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Exposure norms of urban co-operative banks to be tightened

The RBI has also decided to prescribe a comprehensive cyber security framework for UCBs, as a graded approach, based on their digital depth and interconnectedness with the payment systems landscape, digital products offered by them and assessment of cyber security risk.

By: ENS Economic Bureau | Mumbai | Updated: December 6, 2019 4:15:43 am
The Reserve Bank of India (RBI) left its repo rate unchanged at 5.15 per cent but reduced its GDP growth forecast for 2019-20 to 5 per cent from 6.1 per cent. (File Photo)

The RBI has decided to tighten exposure norms for single and group/interconnected borrowers of primary urban co-operative banks (UCBs), in order to reduce concentration risk in exposures and strengthen the role of UCBs in promoting financial inclusion.

“These measures are expected to strengthen the resilience and sustainability of UCBs and protect the interest of depositors,” the RBI said Thursday. The move follows the surfacing of the PMC Bank scam, where almost 70 per cent of the bank’s funds were lent to the HDIL Group of the Wadhawans.

“An appropriate timeframe will be provided for compliance with the revised norms. A draft circular proposing the above changes for eliciting stakeholder comments will be issued shortly,” the central bank said. It has also decided to bring UCBs with assets of Rs 500 crore and above under the Central Repository of Information on Large Credits (CRILC) reporting framework.

The RBI has also decided to prescribe a comprehensive cyber security framework for UCBs, as a graded approach, based on their digital depth and interconnectedness with the payment systems landscape, digital products offered by them and assessment of cyber security risk. The framework would mandate implementation of progressively stronger security measures based on the nature, variety and scale of digital product offerings of banks.

“Such measures would, among others, include implementation of bank specific email domain; periodic security assessment of public facing websites/applications; strengthening the cyber security incident reporting mechanism; strengthening of governance framework; and setting up of Security Operations Center (SOC),” the RBI said. This would bolster cyber security preparedness and ensure that the UCBs offering a range of payment services and higher information technology penetration are brought at par with commercial banks in addressing cyber security threats, the RBI said.

Self-regulatory body for corporate loans

MUMBAI: The Reserve Bank will facilitate the setting up of a self-regulatory body as a first step towards the development of the secondary market for corporate loans. “The SRB will be responsible for standardising documents, covenants and practices related to secondary market transactions in corporate loans …,” it said.

NBFC-peer to peer lending cap hiked

MUMBAI: The RBI has increased the aggregate exposure cap of non-banking financial company-peer to peer lending platform (NBFC-P2P) to all borrowers at any point of time, across all P2P platforms, to Rs 50 lakh. At present, the aggregate limit for both borrowers and lenders across all P2P platforms stand at Rs 10 lakh.

New prepaid payment modes

MUMBAI: The RBI has proposed to introduce a new type of prepaid payment instruments which can be used only for purchase of goods and services up to Rs 10,000. The loading/reloading of such PPI will be only from a bank account and used for making only digital payments such as bill payments, merchant payments, etc. —ENS

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