Reserve Bank of India (RBI) has increased the ceiling on remittances per transaction from India to Nepal from Rs 50,000 to Rs 2 lakh. RBI has also removed the limit of 12 remittances/year per remitter.
- The remittance ceiling was increased by RBI in the exercise of the power conferred under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007.
- The directions would come into effect from October 01, 2021.
i.Indo-Nepal Remittance Facility Scheme was launched by the RBI in May 2008 as an option for cross-border remittances from India to Nepal.
ii.The scheme leverages the National Electronic Funds Transfer (NEFT) ecosystem for cross border remittances with a ceiling of Rs 50,000/remittance and a maximum of 12 remittances/year.
iii.The beneficiaries receive remittances in Nepalese Rupees through credit to their bank account maintained with the subsidiary of State Bank of India (SBI) in Nepal, i.e. Nepal SBI Bank Limited (NSBL) or through an agency arrangement.
i.Presently, RBI has reviewed the scheme and increased the ceiling of remittance to boost trade payments between the 2 countries and also to facilitate person-to-person remittances.
- The hike in the remittance ceiling would also support payments relating to retirement, pension, etc., to our ex-servicemen who have settled/relocated to Nepal.
ii.The ceiling of Rs 50,000 per remittance with a maximum of 12 remittances in a year will continue to apply for remittances by way of cash from walk-in customers or non-customers.
iii.RBI has advised banks to put in place suitable velocity checks and other risk mitigation procedures.
Note – Remittance is generally described as a sum of money sent by someone working abroad to his or her family back home.
RBI Increased the Incentives Paid to the Banks for Coin Distribution
RBI has increased the incentives being paid to the banks for distribution of coins to the general public from Rs 25/bag to Rs 65/bag.
- RBI has reviewed the ‘Currency Distribution & Exchange Scheme’ (CDES) and revised the incentive being paid to the banks for the distribution of coins.
- Objective: To provide a Clean Note policy and to ensure that all bank branches provide better customer service to members of the public with regard to the exchange of notes and distribution of coins.
- An additional incentive of Rs 10 per bag for coin distribution in rural and semi-urban areas was also introduced by RBI.
i.Through the revised scheme, the banks will be provided with incentives of Rs 65/bag based on net withdrawal from currency chest (CCs), without waiting for claims from banks.
ii.CCs branches are directed to pass on the incentive to the linked bank/branches for their coins’ distribution within one week from the receipt of incentives from RBI.
iii.The banks were instructed to include a system of checks and balances to ensure that coins are distributed to retail customers in small lots and not to bulk customers.
- Banks are advised to provide coins to bulk customers (requirement of more than 1 bag in a single transaction) for their business transactions.
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By reviewing the market conditions and market borrowing program of the government, the RBI has modified the auction methodology of the benchmark securities of tenor 2-year, 3-year, 5-year, 10- year, 14-year tenor and Floating Rate Bonds (FRBs) to uniform price auction method (earlier it was based on multiple price-based auctions).
Key Roles of Reserve Bank of India (RBI):
i.Monetary policy Framing – It frames the Monetary policy of the country to meet the challenges and maintain the price stability of the economy.
ii.Decides interest rate – A six-member monetary policy committee headed by the RBI governor, decides the benchmark repo rate.
iii.Regulates Forex – Foreign Exchange (Forex) Management Act (‘FEMA’) envisages the RBI a key role in managing Forex reserves.