The Reserve Bank of India (RBI) has decided to ask banks and other regulated entities (REs), including non-banking finance companies (NBFCs), to provide more transparency and details on pricing of loans and other charges levied on retail and medium, small and micro enterprises (MSME) customers. The RBI has decided to mandate all REs to provide the ‘Key Fact Statement’ (KFS) to the borrowers for all retail and MSME loans. “Providing critical information about the terms of the loan agreement, including all-inclusive interest cost, will greatly benefit the borrowers in making an informed decision,” it said. The RBI has recently asked lenders to provide their borrowers a KFS containing the information regarding a loan agreement, including all-in-cost of the loan, in simple and easily understandable format. “Currently KFS is specifically mandated in respect of loans by scheduled commercial banks to individual borrowers, digital lending by REs and microfinance loans,” the RBI said. Offline e-rupee on the cards The RBI has proposed to introduce an offline functionality in CBDC-Retail (CBDC-R)— e-rupee or digital rupee — for enabling transactions in areas with poor or limited internet connectivity. “Multiple offline solutions (proximity and non-proximity based) across hilly, rural and urban locations will be tested for this purpose. These functionalities will be introduced through the pilots in a gradual manner,” the central bank said. CBDC-R pilot currently enables person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks. “It is now proposed to enable additional use cases using programmability and offline functionality. Programmability will permit users like, for instance, government agencies to ensure that payments are made for defined benefits. Similarly, corporates will be able to program specified expenditures like business travel for their employees. Additional features like validity period or geographical areas within which CDBC may be used can also be programmed,” it said. Gold hedging in IFSC The RBI has decided to also allow resident entities to hedge the price of gold in the over the counter (OTC) segment in the International Financial Services Centre (IFSC). This will provide resident entities more flexibility and easier access to derivative products in hedging their exposure to gold prices. With a view to providing flexibility to resident entities to hedge their exposures to gold price risk efficiently, resident entities were permitted in December 2022 to access recognised exchanges in the IFSC. ETP regulations to be reviewed The central bank has decided to review the regulatory framework for electronic trading platforms (ETPs). Over the last few years, there has been increased integration of the onshore forex market with offshore markets, notable developments in the technology landscape and an increase in product diversity. Market makers have also made requests to access offshore ETPs offering permitted rupee products, the RBI said. In October 2018, the Reserve Bank had put in place a regulatory framework for ETPs for executing transactions in financial instruments regulated by it.
