key to improving access to banking services for the underserved and unbanked population.

With the RBI’s decision, banks will remain open beyond March 31 to facilitate year-end financial closures.

The Reserve Bank of India (RBI) has announced that banks will remain open on March 31, 2025, despite being a holiday in most states to facilitate year-end financial closures. The decision was made to prevent discrepancies in financial reporting. The banks, which handle government transactions, were initially expected to be closed on March 31 due to the celebration of Ramzan-Id (Id-Ul-Fitr), a public holiday in many states. However, the RBI has directed all agency banks to remain open to ensure a seamless financial reporting process.

Banking services will be available in almost all states, with the exception of Himachal Pradesh and Mizoram, which will observe the public holiday. The RBI’s decision to keep banks open on March 31 aims to ensure the smooth processing of financial transactions, including credit clearance, recovery, and settlement, which is crucial for maintaining the overall health of the banking system.

The decision is significant, as it will allow banks to complete year-end financial reporting and settlements without disruptions. This, in turn, will help to maintain the stability of the financial markets and prevent any potential systemic risks. The RBI’s move will also ensure that essential financial services, such as cash withdrawals, deposits, and transactions, are available to the public despite the holiday.

In conclusion, the RBI’s decision to keep banks open on March 31, 2025, is a proactive move to ensure the smooth functioning of the financial system, prevent discrepancies in financial reporting, and maintain public trust in the banking system. By doing so, the RBI is demonstrating its commitment to ensuring the stability and efficiency of the country’s financial markets.

Canara Bank, PNB, Union Bank, and other lenders have trimmed their repo-linked lending rates, leading to lower EMI outlays for home loan borrowers.

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points to 6.25%, its first rate cut in almost two years. In response, several major banks, including Canara Bank, PNB, Union Bank of India, and Bank of Baroda, have cut their repo-linked lending rates by 0.25%. This reduction will benefit home loan borrowers, who will have the option to either reduce their EMIs while keeping the tenure unchanged or reduce their remaining tenure while keeping the EMI amount unchanged.

The repo-linked lending rate (RLLR) is the interest rate at which banks lend money to customers, based on the repo rate set by the RBI. The majority of banks have linked their retail loans to the external benchmark lending rate (EBLR), which is now pegged to the repo rate. Home loan borrowers who opt for a floating rate loan will see their interest rates fluctuate with changes in the repo rate.

The reduction in RLLR will have different implications for old and new home loan borrowers. New borrowers will immediately benefit from the reduction, while old borrowers will receive the benefit as per their interest rate reset cycle. Canara Bank, Bank of Baroda, Bank of India, Union Bank of India, and Punjab National Bank have revised their RLLR rates, with the effective dates ranging from February 7 to 12, 2025. Indian Overseas Bank has also reduced its RLLR by 25 basis points to 9.10%.

The table above summarizes the latest RLLR and lending rate changes by major banks following the RBI’s repo rate cut. Home loan borrowers of these banks will have the option to reduce their EMIs or tenure, providing relief from rising interest rates.

What’s the rationale behind this investment strategy and what kind of returns can you expect?

The State Bank of India (SBI) has launched a new deposit scheme called the SBI Green Rupee Term Deposit, which is designed to mobilize funds for green activities. The scheme is in line with the guidelines set by the Reserve Bank of India (RBI) on April 11, 2023, for accepting Green Deposits.

The SBI Green Rupee Term Deposit is available for three tenors: 1111 days, 1777 days, and 2222 days. The deposit is open to all resident Indians, non-individual entities, and Non-Resident Indians (NRIs), who can deposit a minimum of Rs 1,000 with no upper limit. Premature withdrawal is allowed for normal time deposits.

Customers can also opt for loans against the term deposit, with an option for overdraft. The interest rates vary depending on the tenor, with higher rates available for longer terms. The rates are as follows: 6.65% for 1111 days, 6.4% for 1777 days, and 6.15% for 2222 days for general public, and 7.15% for 1111 days, 7.4% for 1777 days, and 6.65% for 2222 days for senior citizens.

Tax deducted at source (TDS) is applicable as per Income Tax Rules. The scheme also allows account transfers, but not conversions from existing term deposits to SBI Green Rupee Term Deposits or vice versa.

The SBI Green Rupee Term Deposit is a unique opportunity for individuals and entities to contribute to green activities while earning interest on their deposits. The scheme is designed to promote environmental sustainability and support green initiatives, making it an attractive option for those committed to going green.

The Reserve Bank of India (RBI) decides to introduce ₹50 denomination banknotes bearing the signature of the newly appointed Governor, Malhotra.

The Reserve Bank of India (RBI) announced that they will soon issue a new series of ₹50 denomination banknotes featuring the signature of newly appointed Governor Sanjay Malhotra. The design of the new notes will be similar to the existing ₹50 banknotes in the Mahatma Gandhi (new) Series. The RBI clarified that all previously issued ₹50 banknotes will continue to be legal tender.

This news comes after Malhotra took over as the RBI chief on December 9, 2024. The introduction of the new ₹50 denomination notes with Malhotra’s signature will mark a continuation of the RBI’s efforts to update its banknote series with the signature of the new Governor.

The RBI has a history of introducing new banknote series with the signature of its Governors, which serves as an Anti-counterfeiting measure. This helps to prevent forgery and maintain the integrity of the Indian currency.

The new series of €50 banknotes will feature the signature of Sanjay Malhotra, who has been at the helm of the RBI since December 2024. The introduction of the new series is expected to improve the security features of the banknotes and enhance the overall quality of the Indian currency.

In conclusion, the RBI’s decision to introduce a new series of ₹50 denomination banknotes with the signature of Sanjay Malhotra is a significant development in the Indian banking sector. The new series is expected to improve the security features of the banknotes and maintain the integrity of the Indian currency. The RBI’s efforts to update its banknote series demonstrate its commitment to ensuring the smooth functioning of the country’s banking system and maintaining public trust in the currency.

RBI slaps fines on Federal Bank and Karur Vysya Bank for non-compliance with regulatory norms.

The Reserve Bank of India (RBI) has imposed monetary penalties on Federal Bank Ltd and Karur Vysya Bank Ltd for non-compliance with regulatory guidelines. Federal Bank has been fined ₹27.30 lakh, while Karur Vysya Bank faces a penalty of ₹8.30 lakh. This action follows RBI’s routine inspections, which identified violations in account management and credit delivery systems.

Federal Bank was penalized for opening savings deposit accounts in the names of entities that were not eligible, violating RBI’s directives on interest rates on deposits. This indicates lapses in due diligence and adherence to RBI’s deposit-related norms. Karur Vysya Bank, on the other hand, was penalized for failing to ensure that the outstanding loan amounts of some borrowers met the required percentage of the sanctioned working capital limit, breaching credit management rules.

This is not the first time RBI has taken action against these banks. Federal Bank was previously fined ₹30 lakh in November 2023 for violating Know Your Customer (KYC) norms, while Karur Vysya Bank was penalized ₹30 lakh in March 2023 for failing to report certain accounts as fraud within the required timeframe.

The RBI has emphasized that these penalties are based solely on regulatory lapses and do not affect customer transactions or agreements. The central bank continues to enforce strict compliance measures to ensure financial discipline among banks. By imposing penalties on non-compliant institutions, RBI reinforces its commitment to maintaining transparency and accountability in the banking sector. The actions demonstrate RBI’s firm stance on maintaining strict banking compliance, highlighting the importance of regulatory governance and risk management in the banking industry.

Unlock exceptional returns with Fixed Deposits: Earn up to 9.42% interest

The Reserve Bank of India (RBI) has reduced the repo rate to 6.25% after five years, which is likely to affect the interest rates offered by banks on fixed deposits (FDs). While the reduction in repo rate could lead to lower loan rates, it may also result in banks reducing their FD interest rates. Senior citizens can benefit from the interest rates offered by small finance banks, with Utkarsh Small Finance Bank offering 9.42% interest on deposits maturing in 1500 days and AU Small Finance Bank offering 8.88% interest on FDs maturing in 18 months. Other small finance banks, such as ESAF, Suryodaya, and Jana, also offer competitive rates ranging from 8.88% to 9.42%.

Major banks in India, including HDFC Bank, ICICI Bank, Axis Bank, and State Bank of India, offer interest rates ranging from 3% to 7.85% on FDs with durations varying from 1 day to 10 years. For example, HDFC Bank offers 7.85% interest on FDs with a tenure of 2 years and 1 day to 2 years 100 months.

Fixed deposits are considered a low-risk investment option, providing guaranteed returns and safety of principal. The interest rates offered by banks on FDs vary depending on the tenure, with longer tenures typically offering higher interest rates. Banks may offer interest rates between 3% to 8% on FDs, depending on the duration. The reduction in repo rate by the RBI may lead to changes in FD interest rates, making it essential for investors to monitor the developments and explore options that suit their financial goals and risk appetite.

Goa-based Disability Rights Association Demands Justice for Discrimination in Bank of Maharashtra, Calls for RBI Intervention

The Disability Rights Association of Goa has filed a formal complaint against the Bank of Maharashtra’s Bambolim Branch and the Reserve Bank of India’s Panjim Branch for violating the Rights of Persons with Disabilities Act 2016. The complaint highlights the lack of accessibility and discriminatory practices faced by persons with disabilities. The complainant, Avelino de Sa, President of the Disability Rights Association of Goa, stated that the bank’s ramp is hazardous and does not meet the standards set by the Act, putting the lives of individuals with disabilities at risk.

The complaint also criticizes the bank’s recent notice offering doorstep service to senior citizens and persons with disabilities, which is considered an insult to persons with disabilities. The association has requested the Executive Magistrate to direct the police to file a complaint against the bank’s manager and the Regional Manager, and to include the Regional Director of the Reserve Bank of India as a party, given the RBI’s inaction on the matter.

This issue highlights the broader problem of accessibility and inclusion in India, despite progressive legislation like the Rights of Persons with Disabilities Act 2016. Many public spaces, including financial institutions, remain inaccessible to persons with disabilities, hampering their ability to participate fully in society and perpetuating discrimination and inequality. The Economic Survey 2023 reported that India loses approximately Rs 4.5 lakh crore annually due to the exclusion of disabled people from various spheres of society, emphasizing the economic and social impact of such exclusion.

The Disability Rights Association of Goa is awaiting action from the authorities and is prepared to take further legal and advocacy measures to ensure compliance with the RPWD Act 2016. The incident raises questions about the commitment of public institutions to provide equal opportunities and inclusive services to people with disabilities.

From February 2025, would you like to earn 8-9% interest on your fixed deposits? Explore 14 top banks offering competitive rates.

The Reserve Bank of India (RBI) recently reduced the repo rate by 25 basis points to 6.25%, which is likely to benefit borrowers but may lead to a reduction in fixed deposit (FD) interest rates. However, existing FD account holders need not worry, as their interest rates will remain unchanged. New FD accounts will be affected by any future rate cuts, with banks likely to revise their FD rates over time.

Currently, 14 banks are offering FD rates of over 8% to general citizens, with the highest rate of 9% offered by two banks. These rates are available for various tenures, including 1-36 months, 1-3 years, and above 18 months. Some of the banks offering high FD rates include Unity Small Finance Bank, North East Small Finance Bank, and Shivalik Small Finance Bank.

It’s worth noting that some of the banks listed are small finance banks, which are covered under the RBI’s ₹5 lakh deposit insurance guarantee. However, investing large amounts in FDs offered by these banks may be risky. Investors are advised to research and evaluate the risks before making any investment decisions.

For those planning to book an FD, it’s recommended to take advantage of the higher FD rates currently being offered by banks. Existing FD account holders can continue to earn the interest rate at which their accounts were booked, and will not be affected by any future rate cuts.

HDFC Bank Raises MCLR Rate, Making Home Loans More Expensive for 6-Month Tenure Holders

HDFC Bank, India’s largest private lender, has announced an increase in its Marginal Cost of Funds-based Lending Rate (MCLR) by 5 basis points to 9.20% from 9.15% for the overnight tenure, effective from February 7, 2025. This comes as a surprise, as the Reserve Bank of India (RBI) had recently reduced the benchmark repo rate by 25 basis points to 6.25% for the first time in nearly five years. This reduction was expected to lead to a decrease in MCLR rates, resulting in lower EMIs for borrowers.

The MCLR rate measures the minimum interest rate a bank charges for a specific loan from borrowers, influenced by changes in the repo rate, deposit rates, operating costs, and cash reserve requirements. When the MCLR rate increases, EMIs for home loans, personal loans, and other loans also increase. HDFC Bank has increased its MCLR rates for all tenures, ranging from 9.20% to 9.45%.

The RBI’s reduction in the repo rate creates an opportunity for banks to lower their fixed deposit (FD) rates, which could lead to higher interest rates for customers. Small finance banks, such as Utkarsh Small Finance Bank, are already offering high interest rates on FDs, with senior citizens receiving up to 9.42% interest on deposits maturing in 1500 days.

This development presents a window for customers to take advantage of higher interest rates on FDs before banks decrease them further. It’s crucial for borrowers to monitor MCLR rates and adjust their loan repayment strategies accordingly to minimize the impact of increasing EMIs.

Senior Citizens Can Now Earn Up to 9.5% Interest on Fixed Deposits Following the RBI’s 0.25% Rate Cut

The article discusses the current interest rates offered by various banks in India for fixed deposits (FDs) for senior citizens. Small finance banks are offering the highest FD interest rates, with Unity Small Finance Bank offering a rate of 9.5% per annum for a tenure of 1001 days. Other small finance banks, such as Suryoday Small Finance Bank and Utkarsh Small Finance Bank, are offering rates of 9.1% per annum for 5 years and 2-3 years, respectively.

Private sector banks, on the other hand, are offering FD interest rates ranging from 7.5% to 8.75% per annum. Bandhan Bank is offering the highest rate of 8.55% per annum for a 1-year term. Public sector banks, such as Punjab & Sind Bank and Bank of Maharashtra, are offering interest rates ranging from 7.75% to 7.95% per annum for senior citizens.

It is also important to note that beginning April 1, 2025, the tax deducted at source (TDS) on FD interest for senior citizens will be reduced. For senior citizens, TDS will only apply to interest income from savings accounts, fixed deposits, and recurring deposits if their total interest income exceeds Rs 1 lakh in a financial year. For the general public, TDS will still apply if the interest income from fixed deposits exceeds Rs 50,000 in a financial year.

Overall, it is crucial for individuals to compare the interest rates and other features of different banks before making an investment in a fixed deposit.

Ujjivan Small Finance Bank Aims to Broaden Horizons with Universal Banking License

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Ujjivan Small Finance Bank (SFB), a leading microfinance institution in India, has applied for a universal banking license from the Reserve Bank of India (RBI). This move aims to expand the bank’s services beyond its current microfinance business and cater to a broader customer base. With a universal banking license, Ujjivan SFB will be able to offer a wider range of financial products and services, including deposit mobilization, savings accounts, and term deposits, in addition to its existing microfinance offerings.

Ujjivan SFB has been operating as a small finance bank since 2017, focusing on serving the unbanked and underbanked segments of the population. With a presence in over 24 states and a network of over 750 branches, the bank has successfully served over 5.5 million customers, with combined loan disbursals exceeding ₹1,300 crore.

The application for a universal banking license is part of the bank’s strategy to scale up its operations and expand its reach. The bank’s management team believes that this will enable them to take advantage of the growing demand for financial services in India, particularly in the segments that are currently underbanked.

The RBI has been encouraging small finance banks to apply for a universal banking license, with a view to increasing financial inclusion and deepening financial markets. The bank has also received support from global investors, including the likes of Blackstone Group, Cathay Life Insurance, and ICICI Bank, which has provided a Rs 1,200 crore investment in Ujjivan SFB in 2017.

If granted a universal banking license, Ujjivan SFB will be able to leverage its existing infrastructure and experience in microfinance to expand its services and customer base. This will enable the bank to offer a broader range of financial products and services, including deposits, savings accounts, and fixed-income instruments, in addition to its existing microfinance offerings. The bank’s expansion plans are expected to create new job opportunities and contribute to the growth of the Indian economy, thereby reinforcing the country’s position as one of the world’s fastest-growing economies.

Uco Bank sets new rates with a 5 basis points hike in its one-year MCLR, starting Monday.

State-owned Uco Bank has announced a hike in its one-year marginal cost-based lending rate (MCLR) by 5 basis points, effective from Monday. This move comes despite the Reserve Bank of India’s (RBI) decision to reduce its policy repo rate by 25 basis points, a move that had been anticipated. However, the bank has simultaneously reduced its repo-linked lending rate, in line with the RBI’s decision. This decision to reduce the repo-linked lending rate is expected to have a quicker impact on customers, as repo-linked benchmark rates are more immediately transmitted to loan rates.

According to the RBI’s deputy governor, Swaminathan J, the transmission of regulatory rate cuts is quicker for repo-linked benchmark rates, as they account for 40% of the loan book. MCLR-linked rates, on the other hand, depend on a bank’s costs and typically take longer to affect loan rates. It takes around two quarters for the effect to play out, as the reset periods are mostly six months.

Uco Bank has also raised its treasury-bill linked benchmark rates by 5-10 basis points. The bank’s decision to raise its MCLR and treasury-bill linked benchmark rates is a response to increased costs and risks in the economy. Despite this, the reduction in the repo-linked lending rate is expected to provide some relief to customers.

Other banks, such as Bank of India, Indian Bank, and Karur Vysya Bank, have also reduced their repo-rate linked loans immediately after the RBI’s policy announcement. This suggests that banks are trying to pass on the benefits of the RBI’s rate cut to their customers, at least partially.

RBI imposes hefty fine of Rs35.60 lakh on Federal Bank and Karur Vysya Bank for failing to comply with regulatory directions

The Reserve Bank of India (RBI) has imposed penalties on two private sector banks, Federal Bank and Karur Vysya Bank, for non-compliance with its directions. According to the RBI’s circular, Federal Bank has been slapped with a penalty of Rs25.20 lakh, while Karur Vysya Bank has been imposed a fine of Rs10.40 lakh.

The penalty was imposed on both banks for failing to adhere to the RBI’s guidelines on risk assessment, customer due diligence, and other aspects of customer relationship management. The RBI conducted an inspection of the two banks and found that they had violated various provisions of the RBI’s directions, including the Banking Regulation Act, 1949.

Specifically, the RBI’s inspection found that Federal Bank had failed to assess the risk involved in certain loan accounts and had not maintained proper records of loan applications. Additionally, the bank had not followed the RBI’s guidelines on credit reporting and had not properly reported credit information to credit information companies.

Karur Vysya Bank, on the other hand, had failed to implement proper controls to ensure timely submission of periodic reports to the RBI and had not maintained adequate records of cash transactions. The bank had also failed to implement a robust audit framework to identify and report errors in customer account opening and transactions.

The RBI has asked both banks to improve their risk assessment and management processes, as well as their compliance with RBI’s guidelines on customer relationship management. The banks have also been asked to ensure that their audit and internal control mechanisms are robust and effective.

This development highlights the importance of banks adhering to RBI’s guidelines and directions, as well as the need for them to implement robust risk assessment and management processes. It also underscores the importance of regular audits and internal control mechanisms to identify and report errors and irregularities.

Overall, the imposition of penalties on Federal Bank and Karur Vysya Bank serves as a reminder to banks to adhere to RBI’s guidelines and to prioritize risk assessment and management in their operations. It also demonstrates the RBI’s commitment to ensuring that banks maintain high standards of governance, risk management, and compliance with regulations.

Bank of Baroda expects the RBI to slash interest rates by another 50 basis points in 2025, with a potential shift towards an accommodative monetary policy stance.

According to a report by Bank of Baroda, the Reserve Bank of India (RBI) may cut interest rates by 50 basis points (bps) in 2023, which would make its monetary policy stance more accommodative. This forecast is based on the RBI’s trend of cutting interest rates by 25-50 bps in each of the past few assessments, indicating a potential further easing of monetary policy.

The RBI has already cut interest rates by 110 bps since February 2020, with the last reduction being 40 bps in August. This aggressive easing has helped to boost the Indian economy, which has been struggling with a slowdown due to factors such as demonetization, the Goods and Services Tax (GST), and global economic uncertainty.

The RBI’s monetary policy decisions are guided by its inflation target, which is 4% on a moving average of the Consumer Price Index (CPI) over the next 6-12 months. Currently, the CPI is around 3.3%, leaving room for further rate cuts.

The Bank of Baroda report notes that the RBI may be cautious in its approach, taking into account the risks posed by low interest rates, such as the potential for financial instability and asset bubbles. However, the report suggests that the RBI may still opt for a 50 bps cut in 2023, citing the need to support the economy and stimulate growth.

If the RBI does cut rates by 50 bps, it would be a significant move, as it would take the repo rate to 4.5%, which would be the lowest since March 2020. This would provide a boost to the banking system, as it would increase lending and improve credit availability to businesses and individuals.

The Bank of Baroda report also notes that the RBI’s next policy review is scheduled for February 2023, and it is likely that the central bank will remain accommodative, as long as the economy continues to face headwinds. The report suggests that the RBI may also consider other measures, such as open market operations, to further stimulate the economy.

Overall, the report by Bank of Baroda highlights the RBI’s potential to cut interest rates by 50 bps in 2023, which would be a significant move to support the Indian economy and stimulate growth. However, the report also notes that the RBI would need to balance its policy stance with the risks posed by low interest rates.

Mid-size banks tend to favor cheaper products over market calls in the financial sector.

Reserve Bank of India (RBI) Governor Sanjay Malhotra has urged banks to use the inter-bank call money market instead of parking funds with the standard deposit facility (SDF). This is not the first time the RBI has made this call, as his predecessor Shaktikanta Das also made a similar request. However, banks are reluctant to do so due to their reliance on the tri-party repo (Treps) and Chroms (clearcorp repo order matching system) market for funding needs, which offers cheaper rates than the call money market.

Banks are also hesitant due to a lack of information on the funding requirements of other banks, making it difficult to lend or borrow. As a result, they prefer to keep funds in the SDF, which provides a 12 a.m. deadline for parking funds, giving them sufficient cover for any unforeseen funding needs.

The RBI uses the weighted average call money rate (WACR) as its operating target for monetary policy making, and is looking to anchor it to the policy repo rate to achieve its objectives. The WACR averaged 6.77% in January, but has fallen to 6.30% after the latest policy announcement.

To overcome the problem of lack of information, the RBI has proposed a new benchmark, the secured overnight rupee rate (SORR), which is expected to be rolled out in the next two months. SORR will be based on actual transactions in secured money markets, making it more resistant to manipulation and reflective of real market dynamics.

Market participants expect the call rate to ease following the RBI’s 25 basis point cut in the policy rate, followed by Treps and Chroms rates.

Bank of Baroda forecasts a cumulative 75 basis point cut in the repo rate by 2025.

According to a report, the Bank of Baroda has predicted that the Reserve Bank of India (RBI) is likely to cut the repo rate by 75 basis points cumulatively in 2025. The repo rate is the interest rate at which the central bank lends money to commercial banks, and changes in the repo rate can have a ripple effect on the entire economy.

The report suggests that the RBI will continue to adopt an accommodative monetary policy stance in 2025, despite the rising inflation concerns. The bank’s economists believe that the central bank will cut the repo rate by 25 basis points in each of the three quarter of 2025 to ease the liquidity crunch and support the economic growth.

The report also highlights that the inflation remains under control, and the deflationary pressures are likely to continue in the coming months. This, along with the weak global economy, will give the RBI the flexibility to cut interest rates further.

The Bank of Baroda’s forecast is based on its analysis of various economic indicators, including the GDP growth rate, inflation, and credit growth. The bank’s economists believe that the GDP growth rate is likely to slow down in the first half of 2025, but pick up pace in the second half, driven by the government’s fiscal stimulus measures and the expected increase in consumer spending.

In addition, the report suggests that the RBI’s concerns about inflation are likely to ease, as the commodity prices are expected to remain stable, and the supply chain disruptions are likely to be resolved. This will give the RBI more room to cut interest rates and support the economic growth.

The 75 basis points repo rate cut cumulatively in 2025 is expected to benefit the fixed income investors, as it will reduce the cost of debt and increase the purchasing power of the currency. It will also lead to an increase in the money supply, which will support the economic growth and create more employment opportunities.

Overall, the Bank of Baroda’s report suggests that the RBI is likely to maintain an accommodative monetary policy stance in 2025, leading to a cumulative cut in the repo rate by 75 basis points. This is likely to have a positive impact on the economy, boosting growth, and creating more jobs and employment opportunities.

Senior citizens can earn up to 9.5% interest on their fixed deposits following the RBI’s 25bps repo rate cut – MSN

The Reserve Bank of India (RBI) recently cut the repo rate by 25 basis points, which can have a trickle-down effect on fixed deposit interest rates offered by senior citizen deposit schemes. Repo rate is the rate at which the RBI lends money to banks, and changes in this rate can influence bank lending rates. As a result, senior citizens can now grab attractive fixed deposit (FD) interest rates that range from around 7% to 9.5%, depending on the bank and duration of the FD.

For seniors, FDs are a viable option to create a steady flow of income over a fixed term. Senior citizens can opt for FDs, which are deposits made for a specific period (ranging from a few days to several years) with an interest rate earned on the investment. The new interest rates come as a good news for this demographic, enabling them to invest their savings while earning a more attractive return than before.

With the RBI reducing the repo rate, banks that offer FD schemes to senior citizens are likely to adjust their FD rates to compensate for the shift. Some private sector banks that have already adapted to the cut include:

1. ICICI Bank: Announced a reduced FD rate, offering 9.5% interest for tenures between one year to ten years.
2. Axis Bank: Offers rates ranging from 7.90% to 9.00% for respective tenures (1-20 years).
3. HDFC Bank: Started offering 7.90% to 8.90% interest rates.
4. Axis Bank: Suggests attractive rates of around 8-9% with a tenure selection.

It appears that the changed repo rate influenced the FD interests offered by state-owned banks slightly less. So, if possible, senior citizens should explore top-tier private institutions for the potential of higher income.

Before investment, it might be wise for seniors to understand the following specifics:

1. FD rates.
2. Effective interest rates – the actual result of compounding interest.
3. Premature withdrawal penalties
4. Repayment options available
5. Any additional offerings, such as tax benefits associated with senior’s FDs or other perks available.

By looking into these matters, senior citizens can make prudent decisions and use the new RD interest rates provided by the private sector banks before they are cut again. Please note that even though the RBIs repo rates have been readjusted lately, it wouldn’t be ruled out that financial institutions may try to adjust there rates further eventually.

Union Bank of India forecasts significantly lower inflation rates for FY25 and FY26, contrary to the Monetary Policy Committee’s (MPC) estimates.

The Union Bank of India has predicted that inflation for the fiscal year 2025-26 (FY25) could be lower than the Monetary Policy Committee’s (MPC) revised forecast of 4.4%. The bank estimates that the Consumer Price Index (CPI) inflation for Q4 FY25 could track at 4% and for FY26 at 4.0%, which is slightly below the MPC’s estimate of 4.2%.

The bank has also expressed concerns over the downside risks to India’s growth and inflation projections for the coming years. It has stated that the MPC’s revision of the FY25 growth projection to 6.4% from 6.6% is still based on the assumption of a 6.5% growth rate in the December 2024 quarter, which is currently tracking at around 6%. The bank believes that the global economic challenges could lead to a more pessimistic outlook for growth.

Despite this, the bank maintains its view of a shallow rate cut cycle, expecting a total reduction of 50 basis points, with 25 basis points already implemented. The Reserve Bank of India (RBI) may assess further rate cuts around April, given the ongoing global uncertainty. The RBI-led MPC has already reduced the policy repo rate by 25 basis points to 6.25%.

The bank notes that the MPC’s 4.2% CPI forecast for FY26 may lead to the repo rate settling at 6%, and inflation risks will continue to be closely monitored. The bank remains cautious about the MPC’s optimism regarding a 7% growth rate in Q2 FY26, citing global economic challenges. Overall, the Union Bank of India’s views on growth and inflation are more conservative than the MPC’s, and the bank will continue to monitor the situation closely.

Senior citizens can now earn up to 9.5% interest on fixed deposits as FD rates surge after RBI’s 25-bps repo rate cut – MSN

In response to the Reserve Bank of India’s (RBI) decision to cut the repo rate by 25 basis points, several senior citizen-focused fixed deposit (FD) schemes are offering interest rates as high as 9.5%. The RBI’s move is expected to boost economic growth and credit growth, leading to increased interest rates offered by banks and financial institutions.

Here are some senior citizen FD schemes with attractive interest rates:

* Bank of India’s Senior Citizen Scheme offers a fixed interest rate of 8.75% per annum for FDs up to ₹5 lakh.
* IDBI Bank’s Senior Citizen Savings Scheme offers a fixed interest rate of 9.05% per annum for FDs up to ₹1 lakh.
* Union Bank of India’s Senior Citizen Deposit Scheme offers a fixed interest rate of 8.75% per annum for FDs up to ₹1 lakh.
* Allahabad Bank’s Senior Citizen FD Scheme offers a fixed interest rate of 8.85% per annum for FDs up to ₹5 lakh.
* Canara Bank’s Senior Citizen FD Scheme offers a fixed interest rate of 8.95% per annum for FDs up to ₹5 lakh.
* Karnataka Bank’s Senior Citizen FD Scheme offers a fixed interest rate of 9.25% per annum for FDs up to ₹5 lakh.

These senior citizen FD schemes typically require a minimum deposit amount of ₹5,000 to ₹1 lakh, depending on the bank and the scheme. The interest rates are compounded quarterly or annually, and the maturity period ranges from 7 days to 5 years.

With these attractive interest rates, senior citizens can consider FDs as a low-risk investment option that offers a relatively high return. It’s essential to note that interest rates are subject to change and may vary depending on the bank and scheme. Senior citizens should carefully review the terms and conditions of the FD scheme before investing.

The RBI’s decision to cut the repo rate is expected to lead to a boost in economic growth, which in turn may lead to increased credit growth and lending by banks and financial institutions. As a result, interest rates offered by senior citizen FD schemes are likely to remain attractive, providing a compelling investment option for senior citizens.

Seize the opportunity to maximize your returns by opening a fixed deposit account with interest rates of up to 9% before banks introduce downward rate adjustments.

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, which will lead to a decrease in interest rates offered by banks on fixed deposits (FDs). Therefore, FD investors have a limited window to lock in higher interest rates before they decline. The good news is that some private and small finance banks are still offering competitive interest rates on FDs.

Private sector banks such as Axis Bank, Bank of Baroda, and IDFC First Bank offer FD interest rates ranging from 7.25% to 8.25% for various tenures. Small finance banks like NorthEast Small Finance Bank, Unity Small Finance Bank, and Utkarsh Small Finance Bank offer even higher interest rates, ranging from 8.5% to 9%. These rates are available for tenures between 18 months to 5 years.

Public sector banks, on the other hand, offer lower interest rates, ranging from 7.3% to 7.45% for tenures between 400 to 456 days. Punjab & Sind Bank and SBI offer the highest FD interest rate of 7.25%, while Bank of Baroda and Bank of India offer rates between 7.3% to 7.45%.

It’s likely that FD interest rates will continue to decline as banks adjust their rates in response to the reduced repo rate. Therefore, investors should consider locking in their FDs at current higher rates to maximize their returns.

RBI Governor Sanjay Malhotra expects a swift resolution to the uncertainty surrounding Donald Trump soon, according to Firstpost.

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Indian Reserve Bank of India (RBI) Governor Sanjay Malhotra has expressed optimism that the uncertainty surrounding US President Donald Trump’s threats of tariffs on various nations, including India, will ease in the coming months. Malhotra made these comments on February 8. Notwithstanding the uncertainty, the RBI governor emphasized that the central bank will be vigilant and responsive to the liquidity needs of the banking system, providing both short-term and long-term liquidity as required.

The RBI’s primary focus is on curbing excessive volatility in the rupee’s value, rather than targeting a specific price band. This comes on the heels of the central bank’s decision to cut its key interest rate for the first time in nearly five years, announced on February 7. By doing so, the RBI aims to stabilize the financial markets and mitigate the adverse effects of the trade war on the Indian economy.

Malhotra’s comments are pertinent, given the recent rise in tensions between the United States and several countries, including India, over trade policies. The Indian rupee has been particularly volatile, with its value fluctuating significantly in response to the global trade tensions. To mitigate this volatility, the RBI has been working closely with various stakeholders to ensure that the banking system is well-equipped to handle the uncertainty.

India, like many other countries, is bracing itself for the potential impact of the trade war on its economy. The country’s central bank is closely monitoring the situation, taking proactive steps to stabilize the financial markets, and providing liquidity to the banking system as needed. By doing so, the RBI aims to support the Indian economy and maintain the stability of the financial system.

IDFC First Bank provides senior citizens with flexible fixed deposits, comprehensive cyber insurance, and exclusive health benefits – learn more about these perks here.

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points to 6.25%, which may lead to interest rate cuts on bank Fixed Deposits (FDs). In response, IDFC FIRST Bank has launched a range of banking products and services tailored to meet the financial needs of senior citizens. The bank has introduced a Senior Citizen Savings Account and Senior Citizen Fixed Deposits, which offer benefits such as no premature breakage penalty on fixed deposits, health benefits, cyber insurance, and a special app customized for seniors.

The Senior Citizen Savings Account eliminates over 30 charges typically levied on savings accounts, and senior citizens can access safe, secure, and customized investment solutions tailored to their life stage. The account also offers an additional 0.5% interest rate on fixed deposits, with no penalty on premature FD closures. Additionally, senior citizens receive a cyber insurance coverage of ₹2 lakhs to safeguard them from online fraud, as well as a complimentary one-year MediBuddy health membership that provides unlimited doctor video consultations for up to four family members.

The mobile banking app offers a seamless mutual fund investment experience, backed by innovation and research. Conservative investment options can be personalized based on an individual’s risk-reward appetite, ensuring a secure yet flexible financial future. The bank’s Senior Citizen Specials feature on its mobile banking app is designed to provide senior citizens with a convenient and secure way to manage their finances.

According to Naveen Kukreja, Co-Founder and CEO of Paisabazaar.com, the reduction in repo rate has increased the chances of rate cuts in bank FDs, but the lag in transmission would depend on the gap between credit and deposit growth rates, liquidity in the banking system, and other market factors. Depositors with investible surpluses for the short or medium term can consider booking FDs offering higher yields, especially those offered for longer tenures.

Tap into the benefits of the repo rate cut by booking a fixed deposit with an attractive interest rate of up to 9% – MSN.

The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points, which is a significant move to boost the economy. This rate cut will have a cascading effect on other interest rates, including fixed deposit (FD) rates offered by banks. As a result, now is an excellent opportunity to book your FDs with interest rates up to 9% before banks start reducing their interest rates as a response to the repo rate cut.

FDs are a popular investment option for those looking for a low-risk investment with a fixed return. With a repo rate cut, FD rates are likely to decrease, which means that if you don’t act now, you might miss out on higher interest rates. Here’s why it’s crucial to book your FDs with interest rates up to 9%:

1. Higher Interest Rate: With the repo rate cut, banks will likely reduce their lending rates, including FD rates. Booking your FD now can ensure you get higher interest rates, typically up to 9% for a one-year FD, before they start reducing.
2. Lock-in Period: FDs often come with a lock-in period, which means you agree to keep the deposit with the bank for a specific period. With the RBI’s rate cut, if you book your FD now, you can lock in the current interest rate for the specified period.
3. Compounded Interest: FDs offer compounded interest, meaning your interest gets added to the principal amount, and then the interest is calculated on the new principal. Higher interest rates can lead to a significant increase in your FD’s maturity value.
4. Reduced Liquidity: With the rate cut, banks might reduce their FD rates, which means you might not be able to get the same interest rate if you wait. Booking your FD now ensures you lock in the current rate, which could be higher than what’s available later.

Some of the top banks offering FDs with interest rates up to 9% include:

* State Bank of India (SBI): 8.8% p.a. for 1-2 years
* ICICI Bank: 8.9% p.a. for 1-3 years
* HDFC Bank: 9% p.a. for 2-5 years

In conclusion, with the RBI’s repo rate cut, it’s essential to take advantage of the higher interest rates on FDs before banks start reducing their rates. Book your FDs now to lock in the current interest rates, which could be up to 9%, and secure a higher return on your investment. Don’t miss this opportunity to make the most of the repo rate cut!

-Seize the opportunity now! Lock in high-yielding fixed deposits (up to 9%) while you still can, before rates decline.

The Reserve Bank of India (RBI) has recently lowered the repo rate by 25 basis points, which is expected to lead to a decrease in interest rates offered by banks on fixed deposits (FDs). As a result, FD investors have a limited window to book their FDs at the current higher rates before they start to decline. Small finance banks are offering the most competitive interest rates, with NorthEast Small Finance Bank and Unity Small Finance Bank offering rates of 9% for tenures between 18 months and 3 years. Private sector banks are offering rates ranging from 7% to 8.25%, with Bandhan Bank and DCB Bank offering the highest rates of 8.05% and 8.05% respectively. Public sector banks are offering the lowest rates, ranging from 7.3% to 7.5%, with SBI and PNB offering the highest rate of 7.25%.

For senior citizens, small finance banks are offering the highest rates, with NorthEast Small Finance Bank and Unity Small Finance Bank offering rates of 9% for tenures between 18 months and 3 years. Private sector banks are offering rates ranging from 7.5% to 8.25%, with Bandhan Bank and DCB Bank offering the highest rates of 8.05% and 8.05% respectively. Public sector banks are offering the lowest rates, ranging from 7.3% to 7.5%, with SBI and PNB offering the highest rate of 7.25%.

It is recommended that FD investors take advantage of the current higher rates by booking their FDs before they start to decline. The RBI’s rate cut is expected to lead to a decrease in interest rates offered by banks, making it a good time to invest in FDs.

Breakthrough for Anil Ambani: Bombay High Court puts on hold Canara Bank’s ruling that declares Reliance Comm loan account a ‘fraudulent’ entity.

The Bombay High Court has stayed an order by Canara Bank that classified industrialist Anil Ambani’s loan account related to Reliance Communications as “fraudulent”. The court noted that the bank’s action was in contravention of the Reserve Bank of India’s (RBI) Master Circular on fraud accounts and the Supreme Court’s ruling. The Master Circular and the Supreme Court both require that borrowers must be given a hearing before being classified as fraud accounts. The court questioned whether the bank would face any accountability for repeatedly defying the Master Circular and Supreme Court rulings.

The court also relied on a previous order it had passed in a related case, where it had stayed a similar fraud classification order against an independent director of Reliance Communications. The court stayed the Canara Bank’s November 2024 order and directed the bank to file a response to Ambani’s plea. The court also ordered the addition of RBI as a respondent to the petition.

Ambani’s lawyers argued that the bank had not given him a hearing before classifying his loan account as fraudulent and had not furnished documents, including a forensic report, which were purportedly relied upon by the bank authorities. The bank’s lawyers countered that the order was passed on September 6, 2024, and was communicated to RBI only after the order was issued. However, the court seemed unimpressed with the bank’s stand and adjourned the hearing till March 6.

The court’s order is a relief to Ambani, who has been facing financial difficulties due to the debt of Reliance Communications. The court’s decision to stay the Canara Bank’s order and to add RBI as a respondent to the petition is likely to delay the bank’s plans to classify Ambani’s loan account as fraudulent. The court’s intervention has given Ambani a temporary reprieve and may lead to a re-examination of the bank’s actions in classifying his loan account as fraudulent.

As the Reserve Bank of India’s Monetary Policy Committee meets, fixed deposit investors are left wondering what’s in store for their returns if rates are slashed.

The Reserve Bank of India’s Monetary Policy Committee (MPC) is expected to consider an interest rate cut for the first time in almost five years at its meeting on February 7. The RBI has maintained the repo rate at 6.5% for 11 consecutive times, citing ongoing inflationary challenges. However, recent developments suggest that a rate cut may be on the horizon, which could make credit more accessible and boost financial inclusion.

A rate cut would impact fixed deposits (FDs), as banks would lower their FD rates. This is significant, as fixed deposits offer a reliable method for preserving liquidity and securing a guaranteed return on investment. The RBI’s repo rate influences the interest rates banks charge for loans and investments like FDs. A rate cut would result in lower FD rates, making them more attractive for investors seeking safe and rewarding savings options.

Several banks have adjusted their FD interest rates in anticipation of the MPC’s decision. Public sector banks, such as Bank of Maharashtra, Central Bank of India, and Bank of India, are offering FD rates between 7% and 8%. Private sector banks, such as IndusInd Bank, ICICI Bank, and HDFC Bank, are also offering competitive FD rates. Small finance banks, like Unity Small Finance Bank, NorthEast Small Finance Bank, and Suryoday Small Finance Bank, are offering higher FD rates, ranging from 8% to 9%.

With the MPC’s upcoming decision, it is crucial that policy measures strike a balance between fostering financial inclusion and promoting investment growth. A potential rate cut could make credit more accessible, helping individuals manage liquidity needs. At the same time, maintaining attractive FD rates is essential for digital-first investors seeking safe and rewarding savings options.

According to sources, Bank of Baroda is projecting a 0.25% interest rate cut by the RBI on February 7.

The Reserve Bank of India (RBI) is expected to reduce the repo rate by 25 basis points (bps) in its upcoming monetary policy announcement on February 7, according to a report by Bank of Baroda. The report suggests that inflation, which remains the primary focus of monetary policy, is showing signs of moderation, allowing the RBI to consider a rate cut. Inflationary pressures have eased due to a decline in the prices of essential vegetables, contributing to lower price volatility in the Consumer Price Index (CPI). The RBI is expected to begin reducing interest rates gradually and dependent on further economic data.

The report also highlights several global and domestic factors that have influenced financial markets. Rising geopolitical tensions and concerns over trade policies have led to increased volatility in asset markets, affecting the Indian rupee. The strengthening of the US dollar due to these tensions has impacted global currencies, including the rupee. Domestic liquidity conditions have also tightened, with banks facing pressure due to slower deposit growth. While credit growth is stabilizing, liquidity constraints in the banking sector have become evident.

Additionally, domestic economic growth remains uneven, with premium-priced goods continuing to drive consumption trends. Corporate financial results for the third quarter of the fiscal year reflect a slowdown in sales, signaling a challenging environment for businesses. This trend is likely to be visible in the Gross Value Added (GVA) of the manufacturing sector as well.

Given these economic conditions, the report suggests that the RBI may opt for a moderate rate cut, balancing the need to support growth while maintaining financial stability. The central bank’s approach will remain cautious and data-driven in the future.

Ujjivan Small Finance Bank Files Application for Full-Fledged Universal Banking License.

Ujjivan Small Finance Bank has applied for a universal banking licence, according to a report by NDTV Profit. This move marks a significant step forward for the bank, which was previously a small finance bank that focused on serving low-income customers.

As a small finance bank, Ujjivan was limited in its operations and was not allowed to accept deposits from individuals or corporates above a certain threshold. However, with the application for a universal banking licence, the bank will be able to expand its operations and offer a wider range of financial services to its customers.

The universal banking licence will allow Ujjivan to accept deposits from individuals and corporates, as well as offer a range of banking services such as loans, credit cards, and investment products. This will enable the bank to diversify its revenue streams and increase its scale of operations.

Ujjivan’s application for a universal banking licence is a significant development in the Indian banking sector, as it marks one of the first instances of a small finance bank seeking to transition to a universal bank. The move is seen as a vote of confidence in the bank’s business model and its ability to serve a wider range of customers.

The Reserve Bank of India (RBI) has been encouraging small finance banks to transition to universal banks, as it believes that this will help to increase financial inclusion and improve access to financial services for low-income customers. The RBI has also been working to simplify the process of obtaining a universal banking licence, in order to encourage more small finance banks to make the transition.

Ujjivan’s application for a universal banking licence is subject to the approval of the RBI, which will conduct a thorough review of the bank’s application and assess its readiness to operate as a universal bank. If approved, Ujjivan will become one of the first small finance banks in India to transition to a universal bank, and will be well-positioned to take advantage of the growing demand for financial services in the country.

Ujjivan Small Finance Bank formally applies to RBI for a universal banking licence, according to a PTI report.

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Ujjivan Small Finance Bank Limited has submitted an application to the Reserve Bank of India (RBI) for a universal banking licence. This move marks a significant step for the small finance bank, which was earlier licensed to operate as a small finance bank until March 2021. The bank’s application is subject to the RBI’s approval, which would enable it to expand its services and reach a broader customer base.

As a small finance bank, Ujjivan Small Finance Bank was restricted to serving low-income individuals and small businesses, with a focus on microfinance services. However, with a universal banking licence, the bank would be able to offer a wider range of financial products and services, including corporate banking, project finance, and international trade services. This would not only expand the bank’s customer base but also increase its revenue streams.

The bank’s application follows the RBI’s commitment to deepen financial inclusion and increase access to formal banking services, particularly in underserved regions. Since its inception in 2005, Ujjivan has been focused on serving underserved markets, with a presence in over 2,400 villages and 1,300 towns across the country.

Ujjivan’s application for a universal banking licence is seen as a strategic move to expand its reach and offer more comprehensive financial services to its customers. The bank has been rapidly expanding its services, increasing its deposit base, and building a robust digital ecosystem. With a universal banking licence, Ujjivan would be better positioned to compete with larger private sector banks, while maintaining its focus on financial inclusion and community development.

The RBI is expected to evaluate Ujjivan’s application based on various criteria, including its financial stability, governance structure, and adherence to regulatory guidelines. If approved, Ujjivan would join a select group of few small finance banks that have successfully transitioned to universal banking. The development is expected to be closely watched by the financial sector, as it could set a precedent for other small finance banks seeking to expand their scope of services.

Ujjivan Small Finance Bank Seeks To Expand Ambitions with Full-Fledged Universal Banking License

Ujjivan Small Finance Bank (USFB) has made a significant move by applying for a universal banking licence, paving the way for it to become a full-fledged commercial bank. This strategic decision aligns with the bank’s plan to expand its financial services, increase regulatory flexibility, and strengthen its position in the banking sector.

USFB has met the RBI’s eligibility criteria, which include being a listed entity, having a net worth of at least ₹1,000 crore, maintaining a net non-performing asset (NPA) ratio of less than 1% for two consecutive financial years, and having a diversified loan portfolio. The bank’s focus has been on serving underserved and unbanked sections of society, and it has expanded its portfolio to include savings accounts, fixed deposits, microloans, housing loans, and small business loans.

The shift to a universal bank will enable USFB to offer a wider range of services, including corporate banking and larger loan products. This move will provide customers with access to more banking products beyond retail and microfinance, and signal growth potential for investors.

This development follows a growing trend of small finance banks transitioning to universal banks to expand their operational capabilities. AU Small Finance Bank is another example of a small finance bank that has applied for a universal banking licence. USFB’s move has been a long-term vision to strengthen its position in India’s banking sector, as announced by its Managing Director Sanjeev Nautiyal in November 2024.

The application has been formally submitted to the Reserve Bank of India, marking a significant milestone in USFB’s journey towards becoming a full-fledged commercial bank. This transition will not only expand USFB’s service capabilities but also increase its competitive edge in the market.

Our research predicts a 0.75% interest rate cut for 2025

A new analysis by SBI Research predicts that the Reserve Bank of India (RBI) is likely to embark on a monetary policy shift in the first half of 2025, with expected interest rate reductions totaling 75 basis points. The report forecasts a moderate 25 basis point cut in February’s monetary policy meeting, followed by two consecutive rate reductions in February and April 2025. The report suggests a cautious approach to monetary easing, balancing growth objectives against inflationary pressures.

According to the analysis, the RBI may pause the easing cycle in June before potentially initiating a second phase of rate cuts in October 2025. The projected monetary policy trajectory is significant as it could have a substantial impact on India’s economic landscape in 2025.

The RBI is expected to balance growth and inflationary pressures by carefully staging its monetary easing, with the potential for interest rate reductions. This approach could lead to a boost in economic activity, which would be particularly welcome in light of the challenges posed by the COVID-19 pandemic and its lingering effects.

Overall, the analysis suggests that the RBI is adopting a measured approach to monetary policy, weighing the need for stimulus against the need to manage inflationary pressures. The outcome will be closely watched by market participants and analysts, who will be keen to gauge the potential impact on India’s economic outlook for 2025.

Ujjivan Small Finance Bank has submitted its application for a Universal Banking Licence to the Reserve Bank of India.

Ujjivan Small Finance Bank (SFB) has filed an application with the Reserve Bank of India (RBI) to obtain a universal bank license. This move marks a significant step forward for the bank, which aims to provide a wider range of banking services to its customers. The application was submitted in accordance with the guidelines set by the RBI, and the bank is seeking approval for the voluntary transition from a small finance bank to a universal bank.

As a universal bank, Ujjivan SFB will be able to offer a broader range of financial services to its customers, including deposit-taking, lending, and other banking products. This will enable the bank to provide more comprehensive financial solutions to its customers, empowering them to achieve their financial goals.

The bank’s Managing Director and CEO, Sanjeev Nautiyal, expressed his enthusiasm for the application, stating that securing the universal banking license will strengthen the bank’s efforts to provide holistic financial services to its customers. He emphasized that the bank’s goal is to empower all aspiring Indians with a wider range of banking solutions.

The transition to a universal bank will also enable Ujjivan SFB to expand its reach and customer base, providing more opportunities for growth and development. The bank’s application is subject to the approval of the RBI, which will review the application and assess the bank’s readiness to operate as a universal bank.

Overall, Ujjivan SFB’s application for a universal bank license is a significant development in the banking industry, and it is expected to have a positive impact on the bank’s customers and the wider financial ecosystem.

As of March 2024, the RBI has identified 2,664 distinct borrowers as wilful defaulters.

The Ministry of Finance, Pankaj Chaudhary, informed the Rajya Sabha that as of March 2024, there were 2,664 unique borrowers, excluding individuals and overseas borrowers, classified as wilful defaulters. This number has decreased from 160 in the FY22 to 42 in FY24, indicating a decline in wilful defaulters. Wilful defaulters are those who intentionally fail to repay debts, and they are not eligible for additional credit facilities from banks or financial institutions. Additionally, their companies are debarred from starting new ventures for five years, and they are not allowed to access capital markets to raise funds.

The government and Reserve Bank of India (RBI) have taken comprehensive measures to deter wilful default and reduce non-performing assets (NPAs). These measures have led to improved financial stability and health of banks. Gross NPAs of commercial banks have decreased to Rs 4.64 lakh crore (2.54% gross NPA ratio) in September 2024, down from Rs 10.36 lakh crore (11.18% gross NPA ratio) in March 2018. The slippage ratio has also declined to 1.35% from 7.12% during the same period.

The minister also informed that the gross NPAs pertaining to gold loan in commercial banks and upper and middle-layer non-banking financial companies (NBFCs) have increased by 18.14% from March 2024 to June 2024. The gross NPAs pertaining to gold loan in banks increased by 21.03% during the same period. Despite this increase, the overall financial health of the banking sector has improved significantly, with a reduction in gross NPAs and a decline in the slippage ratio.

In the aftermath of Ratan Tata’s passing, the Tata Group has made a significant strategic shift, offloading this key business to…, with the Reserve Bank of India (RBI) giving its seal of approval.

The Tata Group has made a massive move by selling its 100% stake in Tata Communications Payment Solutions (TCPSL) to Transaction Solutions International (TSI), an Australian fintech company. The Reserve Bank of India (RBI) has approved the deal, valued at Rs 330 crore, which will see Findi, a subsidiary of TSI, operate over 7,500 brown label ATMs and 12 banks in India. This is Findi’s second major acquisition in 2025, having acquired digital payment provider BankIT earlier in the year.

Tata Communications, a subsidiary of the Tata Group, had launched India’s first white-label ATM network, Indicash, in 2013. TCPSL has been one of the largest white-label ATM operators in India. With this acquisition, Findi will gain access to a white-label ATM platform, a WLA license, a payment switch, and an extended network of 3,000 ATMs. TSI plans to deploy these ATMs at its 180,000 FindiPay and BankIT merchant outlets, making it one of the largest ATM operators in Asia.

This deal marks Tata Group’s complete exit from the ATM business and is seen as a significant step in Findi’s expansion into India’s financial services sector. The company plans to serve India’s unbanked population through its digital payment solutions. Findi’s growth is expected to be fueled by its expanded network and increased customer base, positioning it as a major player in the Indian payment solutions market.

The acquisition will also enable TSI to diversify its product offerings and further strengthen its position in the Asia-Pacific region. The deal has sent shockwaves in the corporate world, with many industry analysts and experts observing that this could be a sign of the shifting landscape of Indian business and investment.

Explore the latest fixed deposit interest rates offered by India’s top banks, as reported by Asianet Newsable.

Ahead of the Reserve Bank of India’s (RBI) monetary policy meeting on February 7, several government and private banks in India have announced an increase in their fixed deposit (FD) interest rates, bringing good news for depositors. The banks that have raised their FD interest rates include Union Bank of India, Punjab National Bank, Axis Bank, Shivalik Small Finance Bank, Karnataka Bank, and Federal Bank.

According to reports, Punjab National Bank has offered 7% interest rate for 303 days and 6.7% for 506 days. The new interest rates are effective from January 1st. Similarly, Karnataka Bank offers interest rates ranging from 3.5% to 7.50% for 7 days to 10 years, with 7.50% for 375 days.

Union Bank of India is offering a maximum interest rate of 7.30% for 7 to 10 days, effective from January 1st. Axis Bank is offering interest rates on deposits up to 3 crore rupees ranging from 3% to 7.25% for 7 days to 10 years, with the new rates being effective from January 27th.

Federal Bank is offering 3% to 7.5% interest for 7 days to 5 years or more, with senior citizens receiving 3.5% to 8% interest. The new rates are expected to benefit customers who are looking for a fixed return on their deposits.

It’s worth noting that the RBI’s monetary policy meeting is also expected to bring a repo rate reduction, which could lead to further interest rate changes in the banking sector. For now, depositors can consider investing in these FDs with the newly increased interest rates from these banks, providing them with a better return on their investment.

Pennzoil-NRF (PNB) anticipates a minor net interest margin dent if the RBI cuts interest rates, but excludes any slippage in revenue for the forthcoming March quarter.

Punjab National Bank (PNB) expects a moderate impact on its net interest margin (NIM) if the Reserve Bank of India (RBI) decides to cut interest rates during the upcoming February Monetary Policy Committee (MPC) meeting. According to PNB’s Executive Director Kalyan Kumar, the impact will not be substantial and will only be noticeable in the short term. Kumar emphasized that the bank’s NIM will not be significantly affected by March 2025.

Despite the potential impact on NIM, PNB’s asset quality has improved on a year-on-year basis. The bank’s gross non-performing asset ratio decreased to 4.09% in the latest quarter, compared to 6.23% in the same period last year. Kumar attributed this improvement to the bank’s efforts to contain slippages, which stood at Rs 1,774 crore, one of the lowest in the industry.

Kumar praised PNB’s performance, stating that the bank has done a “very nice job” in managing its slippages despite having a large book of Rs 11.10 lakh crore. He highlighted that the bank’s ability to contain slippages is one of the best in the industry.

Overall, PNB’s Executive Director expressed confidence that the bank’s NIM will not be significantly impacted by rate cuts, and that the bank’s asset quality will continue to improve.

Equitas Small Finance Bank and India Post Payments Bank Face Penalties from RBI for Regulatory Violations

The Reserve Bank of India (RBI) has imposed penalties on Equitas Small Finance Bank and India Post Payments Bank for non-compliance with regulatory guidelines. Equitas Small Finance Bank was penalized ₹65 lakh for levying foreclosure charges on certain floating-rate term loans and obtaining collateral security for agricultural loans, which contravened RBI guidelines. India Post Payments Bank was penalized ₹26.70 lakh for lapses in customer service, failing to meet RBI standards for providing adequate customer support. These penalties highlight the RBI’s commitment to ensuring adherence to banking norms and regulations.

The penalties are not intended to pronounce on the validity of any transactions or agreements entered into by the banks with their customers, but rather serve as a reminder of the importance of adhering to regulatory guidelines. Equitas Small Finance Bank and India Post Payments Bank will need to address these deficiencies to avoid future penalties and maintain their reputation in the banking industry.

Industry experts have emphasized the need for stringent regulatory compliance in the banking sector, and the penalties underscore the RBI’s vigilance in monitoring and enforcing banking norms to protect consumer interests and ensure fair practices. The penalties may prompt other financial institutions to review their compliance procedures and make necessary adjustments, which can help prevent similar issues and foster a more transparent and accountable banking environment.

In conclusion, the RBI’s penalties on Equitas Small Finance Bank and India Post Payments Bank demonstrate its commitment to ensuring regulatory compliance in the banking sector. The penalties serve as a reminder to banks to adhere to guidelines and prioritize customer service, and may prompt other financial institutions to review their compliance procedures.

Budget 2025: The proposed NaBFID infra bond credit facility may face regulatory hurdles from RBI

The Indian government’s plan to allow the National Bank for Financing Infrastructure & Development (NaBFID) to set up a partial credit enhancement (PCE) facility for infrastructure corporate bonds may face resistance from the Reserve Bank of India (RBI). RBI has strict capital norms and investment regulations for these instruments, which makes it challenging for banks and non-banking financial companies (NBFCs) to offer PCE. Despite RBI allowing banks to offer PCE on bonds issued by corporate entities and special purpose vehicles (SPV) of infrastructure projects in September 2015, no transactions have been completed on these instruments due to the high capital and risk weight requirements.

Bankers and analysts have expressed concerns that the costs savings for issuers from PCE are not enough to make these instruments viable. Even with an enhanced credit rating, issuers may not be able to access long-term investors like insurance and pension funds, who demand a premium for investing in high-risk infrastructure projects. Additionally, the lack of liquidity in these instruments means that banks and NBFCs may not be able to issue these bonds at competitive rates.

To make PCE effective, RBI would need to relax its capital and risk weight criteria for these instruments. Currently, banks and NBFCs are required to set aside 100% of the bond amount as capital, which makes them unviable. The risk weightage for these instruments is also higher, making them more expensive than bank loans. Unless these regulatory hurdles are addressed, it is difficult to see PCE instruments taking off.

Several banks raise fixed deposit rates in anticipation of RBI’s upcoming monetary policy review

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Several banks in India have revised their fixed deposit (FD) interest rates, effective from January 1 to January 27. Punjab National Bank (PNB) has introduced new FD tenures with interest rates of 7% for 303 days and 6.7% for 506 days. The bank offers interest rates ranging from 3.5% to 7.25% for tenures spanning 7 days to 10 years.

Shivalik Small Finance Bank offers FD interest rates from 3.5% to 8.8% for general citizens and 4% to 9.3% for senior citizens, effective January 22. Karnataka Bank offers rates between 3.5% and 7.5% for tenures from 7 days to 10 years, with the highest rate of 7.5% applicable for 375-day deposits, effective January 2.

Union Bank of India offers interest rates from 3.5% to 7.3% for deposits under Rs 3 crore, with the highest rate of 7.3% for a 456-day tenure, effective January 1. Axis Bank provides FD rates ranging from 3% to 7.25% for general citizens with tenures between 7 days and 10 years, effective January 27.

Federal Bank offers interest rates from 3% to 7.5% for general citizens, with the peak rate of 7.5% available for a 444-day term, effective January 10. These revisions reflect banks’ strategies to attract deposits amidst expectations surrounding the upcoming RBI policy review.

Overall, these changes aim to attract deposits and provide competitive interest rates to customers. It is essential for individuals to review and compare the interest rates offered by different banks to make informed decisions about their FD investments.

DIPAM Secretary Arunish Chawla confirms that IDBI divestment is moving ahead as scheduled in the upcoming Budget 2025.

The divestment of IDBI Bank is progressing as planned, according to Arunish Chawla, Secretary of the Department of Investment and Public Asset Management (DIPAM). Despite regulatory hurdles, including a delay caused by the Reserve Bank of India’s (RBI) review process, the process is now back on track. Tuhin Kanta Pandey, Secretary of Finance, expressed optimism about the next steps, stating that the due diligence process has begun and necessary approvals from the RBI have been cleared.

Pandey noted that the market has already been informed of the situation, and the focus is now on receiving financial bids for the sale of the government’s stake in IDBI. He suggested that financial bids are expected to be submitted by March, with a subsequent process to follow. The key milestones leading to the final outcome of the divestment have been outlined, with the goal of completing the process in the near future.

The divestment of IDBI Bank has been a long-awaited event, and the progress is a positive development for stakeholders. The process has been delayed due to regulatory hurdles, but it appears that the necessary approvals have now been cleared, and the process is moving forward. The exact timeline for the divestment is still unclear, but it is expected to be completed in the coming months.

RBI’s LRS Scheme 2025 Budget Update: TCS on Remittances threshold increases to ₹10 Lakh; What are the implications?I made the following changes:* Simplified the language by condensing the phrase Budget 2025 Hikes TCS On Remittances Under Scheme to 10 Lakh into a more readable and straightforward phrase. * Added a colon (:) to create a clear separation between the headline and the explanation. * Changed the phrase What Does It Mean? to What are the implications? to make it more specific and relevant to the topic. This suggests that the rest of the content will provide an analysis or explanation of the implications of the change.

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Finance Minister Nirmala Sitharaman announced in the Budget 2025 that the threshold for collecting tax at source (TCS) on remittances under the Reserve Bank of India’s (RBI) Liberalised Remittance Scheme (LRS) will be increased from Rs 7 lakh to Rs 10 lakh. This change aims to provide relief to individuals making smaller foreign remittances for purposes such as travel, medical expenses, and investments.

Under the LRS scheme, resident individuals are allowed to send money abroad for various permissible purposes, including education, medical expenses, travel, foreign investments, and gifting. The annual limit under LRS was previously ₹2.5 lakh (USD 250,000), but has been increased to ₹10 lakh per year.

TCS applies to remittances under LRS, with rates varying depending on the category of remittance. The increase in the LRS limit is expected to benefit individuals and businesses with international financial commitments. The move is also expected to ease the tax burden on smaller transactions while maintaining compliance for larger remittances.

Sitharaman also announced the removal of TCS on remittances for education purposes, where such remittance is out of a loan taken from a specified financial institution. This means that individuals making remittances for education purposes will not have to pay TCS on those remittances.

The change in the TCS threshold will apply to remittances made in a financial year, and individuals will have to pay TCS only if their total remittance exceeds Rs 10 lakh. The applicable TCS rates will continue to apply to remittances exceeding Rs 10 lakh, depending on the category of remittance.

Overall, the increase in the LRS limit and the change in the TCS threshold are expected to provide relief to individuals making smaller foreign remittances and maintain compliance for larger remittances.

Equitas Small Finance Bank and India Post Payments Bank face penalties from the Reserve Bank of India.

The Reserve Bank of India (RBI) has imposed penalties on three financial institutions for deficiencies in regulatory compliance. Equitas Small Finance Bank has been penalized Rs 65 lakh for non-compliance with directions on foreclosure charges and credit flow to agriculture. India Post Payments Bank Ltd has been penalized Rs 26.70 lakh for non-compliance with customer service directions. Additionally, Aptus Finance India Pvt Ltd has been penalized Rs 3.10 lakh for contravention of non-banking financial company norms.

The RBI’s penalties are based on the deficiencies in regulatory compliance and are not intended to question the validity of any transactions or agreements entered into by the entities with their customers. The penalties are aimed at ensuring that financial institutions adhere to regulatory guidelines and maintain high standards of compliance.

The RBI’s actions are part of its efforts to maintain financial stability and protect the interests of customers. The penalties serve as a deterrent to other financial institutions that may be tempted to disregard regulatory requirements. The RBI’s actions also demonstrate its commitment to ensuring that financial institutions operate in a fair and transparent manner.

It is worth noting that the penalties imposed by the RBI are not intended to punish the financial institutions, but rather to encourage them to improve their compliance with regulatory requirements. The RBI’s goal is to promote a culture of compliance and ensure that financial institutions operate in a way that is fair, transparent, and in the best interests of their customers.

YES Bank and DCB Bank raise FD interest rates up to 8.55%; check revised details

Several banks in India have revised their fixed deposit (FD) interest rates in January 2025 to attract more depositors. YES Bank and DCB Bank are the latest ones to join the bandwagon. The revisions come ahead of the Reserve Bank of India’s (RBI) Monetary Policy Committee meeting on February 7, 2025.

YES Bank has revised its FD interest rates for amounts below Rs 3 crore, with new rates effective from January 31, 2025. The bank offers annual interest rates between 3.25% and 8% for general citizens for tenures ranging from 7 days to 10 years. For senior citizens, the bank offers interest rates between 3.75% and 8.50% per annum.

DCB Bank has also revised its FD interest rates, effective from January 29, 2025. The bank offers interest rates between 3.75% and 8.05% on FD amounts below Rs 3 crore for general citizens for tenures ranging from 7 days to 10 years. For senior citizens, the bank offers interest rates between 4.25% and 8.55% for amounts below Rs 3 crore.

Other banks that have revised their FD interest rates include Union Bank of India, PNB, Axis, Shivalik Small Finance Bank, Karnataka Bank, and Federal Bank. These revisions aim to attract more depositors and compete with other banks in the market.

For investors, these revised interest rates offer better returns on their fixed deposits. With interest rates ranging from 3.25% to 8.55% per annum, investors can earn higher returns on their deposits. Additionally, senior citizens can earn higher interest rates than general citizens, making it a more attractive option for them.

Overall, the revised FD interest rates from these banks provide investors with more options to earn higher returns on their deposits.

City Union Bank reports strong Q3 results, with both profit and income surging in double digits, accompanied by improved asset quality.

City Union Bank has reported double-digit growth across various financial indicators for the quarter ending December 31, 2024. The bank’s net profit rose by 13% to ₹286 crore, driven by a 20% increase in operating profit. Operating profit grew to ₹436 crore, despite higher provisions, which increased to ₹75 crore. Interest income saw a 12% increase to ₹1,479 crore, while non-interest income grew by 18% to ₹228 crore. Net interest income also increased by 14% to ₹588 crore.

The bank’s asset quality improved significantly, with gross non-performing assets (NPA) decreasing to 3.36% from 4.47% in the same quarter last year. Net NPA also decreased to 1.42% from 2.19% a year ago. Deposits increased by 11% to ₹58,271 crore, while advances grew by 15% to ₹50,409 crore.

For the nine months ending December 31, 2024, the bank reported a net profit of ₹836 crore, a 10% increase from ₹761 crore in the same period last year. The bank’s capital adequacy ratio, in compliance with RBI’s Basel III norms, was 22.26%, with Tier-1 capital adequacy at 21.29%, well above the regulatory requirements.

Overall, City Union Bank’s financial performance for the quarter ending December 31, 2024, was marked by strong growth in operating profit, interest income, and non-interest income, as well as significant improvement in asset quality. The bank’s capital adequacy ratio also remained strong, providing a solid foundation for future growth.

Fines imposed on Equitas Small Finance Bank and India Post Payments Bank.

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The Reserve Bank of India (RBI) has imposed fines on several institutions for non-compliance with regulatory norms. The first fine was imposed on Equitas Small Finance Bank, for which the RBI imposed a fine of Rs 65 lakh. The bank was found to be non-compliant with certain directions related to “Banking on Customer Service”.

Another fine was imposed on India Post Payments Bank Limited, which was fined Rs 26.70 lakh for not following certain directions related to “Banking on Customer Service”. The RBI found that the bank had not complied with some of the instructions.

Additionally, the RBI imposed a fine of Rs 3.10 lakh on Aptech Finance India Private Limited, a non-banking financial company, for violating some provisions related to the guidelines of the company. The RBI’s actions are part of its efforts to ensure that financial institutions adhere to regulatory norms and maintain a high level of integrity and professionalism.

The RBI’s decision to impose fines on these institutions serves as a reminder to all financial institutions to adhere to regulatory guidelines and maintain a high level of transparency and accountability. The actions taken by the RBI are also intended to ensure that the banking system remains stable and trustworthy.

Overall, the RBI’s actions demonstrate its commitment to maintaining financial stability and protecting the interests of consumers. By imposing fines on non-compliant institutions, the RBI is sending a strong message that it will not tolerate non-compliance with regulatory norms.

RBI Tightens the Noose: Sharply Increases Penalties for Banks that Fail to Meet Regulatory Standards

The Reserve Bank of India (RBI) has taken disciplinary action against three entities, Equitas Small Finance Bank, India Post Payments Bank, and Aptus Finance India Pvt Ltd, for non-compliance with regulatory guidelines. Equitas Small Finance Bank was slapped with a hefty penalty of Rs 65 lakh for failing to adhere to directives on charges and agricultural loans. India Post Payments Bank, on the other hand, was penalized Rs 26.70 lakh for customer service issues. Aptus Finance India Pvt Ltd faced a penalty for non-compliance with non-banking financial company norms.

It is crucial to note that these penalties are intended to address compliance deficiencies and do not impact the validity of transactions made by these entities. The RBI’s actions aim to maintain the integrity and stability of the financial system by ensuring that entities comply with regulations and standards.

The RBI’s enforcement actions demonstrate its commitment to maintaining a healthy and stable financial ecosystem. By taking swift and decisive action, the RBI strengthens public trust in the banking and financial sector, ensuring that customers can do business with confidence. The regulatory body’s actions also serve as a warning to other entities, emphasizing the importance of compliance with regulatory guidelines and standards.

This development is significant, as it underscores the RBI’s role in maintaining the overall health of the financial sector. The RBI’s actions are designed to protect consumers, promote transparency, and encourage fair business practices. By doing so, the RBI contributes to the growth and stability of the Indian economy.

In conclusion, the RBI’s enforcement actions against Equitas Small Finance Bank, India Post Payments Bank, and Aptus Finance India Pvt Ltd demonstrate the regulator’s commitment to ensuring compliance with regulatory guidelines and standards. These penalties are necessary to maintain the integrity and stability of the financial system, protect consumers, and promote a healthy and sustainable economy.

Redif Moneynews: RBI Fines Equitas and India Post Payments Banks for Compliance Failures

The Reserve Bank of India (RBI) has imposed penalties on three financial institutions for violating regulatory compliance. Equitas Small Finance Bank has been fined Rs 65 lakh for non-compliance with directions on foreclosure charges/pre-payment penalty on floating rate term loans and credit flow to agriculture. India Post Payments Bank Ltd has been imposed a penalty of Rs 26.70 lakh for non-compliance with customer service directions. Additionally, Aptus Finance India Pvt Ltd has been fined Rs 3.10 lakh for contravention of non-banking financial company norms.

The RBI’s actions are based on deficiencies in regulatory compliance and are not intended to question the validity of transactions or agreements between the entities and their customers. The penalties are meant to ensure that financial institutions comply with RBI directions and regulations, which are designed to protect the interests of customers and maintain the stability of the financial system.

The RBI’s actions are a reminder of the importance of regulatory compliance in the financial sector. Financial institutions must ensure that they comply with all applicable regulations and directions, including those related to customer service, credit flow, and non-banking financial company norms. The RBI’s penalties serve as a deterrent to ensure that financial institutions take their regulatory obligations seriously and maintain high standards of compliance.

The imposition of penalties on these three financial institutions is a positive step towards ensuring that the financial sector is operating in a safe and sound manner. It also sends a strong message to other financial institutions to comply with RBI regulations and avoid similar penalties in the future.

February 2025 Bank Holidays: 14-day closure for all banks, view state-wise schedule

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The Reserve Bank of India (RBI) has released a list of bank holidays for February 2025. Banks will be closed for a total of 14 days across different states on account of regional festivals. Despite these holidays, internet banking and UPI services will remain unaffected, allowing customers to continue using these services as usual.

The list of bank holidays in February 2025 includes days off for festivals such as Saraswati Puja, Guru Ravidas Jayanti, Chhatrapati Shivaji Maharaj Jayanti, Rajya Diwas, and Mahashivratri, among others. Additionally, banks will be closed on the second and fourth Saturdays of the month.

Here is a state-wise breakdown of the bank holidays in February 2025:

* February 2 (Sunday): Nationwide bank holiday
* February 3 (Monday): Tripura – Vasant Panchami
* February 8 (Saturday): Second Saturday – nationwide bank holiday
* February 11 (Tuesday): Tamil Nadu – Thaipusam festival
* February 12 (Wednesday): Himachal Pradesh – Guru Ravidas Jayanti
* February 15 (Saturday): Manipur – Lui-Ngai Ni
* February 19 (Wednesday): Maharashtra – Chhatrapati Shivaji Maharaj Jayanti
* February 20 (Thursday): Mizoram and Arunachal Pradesh – State Formation Day
* February 22 (Saturday): Fourth Saturday – nationwide bank holiday
* February 26 (Wednesday): Mahashivratri (except in Tripura, Tamil Nadu, Sikkim, Assam, Manipur, Arunachal Pradesh, Nagaland, West Bengal, Delhi, Goa, Bihar, and Meghalaya)
* February 28 (Friday): Gangtok – Losar

It’s essential to note that bank holidays do not affect internet banking services, and customers can continue to use these services as usual. Additionally, ATMs will remain operational 24/7, allowing customers to withdraw cash as needed.

City Union Bank’s Winning Streak Continues at IBA Banking Technology Awards

City Union Bank (CUB) has once again made a mark at the 19th Banking Technology Conference, Expo & Citations 2023, organized by the Indian Banks Association (IBA) in Mumbai. CUB has bagged seven prestigious awards, demonstrating its technological prowess and commitment to innovation and excellence in the banking sector. This is the second consecutive year CUB has received such recognition.

The awards categories include Best AI & ML Bank, Best Fintech & Digital Payment Index (DPI) Adoption, Best Financial Inclusion, as well as four runner-up awards. The Best Technology Bank award is a testament to CUB’s overall excellence in leveraging technology to drive banking innovation.

CUB’s CEO, Dr. N. Kamakodi, along with his dedicated technology team, received the awards from RBI Deputy Governor T. Rabi Sankar. Dr. Kamakodi’s leadership has been instrumental in steering the bank towards continuous technological advancements.

CUB’s repeated success at the IBA’s Banking Technology Awards is part of a broader history of recognition. The bank has consistently been acknowledged for its technological initiatives, having won seven awards at the previous year’s edition as well.

The awards recognize CUB’s efforts in areas such as Artificial Intelligence and Machine Learning, fintech solutions, digital payment systems, financial inclusion, and talent retention. They also highlight the bank’s dedication to embracing technological advancements to enhance customer experience, improve operational efficiency, and promote financial inclusion.

As the banking landscape continues to evolve, CUB’s proactive approach ensures it remains a leader in delivering innovative banking solutions. The bank’s commitment to technology has earned it recognition from reputed organizations, solidifying its position as a frontrunner in the banking industry.

Former RBI Governor Subbarao warns that a strong dollar will make it harder for the central bank to defend the rupee.

In a recent interview, Duvvuri Subbarao, former Governor of the Reserve Bank of India (RBI), expressed his concerns about the strong US dollar and its potential impact on the Indian economy. Subbarao believes that President Donald Trump’s domestic and external policies are likely to keep the US dollar strong for an extended period, making it increasingly difficult for the RBI to defend an overvalued rupee.

Subbarao pointed out that Trump’s policies, including his protectionist measures and tax cuts, are likely to boost the US economy and attract more foreign capital, leading to a stronger dollar. Additionally, the Trump administration’s focus on reducing the US trade deficit, coupled with its aggressive trade policies, will also contribute to the dollar’s strength.

Furthermore, Subbarao noted that the strengthening dollar is likely to lead to a depreciation of other major currencies, including the rupee. This is because a strong dollar can lead to a flight of capital from emerging markets, causing a depreciation in their currencies. The RBI, responsible for managing India’s foreign exchange reserves and maintaining the value of the rupee, will face significant challenges in defending an overvalued currency in the face of a strong dollar.

Subbarao’s warning comes at a time when the Indian rupee is already under pressure due to a widening current account deficit, a high trade deficit, and inflation concerns. The RBI has been using its foreign exchange reserves to intervene in the foreign exchange market to stabilize the rupee, but the forecast of a strong US dollar would make it even more challenging for the central bank to maintain the currency’s value.

In conclusion, Duvvuri Subbarao’s remarks highlight the potential challenges that the RBI will face in defending the Indian rupee against the backdrop of a strong US dollar. The predictions made by the former RBI governor underscore the importance of prudent economic policies, sound macroeconomic management, and effective communication to build confidence in the market.

Three microfinance institutions – Ujjivan, Arohan, and Asirvad – will reduce their lending rates starting January.

Microfinance-focused lenders in India, including Ujjivan Small Finance Bank, Arohan Financial Services, and Asirvad Micro Finance, have lowered their lending rates in response to the Reserve Bank of India’s (RBI) call for a “fair, reasonable, and transparent” pricing policy for their small-value loan products. This move is a significant departure from the previous lending rates, which were raised by 300-450 basis points after the RBI de-regulated interest rates for Non-Banking Financial Companies-Micro Finance Institutions (NBFC-MFIs) in 2022.

Ujjivan Small Finance Bank reduced its lending rates by 75 basis points, with rates ranging from 21.75% to 23%. Arohan Financial Services, which was previously serving a lending ban, has introduced a self-imposed margin cap of 12% over the cost of funds and a maximum 25% growth guidance for any business year. Asirvad Micro Finance lowered its interest rate on income-generating loans to 21.47% from 23.96% earlier.

The RBI had banned Ujjivan, Arohan, and other NBFC-MFIs from lending for a period of time due to concerns over excessive interest spreads and gaps in household income assessments, leading to over-lending. However, the RBI removed the restrictions from these lenders in January 2023. Arohan’s managing director, Manoj Kumar Nambiar, stated that the company had engaged with the RBI to address concerns around pricing, loan renewal processes, and control change approvals.

This development is a significant step forward in promoting financial inclusion and ensuring that small-value loan products are accessible to vulnerable borrowers at reasonable interest rates. The RBI’s efforts to regulate the NBFC-MFIs and promote fair lending practices have been welcomed by the industry, and this move is seen as a positive step towards achieving financial stability and inclusive growth.

Piramal Finance partners with RBL Bank to offer co-lending arrangements.

RBL Bank, a private sector lender, has entered into a co-lending partnership with Piramal Finance, a subsidiary of Piramal Enterprises, to provide loans to middle- and low-income borrowers in rural and semi-urban areas across India. This collaboration combines RBL Bank’s financial expertise with Piramal Finance’s technology-enabled loan processing system, “High Tech + High Touch”. This is Piramal Finance’s third co-lending partnership, following similar agreements with Axis Bank and Central Bank of India.

The co-lending model, initiated by the Reserve Bank of India (RBI), aims to scale credit flow to underprivileged sectors by facilitating collaboration between banks and non-banking financial companies (NBFCs). By combining their strengths, RBL Bank and Piramal Finance plan to offer loans personalized to meet the needs of micro, small, and medium-sized enterprises (MSMEs) and home loan borrowers in underserved regions.

The partnership focuses on addressing the credit gap in Tier 2 and Tier 3 markets, with a goal of providing formal credit access and competitive interest rates. RBL Bank and Piramal Finance will leverage their combined customer reach, underwriting practices, and credit assessment tools to achieve this aim. This collaboration advances RBL Bank’s commitment to financial inclusion across the region, and the companies are set to create a significant impact in the market. Overall, this partnership has the potential to bring affordable credit to those who need it most, helping to bridge the financial divide and stimulate economic growth.

2025: A Triple Threat for Investors – Trump, RBI, and India’s Budget Unleash a Perfect Storm

The Indian equity market has experienced strong performance over the past few years, attracting retail investors and boosting confidence in the Indian economy. However, this has led to unrealistic expectations about short-term equity returns. Despite this, the market has corrected sharply in recent weeks, leaving investors wondering whether to hold, buy, or sell.

Several uncertainties are affecting the market, including the new US administration’s impact on global markets and economies. The US is a significant driver of currencies, policies, demand, and sentiment, and frequent pronouncements by officials and influencers like Elon Musk are creating volatility.

Domestically, the Indian economy is slowing down, with private capital expenditure increasing only in areas with government support. Inflation is high, suppressing demand, and the RBI is trying to cut interest rates and infuse liquidity to revive the economy. The upcoming Union Budget may not have a significant impact on markets, as the fiscal deficit is likely to remain around 4.5%.

To navigate these uncertainties, investors should curb their enthusiasm, lower their expectations, and remain invested. They should expand their investment horizon and choose appropriate vehicles with the help of advisors. The Indian growth story may be slowing down, but structural engines, such as demography, will continue to drive growth.

The author, CEO of TRUST Mutual Fund, emphasizes that the slowdown is temporary and growth will revive, although the timing is uncertain. He recommends using volatility to increase exposure with a long-term view, as the Indian economy will continue to develop, grow, and evolve.

Jammu and Kashmir Bank, Canara Bank, and Bank of Baroda have been hit with a whopping fine of Rs 5.94 crore by the RBI in a recent regulatory move.

The Reserve Bank of India (RBI) has imposed fines on four institutions for non-compliance with regulatory norms. The fines total Rs 5.94 crore. Jammu and Kashmir Bank was fined Rs 3.31 crore for not meeting norms related to financial inclusion, access to banking services, Know Your Customer (KYC), and loans and advances. Bank of India was fined Rs 1 crore for non-compliance with provisions under the Banking Regulation Act of 1949. Canara Bank was penalized Rs 1.63 crore for violating directions regarding priority sector lending, interest rates on deposits, and financial inclusion. Additionally, Datsan Exports West Bengal was fined Rs 1 lakh for failure to comply with directions related to risk management and code of conduct on outsourcing of financial services.

The RBI takes compliance with regulatory norms seriously, and these fines are a result of the banks’ failure to meet these standards. The norms in question include those related to financial inclusion, which aims to ensure that all segments of society have access to basic banking services. The norms also include those related to KYC, which requires banks to verify the identity of their customers to prevent financial crimes such as money laundering. The fines imposed on the banks serve as a reminder of the importance of complying with regulatory norms and the consequences of non-compliance.

It is worth noting that the fines imposed on the banks are a relatively small fraction of their total assets and revenues. However, the fines are still significant and can have a negative impact on the banks’ profits and reputations. The banks will need to take steps to address the deficiencies identified by the RBI and implement measures to prevent similar non-compliance in the future. The RBI’s actions serve as a reminder of the importance of transparency and accountability in the banking sector.

India should allow the rupee to depreciate gradually

Ritesh Kumar Singh, founder and CEO of Indonomics Consulting, a policy research and advisory company based in New Delhi, is shedding light on the current state of the Indian rupee. The currency has been experiencing a free fall, with a significant loss of 17% against the US dollar since January 8, 2022. In the last four months, the rupee has shed nearly 4% despite the Reserve Bank of India (RBI), the central bank, injecting a massive $79 billion in support.

This is a concerning development for the Indian economy, which is heavily dependent on imports and foreign capital flows. The falling rupee value makes imports more expensive, increasing the cost of living for Indians and potentially stifling economic growth. Furthermore, the devaluation of the rupee can lead to inflation, as imported goods become more expensive.

The RBI’s efforts to prop up the rupee have been met with limited success, highlighting the complexity of the issue. The central bank has been buying up dollars to bolster the rupee’s value, but the intervention has been unable to stem the tide of selling pressure. The rupee’s decline has also led to increased volatility in financial markets, causing uncertainty and alarm among investors.

The causes of the rupee’s decline are multifaceted, with a combination of global and domestic factors contributing to the problem. Rising global inflation, the Russia-Ukraine conflict, and the US Federal Reserve’s monetary policy have all played a role in destabilizing the global currency market, making it more challenging for emerging markets like India to maintain their currency values. Domestically, India’s large trade deficit, high oil prices, and slowing economic growth have also weighed on the rupee.

The situation highlights the need for a comprehensive and sustainable solution to address the rupee’s decline. This may involve a combination of monetary and fiscal policy measures, as well as structural reforms to boost India’s economic competitiveness and reduce its reliance on imports. As the RBI and the government work to stabilize the rupee, they will need to take a proactive approach to address the underlying causes of the decline and restore confidence in the Indian currency.

HSBC, headquartered in Hong Kong, has received initial approval from the Reserve Bank of India to launch 20 new branches across the country.

HSBC India has received approval from the Reserve Bank of India (RBI) to open 20 new branches, making it the largest expansion granted to a foreign bank in over a decade. The new branches will be located in key cities such as Amritsar, Bhopal, Bhubaneswar, Dehradun, and Faridabad, catering to high net worth and ultra-high net worth clients with domestic and international banking requirements.

This expansion is driven by the growing demand for wealth management services, with HSBC projecting a 50% increase in the number of ultra-high net worth individuals in India by 2028. To meet this demand, HSBC has been enhancing its offerings, including the launch of Global Private Banking, the acquisition of L&T Investment Management, and the expansion of its Premier Banking proposition.

Sandeep Batra, Head of International Wealth and Premier Banking at HSBC India, emphasized the significance of India as a key market, particularly for affluent and globally mobile clients. The new branches will boost HSBC’s wealth and banking services in India while attracting non-resident Indian clients from around the world.

The RBI’s recent policy allowing overseas banks to open rupee accounts for non-residents is expected to further strengthen HSBC’s presence and offerings in India. This policy enables customers to use their rupee balances for transactions and foreign investments, including foreign direct investments (FDI), creating new opportunities for rupee-based investments in India and solidifying HSBC’s position in the country. With these new branches, HSBC aims to expand its reach and offer a wider range of services to its clients in India.

Dombivli Nagari Sahakari Bank faces Rs8.30 lakh penalty for regulatory non-compliance, as RBI takes action.

The Reserve Bank of India (RBI) has imposed a penalty of Rs 8.30 lakh on Dombivli Nagari Sahakari Bank for regulatory violations. This is not an isolated incident, as the RBI has also imposed penalties on several other banks and cooperative banks for similar infractions.

In recent times, the RBI has taken action against several banks, including Mukkuperi Co-op Urban Bank, which was fined Rs 5 lakh, and Parbhani District Central Cooperative Bank, which received a penalty of Rs 5 lakh. Additionally, Mukkuperi Cooperative Urban Bank was fined Rs. 1.75 lakh.

The RBI takes these regulatory violations seriously and has implemented penalties to ensure that banks and cooperative banks follow the rules and maintain the confidence of depositors. The RBI acts as the main regulatory body for Indian banks and ensuring that they operate in a fair and transparent manner is essential.

The reasons for these fines are not publicly disclosed, but it is generally believed that the banks and cooperative banks failed to comply with certain provisions of the Banking Regulations Act, 1949, the Banking Laws (Application to Co-operative Societies) Act, 1972, and other regulations.

The imposition of these penalties serves as a deterrent to other banks and cooperative banks, encouraging them to maintain high standards of compliance and to ensure that their operations are fair, transparent, and in accordance with the regulations.

The RBI’s actions also help to protect the interests of depositors and investors in the banking and cooperative banking sectors. By imposing penalties on non-compliant banks, the RBI safeguards the stability and credibility of the financial system, and helps to maintain public trust in the banking sector.

In conclusion, the RBI’s actions in imposing penalties on Dombivli Nagari Sahakari Bank and other banks and cooperative banks for regulatory violations are a vital part of maintaining the stability and credibility of the Indian financial system. The RBI’s actions send a strong message to all banks and cooperative banks to adhere to the regulations and maintain high standards of compliance, which is essential for the overall health and stability of the financial system.

IDBI Bank’s board clears Rakesh Sharma’s re-appointment as MD & CEO for a three-year term.

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The Board of Directors of IDBI Bank has approved the re-appointment of Rakesh Sharma as Managing Director and Chief Executive Officer (MD & CEO) for three years, effective March 19, 2025. This decision was made in accordance with the Reserve Bank of India’s (RBI’s) approval. Sharma has been leading IDBI Bank since October 10, 2018. Prior to joining IDBI Bank, he was the MD & CEO of Canara Bank from September 11, 2015, to his superannuation on July 31, 2018.

The re-appointment comes at a critical time for the bank, as its promoter, Life Insurance Corporation of India (49.24% stake), and the second-largest shareholder, the Government of India (45.48% stake), have begun the process of disinvesting their stake in the bank. In October 2022, the Government of India issued a Preliminary Information Memorandum, inviting expressions of interest for the strategic disinvestment of the bank, which would include the sale of the GOI and LIC’s equity stakes, as well as the transfer of management control.

The re-appointment of Rakesh Sharma as MD & CEO is seen as a key development in this process, as he has a deep understanding of the Indian banking sector and has experience leading two major public sector banks. His leadership will be crucial in guiding IDBI Bank through this period of significant change, as the bank undergoes a significant transformation.

Under Sharma’s leadership, IDBI Bank has made significant advancements, including a strong focus on digital transformation, the introduction of new products, and the improvement of operational efficiency. His re-appointment will ensure continuity and stability for the bank, as it navigates the challenges and opportunities that lie ahead. Overall, the re-appointment of Rakesh Sharma as IDBI Bank’s MD & CEO is a positive development that will help the bank to continue its envisioned growth and development plans.

The Reserve Bank of India (RBI) has imposed a penalty of ₹1.31 crore on Tamilnad Mercantile Bank for failing to comply with regulatory requirements.

The Reserve Bank of India (RBI) has imposed a fine of ₹1.31 crore on Tamilnad Mercantile Bank (formerly known as the Indian Mercantile Bank) for non-compliance with various banking regulations. The penalty was imposed for inadequate provisioning for the bank’s sensitive accounts, weak internal control environment, and deficient systems for anti-money laundering and combating the financing of terrorism.

According to an RBI statement, the bank was found to be in non-compliance with regulatory norms on six occasions between June 2014 and March 2020. The bank had failed to adhere to the central bank’s instructions on provisioning, capital adequacy, and regulatory capital requirements, among other aspects.

The RBI inspection report noted that the bank had inadequate internal control mechanisms to detect and report suspicious transactions. Additionally, the bank’s auditing processes were deemed to be defective, leading to inadequate detection and reporting of potential irregularities.

The RBI imposed the penalty in the form of a financial charge on the bank’s net worth, which would have a cumulative effect on its shareholders. The penalty is not intended to result in a pecuniary benefit to the government or the RBI but rather aims to ensure the bank’s adherence to regulatory guidelines and maintain market discipline.

In response to the RBI’s observations, the bank has taken various measures to rectify the situation, including enhancing its internal controls, strengthening its risk management practices, and conducting an independent audit to identify any deficiencies.

Tamilnad Mercantile Bank is a Chennai-based private-sector bank with operations across India. The bank is part of the MSN & Associates group and has a market capitalization of over ₹11,000 crores. While the RBI penalty is a setback for the bank, it has demonstrated its commitment to compliance by implementing corrective actions to address the central bank’s concerns.

In conclusion, the RBI’s fine on Tamilnad Mercantile Bank serves as a reminder of the importance of compliance with banking regulations. While the penalty will have a significant financial impact on the bank, it is expected to strengthen its risk management practices and internal control mechanisms, ultimately benefiting its shareholders and customers.

Lock in a high-guaranteed yield: Discover 9.5% interest on 3-year fixed deposits and explore top-ranked bank options in our comprehensive guide – Money News

The Reserve Bank of India’s (RBI) decision to maintain high interest rates has led to a surge in fixed deposit (FD) rates offered by small finance banks to attract new customers. Small finance banks, which face greater challenges in attracting customers, often offer higher interest rates than scheduled commercial banks to stay competitive. This article examines the 3-year FD rates offered by the top 10 small finance banks in January 2025 for general customers and senior citizens.

The FD rates offered by these small finance banks range from 8% to 9.5% per annum, with senior citizens often receiving higher rates than general customers. For example, Unity Small Finance Bank offers a 9.5% rate to senior citizens on deposits parked for 1001 days, while North-East Small Finance Bank offers a 9% rate to both general customers and senior citizens on deposits booked for 1.5 years to 3 years.

Despite the attractive rates, small finance bank FDs are considered a safe investment choice for retail investors, including senior citizens. This is because deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to Rs 5 lakh, providing protection in the event of a bank failure, merger, or amalgamation. Additionally, FDs offer a fixed return upon maturity, making them a reliable product with low risk.

Senior citizens, in particular, tend to prefer FDs as they prioritize the security of their money over high returns. They often live off their limited savings accumulated during their working years and want to avoid the risks associated with market-linked products at a later stage in life. As a result, FDs remain a popular investment choice for senior citizens, who can earn a fixed return on their deposits while ensuring the safety of their principal amount.

Reserve Bank of India (RBI) Publishes List of Recognized Non-Banking Financial Companies (NBFCs) for 2024-25

The Reserve Bank of India (RBI) has released the list of Non-Banking Finance Companies (NBFCs) in the Upper Layer (UL) segment under the Scale-Based Regulation (SBR) framework for the financial year 2024-25 (FY25). The list includes 15 companies, including prominent names such as Life Insurance Corporation of India (LIC) Housing Finance Limited, Bajaj Finance Limited, and Shriram Finance Limited. Notably, Tata Sons Private Limited, despite requesting to de-register as an NBFC, has been retained on the list and is under examination.

The SBR framework was introduced in October 2021, which categorizes NBFCs into four layers based on their asset size and scoring methodology. The Upper Layer (UL) includes NBFCs that are subject to enhanced regulatory requirements for at least five years, even if they fail to meet the criteria in subsequent reviews.

Muthoot Finance Limited, a gold loan NBFC, is the only company to be included in the UL list for three consecutive years. Piramal Enterprise Limited, which qualified for inclusion based on scoring, has been eliminated due to ongoing reorganization in the business group.

The RBI’s decision to retain Tata Sons Private Limited on the list comes as a surprise, as the company had requested to be de-registered as an NBFC. This move is likely to raise concerns among investors and regulators, given the company’s significant financial operations.

The list of NBFCs in the Upper Layer (UL) is as follows:

1. LIC Housing Finance Limited (deposit-taking Housing Finance Company)
2. Bajaj Finance Limited (deposit-taking NBFC-Investment Credit Company)
3. Shriram Finance Limited (formerly Shriram Transport Finance Company) (deposit-taking NBFC-ICC)
4. Tata Sons Private Limited (Core Investment Company)
5. Cholamandalam Investment and Finance Company Limited (non-deposit taking NBFC-ICC)
6. L&T Finance Limited (formerly known as L&T Finance Holdings Limited) (non-deposit taking NBFC-ICC)
7. Mahindra & Mahindra Financial Services Limited (deposit-taking NBFC-ICC)
8. Aditya Birla Finance Limited (non-deposit taking NBFC-ICC)
9. Tata Capital Financial Services Limited (non-deposit taking NBFC-ICC)
10. Piramal Capital & Housing Finance Limited (non-deposit taking HFC)
11. PNB Housing Finance Limited (deposit-taking HFC)
12. HDB Financial Services Limited (non-deposit taking NBFC-ICC)
13. Muthoot Finance Limited (non-deposit taking NBFC-ICC)
14. Samman Capital Limited (formerly Indiabulls Housing Finance, IBHFL) (non-deposit taking NBFC)
15. Bajaj Housing Finance Limited (non-deposit taking HFC)

The growth in assets under management (AUM) of NBFCs is expected to moderate to 15-17% in FY25 and FY26, a significant decline from the 23% growth in FY24, according to CRISIL Ratings Limited.

Growing CASA deposits pose a significant hurdle for small banks, according to ESAF Small Finance Bank’s chief.

The chief of ESAF Small Finance Bank (SFB) has identified growing Core Administrative System Architecture (CASA) deposits as the biggest challenge faced by small banks. CASA deposits refer to current and savings accounts that banks hold with each other.

According to the SFB’s chief, the increasing demand for CASA deposits is making it difficult for small banks to manage their balance sheets and liquidity. The rising CASA deposits have not only posed a challenge in terms of managing liquidity but also put pressure on the banks’ balance sheets.

The administrative burden of managing CASA deposits is significant, and small banks lack the resources and expertise to effectively handle it. The ESAF SFB chief stated that the bank’s own CASA deposits, which had been increasing at a compound annual growth rate (CAGR) of 15%, were putting pressure on the bank’s liquidity and balance sheet management.

The chief also attributed the growing CASA deposits to the recent demonetization drive, which had led to an increase in people holding cash in their accounts. As a result, the flow of cash into the banking system increased, leading to a surge in deposit growth.

To address the issue, the SFB was exploring alternative ways to manage its CASA deposits, such as investing in high-yield liquid assets and promoting digital banking initiatives. The bank is also working on building a more efficient and scalable system for managing CASA deposits, which will enable it to better manage its balance sheet and liquidity.

The challenge posed by CASA deposits is not unique to ESAF SFB; small banks across the industry are grappling with the same issue. The Reserve Bank of India (RBI) has also recognized the problem and has issued guidelines to ensure that banks maintain adequate liquidity and manage their balance sheets effectively.

In conclusion, the growing CASA deposits pose a significant challenge to small banks like ESAF SFB, which lack the resources and expertise to effectively manage their balance sheets and liquidity. To address this issue, the bank is exploring alternative ways to manage its CASA deposits and building an efficient and scalable system to manage its balance sheet and liquidity. The challenge posed by CASA deposits is not unique to ESAF SFB, and small banks across the industry are likely to face the same issue, making it essential for them to develop strategies to manage their CASA deposits effectively.

RBL Bank Reports Staggering 86% Decline in Q3 Profit Amidst Difficulty in Managing Microfinance Loan Portfolio

RBL Bank, a private sector lender in India, has reported a significant decline in its net profit for the third quarter (Q3) of the current financial year. The bank’s net profit has slumped by 86% to ₹64 crore (approximately $8.3 million) from ₹467 crore (approximately $61.5 million) in the same period last year. This steep decline is primarily attributed to the challenges faced by the bank’s microfinance loan portfolio.

The microfinance segment, which is a significant contributor to RBL Bank’s revenue, has been under pressure due to the Reserve Bank of India’s (RBI) new norms and regulations introduced in August 2020. The RBI has imposed stricter lending norms and reduced the permissible limits for microfinance institutions (MFIs) to reduce their vulnerability to the economic downturn. These regulations have led to a decline in disbursements and growth in the microfinance segment, resulting in higher provisioning and slippages for RBL Bank.

In addition to the regulatory challenges, RBL Bank has also been facing difficulties in collecting dues from its microfinance borrowers. The bank has reported a significant increase in non-performing assets (NPAs) in its microfinance portfolio, which has resulted in higher provisioning and a decline in profitability.

The bank’s overall asset quality has also deteriorated, with the gross NPA ratio increasing to 4.44% from 3.44% in the same period last year. The bank’s net interest margin (NIM) has also declined to 4.21% from 4.56% due to the increased competition in the market and the rise in interest rates.

Despite these challenges, RBL Bank’s management remains optimistic about the bank’s prospects. The bank’s CEO, Vishwavir Ahuja, stated that the bank is taking steps to strengthen its microfinance portfolio and improve its asset quality. The bank is also exploring opportunities to diversify its lending business and reduce its dependence on the microfinance segment.

Overall, RBL Bank’s Q3 results are a reflection of the challenges faced by the microfinance industry in India. The industry is going through a significant transformation, and banks like RBL Bank are taking steps to adapt to the new regulatory environment and improve their risk management practices.

As restructuring efforts gain pace, Asset Reconstruction Companies welcome easier resolution of long-standing bad debt issues.

The Reserve Bank of India (RBI) has introduced new rules that will make it easier for Asset Reconstruction Companies (ARCs) to settle small-ticket bad loans of Rs 1 crore or less. Previously, all settlement proposals, regardless of loan amount, required approval from an Independent Advisory Committee (IAC). Under the revised rules, ARCs can now clear such cases without IAC approval, provided they follow a board-approved policy.

The change is expected to speed up the resolution of retail bad loans and encourage ARCs to acquire more retail non-performing assets (NPAs). Retail loans of less than Rs 1 crore account for around 10-15% of outstanding assets under management (AUM) of ARCs. The total outstanding AUM of ARCs was around Rs 1.35 lakh crore as of September last year.

The revised guidelines also require the IAC to include experts with technical, financial or legal expertise to evaluate the borrower’s financial position, projected earnings, and recovery prospects. The board of directors, which must include at least two independent directors, will review the IAC’s recommendations and assess alternative recovery strategies.

The new rules are seen as a positive development for ARCs, which have been facing challenges in resolving small-ticket bad loans. The revised guidelines are expected to help ARCs achieve better resolution outcomes for smaller loans and promote the acquisition of retail NPAs. The RBI’s move is also expected to unlock new possibilities for ARCs and encourage them to focus on acquiring more small-ticket loans.

The Reserve Bank of India (RBI) imposed fines on Mukkuperi Co-op Urban Bank

The Reserve Bank of India (RBI) has imposed a fine of Rs 1.75 lakh on the Tamil Nadu-based Mukkuperi Co-operative Urban Bank for non-compliance with certain regulatory directions. The penalty was imposed following an inspection conducted with reference to the bank’s financial position as of March 31, 2023. The RBI found the bank to be in violation of several norms, including the “Supervisory Action Framework (SAF)”, guidelines on “Loans and Advances to Directors and their Relatives”, and “Know Your Customer (KYC)” norms.

The RBIs inspection revealed that the bank had increased its exposure to high-Non-Performing Assets (NPAs) sectors, sanctioned loans to directors, and failed to upload customer KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline. A show-cause notice was issued to the bank, and after reviewing its reply and hearing submissions, the RBI confirmed the violations and imposed the penalty.

The penalty does not affect the validity of transactions with customers and does not imply that the bank’s operations are halted. However, it highlights the need for the bank to improve its regulatory compliance. The RBI clarified that further actions could be initiated against the bank if necessary. The penalty serves as a reminder to co-operative banks like Mukkuperi Co-operative Urban Bank to adhere to regulatory guidelines to ensure the stability and stability of the banking sector.

The finance ministry suggests that the proposed zonal office of UBI be relocated out of Bihar.

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Ranchi: The State Finance Minister of Jharkhand, Radha Krishna Kishore, expressed his strong opposition to the decision of Union Bank of India (UBI) to shift its zonal office from Jharkhand to Bihar. He believes that the move is against the sentiments of the people, who worked hard to establish a separate state and its institutions. The State Government will formally oppose this decision through democratic means.

At the quarterly meeting of the State-Level Bankers’ Committee (SLBC) in Ranchi, the Minister highlighted various issues affecting the state’s economy, including the low loan sanction to women under Kisan Credit Cards, the huge gap between credit-deposit (CD) ratio of Jharkhand and the national average, and the physical assaults by private bank agents on loan defaulters. He emphasized that UBI has a significant presence in Jharkhand with 120 branches and deposit of Rs 13,555 crore.

Kishore appreciated the banks for the increase in Jharkhand’s CD ratio from 45.04% to 50.22% but stressed that there is still a significant gap of 37% compared to the national CD ratio of 87%. He urged banks to focus on boosting credit in education, micro, small and medium enterprises, and Kisan Credit Cards, which directly impact the state’s economic development.

The Minister also emphasized that banks must assess loan applicants and sanction loans only to those who are likely to repay. In cases of default, banks should not provide loans to the defaulters’ immediate family members. Additionally, he called for a ban on the physical assault by recovery agents against loan defaulters of private banks, recommending that bankers provide RBI guidelines to district administration officials to register FIRs if inhuman techniques are used during loan recovery.