Rules for urban co-operative banks to be tightened
The Reserve Bank of India (RBI) plans to raise governance rules to strengthen the more than 1,500 urban co-operative banks after a scam at Punjab and Maharashtra Co-operative Bank (PMC)exposed cracks in the system earlier this year.
By : migrator
Update: 2019-12-05 19:58 GMT
Mumbai
The RBI will soon be setting new regulations regarding maximum exposure to a single borrower to reduce risks in the system, it said in a post-policy document on Thursday after it left its key interest rates unchanged. This comes after it was discovered that PMC used more than 21,000 fictitious accounts to hide loans it made to a single corporate borrower. PMC’s loans to Housing Development and Infrastructure Limited, a realty company stood at 65 billion rupees ($905.7 million), which accounts for 73% of its overall Rs 88.8 billion loan book.
The RBI will also bring large urban co-operatives under the Central Repository of Information on Large Credits (CRILC) framework.
This will require banks with assets of 5 billion rupees and more to report loan-related information to this database, helping regulators detect signs of debt stress and potential default.
New prepaid payment instrument on anvil
The Reserve Bank of India (RBI) will introduce a new type of prepaid payment instrument (PPI) which could be used only for purchase of goods and services up to a limit of Rs 10,000. Accordingly, the loading of such PPI will be only through a bank account and it could be used for making only digital payments such as bill payments and merchant payments, among others.
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