Banking Current Affairs 2015

RBI relaxes KYC norms for Non-Banking Financial Companies (NBFC’s)

Reserve Bank of India (RBI) has relaxed Know-Your-Customers (KYC) norms for Non-Banking Financial Companies (NBFCs).

In this regard, RBI has amended the KYC norms in order to remove the practical difficulties and constraints being faced by NBFC’s in getting KYC documents at frequent intervals.

Previously, as per the norms it was necessary for NBFC’s to undertake KYC once in every 5 years for low risk category customers and once in two years for both high and medium risk categories.

But as per new norms, full KYC exercise will be required to be done at least every 10 years for low risk and at least every 8 years for medium risk individuals and entities.

While for the high-risk individuals and entities, it should be done in at least every 2 years.

This full KYC exercise will be done by taking into account whether and when client due diligence measures have previously been undertaken and the adequacy of data obtained.

However, the new norm does not mention physical presence of clients for such periodic updations.

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RBI signs an information sharing agreement with US banking regulators

Reserve Bank of India (RBI) has signed an information sharing agreement with United States (US) banking regulators for better coordination with them in supervising financial institutions.

Earlier in December 2014, RBI had concluded a Statement of Co-operation (SoC) on “Supervisory Cooperation and Exchange of Supervisory Information” with the US banking regulators  like Board of Governors of the Federal Reserve System(FRB), Office of the Comptroller of Currency (OCC) and Federal Deposit Insurance Corporation (FDIC).

SoC was signed by Michael S Gibson- Director, FRB; Martin Pfinsgraff, Senior Deputy Comptroller-OCC; Doreen R Eberley, Director-FDIC and Indian counterpart P R Ravi Mohan, Chief General Manager-in-Charge, Department of Banking Supervision, RBI.

  • RBI by signing such MoU/SoC with supervisors of other countries is seeking to promote greater co-operation and share supervisory information among the authorities.
  • In this regard, RBI in total has signed 22 such MoUs, one Letter for Supervisory Co-operation and one SoC, with overseas regulators/supervisors.

Background

In September 2014, during Prime Minister Narendra Modi’s visit to the US, both countries had issued a joint statement to boost the efforts of the RBI and American banking regulators and supervisors for exchange of information to enhance the effectiveness of cross border supervision.

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Government splits Chairman & MD post in PSU banks and names chiefs for 4 PSU banks

Government has decided to separate the post of Chairman and Managing Director (MD) and Chief Executive Officer (CEO) in public sector banks.

With this decision government is breaking the tradition of having the heads of state-run banks act as both chairman and managing director.

As per the Finance Ministry, the Chairman in public sector banks other than State Bank of India (SBI) will be a part- time board member. He will preside over the board meetings and will not be an Executive Chairman.

This means that for the first time, PSU banks will have a non-Executive Chairman, giving operational responsibility to Managing Director and Chief Executive Officer (CEO).

In pursuance of the decision, the government has appointed four Managing Directors and CEOs of following 4 PSU banks

  • Koteeswaran was named as MD and CEO of Indian Overseas Bank.
  • Srinivas was named as MD and CEO of United Bank of India.
  • Animesh Chauhan was named MD and CEO of Oriental Bank of Commerce.
  • Kishore Sansi was named MD and CEO of Vijaya Bank.

Above 4 MD’s and CEO’s will have tenure of 3 years or till the date of superannuation, whichever is earlier. These appointments were made based on the recommendations of Appointments Board chaired by the Reserve Bank of India (RBI) Governor.

Government also has decided to go for a fresh selection procedure for the post of Chairman and MD and CEO in Bank of Baroda, Punjab National Bank and Canara Bank, which are ‘A’ category large banks.

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