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RBI

RBI Governor Urges Banks to Prioritize Governance and Ethical Practices

Leave a Comment / By / Governance Community

RBI Governor Shaktikanta Das on Monday called upon private sector banks to bolster their internal governance frameworks and curb unethical practices. Speaking at the Conference of Directors of Private Sector Banks in Mumbai, Das emphasized the long-term risks of practices like mis-selling products and opening accounts without proper KYC verification. “While such practices may yield short-term gains, they ultimately expose banks to reputational damage, supervisory scrutiny, and financial penalties,” he noted, urging bank boards to lead the charge in ensuring ethical operations. Das highlighted the need for banks to carefully structure employee incentives to avoid encouraging unethical behaviors. He also pointed out that the Indian banking sector is at a juncture of both opportunities and challenges, with improving financial indicators reflecting strong efforts by bank management and boards. To maintain this momentum, the governor underscored the importance of leveraging strong fundamentals to build resilience and grow sustainably. “Good times are the best times to reinforce resilience and fortify defenses,” he remarked. The governor also touched upon emerging challenges posed by technological advancements, the rise of fintech, third-party dependencies, and climate change. He urged bank boards to act as guiding beacons in this dynamic environment, helping navigate risks while steering towards stable and sustainable growth. Das reaffirmed the RBI’s commitment to supporting the banking sector in its pursuit of innovation and resilience. He emphasized that a proactive approach to governance and ethics is crucial for fostering trust and stability in India’s rapidly evolving financial landscape. Source: CNBCTV 18 Photo Credit: CNBCTV 18

RBI Approves ₹2.11 Lakh Crore Dividend Payout to Government for 2023-24

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The Reserve Bank of India (RBI) has approved a substantial ₹2.11 lakh crore dividend payout to the central government for the financial year 2023-24. This amount is more than double the ₹87,416 crore paid for the previous financial year, 2022-23. The decision was made during the 608th meeting of the Central Board of Directors of the RBI, chaired by Governor Shaktikanta Das on May 22. In a statement, the RBI announced, “The Board…approved the transfer of ₹2,10,874 crore as surplus to the Central Government for the accounting year 2023-24.” This significant dividend payout surpasses analysts’ expectations, who had anticipated a surplus transfer between 750 billion rupees to 1.2 trillion rupees, driven by strong foreign exchange earnings. Additionally, the RBI has increased the Contingent Risk Buffer (CRB) to 6.5% for FY 2023-24, up from 6% in the previous financial year. The CRB is a financial safeguard against potential risks, and its increase reflects the RBI’s confidence in the economy’s resilience and robustness. The large dividend payout is expected to provide a substantial boost to the central government’s finances, aiding in fiscal management and potentially funding various public expenditure programs. This move by the RBI underscores its strong financial performance and the positive outlook for India’s economic growth. The enhanced dividend payout comes at a critical time, supporting the government’s efforts to manage its fiscal deficit and fund developmental initiatives. The decision reflects the RBI’s commitment to maintaining a robust financial position while supporting the government’s economic agenda.  

Central Government Employees Anticipate Pay Hike and Arrears on March 30: 7th Pay Commission Updates

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Central government employees are eagerly awaiting potential salary increases and arrears, with reports suggesting that they might receive them on March 30, a day earlier than usual, due to March 31 falling on a Sunday. However, the Reserve Bank of India (RBI) has instructed banks to operate on March 31, despite it being a non-working day, as it marks the end of the financial year. The increase in salaries is linked to the dearness allowance (DA) for employees and pensioners, calculated based on the latest Consumer Price Index for Industrial Workers (CPI-IW) data. The increment follows the accepted formula recommended by the 7th Central Pay Commission. Earlier this year, the government approved a 4 percent rise in DA, effective from January 2024, bringing it up to 50 percent. This elevation in DA triggers corresponding increases in House Rent Allowance (HRA) and various special allowances, benefiting millions of central government employees and pensioners. The last increase in DA occurred in October 2023, when it rose from 42 percent to 46 percent, benefiting nearly 49 lakh central government employees and over 67 lakh pensioners. Additionally, the government had approved Diwali bonuses for certain officials, setting a limit for non-productivity linked bonuses. The anticipation of salary hikes and arrears reflects the government’s commitment to enhancing employee welfare, particularly during a challenging economic period.

RBI Approves Merger of Fincare Small Finance Bank with AU Small Finance Bank

Leave a Comment / By / Human Resource Community

The Reserve Bank of India (RBI) has given its approval for the merger of Fincare Small Finance Bank Ltd with AU Small Finance Bank Ltd, effective from April 1, 2024. Following the merger, all branches of Fincare Small Finance Bank Ltd will operate as branches of AU Small Finance Bank Ltd. This decision from the RBI comes after the Competition Commission of India (CCI) had previously approved the merger of the two banks. As per the CCI statement, the merger involves Fincare and AU, with AU being the entity resulting from the merger. Shareholders of Fincare will receive shares in the merged entity following the combination. AU Small Finance Bank offers a range of personal and commercial banking services, including deposits, loans, debit and credit card services, institutional banking, and digital banking services. Headquartered in Jaipur, AU Small Finance Bank operates under the AD-II bank category for foreign exchange transactions and provides ancillary services such as the distribution of insurance and investment products like mutual funds. On the other hand, Fincare Small Finance Bank offers deposit services like savings and current accounts, fixed deposits, and recurring deposits, along with lending services such as retail and microfinance loans. Additionally, Fincare provides digital banking services and distributes insurance products. The merger between Fincare Small Finance Bank and AU Small Finance Bank is expected to streamline operations and enhance the range of services offered to customers across the country.