As part of the Agenda for 2024-25, the Department of Regulation (DoR) will focus on certain key deliverables
FinTech BizNews Service
Mumbai, May 31, 2024: RBI released its ANNUAL REPORT 2023-24 on 30 May, 2024. The report contains Part I: The Economy: Review and Prospects and Part II: The Working and Operations of The Reserve Bank of India.
During 2023-24, the Reserve Bank continued with initiatives to build a resilient and sound financial system. Several regulatory and supervisory measures were implemented in line with global best practices towards further strengthening of governance, risk management practices and capital buffers.
Agenda for 2024-25
During 2024-25, the Department of Regulation (DoR) will focus on the following key deliverables:
• Review of guidelines on valuation of properties based on international best practices (Utkarsh 2.0);
• Regulatory framework for web-aggregation of loan products;
• With a view to strengthen the extant regulatory framework governing project finance and to harmonise the instructions across all REs, the extant prudential norms for projects under implementation were reviewed, and a comprehensive regulatory framework applicable for all REs is proposed to be issued;
• In January 2023, the Reserve Bank released a discussion paper on securitisation of stressed assets to seek comments from market participants. The final guidelines will be issued after examining the stakeholders’ comments;
• The extant regulations on interest rates on advances vary across REs. In order to harmonise the same, a comprehensive review of the extant regulatory instructions is underway;
• A discussion paper on introduction of expected credit loss (ECL) framework for provisioning by banks was issued on January 16, 2023, soliciting comments from stakeholders. While comments on the discussion paper are being examined, an external working group - comprising of domain experts from academia, industry and select major banks - was constituted to holistically examine and provide independent comments on some of the technical aspects. The recommendations of the working group would be duly factored in while framing the draft guidelines;
• Delineating the role of various committees (viz., Audit Committee of the Board, Nomination and Remuneration Committee, and Risk Management Committee) in NBFCs as mentioned in the scale-based regulatory framework issued on October 22, 2021;
• Reviewing the requirement of obtaining prior approval of the Reserve Bank for change in management of NBFCs/housing finance companies (HFCs), which would result in change in more than 30 per cent of the directors, excluding independent directors;
• In view of the operationalisation of a new overseas investment regime under Foreign Exchange Management (Overseas Investment) Rules, 2022, a review of extant guidelines on overseas investments by NBFCs and core investment companies shall be undertaken;
• In April 2021, an external committee was set up by the Reserve Bank to review the existing legal and regulatory framework applicable to asset reconstruction companies (ARCs) and recommend measures to enhance their efficacy. Major recommendations of the Committee were implemented vide circular dated October 11, 2022. Remaining recommendations of the Committee shall be examined and implemented during 2024-25;
• Standalone primary dealers (SPDs) are placed in middle layer of the scale-based regulatory framework for NBFCs. However, unlike NBFCs, the SPDs are subject to guidelines on minimum capital requirements for market risk in view of their exposure to government securities and other market related products and are also eligible to undertake various core and non-core activities which a NBFC is not allowed to undertake. A review of the framework for market risk for SPDs would be undertaken to bring about convergence with Basel III standards for banks; and • Connected lending can involve moral hazard issues leading to compromise in pricing and credit management. The extant guidelines on the issue are limited in scope and are not applicable uniformly to all REs. As announced in the Reserve Bank’s Statement on Developmental and Regulatory Policies (December 8, 2023), a unified regulatory framework on connected lending for all the REs will be put in place for which a draft circular will be issued for public comments.
