RBI unlikely to extend relaxation granted to banks last year to comply with its CCB norms; gives first 'in-principle' nod to convert an urban cooperative bank into a small finance bank; allows category–I banks to offer foreign exchange prices to customers beyond market hours.
The RBI may not extend the relaxation given to banks last year to comply with its capital conservation buffer (CCB) norm of 2.5% by the end of FY20.
Good to Know: CCB is the amount banks have to set aside to absorb losses during times of stress.
The deferment of the CCB’s last tranche of an additional 0.625% from 1.875% in March 2019 to 2.5% in March 2020 had left banks with ?37,000cr of extra capital, on the back of which they could have increased lending by ?3.5trn. This headroom will not be available in FY21 unless PSBs are adequately recapitalised. BS
The RBI has granted ‘in-principle’ approval to Saharanpur-based Shivalik Mercantile Cooperative Bank to convert into a Small Finance Bank (SFB) on January 6th, making it the first such lender to have opted for the transition.
On being satisfied that the applicant has complied with the requisite conditions laid down by it as part of “in-principle” approval, the RBI would consider granting it a licence for the commencement of banking business under Section 22 (1) of the Banking Regulation Act, 1949 as an SFB,” the regulator said. Moneycontrol
The RBI has permitted category–I banks to offer foreign exchange prices to users at all times, out of their Indian books, either by a domestic sales team or through their overseas branches.
The move is likely to help traders hedge their bets on the domestic front. ET Markets Forex
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