International Standardization and Co-Operation in Banking Supervision

I. INTRODUCTION The need for international standardization and co-operation in banking supervision was felt as early as in the 1930s with the negotiation of the Bretton Woods Agreement. In light of world wars, followed by financial deregulation and financial crisis, this need has only increased. Today the Bank of International Settlements (“BIS”), which is also…

FPIs permitted exposure above 20% of its corporate bond portfolio to a single corporate

Foreign Portfolio Investors are governed by the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations 2014 and by the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017, as amended from time to time. Thereafter, Securities and Exchange Board of India (“SEBI”) vide Circular No. CIR/IMD/FIIC/1/2015 dated…

Evolution of India’s Digi Payment Ecosystem: Stage II

To read Part I, Click here Various systems are currently in place to meet remittance requirements. The National Electronic Funds Transfer (“NEFT”) began its journey only in 2005 as a local Electronic Funds transfer system, it later expanded to cover larger areas. At present, NEFT acts as a nation-wide payment system and facilitates one-to-one funds…

Evolution of India’s Digi Payment Ecosystem: Introduction and Paper-based Payments

Presently India boasts of a robust and advanced payment system ecosystem with the National Electronic Funds Transfer (“NEFT”), Immediate Payment Service (“IMPS”), Aadhaar-Enabled Payment System (“AEFT”), and Unified Payments Interface (“UPI”) among others. The need for bulk and repetitive payment systems is met by systems such as Electronic Clearing Service (“ECS”), the National Automated Clearing…

RBI suggests ease of norms for Retail Payment Systems, discusses competition concerns

The Reserve Bank of India (“RBI”) on January 21, 2019 floated a policy paper on ‘Authorisation of New Retail Payment Systems’. This policy expresses risk considerations arising from extant concentration risk in retail payment risks, from a financial stability perspective. The Policy discusses possibilities of review of norms pertaining to the entry of retail payment…

Recapitalization of PCA Banks

In a previous post, I discussed about the Prompt Corrective Action (“PCA”) framework. India’s Central Bank, the Reserve Bank of India (“RBI”) vide Press Release No. 2018-2019/2034 dated February 26, 2019 declared the removal of Allahabad Bank and Corporation Bank as well as Private Sector Dhanlaxmi Bank out of the PCA framework. Earlier on February…

Hedging exchange rate risk by FPIs under VRR Scheme

  Proposal revamping the Institutional Trading Platform Framework was notified by the RBI yesterday. RBI notably also notified the operational guidelines for hedging of exchange rate risk by FPI under the VRR  to permit FPIs to participate in currency and interest rate derivative instrument, OTC or exchange-traded, to hedge their interest rate or currency risk. Foreign Exchange Derivative Contracts…

Voluntary Retention Route for FPIs notified

In my earlier blog post, I discussed RBI’s Proposed Voluntary Retention Route, facilitating FPIs to undertake long-term investment in the Indian debt markets. RBI notified this proposal yesterday vide A.P. (DIR Series) Circular No. 21 titled ‘ Voluntary Retention Route’ (VRR) for Foreign Portfolio Investors. RBI has brought in this scheme by effecting amendments to…