 "Raghuram Rajan, RBI")
Concerned over rising bad loans, the Reserve Bank of India (RBI) will soon come out with a draft framework on large exposure of bank loans to corporates.
"Taking into account the views and suggestions from stakeholders on the discussion paper on 'Large Exposures Framework and Enhancing Credit Supply through Market Mechanism', a fresh discussion paper will be issued by April 30, 2016, on large borrowers meeting part of their funding requirements from markets," RBI Governor Raghuram Rajan said.
A draft circular on the Large Exposures Framework will be issued for public comments in June 2016, which is to be implemented by January 1, 2019, he said, after unveiling the first bi-monthly monetary policy review for 2016-17.
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In order to promote start-ups in the country, RBI will also release norms with respect to deferred payment.
"In addition, guidelines in respect of deferred payment through escrow/indemnity arrangement for transfer of shares, enabling investment by foreign venture capital investors in start-ups and overseas investment operations for start-ups will be issued soon in consultation with the government," he said.
The simplification of process for dealing with delayed reporting of FDI transactions and provisions for an enabling external commercial borrowing regime for start-ups are being examined by the government and RBI.
On rationalisation of the branch authorisation policy, RBI said there is need to review in light of changes in mode of delivery of banking services.
Currently, banks provide services through a variety of business outlets — branches, extension counters, satellite offices, mobile branches, ultra small branches and the like.
The current policy approach is to facilitate adequate outreach of banking outlets in unbanked areas while at the same time providing autonomy to banks to decide their business strategy.
"Given that regulations are written in terms of branches, with a view to facilitating financial inclusion and providing flexibility on the choice of delivery channel, it is proposed to redefine branches and permissible methods of outreach, keeping in mind the various attributes of the banks and the types of services that are sought to be provided," it said.
As there is improvement in the situation, RBI said, it has been decided that it is not necessary to activate counter-cyclical capital buffers at this point in time.
It further said a Supervisory Enforcement Framework intended to meet the principles of natural justice and global standards of transparency, predictability, standardisation, consistency, severity and timeliness of action will be formalised by June 2016.
