The Reserve Bank of India (RBI) has allowed all eligible current account transactions including trade transactions with Sri Lanka to be/may be settled in any permitted currency outside the Asian Clearing Union (ACU) mechanism with immediate effect.
- This provision has been made after reviewing clause b of sub-Regulation 2 of Regulation 3 and clause c of sub-Regulation 2 of Regulation 5 of Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016.
- Currently, ACU settlements are done in three currencies: US dollar, the euro, and the Japanese yen
About ACU:
Established in 1974 and headquartered in Tehran, Iran, ACU is an initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), for promoting regional cooperation and trade among member countries. It facilitates payments for eligible transactions on a multilateral basis. This economizes the use of foreign exchange reserves, and transfer costs.
- Currently, there are 9 members of the ACU viz. the Central Banks and Monetary Authorities of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka.
It should be noted that all instruments of payments under ACU have a common unit of account i.e. Asian Monetary Unit (AMU) and is denominated as ACU dollar, ACU euro and ACU yen, which is equivalent in value to one US dollar, one euro and one Japanese yen respectively.
- Settlement of such instruments is made by Category-I Banks through the ACU dollar accounts, ACU euro accounts and ACU yen accounts, which should be distinct from the other US dollar, euro and Japanese yen accounts respectively maintained for non-ACU transactions.
RBI imposes Fines on 3 co-operative banks for Non-Compliance
On July 11, 2022, the RBI imposed penalty on three cooperatives banks for deficiencies in regulatory compliance by exercising its powers conferred under provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation (BR) Act, 1949.
- The banks are Nasik Merchant’s Co-operative Bank Ltd in Nashik (Maharashtra); Maharashtra State Co-operative Bank Ltd in Mumbai (Maharashtra); and National Central Cooperative Bank Limited in Bettiah(Bihar).
Penalties:
Nasik Merchant’s Co-operative Bank Ltd
RBI imposed a monetary penalty of Rs 50 Lakh for non-compliance with the directions issued by RBI on ‘Placement of deposits with other banks’ and ‘Interest Rate on Deposits’.
Maharashtra State Co-operative Bank Ltd
RBI imposed a monetary penalty of Rs 37,50,000 ((Rupees Thirty Seven Lakh and Fifty Thousand) for non-compliance with the directions issued by National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds- Guidelines for Classification, Reporting and Monitoring’.
National Central Cooperative Bank Limited, Bettiah
RBI imposed a monetary penalty of Rs 2 Lakh for non-compliance with the directions issued by RBI on (i) The Depositor Education and Awareness Fund and (ii) Know Your Customer (KYC).
Recent Related News:
i.RBI imposed several restrictions on Bengaluru (Karnataka)- based Bank namely, ‘Shushruti Souharda Sahakara Bank Niyamita’ for a period of six months w.e.f. April 7, 2022, due to decline in the lender’s financial position.
ii.RBI has imposed a monetary penalty of Rs 17.63 lakh on Manappuram Finance
Limited for non-compliance with certain provisions of the Master Direction on Issuance and Operation of Prepaid Payment Instruments (PPIs) dated October 11, 2017 (updated as on February 28, 2020) and the Master Direction – Know Your Customer (KYC) Direction dated February 25, 2016 (as updated on April 20, 2020).
About Reserve Bank of India (RBI):
Establishment– April 1, 1935
Headquarters– Mumbai, Maharashtra
Governor– Shaktikanta Das
Deputy Governors– Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
