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  PBBL Board Reconstituted: Interesting Questions to answer Paytm Payment Bank Ltd (PBBL) reconstituted its board with two ex-bankers, who held very high positions in PSBs and two ex-IAS officers joining as independent directors. All of them along with the existing CEO explained that the goal is to make PBBL a paragon of regulatory compliance and fostering a culture of best practices. OCL also withdrew its nominee and its founder promoter also resigned from his position as part-time Chairman of PBBL. What is surprising is the timing of the rejig. Please see the following sequence of events 1. RBI has prohibited credits in customers accounts/PPIs/wallets etc of PBBL after 15th March 2024. 2. RBI Governor indicated that there is hardly any chance for the regulator to review its decision on the restrictions imposed on PBBL 3. RBI advised NPCI to examine the request of OCL application of TPAP with a rider that the UPI handle of paytm be migrated from PBBL to a set of 4-5 banks for acti...

  Green  Deposits: Not yet bankable! Introduction : Green Deposit Scheme, introduced by Reserve Bank of India (RBI/regulator) last year, was in the news recently, when State Bank of India disclosed that it has approached the regulator to reduce the Cash Reserve Ratio requirements for such deposits. Probably, SBI might have highlighted the accounting and audit costs involved to  ensure that the said deposits are used for financing green projects only. It will be worthwhile to see a brief of the scheme, before looking into how such deposits are marketed at present and also whether green deposits will see a decent traction in future. Brief of the Scheme: With a view to fostering and developing a green finance ecosystem in the country, RBI has put in place a framework, effective from 1st June 2023, for acceptance of Green Deposits by the Regulated entities (REs). All scheduled commercial banks, deposit taking NBFCs including Housing Finance Companies (HFCs) were covered....

PBBL: Supervisory Non compliance - Continuation of an unending series of IT lapses by FIs When core banking solution (CBS) was introduced in my Bank in 2005, I was heading a major branch in a metropolitan centre. After the bank successfully migrated to CBS, we were canvassing customers for availing personal and corporate internet banking facilities. When I approached the ED of one of the most reputed NBFCs, enjoying comprehensive credit facilities with a consortium of banks (our bank was a member of the consortium), he flatly refused to have an internet banking facility for his personal account even for viewing purposes. He said, "Viswanathan, I do not have faith in the capability of the bank to safeguard my account and protect the data, without being misused". He was very firm and did not even take an ATM debit card. Whether he changed his mind now, I am not aware.  When Reserve Bank of India (RBI/regulator) directed Paytm Payments Bank Ltd. (PBBL) to stop onboarding of new...

 MPC decides status quo MPC meeting decisions and communications in a nutshell: 1. Repo rate uunchanged at 6.5%. Stance also is unchanged as "r emaining focused on withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth".   Clear indication that RBI wants bank credit growth should moderate, especially where credit risk weights have been revised. 2. RBI also conveys that liquidity strains are not witnessed. The deficit has not crossed 1% of DTL (Rs.2.5 lac cr.) even in peak times. The Governor outlined the strategy to manage liquidity: VRR will be used to pump in liquidity, when there is deficit and VRRR will be used, when it feels there is a need  correct low level overnight lending rates. Statement on development and regulatory policies announced by RBI.  Three are found interesting. 1 KFS (Key Financial Starement) for retail and MSME loans & advances:  This is already in vogue for personal and micr...

MPC is likely to vote on account! Finance Minister Smt. Nirmala Sitharaman sprang a surprise by presenting a 'true Votes on account' Interim Budget to the Parliament on 1st February 2024. Even her predecessor, Shri Piyush Goyal came out with a 'sop' of DBT of Rs.6000 per year to farmers in his interim budget presented to Parliament, prior to 2019 elections. Honestly, I thought she might enhance the per annum to DBT to farmers to Rs.7500 from the present levels. Inflation and shortfall in rains in majority of the states would have come in handy to support such a step. But she chose otherwise. Congratulations to the FM for walking the talk she made. Repo Rate: Taking a cue from FM, the MPC may well decide to continue the pause in repo rate for the sixth consecutive time. Though  (i) comfortable forex reserves, (ii) rupee versus dollar continuing in the Rs.82- Rs.83 corridors, (iii) CAD  is down year on year, (iv) average crude oil prices remaining below USD 85 per barrel...