12 August 2019

Notifications & Circulars

Reserve Bank of India



Task Force on Offshore Rupee Markets submits report to the Governor


The Task Force on Offshore Rupee Markets, set up by the Reserve Bank of India in February 2019 and chaired by Smt. Usha Thorat, former Deputy Governor, RBI, submitted its report to the Governor on 30th July, 2019. The Task Force was set up to examine the issues relating to the offshore Rupee markets in depth and recommend appropriate policy measures while factoring in the requirement of ensuring stability of the external value of the Rupee including measures for incentivising non-residents to access the onshore foreign exchange market.

The Task Force interacted with representatives of various banks, financial institutions, large corporates in India and abroad, foreign portfolio investors, asset managers, industry bodies, experts and practitioners. The key recommendations of the Task Force are:

(a) To extend onshore market hours to improve access of overseas users;

(b) To permit Indian banks to freely offer prices to global clients around the clock;

(c) To enable Rupee derivatives (settled in foreign currency), to be traded in the International Financial Services Centers (IFSC) in India, to begin with on exchanges in the IFSC.

(d) To allow users to undertake forex transactions up to USD 100 million in OTC currency derivative market without the need to establish underlying exposure.

(e) To facilitate non-residents to hedge their foreign exchange exposure onshore by:

Establishing a central clearing and settlement mechanism for non-resident transactions in the onshore market;

Implementing margin requirement for non-centrally cleared OTC derivatives and allowing Indian banks to post margins abroad;

Aligning the tax treatment of foreign exchange derivatives with that in major international centres; and

Centralising the KYC requirements across financial markets with uniform documentation requirement.

The report of the Task Force has been published on the RBI website today. Members of the public may offer their comments on the report by August 31, 2019 through email.

Tags : Task Force Report Submission

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Press Information Bureau


Motor Vehicles

Sanction for 5595 electric buses under Fame Phase-II


The Department of Heavy Industry has approved the sanction of 5595 electric buses to 64 Cities, State Government Entities, State Transport Undertakings (STUs) for intra-city and intercity operation under FAME India scheme phase II in order to give a further push to clean mobility in public transportation.

The Department had invited the Expression of Interest (EoI) from million-plus cities, smart cities, State/UT capitals and cities from special category states for submission of proposal for deployment of electric buses on operational cost basis.

Eight six proposals from 26 States/UTs for the deployment of 14988 e-Buses were received. After evaluation of these proposals as per EoI, on the advice of Project Implementation and Sanctioning Committee (PISC) the Government sanctioned 5095 electric buses to 64 Cities / State Transport Corporations for intra-city operation, 400 electric buses for intercity operation and 100 electric buses for last mile connectivity to Delhi Metro Rail Corporation (DMRC).

Each selected City/STUs is required to initiate the procurement process in a time bound manner for deployment of sanctioned electric buses on operational cost basis. As per EoI, buses which satisfy required localization level and technical eligibility notified under FAME India scheme phase II will be eligible for funding under FAME India scheme phase II.

These buses will run about 4 billion kilometers during their contract period and are expected to save cumulatively about 1.2 billion liters of fuel over the contract period, which will result into avoidance of 2.6 million tonnes of CO2 emission.

Tags : Sanction Electric Buses Fame Phase-II

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Reserve Bank of India



Standing Liquidity Facility for Primary Dealers


In the Third Bi-monthly Monetary Policy Statement 2019-20 of the Monetary Policy Committee (MPC) of August 07, 2019, the policy repo rate under the Liquidity Adjustment Facility (LAF) has been reduced by 35 basis points to 5.40 per cent from 5.75 per cent with immediate effect.

2. Accordingly, the Standing Liquidity Facility provided to Primary Dealers (PDs) (collateralised liquidity support) from the Reserve Bank would be available at the revised repo rate of 5.40 per cent with effect from August 07, 2019.

Tags : Liquidity Facility Primary Dealers

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Reserve Bank of India



Statement on Developmental and Regulatory Policies


This Statement sets out various developmental and regulatory policy measures in the areas of Financial Markets; Payment and Settlement Systems; Banking Regulation, Financial Inclusion and Credit flow to NBFCs.

I. Financial Markets

1. Introduction of stripping/reconstitution facility for State Development Loans (SDLs)

As a debt manager to the States in terms of Section 21A of RBI Act 1934, the Reserve Bank has been making efforts to develop the SDL market in both primary and secondary segments. The extension of the Scheme of Non-Competitive Bidding and aggregators/facilitators to SDLs are some of the efforts taken by RBI in this direction. In continuation of these efforts, it has been decided to introduce the stripping/reconstitution facility for SDLs. This measure will be implemented in consultation with the respective State governments.

II. Payment and Settlement Systems

2. Round-the-Clock Availability of National Electronic Funds Transfer System

Currently, the National Electronic Funds Transfer (NEFT) payment system operated by the Reserve Bank as a retail payment system is available for customers from 8.00 am to 7.00 pm on all working days of the week (except 2nd and 4th Saturdays of the month). As mentioned in the Payment System Vision 2021 document, the Reserve Bank will make available the NEFT system on a 24x7 basis from December 2019. This is expected to revolutionise the retail payments system of the country.

3. Expansion of Biller Categories for Bharat Bill Payment System

The Bharat Bill Payment System (BBPS), an interoperable platform for repetitive bill payments, currently covers five segments viz., (i) direct-to-home (DTH); (ii) electricity; (iii) gas; (iv) telecom; and (v) water bills. In order to leverage the advantages of the BBPS and harness its full potential, it has been decided to permit all categories of billers (except prepaid recharges) who provide for recurring bill payments to participate in BBPS on a voluntary basis. Apart from digitisation of cash-based bill payments, these segments would also benefit from the standardised bill payment experience for customers, centralised customer grievance redressal mechanism, prescribed customer convenience fee and the like. Detailed instructions in this regard will be issued by the end of September 2019.

4. 'On-tap' Authorisation for Retail Payment Systems

As announced in the Statement on Developmental and Regulatory Policies of June 6, 2018, the Reserve Bank published a policy paper on January 21, 2019 for public consultation on minimising concentration risk in retail payment systems from a financial stability perspective. Comments/feedback received from a wide array of individuals, public and private entities, institutions and industry associations suggested the need to encourage more players to participate in and promote pan-India payment platforms. Accordingly, in order to benefit from diversification of risk as also to encourage innovation and competition, it has been decided to offer 'on tap' authorisation to entities desirous to function/operate/provide platforms for

Bharat Bill Payment Operating Unit (BBPOU);

Trade Receivables Discounting System (TReDS); and

White Label ATMs (WLAs).

Instructions to this effect will be issued by the end of September 2019.

5. Creation of a Central Payments Fraud Information Registry

At present, there is a mechanism in place for banks to report all banking frauds to the Central Fraud Monitoring Cell of the Reserve Bank. With the digital payment ecosystem making substantial progress in terms of growth of payment infrastructure as well as volume and value of digital payment transactions, fraud risk monitoring and management by the stakeholders have assumed importance. It has always been the endeavour of the Reserve Bank to improve the confidence of customers in the payment systems. The Payment System Vision 2021 also envisages a framework for collecting data on frauds in the payment systems. In order to carry forward these efforts and ensure quick and systemic responses, it is proposed to facilitate the creation of a Central Payment Fraud Registry that will track these frauds. Payment system participants will be provided access to this registry for near-real time fraud monitoring. The aggregated fraud data will be published to educate customers on emerging risks. A detailed framework in this regard will be put in place by the end of October 2019.

III. Banking Regulation, Financial Inclusion and Credit flow to NBFCs

6. Reduction in risk weight for consumer credit except credit card receivables

Under the standardised approach for Credit Risk Management, consumer credit, including personal loans and credit card receivables attract a higher risk weight of 125 per cent or higher, if warranted by the external rating of the counterparty. On a review, it has been decided to reduce the risk weight for consumer credit, including personal loans, but excluding credit card receivables, to 100%.

Guidelines in this regard would be issued by the end of August 2019.

7. Measures to enhance credit flow to NBFC Sector:

During the last one year, the Reserve Bank has taken several measures to facilitate credit flow to the well managed NBFCs/HFCs. The steps taken by the Reserve Bank are as follows:

On September 23, 2018, the Reserve Bank issued a press release stating that along with SEBI, it was closely monitoring the situation and will take measures, as necessary.

The FALLCR (i.e. securities that can be reckoned, both for SLR and LCR), was increased on two occasions (September 27, 2018 and April 4, 2019) by two per cent each, thereby enabling banks to raise additional liquidity by selling their excess SLR securities.

A special FALLCR of 0.5 per cent exclusively for lending to NBFCs was introduced in October 2018.

The risk weights for banks' exposure to NBFCs were harmonised with those of other corporates.

The prudential limit on exposure of banks to NBFCs was also aligned with that of other sectors, thereby increasing it from 10 per cent of the banks' capital to 15 per cent.

The minimum holding period for assets to be securitised or assigned was reduced from one year to six months, thereby enabling the NBFCs and HFCs to raise funds by securitising their originations without having to wait for a longer period.

The durable liquidity in the system was increased through a series of OMOs and Forex SWAPs.

On July 5 2019, the FALLCR scheduled to increase by 0.50 per cent of NDTL each on August 1 and December 1, 2019 was allowed to be frontloaded by banks for computing LCR to the extent of incremental outstanding credit to NBFCs and Housing Finance Companies (HFCs) over and above the amount of credit to NBFCs/HFCs outstanding in their books as on July 5, 2019. Further, on the same day, pursuant to the announcement in the Union Budget of a partial credit enhancement to Public Sector Banks for acquiring highly rated pooled assets of financially sound NBFCs/HFCs, the Reserve Bank, through a press release, conveyed its readiness to provide required liquidity backstop to the banks against their excess G-sec holdings in order to enable them to implement the budget announcement.

It has now been decided to take following further measures to enhance credit flow to the NBFC sector:

(a) Harmonisation of single counterparty exposure limit for banks' exposure to single NBFCs with general single counterparty exposure limit

Under the revised guidelines on large exposure framework (LEF) that came into effect from April 1, 2019, a bank's exposure to a single NBFC is restricted to 15 per cent of its Tier I capital, while for entities in the other sectors the exposure limit is, 20 percent of Tier I capital of the bank, which can be extended to 25 per cent by banks' Boards under exceptional circumstances. As a step towards harmonisation of the counterparty exposure limit to single NBFC with that of the general limit, it has been decided to raise a bank's exposure limit to a single NBFC to 20% of Tier-I capital of the bank.

(b) Credit to the Priority Sector - Permitting banks to on-lend through NBFCs

With a view to further increasing the credit flow to certain priority sectors which contribute significantly to the economic growth in terms of export and employment, and recognizing the role played by NBFCs in providing credit to these sectors, it has been decided to allow, subject to certain conditions, bank lending to registered NBFCs (other than MFIs) for on-lending to Agriculture (investment credit) up to Rs.10.0 lakhs; Micro and Small Enterprises up to Rs. 20.0 lakh and housing up to Rs. 20.0 lakh per borrower (up from Rs.10.0 lakh at present) to be classified as priority sector lending.

Detailed guidelines on the above measures will be issued by the end of August 2019.

Tags : Statement Regulatory Policies Measures

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Ministry Of Home Affairs



Constitution of Unlawful Activities (Prevention) Tribunal for the purpose of adjudicating whether or not there is sufficient cause of declaring the Sikhs For Justice as an unlawful association


Whereas Sikhs For Justice (SFJ) has been declared as an unlawful association, vide, notification number S.O. 2469 (E) dated 10th July, 2019 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii);

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 5 of the Unlawful Activities (Prevention) Act, 1967 (37 of 1967), the Central Government hereby constitutes an Unlawful Activities (Prevention) Tribunal consisting of Mr. Justice D.N. Patel, Chief Justice, High Court of Delhi, for the purpose of adjudicating whether or not there is sufficient cause of declaring the Sikhs For Justice (SFJ) as an unlawful association.

Tags : Constitution Tribunal Adjudication

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Ministry of Consumer Affairs, Food and Public Distribution



Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs (Amendment) Order, 2019


In exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following order further to amend the Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs Order, 2016, namely:-

1. This order may be called the Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs (Amendment) Order, 2019.

2. It shall come into force on the date of its publication in the official Gazette.

2. In the Removal of Licensing Requirements, Stock Limits and Movement Restrictions on Specified Foodstuffs Order, 2016, in clause 3 after sub-clause (3), the following sub-clause shall be inserted namely:-

"(4) the provisions relating to stock limit under any order made under the Act shall not apply to a contract farming purchaser of any agricultural produce registered under any State Act made in this behalf, subject to the overall ceiling of registered quantity specified thereunder."

Tags : Removal Licensing Requirements Amendment order

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Press Information Bureau



Landmark Consumer Protection Bill, 2019 gets Parliamentary approval


Consumer Protection Bill, 2019 would ease the overall process of consumer grievance redressal: Shri Ramvilas Paswan

The Parliament today gave its nod to the landmark Consumer Protection Bill, 2019 which aims to protect the rights of consumers by establishing authorities for timely and effective administration and settlement of consumers' dispute. The Bill was passed by the Lok Sabha on 30th July, 2019 and was passed by Rajya Sabha today through a voice vote. The Bill will replace the more than three decades old Consumer Protection Act, 1986.

Moving the bill for consideration and passing in Rajya Sabha, Union Minister of Consumer Affairs, Food and Public Distribution Shri Ramvilas Paswan said that the new legislation would ease the overall process of consumer grievance redressal. Shri Paswan said that this new bill will provide a better mechanism to dispose consumer complaints in a speedy manner and will help in disposal of large number of pending cases in consumer courts across the nation. Shri Paswan stated that this bill was a long pending legislation and all the recommendations of the Parliamentary Standing Committee were incorporated in the bill except for five recommendations. Shri Paswan also assured all the members of Parliament that their suggestions would be incorporated in the rules to the extent possible within the legal framework.

The bill, among other things, proposes setting up of a Central Consumer Protection Authority (CCPA) to promote, protect and enforce the rights of consumers as a class. The CCPA would make interventions to prevent consumer detriment arising from unfair trade practices. The agency can also initiate class action, including enforcing recall, refund and return of products.

The Bill also envisages simplified dispute resolution process, has provision for Mediation and e-filing of cases. The Consumer will be able to file cases in the nearest commission under the jurisdiction of which he resides.

For the first time there will be an exclusive law dealing with Product Liability. A manufacturer or product service provider or product seller will now be responsible to compensate for injury or damage caused by defective product or deficiency in services.

Additional swift executive remedies are proposed in the bill through CCPA. There are provisions for deterrent punishment to check misleading advertisements and adulteration of products. Product liability provision to deter manufacturers and service providers from delivering defective products or deficient services. The Bill also enables regulations to be notified on E-commerce and direct selling with focus on protection of interest of consumers.

Tags : Consumer Protection Bill Parliamentary approval

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