Business NewsNews

The Reserve Bank of India (RBI) tightened rules on banks’ statutory auditors saying it reserved the right to not approve appointments of such auditors for a specified period if their audit quality was not found satisfactory. The RBI said it will take action against statutory auditors of banks in case of any lapses in their auditing processes including instances such as misstatement of a bank’s financial statement or wrong information in audit report. The framework would cover, inter alia, instances of divergence identified in asset classification and provisioning during the RBI inspection vis-à-vis the audited financial statements of banks.

[Source: The Economic Times]

Legislation UpdatesNotifications

Reserve Bank of India (RBI) has issued instructions to banks regarding the safety of bank lockers for exercising due care and necessary precaution for the protection of the lockers provided to the customer, reviewing the systems in force for their operation on an ongoing basis and taking necessary steps, having well-documented security procedures, properly training staff concerned in the procedure, and internal auditors ensuring that procedures are strictly adhered to. Further, as per an RBI communication to banks (in the context of an incident of bank burglary in which safe deposit lockers were broken open and jewellery reportedly taken away), the liability of the bank depends on the facts and circumstances of the incident and that despite the conditions of the lease agreement that lessees should insure the contents of the lockers, bank can be held liable if negligence is proved (having regard to the conditions of the strong room, the lockers, the safeguards, require in the light of the location etc.).

As per inputs from Public Sector Banks (PSBs), during the last three financial years and for the period up to 31.7.2018 in the current financial year, 43 cases of theft took place in the lockers of PSBs and the approximate amount of loss reportedly suffered by customers is Rs. 16.8 crore? .State / Union territory-wise details of theft from bank lockers of PSBs, reported by PSBs during the said period, are at Annexure. PSBs have informed that FIRs were lodged in all the cases, some arrests have been made by the police, and valuables worth Rs. 6.5 crore have been recovered so far in respect of these cases.

As per inputs from PSBs, banks exercise reasonable care and precaution for the protection of the strong room and the lockers provided, and that security measures including security of locker rooms are reviewed periodically. To strengthen security of lockers, banks also monitor access to locker rooms by CCTV cameras and install burglar alarms. Liability to compensate is governed by provisions of extant applicable laws, such as the Indian Contract Act, 1872, and as such, no specific legislation in this regard is proposed.

Ministry of Finance

Hot Off The PressNews

Supreme Court: The bench of J.S. Khehar, CJ and Dr. D.Y. Chandrachud, J asked the Centre and the Reserve Bank of India to consider the option of allow the deposit of the old Rs. 500 and Rs. 1000 notes to those who were not able to deposit the demonetised notes due to0 genuine and compelling reasons.

Citing an example of one such situation, the Court said that if a person was in jail during the period and was not able to deposit the notes without any fault of his then how can such person be barred.

The Court has granted 2 weeks’ time to the Centre and RBI to submit their response.

Source: PTI

Legislation UpdatesRules & Regulations

The Reserve Bank of India, in exercise of the powers conferred under section 45JA of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, issued Non-Banking Financial Company – Account Aggregator (Reserve Bank) Directions, 2016  for compliance of the same by every non-banking financial company undertaking the business of Account Aggregator. These directions shall come into force with effect from the date of notification, by the Bank in the Official Gazette, of a non-banking institution that carries on ‘the business of an account aggregator’ to be a non-banking financial company, under sub-clause (iii) of clause (f) of section 45I of the Act. These directions provide a framework for the registration and operation of Account Aggregator in India.

To read the Directions, click HERE

Reserve Bank of India

Amendments to existing laws

In exercise of the powers conferred by Section 6(3)(g) and Section 47(2) of the Foreign Exchange Management Act, 1999, the Reserve Bank of India made amendments to the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 by an amendment called Foreign Exchange Management (Export and Import of Currency) (Amendment) Regulations, 2014 dated 4th June, 2014. Amendment to Regulation 3(1); has been made according to which any person who is a resident of India should not take outside or bring back to India(except Nepal or Bhutan) currency notes of amount exceeding Rs. 25000 per person. Also, Regulation 3(1A) has been added according to which any person resident outside India (except a citizen of Pakistan or Bangladesh) who is visiting India should not bring into or take outside India currency notes of amount exceeding Rs. 25000 per person.

To read the notification, click here