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RBI - Banking regulation (Commercial banking (Policy framework (Issuance…

- - - - enhanced CS - bc of different reach, liquidity, capitalization and market power
      - Few initiatives in that direction
        
        licensing policies regarding Universal Banks, Small Finance Banks and Payments Banks
    - - 2013 licensing guidelines
        
        IDFC Bank Limited and Bandhan Bank Limited
      - From 2013 exp
        
        On tap licensing 2016
    - - 2014 guidelines
        
        Licenses to small Finance Banks and Payments Banks
        
        "niche" or "differentiated" banks, with the common objective of furthering financial inclusion
    - - Basel III Capital Regulations by Mar 2019 instead of 18 - closer to Jan 2019 (internationally agreed)
    - - For the directors on the boards of commercial banks (excluding RRBs) have been broadened to include
        
        IT
        
        PSS
        
        HR
        
        Risk management
        
        Biz m/m
    - - credit risk management function separate from the credit sanction process
      - banks are required to frame a Board-approved policy
      - Clearly defined roles for CRO
      - CRO - should not have any reporting relationship with business verticals or business targets
      - “dual hatting” will be allowed i.e., CRO shall not function as CEO/COO/CFO/Chief of Internal Audit
  - - - Global fin crisis - bc of build-up of excessive on-balance sheet and off-balance sheet leverage in banking system
      - R/C of BCBS - RBI - revised guidelines on the leverage ratio
        
        RBI - LR >=4.5%
        
        Basel II >=3%
      - LR - Tier 1 Cap/ Total exposure
    - - to gradually aligning them with the revised global standards
      - reviewed exposure norms in 2014-15
      - will help in risk mitigation during cyclical downturns
        
        bc banks exposure under the framework will be more granular and diversified to a large number of unrelated counterparties
        
        rather than being concentrated to a handful of large and related counterparties
    - - counter-cyclical buffers
      - directly dealing with stress through effective resolution regimes
      - Credit information and the resolution regime and IBC
      - Establish Resolution fund in coordination with FSDC
- - - - Three-tier system
        
        Agricultural Credit Societies (PACS) at the village level
        
        Outside BR 1949 (not regulated by RBI)
        
        Central Cooperative Banks (CCBs) at the district level
        
        State Cooperative Banks (StCBs) at the State level
        
        StCBs/DCCBs - reg under State Cooperative Societies Act of the State concerned
        
        regulated by RBI
  - - - State Cooperative Societies Act of the State concerned or
      - Multi State Cooperative Societies Act, 2002 (if multiple states)
  - - - respective State Governments/Central Government
    - - RBI under sec 22,23 Banking Regulation Act, 1949 (as applicable to Coop societies)
  - - - Task Force for Co-operative Urban Banks
      - State level task force for a states
      - Central task force for multi state UCBs
      - part of MoU
      - Brings all decision makers under one table -quick decision making
      - What they do?
        
        Identification of viable ones - revival path
        
        non-disruptive exit route for the non-viable ones
        
        through merger/amalgamation with stronger banks
        
        conversion into societies or liquidation as the last option
    - - take immediate action on requisitions of the Reserve Bank for supersession of the Board of Directors
      - appointment of liquidators
      - initiating action for removal of CEO/Chairman of a bank
      - enhancing quality of HR and IT resources in the banks on the lines required by RBI
      - corporate governance
        
        minimum fit and proper criteria for members to be eligible for seeking election for the post of director
        
        institute special audit by Chartered Accountants
        
        furnish reports of the findings within a given time frame
        
        introduce long form audit reports for conducting statutory audit
        
        modify its audit rating models to bring it on par with the rating system of RBI conduct statutory audit only through external Chartered Accountants in respect of banks with deposits over a specified minimum level
    - - Department of Co-operative Bank Regulation (DCBR)