On December 1, 2023, the Reserve Bank of India (RBI) and the Bank of England (BoE) signed a Memorandum of Understanding (MoU) for cooperation and information exchange regarding the Clearing Corporation of India Limited (CCIL).
Signatories:
RBI Deputy Governor T Rabi Sankar and BoE Deputy Governor for Financial Stability Sarah Breeden in London, United Kingdom (UK)
What is in the MoU?
i.The MoU establishes a framework for the BoE to rely on the RBI’s regulatory and supervisory activities.
ii.The BoE will also assess and recognize CCIL as a counterparty to clear and settle bonds and overnight indexed swap trades.
iii.It emphasizes cross-border cooperation for international clearing activities and demonstrates BoE’s commitment to deferring to other regulators’ regimes.
iv.The MoU enables BoE to assess CCIL’s application for recognition as a third-country Central Counterparty (CCP), a prerequisite for UK banks to clear transactions through CCIL.
Note: It should be noted that in terms of section 3 of the Payment and Settlement Systems Act, 2007 (“PSS Act”), RBI is the designated authority for the regulation and supervision of payment systems, including CCIL, which operates in India under the PSS Act.
RBI fines Bank of America, N.A., HDFC Bank
RBI in exercise of powers under the provisions of Section 11(3) of FEMA (Foreign Exchange Management Act), 1999 has imposed a monetary penalty of Rs 10,000 on Bank of America, N.A. for violation of RBI’s instructions on reporting requirements under Liberalised Remittance Scheme of FEMA, 1999.
- This penalty will not affect any transaction or agreement entered into by the bank with its customers.
- RBI issued a Show Cause notice to the bank, and after reviewing their written and oral responses, concluded that the violations were substantiated, leading to the imposition of a penalty.
CSB Bank Promoter gets RBI nod to Retain 26% Stake in Lender
RBI approved the promoter of CSB Bank to retain a 26% stake in the lender. This is higher than the 15% stake that RBI had previously advised.
Key Points:
i.The RBI previously required bank promoters to reduce their shareholding to 15% to ensure that these institutions are widely held. However, following a legal battle with Uday Kotak, the promoter of Kotak Mahindra Bank, RBI permitted promoters to retain up to 26% in banks
ii.CSB Bank is based in Thrissur, Kerala. FIH Mauritius Investments Ltd (FIHM) currently holds a 49.72% stake in the bank.
- It will reduce its shareholding within 15 years from the date of completion of investments.
Recent Related News:
i.RBI sanctioned the Scheme of Amalgamation of The Navanirman Co-operative
Urban Bank Ltd., Hyderabad, Telangana with Rajadhani Co-op. Urban Bank Ltd., Hyderabad, Telangana. The Scheme of Amalgamation is with effect from August 3rd, 2023.
ii.RBI, in consultation with the Government of India (GoI), has reviewed guidelines
for Infrastructure Debt Fund-Non-Banking Financial Companies (IDF-NBFCs) to enhance their role in infrastructure financing and align regulations across NBFCs in this sector.
About Reserve Bank of India (RBI):
Governor – Shaktikanta Das
Deputy Governors –Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar, and
Swaminathan Janakiraman
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra
