On February 9, 2024, the Reserve Bank of India (RBI), in exercise of powers conferred by Section 35B of the Banking Regulation (BR) Act, 1949, has increased the remuneration ceiling of Non Executive Directors (NEDs) of banks from Rs 20 lakh per annum to Rs 30 lakh with immediate effect.
- This decision has been taken after considering the crucial role of NEDs in efficient functioning of bank Boards and its various Committees, and also to attract better talent and ensure corporate governance.
Key Points:
i.Following this, banks must establish fixed remuneration criteria for NEDs with Board approval.
- The Board may set a lower amount, not exceeding Rs 30 lakh per annum, based on bank size, NED experience, and other factors.
ii.Private sector banks still need regulatory approval for Part-time Chairman remuneration under Section 10B(1A)(i) and 35B of the BR Act, 1949.
iii.Banks must disclose director remuneration annually in their Annual Financial Statements (AFS).
iv.These will be applicable to all the Private Sector Banks including Small Finance Banks (SFBs) and Payment Banks (PBs) as also the wholly owned subsidiaries of Foreign Banks.
RBI Permits Indian Banks in GIFT-IFSC for Bullion Exchange Trading and SCC Status
RBI has permitted the branches of Indian banks in GIFT–IFSC (Gujarat International Finance Tec-City International Financial Services Centre) to act as a Trading Member/Trading and Clearing Member (TM/TCM) of India International Bullion Exchange IFSC Ltd (IIBX).
- It also allowed the Indian banks authorized to import gold or silver to act as Special Category Client (SCC) of IIBX .
- The provisions for the same are effective from February 9, 2024.
Key Points:
i.TM/TCM of IIBX must execute trades solely on behalf of clients, without proprietary trading.
ii.SCCs are mandated to execute buy trades for clients and appoint one of the IFSC Banking Units (IBUs) to act as clearing member on their behalf.
iii.Parent banks must obtain a No Objection Certificate from RBI before their branch/subsidiary/joint venture in GIFT IFSC can operate as a TM/TCM on International Bullion Exchange IFSC.
iv.Banks intending to operate as TM or TCM must submit a business plan to RBI’s Department of Regulation with board approval.
v.Banks authorized to import gold/silver can engage in SCC activities after notifying RBI’s Department of Regulation.
vi.Client trades on the exchange require 110% advance pay-in of funds or securities matching the intended transaction value.
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RBI cancels license of Jai Prakash Narayan Nagari Sahakari Bank based in Basmathnagar, Maharashtra
On February 5, 2024, RBI, has cancelled the licence of Jai Prakash Narayan Nagari Sahakari Bank Ltd., Basmathnagar, Maharashtra. With effect from February 6, 2024, The bank ceases to carry on banking business as defined in Section 5(b) read with Section 56 of BR Act, 1949.
Reason:
This decision has been taken because of the following reasons:
i.The bank lacks sufficient capital and earning potential, violating BR Act Sections 11(1) and 22(3)(d) with Section 56.
ii.It failed to meet requirements outlined in Sections 22(3)(a), 22(3)(b), 22(3)(c), 22(3)(d), and 22(3)(e) with Section 56.
Key Points:
i.On liquidation, every depositor shall receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of DICGC Act, 1961.
ii.About 99.78% of the depositors of the bank are entitled to receive full amount of their deposits from Deposit Insurance and Credit Guarantee Corporation (DICGC).
iii.As of September 21, 2023, DICGC has paid Rs 23.89 crore to depositors under the DICGC Act, 1961.
Recent Related News:
i.On September 25, 2023, RBI has cancelled the licence of the Kapol Co-operative Bank Limited, Mumbai, Maharashtra amid inadequate capital and earning prospects. Following, it is immediately prohibited from conducting banking activities, including accepting and repaying deposits, as defined in Section 5 (b) read with Section 56 of the BR Act, 1949 with immediate effect.
ii.RBI also imposed a penalty of Rs 8.80 Lakh on Fedbank Financial Services Limited, a Non-Banking Financial Company (NBFC) in Mumbai, for non-compliance with certain provisions of the Monitoring of Frauds in NBFCs (Reserve Bank) Directions, 2016.
About Reserve Bank of India (RBI):
Governor – Shaktikanta Das
Deputy Governors – Swaminathan Janakiraman, Michael Debabrata Patra, M. Rajeshwar Rao, T. Rabi Sankar
Establishment – 1st April 1935
Headquarters – Mumbai, Maharashtra
