Reserve Bank of India

30.04.2024

Banking

Guidance Note on Operational Risk Management and Operational Resilience

MANU/RMIC/0068/2024

1. Purpose.

1.1 Operational Risk is inherent in all banking/ financial products, services, activities, processes, and systems. Effective management of Operational Risk is an integral part of the Regulated Entities' (REs) risk management framework. Sound Management of Operational Risk shows the overall effectiveness of the Board of Directors and Senior Management in administering the RE's portfolio of products, services, activities, processes, and systems.

1.2 An operational disruption can threaten the viability of an RE, impact its customers and other market participants, and ultimately have an impact on financial stability. It can result from man-made causes, Information Technology (IT) threats (e.g., cyber-attacks, changes in technology, technology failures, etc), geopolitical conflicts, business disruptions, internal/external frauds, execution/ delivery errors, third party dependencies, or natural causes (e.g., climate change, pandemic, etc.).

1.3 An RE needs to factor in the entire gamut of risks (including the aforesaid risks in its risk assessment policies/ processes), identify and assess them using appropriate tools, monitor its material operational exposures and devise appropriate risk mitigation/management strategies using strong internal controls to minimize operational disruptions and continue to deliver critical operations, thus ensuring operational resilience.

1.4 Until recently, the predominant Operational Risks that REs faced emanated from vulnerabilities related to increasing dependence and rapid adoption of technology for provision of financial services and intermediation. However, the financial sector's growing reliance on third-party providers (including technology service providers) exacerbated by Covid-19 pandemic with greater reliance on virtual working arrangements, has highlighted the increasing importance of Operational Risk Management and Operational Resilience; which not only benefits the RE by strengthening its ability to remain a viable going concern but also supports the financial system by ensuring continuous delivery of critical operations during any disruption.

1.5 In view of the foregoing, the Reserve Bank, through this Guidance Note on Operational Risk Management and Operational Resilience (hereafter 'Guidance Note') intends to:

1.5.1 promote and further improve the effectiveness of Operational Risk Management of the REs, and

1.5.2 enhance their Operational Resilience given the interconnections and interdependencies, within the financial system, that result from the complex and dynamic environment in which the REs operate.

1.6 This Guidance Note updates the "Guidance Note on Management of Operational Risk" dated October 14, 2005. It has been prepared based on the Basel Committee on Banking Supervision (BCBS) principles documents issued in March 2021, viz., (a) 'Revisions to the Principles for the Sound Management of Operational Risk' and (b) 'Principles for Operational Resilience' as well as the some of the international best practices.

1.7 The Guidance Note has adopted a principle-based and proportionate approach to ensure smooth implementation across REs of various sizes, nature, complexity, geographic location and risk profile of their businesses. Although the exact approach may vary from RE to RE, the Guidance Note provides an overarching guidance to REs for improving and further strengthening their Operational Risk Management Framework (ORMF). It gives adequate flexibility to REs for Operational Risk Management to enhance their ability to withstand, adapt and recover from potential operational disruptions and ensure their Operational Resilience. The systems, procedures and tools prescribed in this Guidance Note are indicative in nature and should be read in conjunction with the relevant instructions issued by Reserve Bank from time to time. In case of inconsistency, if any, the relevant instructions issued by the Reserve Bank would prevail.

1.8 The operational risk regulatory capital requirements shall continue to be guided by the applicable guidelines1.

2. Application

2.1 This Guidance Note shall apply to the following REs:

2.1.1 All Commercial Banks2;

2.1.2 All Primary (Urban) Co-operative Banks/State Co-operative Banks/Central Co-operative Banks;

2.1.3 All All-India Financial Institutions (viz., Exim Bank, NABARD, NHB, SIDBI, and NaBFID); and

2.1.4 All Non-Banking Financial Companies including Housing Finance Companies.

3. Repeal and Transitional Arrangements

With the issuance of this Guidance Note the "Guidance Note on Management of Operational Risk" dated October 14, 2005, stands repealed.

4. Key changes

Key changes carried out in this Guidance Note vis-a-vis the repealed Guidance Note are given in Annex.

Tags : Guidance Note Operational Risk Management Operational Resilience

Share :

Top

Securities and Exchange Board of India

30.04.2024

Capital Market

Notification regarding ease of doing business under various SEBI Regulations

MANU/SMFD/0003/2024

1. SEBI constituted various Working Groups to recommend measures to simplify and ease compliances under various SEBI Regulations. Accordingly, a working group was constituted to review the present regulatory framework under SEBI (Mutual Funds) Regulation, 1996 and recommend measures to promote ease of doing business for mutual funds. Based on the recommendations of the working group, a public consultation was carried out.

2. Accordingly, the following has been decided:

2.1. In partial modification to the Clause 3.3.11 of the Master Circular for Mutual Funds dated May 19, 2023, it has been decided as under:

"For commodity based funds such as Gold ETFs, Silver ETFs and other funds participating in commodities market, appointment of a dedicated fund manager shall be optional. However, the person appointed as fund manager of such funds should have adequate expertise and experience to manage investments in commodities market. The Board of the AMCs shall be responsible for ensuring compliance and reporting regarding the same to trustees, on a periodic basis."

2.2. Further, in partial modification to the Clause 12.19.3.1 of the Master Circular for Mutual Funds dated May 19, 2023, it has been decided as under:

"Appointment of a dedicated fund manager for making the above overseas investments stipulated under paragraph 12.19.2.1 to 12.19.2.9 shall be optional. However, the person appointed as fund manager of such funds should have adequate expertise and experience to manage investments in overseas securities. The Board of the AMCs shall be responsible for ensuring compliance and reporting regarding the same to trustees, on a periodic basis."

3. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 25(22)(a)(ii) and Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.

Tags : SEBI Regulations Mutual funds Ease of doing business

Share :

Top

Reserve Bank of India

29.04.2024

Banking

RBI imposes monetary penalty on The Central Co-operative Bank Limited, Bikaner, Rajasthan

MANU/RPRL/0293/2024

The Reserve Bank of India (RBI) has, by an order dated April 16, 2024, imposed a monetary penalty of ₹2.00 lakh (Rupees Two lakh only) on The Central Co-operative Bank Limited, Bikaner, Rajasthan (the bank) for non-compliance with directions issued by the National Bank for Agriculture and Rural Development (NABARD) on 'Frauds-Guidelines for Classification, Reporting and Monitoring'. This penalty has been imposed in exercise of powers vested in RBI, conferred under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by NABARD with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with NABARD directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.

After considering the bank's reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of delay in reporting of frauds was sustained, warranting imposition of monetary penalty.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

Tags : Penalty Imposition Non-compliance

Share :

Top

Press Information Bureau

02.05.2024

Commercial

Launch of Intelligent Transportation System (ITS) Technology/Product Booklet and ToT of Thermal Camera to Industry

MANU/PIBU/0362/2024

The Indigenous Technologies of Thermal camera, designed and developed by CDAC Thiruvananthapuram under InTranSE Program of MeitY, was transferred to M/s Aditya Infotech (CP Plus). It is a step towards Innovation, Science and Technology theme of Vikshit Bharat @2047.

Thermal Camera: The thermal Smart camera has an inbuilt Data Processing Unit (DPU) to run various AI based analytics. The indigenised technology is targeted for applications across multiple domains, including Smart cities, Industries, Defence and Health, etc. The field implementation, testing and validation of this camera was done for Road traffic applications.

ITS Technology/Product Booklet:

Under InTRanSE program of R& D group, MeitY, technologies/product/solution developed for Traffic control, Public Transit, Road Safety, Sensors for traffic Applications etc. have been compiled in a booklet form which was launched for awareness creation.

The exchange of technology transfer documents happened in the presence of Shri S Krishnan, Secretary, MeitY; Shri Bhuvnesh Kumar, Addl Secretary, MeitY; Prof H P Khincha; Smt Sunita Verma, GC R&D in E&IT, MeitY, senior officials in the Government, CEO and CTO of Industries.

Tags : Launch ITS Thermal Camera

Share :

Top

Securities and Exchange Board of India

02.05.2024

Capital Market

Facilitating collective oversight of distributors for Portfolio Management Services (PMS) through APMI

MANU/SIPM/0002/2024

1. Regulation 23 (11) of SEBI (Portfolio Managers) Regulations, 2020, inter-alia states that the portfolio manager shall ensure that any person or entity involved in the distribution of its services is carrying out the distribution activities in compliance with the SEBI (Portfolio Managers) Regulations, 2020 and circulars issued thereunder from time to time.

2. Additionally, Portfolio Managers are required to ensure that distributors abide by the Code of Conduct as specified in Annexure 2B to the Master Circular dated March 20, 2023 for Portfolio Managers.

3. In order to simplify and ease compliances, a working group was constituted to review the present regulatory framework under SEBI (Portfolio Managers) Regulations, 2020 and recommend measures to promote ease of doing business. Based on the recommendations of the working group, a public consultation was carried out.

4. Pursuant to the above, in order to facilitate collective oversight of PMS distributors at the industry level, it has been decided that any person or entity involved in the distribution of portfolio management services shall obtain registration with APMI. Portfolio Managers shall ensure that any person or entity engaged in the distribution of its services has obtained registration with APMI, in accordance with the criteria laid down by APMI.

5. This circular shall come into effect from January 01, 2025. APMI shall issue the criteria for registration of distributors by July 01, 2024.

6. This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 read with Regulation 43 of SEBI (Portfolio Managers) Regulations, 2020, to protect the interest of investors in securities and to promote the development of, and to regulate the securities market.

Tags : Distributors PMS APMI

Share :

Top

Ministry of Finance 

01.05.2024

Goods and Services Tax

Acceptance of Electronic Certificate of Origin (e-CoO) issued by Korea under India-Korea Comprehensive Economic Partnership Agreement

MANU/CUST/0035/2024

1. Representations have been received in the Board with regard to the India-Korea Comprehensive Economic Partnership Agreement (CEPA), seeking clarification on, inter alia, whether Electronic Certificates of Origin (e-COOs) issued by the Issuing Authority of the Republic of Korea are acceptable under India-Korea CEPA after implementation of India-Korea Electronic Origin Data Exchange System (EODES).

2. In this regard, it is hereby clarified that in pursuance of the implementation of India-Korea EODES, the electronic certificates of origin shall be considered acceptable for the purpose of claiming preferential benefit under India-Korea CEPA, provided that the e-CoO has been issued in the prescribed format, bears all particulars including QR code, and fulfills all other requirements stated in notification No. 187/2009-Customs (N.T.) dated 31.12.2009 and any further amendments. The e-CoO shall have the same legitimacy as the original copy of its manually issued counterpart.

3. The e-CoO shall continue to be mandatorily uploaded on e-Sanchit by the importer/Customs Broker for availing preferential benefit, and the e-CoO particulars such as reference number and date, originating criteria etc. shall be carefully entered while filing the bill of entry.

4. In pursuance of the implementation of EODES, a system has been designed in ICES to verify the e-CoO particulars against the data received electronically from the Customs of the exporting country, including w.r.t multiple use of single COO. The system automatically debits e-CoO quantity from the COO certificate ledger. Therefore, physical defacement of the printed copy of e-CoO shall no longer be required w.r.t India-Korea CEPA.

5. For further procedural clarity, Advisory No. 31/2023 dated 22.12.2023 issued by DG (Systems), may be referred.

6. It is requested that the above procedure for accepting e-CoO may be suitably implemented in Customs formations under your jurisdiction.

Tags : Acceptance e-CoO Issuance

Share :