Reserve Bank of India Current Affairs - 2020

RBI enhances scope of Special Non-Resident Rupee accounts

The Reserve Bank of India (RBI) has enhanced scope of ‘Special Non-resident Rupee’ (SNRR) by allowing persons residing outside India to open such accounts for purposes such as- (a) external commercial borrowing (ECB), (b) trade credit and and (c) Trade (Export/ Import) Invoicing, in domestic currency. The step is taken to popularise cross-border transactions in Indian rupee (INR).

Key Highlights

Objective: The step is taken with a view to promote usage of INR products by persons’ resident outside India. Other reasons for allowing such move includes export/ import invoicing and business related transactions outside International Financial Service Centre, all in domestic currency of INR.

The apex bank, RBI in consultation with Government of India has been decided to expand the scope of SNRR Account by permitting non-residents to open such accounts for rupee denominated overseas borrowings and trade credit/ invoicing for popularising cross-border transactions in domestic currency.

Any person resident outside India, having a business interest in India, can open a non-interest bearing SNRR account with a bank for bona fide transactions in INR. In addition to this, the RBI, in consultation with government has decided to rationalise certain other provisions for SNRR Account such as removing the restriction on tenure of SNRR account (which is currently 7 years) has for purposes given above.

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Kerala govt gets RBI’s nod for formation of Kerala Bank

The Reserve Bank of India (RBI) has given its final nod to Kerala Government for the formation of Kerala Bank. The final nod by RBI was subjected to certain conditions. RBI’s approval is valid only till 31 March 2020.

Key Highlights

The proposed Kerala Bank would be formed by merging 13 District Co-operative Banks (DCBs) with Kerala State Co-operative Bank. With its formation, the proposed Kerala Bank will be the largest banking network in the state.

The setting up of new bank would also be in accordance with final verdict of some cases pending before a court in this regard.

As per the state government the objective behind formation of Kerala Bank was to strengthen cooperative sector. However it is also suspected that the move would destroy the traditional cooperative sector.

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