The Reserve Bank of India (RBI) has partially relaxed the restrictions it had imposed on SBM Bank (India) Limited (“SBM Bank India“) with regard to transactions made under the Liberalised Remittances Scheme (LRS).
- It has partially relaxed the restrictions by permitting Automated Teller Machine (ATM) and Point-of-Sale (POS) transactions under LRS via Know Your Customer (KYC) -compliant internationally active debit cards issued by the bank.
The relaxation will be effective till March 15, 2023 or till a further order by the RBI.
Backdrop
On January 23, 2023, the RBI issued a directive to “SBM Bank India” directing it to immediately stop all transactions under the LRS until further orders in accordance with sections 35A and 36(1)(a) of the Banking Regulation Act, 1949.
- This move was taken in response to material supervisory concerns observed in the bank.
Liberalised Remittance Scheme (LRS)
i.The Liberalised Remittance Scheme (LRS) of the RBI was launched in 2004, with an initial ceiling of USD 25,000.
- The LRS limit has been gradually revised to align with the current macroeconomic and microeconomic conditions.
ii.The scheme allows all residents, including minors, to freely remit up to USD 250,000 each fiscal year for any permitted current or capital account transaction, or combination of both.
SBM Bank (India) Limited “SBM Bank India”
i.SBM Bank India, a subsidiary of the State Bank of Mauritius, began operations in India on December 1, 2018. It is backed by its parent firm, SBM Group.
- It is the first bank to be granted a universal banking licence by the RBI, allowing it to establish and operate as a Scheduled Commercial Bank (SCB) via a Wholly Owned Subsidiary (WOS) route and provide banking services in India.
ii.It has 12 branches across India, including the recently launched new branch in Kolkata, along with Mumbai, New Delhi, Chandigarh, Pune, Bengaluru, Chennai, Hyderabad, and Ahmedabad, as well as rural centres such as Ramachandrapuram, Palghar, and Abitghar.
- Headquarters – Mumbai, Maharashtra
- MD & CEO – Sidharth Rath
iii.For its remittance business, the bank has partnerships with a number of fintechs, including airpay, BookMyForex, HOPRemit, Vested, Instarem, and INDmoney.
RBI Appoints V. Ramachandra as Advisory Committee Member of SIFL & SEFL
On January 31, 2023, the RBI appointed V. Ramachandra, former Chief General Manager of Canara Bank, as a member of the Advisory Committee of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL) with immediate effect.
- The appointment follows the resignation of Farokh N. Subedar from the Advisory Committee, which took effect on January 31, 2023.
The Srei Group, which primarily serves the infrastructure and Micro, Small & Medium Enterprises (MSME) sectors, owes around Rs. 18,000 crore to around 15 lenders.
- The lenders include the State Bank of India (SBI), UCO Bank, and Axis Bank.
- Furthermore, it has nearly Rs. 10,000 crore in External Commercial Borrowings (ECBs) and bonds.
Backdrop
i.The RBI constituted a three-member advisory committee after superseding the boards of SIFL and SEFL in October 2021.
ii.The RBI also filed applications at the Kolkata Bench of the National Company Law Tribunal (NCLT) for the commencement of the corporate insolvency resolution procedure against SIFL and SEFL.
iii.Following the NCLT’s admission of the petitions, the RBI determined that the three-member committee “will remain as the advisory committee” established under Rule 5(c) of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.
- Objective: To advise the administrator on the operations of the SIFL and SEFL during the corporate insolvency resolution process.
The 3-Member Advisory Committee:
i.Venkat Nageshwar Chalasani, former Deputy Managing Director, SBI.
- In June 2022, Chalasani was appointed as a member of the Advisory Committee, upon the resignation of R. Subramaniakumar.
ii.T. T. Srinivasaraghavan, former Managing Director (MD), Sundaram Finance Limited.
iii.V. Ramachandra, former Chief General Manager, Canara Bank.
Recent Related News:
i.On January 24, 2023, SBM Bank (India) Limited raised Rs. 99 crore from Life Insurance Corporation of India (LIC) through the issuance of second tranche Basel-III compliant Tier II Bonds.
ii.The bank issued its first tranche of tier-II bonds in April 2022, raising Rs. 125 crore at a rate of 9.75%. The bank raised a total of Rs. 224 crore till date through Basel III compliant Tier 2 bonds.
About the Reserve Bank of India (RBI):
Governor – Shaktikanta Das
Deputy Governors – Mahesh Kumar Jain, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Headquarters – Mumbai, Maharashtra
Establishment – 1st April 1935
