June 2021

www.ramyaedu.
com
BANKERS PLUS June

June 2021
2021
Volume II, Issue 3
Lost a Got myself

Colleague Infected
Family Lost a
Members are family
infected member
Future is Third Wave

uncertain may hit hard
Responding to the Pandemic: Have Trust, be Disciplined,

Explore Anew !
Bankers Plus-Monthly e magazine by Ramya Education Enterprise
BANKERS PLUS
VOLUME II, ISSUE 3 | JUNE 2021
CONTENTS
COVER PAGE ARTICLE
RESPONDING TO THE PANDEMIC:
HAVE TRUST, BE DISCIPLINED,
EXPLORE ANEW!
--Dr. Ashok M V
Page- 1-5
REGULATORY UPDATES
Page- 6-32
UPDATES
BANKING & FINANCIAL
SECTOR
Page- 33-41
KNOWLEDGE HUB
Page- 42-57
QUIZ TIME
Page- 58
The copy of this e -magazine is intended for the use of Subscribers only.
Unauthorized sharing is prohibited and liable for appropriate action taken
by the publisher.
BANKERS PLUS, Published by, Ramya Education Enterprises, 5G-
807, Provident Sunworth, Mysore Road, Bangalore-60 | 09819952288
Bankers Plus
Volume II, Issue 3 June 2021
Welcome to June 2021 edition of Bankers Plus. Hope all of you and
your family members are safe at this Pandemic situation.
Impact of second wave of Covid-19 on India is multifold than
expectation. Many lives are lost and situation went out of the control.
Though countrywide uniform Lockdown norms are not implemented,
most of the states have imposed local lock downs which has
significantly affected most of the businesses mainly MSME segment.
Many sectors such as Hotels, Transportation, Automobiles, Retail
and Clothing Industry , Entertainment etc got significantly affected.
The latest measures of the Government to support the stressed
sectors such as Resolution Plan 2.0, Expansion of scope of
ECLGS, Introduction of ECLGS 3.0 and 4.0 are appreciable. But I feel,
for the sectors which are significantly affected such as Transportation,
Hotels, Travel & tourism etc, these measures may not be adequate.
Government should think of Equity support rather than debt support
to uplift them and bailout them from this situation.
I thank all the contributors for the Knowledge hub section of this
month‟s edition. All the bankers are working under stressed conditions
and Covid-19 has significantly affected them and their families. For all
bankers, Dr. Ashok MV is bringing ray of hopes through his valuable
inputs to cope up with the pandemic through his article „Responding
to the Pandemic: Have Trust, be Disciplined, Explore Anew!‟. My
sincere thanks to Dr. Ashok M V for accepting our invitation and
writing this valuable article.
Please email your feedbacks to [email protected].
Shivaprasad K
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Bankers Plus- June 2021
COVER PAGE ARTICLE
Responding to the
Pandemic: Have Trust,
Bank
be Disciplined, Explore
Anew!
Dr. Ashok M V
When I was requested to write a note on coping with the pandemic for
this wonderful magazine accessed by bankers, I did not wish to
duplicate one more round of medical advice. In the last 12 months,
almost everyone reading this magazine has experienced or heard of
tragic events in close family or amongst friends. All of us have
shuddered at the thought of lying alone in strange medical wards,
where even a comforting nurse or doctor‟s face is not directly visible,
let alone caring family members. I know of a brave man who bid
good-bye to his family on zoom, before being intubated, never to
return. And all have heard of guidelines, updated guidelines, change
as a constant in our understandings and recommendations. And
unfortunate administrative errors and even sad attempts at
profiteering. These have only added to concerns about health care
systems making all of us feel cornered, frightened, and helpless.
At the outset, a word for those who have lost family members in
these times. You may feel gutted by what appears like disappearance
virtually. Perhaps, you just did not see them after some time. You did
not grieve well, because you did not get time with them after they left.
You feel unhappy that you did not act early enough. Just remember
these are universal experiences. Some losses take a long time to
heal. You can help yourself by never blaming yourself. And remember
there are others that need your focus. Or you may need to find a new
focus or purpose.
1
COVER PAGE ARTICLE
Responding to the Pandemic: Have
Trust, be Disciplined, Explore Anew!
These are very challenging, but they need to be done. You may also
worry that you may lose more. A sincere appeal to you to share your
grief with friends and relatives. Never close yourself within.
These are hard times, but these will also pass. Some of the general
modes of coping below may also apply to you. Do try.
What is the correct response to this
scenario, which none of us have been
prepared for or even imagined? Our
hospital has had between 400 and 1000
patients with the infection, at most time
points during the last many months. I
have shared many discussions with my
medical colleagues in this matter.
I have had opportunities to share platforms with families of children
with difficulties. And conducted two surveys of families of children with
developmental disorders, about how they were coping with the current
scenario. And a few broad truths have emerged. In a nutshell, we
must become aware that the fundamental values challenged now are
trust and discipline. And we need to regain them to regain strength.
Firstly, I feel that we need to calm ourselves AND trust a source. This
could be a government guideline or a person that we revere or a
respected relative. We should not heed any other advice, except that
given by them. So, we discover our true God, our point of reference
and stick with that. We should not scurry around feeling unsure of
anything they say. We should simply disregard other sources of data,
especially the ubiquitous electronic media, as far as deciding on our
own plan of action is concerned. And the basic good advice includes -
use of masks, hand washing and avoiding social contact to the
extent possible.
2
COVER PAGE ARTICLE
Secondly, we need to recognise an old truth.
We are truly beaten only if we give up.
Consciously make sure our defined roles are
attended to, as far as possible, every single
day. If you were getting your child to go to
school in the morning, then sit with the same
child at the same time, make sure child has
attended to routines and eaten on time and
then sit with them and get them to study with
you for some time. Make sure you also get to
play with them at another time point in the day. Always have
dedicated time for own and extended family or friends (over phone),
every day or at least every week. The moment you let yourself believe
that it is okay to let some routines slide because of the pandemic, we
unknowingly miss out on our strengths.
This strength comes from having a purposeful routine and
delivering on it daily. If you are a bank employee, who must be at
work with skeletal staff (something my friends and relatives had to
do), still do ensure that you do not leave the house without wishing
your spouse and children. You still need to smile at the security guard
of your apartment and the bank, and you will smile at the small
number of customers who come in. You will try to ensure that each of
the customer goes back, in the same way as they did earlier. With a
grateful smile, I presume; even if their work must wait, because of
current limitations. This will need open empathic discussion with them
and explaining how you would be trying your best to move their task
forward. You do not have to lament at the unfortunate circumstances
or how you have been unfairly loaded with this role, etc. After all, your
role was and is to help the customers. I do not intend this as a
criticism from a customer viewpoint. I am using this to illustrate that
our commitment needs to continue despite changed circumstances.
3
COVER PAGE ARTICLE
At the very moment we say it is okay to be different because we are
helpless, well, it is at that exact moment, that we truly lose the battle.
And the more consciously we stick to our roles, we gain strength, and
health too. It takes away the enervating demoralising distress that
comes from knowing, even subconsciously, that we have given in to
the „forces beyond our control‟.
Third, we need to find those activities and
hobbies which we had side-lined because of
the pace of life and rediscover their magic!
All of us can use the time to learn new skills
– professional or personal. We can learn
music or art; read books we always wanted
to or at least hear all the old songs and see
all the classics we were not having time for!
We can formulate new routines that involve
such tasks.
If we do not do it consciously, we can easily get into idle time, which
will expose us to more sad news and more anxiety. Of course, meet
friends or relatives, if living very close by, following all the rules. Make
them play that old boardgame, which you have both forgotten. Or
explore a hobby together. Commiserate for their loss if any. But, day
in and day out, do not discuss how the world has changed.
And most importantly, use this time to develop a fitness routine.
Physical exercise or yoga or whatever you fancy, learn systematically,
and feel proud of your investment into this. Make it fun for your family
too, to have some „nice moves‟ before breakfast. You will discover
unknown strengths within your own family. Most children, young and
old, would be happy to have novel family times together. This is more
relevant than just criticising screen time or lamenting your
helplessness with it.
4
COVER PAGE ARTICLE
Once we take our eyes off the passing time and the sense of
awareness, one can easily give in to laziness. Many have seen their
BMI rising with each passing week! Take this as a blessing in the form
of time and focus on new activities, so that you are not left with time
to brood.
Do delegate household tasks and let all members participate in

housekeeping. Get your children to learn cooking or teach you how to
use the new laptop! Shared times will easily beat gadgetry. Do try
wholeheartedly. Start by planning joint activities than criticising
children. If you follow an internally driven structure, more children
would do so too. Finally, make sure that the unstructured days do
not let you miss out on sleep routines. This is crucial. The ones
who slept and woke up at the exact timings as before, are certainly
more likely to follow all other suggestions above!
Go on then and create happy memories for the future, when you
will share stories on how you beat the pandemic! Cheers!
About the Author,

Dr. Ashok Mysore is Professor of Psychiatry at
St.John‟s Medical College Hospital, Bangalore.
5
Volume II, Issue 3 BANKERS PLUS
June 2021
Volume II, Issue 2

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UPDATES
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Bankers Plus
Regulatory Updates June 2021
RTGS Credit to MSME

Entrepreneurs
To boost flow of credit to MSME segment and further

encouraging participation of banks in entrepreneurship
development activities, RBI in the month of Feb 2021 allowed,
Scheduled Commercial Banks to deduct the amount
equivalent to credit disbursed to „New MSME borrowers‟ from
their Net Demand and Time Liabilities (NDTL) for calculation
ofSBICAP
the Cashwhich is a subsidiary
Reserve of the State Bank of India has
Ratio (CRR).
set up a SPV (SLS Trust) to manage this operation.
For the purpose of this exemption, „New MSME borrowers‟
shall be defined as those MSME borrowers who have not
availed any credit facilities from the banking system as on
January 1, 2021. This exemption will be available only up to
₹25 lakh per borrower disbursed up to the fortnight ending
October 1, 2021, for a period of one year from the date of
origination of loan or tenure of the loan, whichever is earlier.
By considering the current economic situation and to give
further boost to MSME sector, RBI has decided to extend this
exemption for such credits disbursed up to the fortnight ending
December 31, 2021. Banks are required to report the
exemption availed at the end of a fortnight to RBI under the
item “Any other liabilities coming under the purview of
zero prescription” certified by the CFO.
7
Bankers Plus Regulatory Updates
June 2021
Utilization of Counter
RTGS
Cyclical Provisioning
Buffer
As per RBI guidelines issued in 2011, commercial banks need

to maintain Provisioning Coverage Ratio (PCR) for
Advances of 70 percent with reference to their gross NPA
position. The surplus of the provision under PCR as per
prudential norms should be segregated into an account styled
as “Countercyclical Provisioning Buffer” and this buffer will
beSBICAP
allowedwhich
to beisused
a subsidiary
by banksoffor
themaking
State Bank of India
specific has
provisions
set up
for NPAs a SPVperiods
during (SLS Trust) to manage
of system wide this operation.
downturn, with the
prior approval of RBI.
In the FY 2014-15, banks were allowed to utilise upto 33 per
cent and 50 per cent of countercyclical provisioning buffer
held by them as on March 31, 2013 and December 31, 2014
respectively, for making specific provisions for non-performing
assets.
In order to mitigate the adverse impact of COVID 19 related
stress on banks, as a measure to enable capital conservation,
RBI has decided to allow banks to utilise 100 percent of
countercyclical provisioning buffer held by them as on Dec
31, 2020 for making specific provisions for NPA with prior
approval of their Boards. Such utilization is permitted with
immediate effect and upto March 31, 2022.
8
Regulatory Updates Bankers Plus
June 2021
Periodic Updation of
RTGS
KYC –Relaxation
As per RBI master directions on KYC/AML norms, Regulated

Entities (REs) shall adopt a risk-based approach for periodic
updation of KYC documents of their customers. Periodic
updation shall be carried out at least once in every two years
for high risk customers, once in every eight years for
medium
SBICAPrisk customers
which and once
is a subsidiary in every
of the ten years
State Bank for has
of India low
risk customers from(SLS
set up a SPV the Trust)
date oftoopening
manageofthis
theoperation.
account / last
KYC updation. If the same is not updated, the banks can
impose restrictions on operations in these accounts as per
their board approved policies.
Keeping in view the current COVID-19 related restrictions in
various parts of the country, REs are advised that in respect
of the customer accounts where periodic updation of KYC is
due and pending as on date, no restrictions on operations of
such account shall be imposed till December 31, 2021, for
this reason alone (non updation of KYC documents) , unless
warranted under instructions of any regulator/ enforcement
agency/court of law, etc.
However, banks can continue requesting customers to submit
KYC documents for updation.
9
June 2021
PSL Targets - On- RTGS

lending by SFBs to
NBFC-MFIs
As per present RBI guidelines, lending by Small Finance

Banks (SFBs) to Micro-Finance Institutions (MFIs) for on-
lending is not reckoned for Priority Sector Lending (PSL)
classification.
In view of the fresh challenges brought on by the COVID-19
pandemic and to address the emergent liquidity position of
SBICAP which is a subsidiary of the State Bank of India has
smaller MFIs, RBI has decided to allow PSL classification to
the fresh credit extended by SFBs to registered NBFC-MFIs
and other MFIs (Societies, Trusts etc.) which are members of
RBI recognized „Self-Regulatory Organizations‟ of the sector
and which have a „gross loan portfolio‟ of upto Rs. 500 crore
as on 31st March 2021, for the purpose of on-lending to
individuals.
Bank credit as above will be permitted up to 10% of the bank‟s
total priority sector portfolio as on 31st March, 2021. This
dispensation is valid upto March 31st, 2022. However, loans
thus disbursed will continue to be classified under Priority
Sector till the date of repayment/maturity whichever is earlier.
Loans sanctioned by the commercial banks to NBFC-MFIs are
eligible to get classified under PSL under respective categories
viz., Agriculture, MSME, Social Infrastructure and Others.
10
June 2021
Prepaid Payment
Instruments (PPIs) –
New Guidelines
Prepaid Payment Instruments (PPIs) are the payment

instruments that facilitate purchase of goods and services,
including financial services, remittance facilities, etc., against
the value stored on such instruments. PPIs that can be issued
in the country are classified under three types viz. (i) Closed
System
SBICAPPPIs,
which(ii)
is Semi-closed
a subsidiary ofSystem PPIs,
the State Bankand (iii) Open
of India has
SystemsetPPIs. RBI (SLS
up a SPV has recently
Trust) topermitted following
manage this provisions
operation.
with respect to PPIs.
I. PPI interoperability
Interoperability is the technical compatibility that enables a
payment system to be used in conjunction with other payment
systems. Interoperability allows PPI Issuers, System Providers
and System Participants in different systems to undertake,
clear and settle payment transactions across systems without
participating in multiple systems.
As per the latest guidelines, It shall be mandatory for PPI
issuers to give the holders of full-KYC PPIs (KYC-compliant
PPIs) interoperability through authorised card networks (for
PPIs in the form of cards) and UPI (for PPIs in the form of
electronic wallets).
11
Interoperability shall be mandatory on the acceptance side
and the same needs to be enabled by March 31, 2022. PPIs
for Mass Transit Systems (PPI-MTS) shall remain exempted
from interoperability while Gift PPI issuers have the option to
offer interoperability.
II. Maximum Amount Outstanding in PPIs:
The maximum amount outstanding in respect of full-KYC PPIs
(KYC-compliant PPIs) has been increased from ₹1 lakh to ₹2
lakh.
III. Permitting Cash Withdrawal from Full-KYC PPIs of
Non-Bank PPI Issuers:
The feature of cash withdrawal shall
be permitted in respect of full-KYC
PPIs issued by non-bank PPI issuers
as well.
setThe
up afollowing conditions
SPV (SLS Trust) toshall,
manage this operation.
however, be applicable,
 Maximum limit of ₹2,000 per transaction with an overall
limit of ₹10,000 per month per PPI.
 All cash withdrawal transactions performed using a card /
wallet, shall be authenticated by an Additional Factor of
Authentication (AFA) / PIN.
 Any PPI issuer offering this facility shall put in place proper
customer redressal mechanisms. Complaints in this regard
shall fall under the ambit of the respective ombudsmen
schemes and instructions on limiting liability of customers.
 PPI issuers shall put in place suitable cooling period for
cash withdrawal upon opening the PPIs or loading / re-loading
of funds into PPIs to mitigate the risk of the fraudulent uses.
12
IV. Other Provisions:
The cash withdrawal limit from Points of Sale (PoS) terminals
using debit cards and open system prepaid cards issued by
banks in India has also been rationalised to ₹2,000 per
transaction within an overallRTGS
monthly limit of ₹10,000 across
all locations (Tier 1 to 6 centres).
Additionally, the requirement of submission of data by the
issuers to RBI on the cash withdrawls using prepaid
instruments has been dispensed with.

June 2021

Interest
set up arates payable
SPV (SLS Trust) to manage this operation.
on unclaimed interest
bearing deposits
RBI had last specified the rate of interest payable by banks to

the depositors on the unclaimed interest bearing deposit
amount transferred to the Depositor Education and
Awareness Fund (DEAF) in July, 2018 (3.5% p.a.).
RBI has recently decided to reduce the rate of interest
payable by banks to the depositors/claimants on the
unclaimed interest bearing deposit amount transferred to the
DEAF to 3 percent simple interest per annum with effect from
11th May 2021.
13
June 2021
Government Agency
RTGS
Business Arrangement-
Private Banks
In February 2021, Government of India has permitted Private

Sector Banks for carrying out the Government Business.
Bankers
Based onPlusthis decision, RBI has recently revised
June 2021
guidelines/framework for authorising Scheduled Private Sector
Banks as agency banks of RBI for conduct of government
business which is attracts
SBICAP which agency
a subsidiary of the commission. The has
State Bank of India key
highlights
set upofa the
SPVRBI‟s latest to
(SLS Trust) guidelines in this
manage this regard are
operation.
provided below,
I. For existing Private Sector Agency Banks (already
having agency banking agreement with RBI):
The private sector banks which are already conducting
Government business (Either Central Government or State
Government) can continue the existing business without
obtaining any fresh approval from RBI.
For the purpose of undertaking fresh/additional government
agency business by these existing private sector agency
banks, after obtaining approval from Controller General of
Accounts (CGA) (for Central Government) or the Finance
Department of the State Government (for State Government)
they need to obtain approval from Department of
Government and Bank Accounts – RBI.
14
II. For other private sector banks (not having agency
banking agreement with RBI):
Scheduled private sector banks, not having agency banking
agreement with RBI, but intend to handle Government agency
business, may be appointed RTGS
as agents of RBI upon execution
of an agreement with RBI. This will be subject to the condition
that the concerned bank is not under Prompt Corrective
Action (PCA) framework or moratorium at the time of
making the application or signing of the agreement with RBI.
The choice of accrediting an agency bank or discontinuing
them (including scheduled private sector agency bank) for any
particular government agency business rests solely with the
concerned Central Government Departments /State
Governments.
Approval from is
SBICAP which Department
a subsidiary of theGovernment
State Bank ofand
IndiaBank
has
Accounts
set up–RBI is (SLS
a SPV compulsory
Trust) tofor empanelment
manage as agency
this operation.
bank either to carry out Central or State Government
business. Once RBI authorises a bank for any Government
business, separate approval from RBI with regard to mode
(physical or e-mode) and area of operations is not required
and the same will be decided by the office of CGA (for Central
Government) or the Finance Department of the State
Government, keeping RBI informed in the matter.
Bankers Plus-Monthly e-magazine

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15
June 2021
Amalgamation -
RTGS
DCCBs with the State
Co-operative Bank
Government of India has notified the Banking Regulation

(Amendment) Act, 2020 (39 of 2020) for the State Co-
operative Banks (StCBs) and District Central Co-operative
Banks (DCCBs) with effect from, April 1, 2021. With the issue
of this notification, the amalgamations of the above banks
have to be sanctioned by Reserve Bank of India in terms of the
provisions of the Section 44-A read with Section 56 of the
Banking Regulation Act, 1949. RBI has issued the following
guidelines for considering such proposals for approvals.
 Respective State Government should make the proposal to
amalgamate one or more DCCB/s in the State with the StCB
after conducting a detailed study of the legal framework along
with additional capital infusion strategy, assurance regarding
financial support if required, projected business model with
clear profitability and proposed governance model for the
amalgamated bank.
 The scheme should be approved by the requisite majority of
shareholders (i.e. by 2/3rd of the majority ).
 Such proposal for amalgamation by the state government
should be examined and recommended by NABARD.
16
After the proposal has been submitted, the sanction/
approval by RBI will be a two-stage process. In the first
On
stage, an 'in-principle' approval‟ will be accorded subject to
Tap
fulfillment of certain conditions, following which the processes
TLTROs
for amalgamation may be initiated
RTGS by all concerned.
After meeting all compliance requirements specified in in-
principle' approval, NABARD and Reserve Bank of India
may be approached by these banks for final approval along
with compliance report. To enable the Reserve Bank to
consider the application for sanction, the State Government
shall submit the specified details to RBI.
Major regulatory requirements for considering the
amalgamation of these banks are,
1. There should not be any legal impediments for such
amalgamation.
2. Financial parameters of the amalgamated entity should be
robust. It should have its CRAR above the prescribed
regulatory minimum, Gross NPA below 7% and Net NPA
below 5% and availability of adequate liquid assets. Post-
amalgamation, it should be a profit making and financially
viable entity on sustained basis.
3. The StCB should have a satisfactory track record of
regulatory and supervisory compliance and should have
strong governance/ management practices.
4. DICGC clearance for the amalgamation shall be obtained
by the StCB before applying for final approval.
For complete RBI guidelines & procedures on the
amalgamation,click below. RBI circular-Amalgamation of
STCB & DCCBs-Click here
17
June 2021
On
Tap
TLTROs On
Sovereign
RTGS
Tap Gold Bond
Scheme
TLTRs(SGB) 2021-22
Government of India has recently announced Sovereign

Gold Bond Scheme 2021-22, Series I, II, III, IV, V and VI.
The date of issuances shall be as per the details given in the
calendar below.
S.
Tranche Date of Subscription Date of Issuance
No.
1. 2021-22
set up aSeries
SPV I(SLSMayTrust)
17–21,to2021
manage thisMay 25, 2021
operation.
2. 2021-22 Series II May 24–28, 2021 Jun 01, 2021
3. 2021-22 Series III May 31-Jun 04, 2021 Jun 08, 2021
4. 2021-22 Series IV Jul 12- 16, 2021 Jul 20, 2021
5. 2021-22 Series V Aug 09-13, 2021 Aug 17, 2021
6. 2021-22 Series VI Aug 30- Sep 03, 2021 Sep 07, 2021
The Subscription of the Gold Bonds under this Scheme shall
be open (Monday to Friday) on the dates specified above,
provided that the Central Government may, with prior notice,
close the Scheme at any time before the period specified
above. The investors (Resident Indians in the capacity of
individual or on behalf of minor child, or jointly with any other
individual) need to submit the prescribed application form
along with PAN details to the authorized sellers. GOI will notify
the issue price before the date of subscription begins.
18
June 2021
On
Tap
Indian
TLTROs Insurance Companies
RTGS
(Foreign Investment)
Amendment Rules, 2021
Government of India vide Gazette dated 19th May 2021,

notified Indian Insurance Companies (Foreign Investment)
Amendment Rules, 2021. These new rules further amend the
Indian Insurance Companies (Foreign Investment) Rules,
2015. Few of the major highlights of the Gazette Notification is
provided here.
 The “Total Foreign Investment” in an Indian Insurance
Company, shall mean the sum total of direct and indirect
foreign investment by Foreign Investors in such company,
calculated in such manner as is specified in regulations made
by IRDAI with regard to registration of Indian Insurance
Companies. The limit on foreign investment in an Indian
insurance company has been increased to 74 percent from
the existing 49 percent.
 In an Indian Insurance Company having foreign investment,
a majority of its directors, a majority of its Key Management
Persons, and at least one among the chairperson of its Board,
its managing director and its Chief Executive Officer, shall be
Resident Indian Citizen. If this guideline is not complied, the
same need to be complied within a period of one year i.e.
before 18th May 2022.
19
 In an Indian Insurance Company having foreign investment
exceeding 49 per cent for a financial year for which dividend
is paid on equity shares and for which at any time the
solvency margin is less than 1.2 times the control level of
solvency, not less than 50 per cent of the net profit for the
financial year shall be retained in general reserve; and not
less than 50 per cent of its directors shall be independent
directors, unless the chairperson of its Board is an
independent director, in which case at least one-third of its
Board shall comprise of independent directors.
Complete Gazette Notification of GOI can be viewed by
clicking below,
Gazette notification-Click here

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Bankers Plus
RBIA
Amendment to the
Master Direction on
KYC
RBI has recently amended Master Direction on KYC to

further leverage the Video based Customer Identification
Process (V-CIP) and to simplify and rationalise the process
of Periodic Updation of KYC. Few of the major amendments
made to the Master directions are provided here,
I. SBICAP
Amendments
which pertain to V-CIP
is a subsidiary of Process
the State Bank of India has
set up a Definition
 Amended SPV (SLS Trust) to manage
of V-CIP: Videothis operation.
based Customer
Identification Process (V-CIP) is an alternate method of
customer identification with facial recognition and customer
due diligence by an authorised official of the Regulated entity
by undertaking seamless, secure, live, informed-consent
based audio-visual interaction with the customer to obtain
identification information required for CDD purpose, and to
ascertain the veracity of the information furnished by the
customer through independent verification and maintaining
audit trail of the process. Such processes complying with
prescribed standards and procedures shall be treated on par
with face-to-face CIP .
 Accounts, both deposit and loans, opened using OTP
based e-KYC shall not be allowed for more than one year
unless face to face identification or V-CIP is carried out.
21
RBIA
 REs may undertake V-CIP to carry out,

(a) CDD in case of new customer on-boarding for individual
customers, proprietor in case of proprietorship firm,
authorised signatories and Beneficial Owners (BOs) in case of
Legal Entity (LE) customers. In case of CDD of a
proprietorship firm, REs shall also obtain the equivalent e-
document of the activity proofs with respect to the
proprietorship firm apart from undertaking CDD of the
proprietor.
(b) Conversion of existing accounts opened in non-face to
face) mode using Aadhaar OTP based e-KYC authentication.
(c) Updation/Periodic updation of KYC for eligible customers.
 REs opting to undertake V-CIP, shall have the minimum
required infrastructure and employee training system
specified by RBI.
 V-CIP Records and Data Management: The entire data
and recordings of V-CIP shall be stored in a system / systems
located in India. REs shall ensure that the video recording is
stored in a safe and secure manner and bears the date and
time stamp that affords easy historical data search. The entire
data to be preserved for at least five years after the
business relationship is ended.
22
II. Amendments pertain to Periodic updation of KYC
REs shall adopt a risk-based approach for periodic

updation of KYC. However, periodic updation shall be
carried out at least once in every two years for high risk
customers, once in every eight years for medium risk
customers and once in every ten years for low risk
customers from the date of opening of the account / last
KYC updation. While updating the KYC following revised
guidelines need to be used by the REs.
A. Individual Customers:
(a) No change in KYC information: a self-declaration from
the customer in this regard obtained either through registered
email or through digital channels or through letter suffices.
(b) Change in address: In case of a change only in the
address details of the customer, a self-declaration of the new
address shall be obtained from the customer through
customer‟s email-id registered with the RE, or through digital
channels or through a letter. The declared address shall be
verified through positive confirmation within two months,
by means such as address verification letter, contact point
verification, deliverables etc.
Further, REs, at their option, may obtain a copy of OVD or
deemed OVD or the equivalent e-documents as per their own
board approved internal policy.
23
(c) Accounts of customers who were minor at the time of
opening account on their becoming major: Fresh
photographs shall be obtained on their becoming a major and
at that time it shall be ensured that CDD documents as per
the current CDD standards are available with the REs.
Wherever required, REs may carry out fresh KYC of such
customers i.e. customers for whom account was opened
when they were minor, on their becoming a major.
B. Customers other than individuals:
(a) No change in KYC information: a self-declaration in this
regard shall be obtained either through registered email or
through digital channels or through letter suffices.
(b) Change in KYC information: In case of change in KYC
information, RE shall undertake the KYC process equivalent
to that applicable for on-boarding a new non individual
customer.
C. Additional Amendments:
(a) Banks to have a clear and transparent board approved
policy in this regard. Banks may also takes steps to facilitate
periodic updation of KYC at any branch other than home
branches.
(b) Banks to issue an acknowledgment to the customer
mentioning the date of receipt of the relevant document(s),
including self-declaration from the customer, while carrying
out periodic updation.
Complete RBI notification in this regard can be viewed by
Clicking below,
Amendment in KYC Norms-Click here
24
June 2021
Resolution Framework 2.0

– Resolution of Covid-19
related stress of MSMEs
Due to the outbreak of Second Wave of Covid-19 pandemic,

which affected the businesses, RBI has decided to extend
facility to stressed MSME borrowers for restructuring
existing loans without a downgrade in the asset classification
subjected to following terms and conditions.
(1) The borrowing entity is GST-registered on the date of
SBICAP which of
implementation is athe
subsidiary of the State
restructuring. Bankthis
However, of India has
condition
will not apply toTrust)
MSMEs to manage this operation.
that are exempt from GST-registration
as on March 31, 2021.
(2) The aggregate exposure, including non-fund based
facilities, of all lending institutions to the borrower does not
exceed ₹25 crore as on March 31, 2021 and is a standard
account as on March 31, 2021.
(3) The borrower‟s account was not restructured in terms of
the MSME restructuring scheme 2019 or Resolution frame
work provided in August 2020 during first wave of Covid-19.
(4) The restructuring of the borrower account is invoked by
September 30, 2021.
(5) The decisions on applications received by the lending
institutions under this facility shall be communicated in writing
to the applicant within 30 days of receipt of such applications.
25
(6) The decision to invoke the restructuring under this facility
shall be taken by each lending institution having exposure to
a borrower independent of invocation decisions taken by
other lending institutions, if any, having exposure to the same
borrower.
(7) The restructuring of the borrower account is implemented
within 90 days from the date of invocation.
(8) If the borrower is not registered in the Udyam
Registration portal, such registration shall be required to be
completed before the date of implementation of the plan.
(9) If the account classification is slipped to NPA between
April 1, 2021 and date of implementation, the account to
be upgraded as „standard asset‟, as on the date of
implementation of the restructuring plan.
Upon implementation of the restructuring plan, the lending
institutions shall keep provision of 10 percent of the residual
debt of the borrower. The banks should have a separate
borad approved policies in this regard.
In respect of accounts of borrowers which were restructured
in terms of the MSME restructuring circulars, lending
institutions are permitted, as a one-time measure, to review
the working capital sanctioned limits and / or DP based on a
reassessment of the working capital cycle, reduction of
margins, etc. without the same being treated as restructuring.
The decision with regard to above shall be taken by lending
institutions by September 30, 2021. The reassessed
sanctioned limit / drawing power shall be subject to review by
the lending institution at least on a half yearly basis and the
renewal / reassessment at least on an annual basis.
26
Bankers Plus
Resolution Framework
2.0 – Individuals and
Small Businesses
With an objective of alleviating the potential stress to

individual borrowers and small businesses due to the
outbreak of Covid-19 pandemic, the following set of
measures are being announced by RBI.
I. Resolution of advances to individuals and small
businesses
Lending
setinstitutions are permitted
up a SPV (SLS to offer athis
Trust) to manage limited window to
operation.
individual borrowers and small businesses to implement
resolution plans in respect of their credit exposures while
classifying the same as „Standard‟ upon implementation of
the resolution plan subject to the conditions specified below,
(a) Eligible Category of Borrowers:
 Individuals who have availed of personal loans excluding
the credit facilities provided by lending institutions to their own
personnel/staff.
 Individuals who have availed of loans and advances for
business purposes with an aggregate exposure of not more
than Rs.25 crore as on March 31, 2021.
 Small businesses, including those engaged in retail &
wholesale trade, other than those classified as MSMEs, with
an aggregate exposure upto Rs.25 crore as on Mar 31, 2021.
27
 Borrower accounts should not have availed of any
resolution in terms of the Resolution Framework – 1.0 and
credit facilities extended to the borrower was classified as
Standard by the lending institutions as on March 31, 2021.
(b) Invocation of resolution process
 Lending institutions should frame a board approved policy
in this regard within the period of June 5th 2021.
 The resolution process under this window shall be treated
as invoked when the lending institution and the borrower
agree to proceed with the efforts towards finalizing a
resolution plan to be implemented.
 On receipt of applications from their customers for
invoking resolution process, the decision on the application
shall
SBICAPbe communicated to theofapplicant
which is a subsidiary the State within
Bank of30India
dayshasin
writing.
 The last date for invocation of resolution permitted under
this window is September 30, 2021.
 The resolution plans implemented under this window may
inter alia include rescheduling of payments, conversion of
any interest accrued or to be accrued into another credit
facility, revisions in working capital sanctions, granting
of moratorium etc. based on an assessment of income
streams of the borrower. However, compromise
settlements are not permitted as a resolution plan for this
purpose.
 The moratorium period, if granted, may be for a
maximum of 2 years, and shall come into force immediately
upon implementation of the resolution plan.
28
The extension of the residual tenor of the loan facilities
may also be granted to borrowers, with or without payment
moratorium. The overall cap on extension of residual tenor,
inclusive of moratorium period if any permitted, shall be two
years.
The resolution plan should be finalized and implemented
within 90 days from the date of invocation of the resolution
process under this window.
II. Asset classification and provisioning

If the resolution plan is implemented, the asset classification
of borrowers‟ accounts classified as Standard may be
retained as such upon implementation, whereas the
borrowers‟ accounts which may have slipped into NPA
between invocation and implementation may be upgraded
as Standard, as on the date of implementation of the
resolution plan.
The lending institutions shall keep provisions from the date of
implementation, which are higher of the provisions held as
per the extant IRAC norms immediately before
implementation, or 10 percent of the renegotiated debt
exposure of the lending institution post implementation
(residual debt). Residual debt, for this purpose, will also
include the portion of non-fund based facilities that may have
devolved into fund based facilities after the date of
implementation.
29
III. Working capital support for small businesses where
resolution plans were implemented previously
In respect of borrowers where resolution plans had been
implemented in terms of the Resolution Framework – 1.0,
lending institutions are permitted, as an one-time measure,
to review the working capital sanctioned limits and / or
drawing power based on a reassessment of the working
capital cycle, reduction of margins, etc. without the same
being treated as restructuring. The decision with regard to
above shall be taken by lending institutions by September
30, 2021, with the margins and working capital limits being
restored to the levels as per the resolution plan implemented
under Resolution Framework – 1.0, by March 31, 2022.
IV. Disclosures and Credit Reporting
The number of borrower accounts where modifications were
sanctioned and implemented as per the terms described
above, and the aggregate exposure of the lending institution
to such borrowers may also be disclosed on a quarterly
basis, starting from the quarter ending June 30, 2021.
The credit reporting by the lending institutions in respect of
borrowers where the resolution plan is implemented shall
reflect the “restructured due to COVID-19” status of the
account. The credit history of the borrowers shall
consequently be governed by the respective policies of the
credit information companies as applicable to accounts that
are restructured.
Complete Guidelines can be viewed by clicking below,
RBI Resolution Framework -Click here
30
June 2021
Expansion of Emergency
Credit Line Guarantee Scheme
& Introduction of ECLGS 4.0
On account of the disruptions caused by the second wave of

COVID 19 pandemic to businesses across various sectors of
the economy, Government has further enlarged the scope of
Emergency Credit Line Guarantee Scheme (ECLGS)
recently with the following additional scope and coverage.
(a) Introduction of ECLGS 4.0 : Under this scheme, 100%
SBICAP which
guarantee cover isto aloans
subsidiary of thecrore
up to Rs.2 Stateto
Bank of India has
hospitals/nursing
set up a SPV (SLS
homes/clinics/medical Trust) toformanage
colleges settingthis
up operation.
on-site oxygen
generation plants is provided by NCGTC. The Rate of interest
on these facilities is capped at 7.5%.
(b) Borrowers who are eligible for restructuring as per RBI
guidelines of May 05, 2021 and had availed loans under
ECLGS 1.0 of overall tenure of four years comprising of
repayment of interest only during the first 12 months with
repayment of principal and interest in 36 months thereafter will
now be able to avail a tenure of five years for their ECLGS
loan i.e. repayment of interest only for the first 24 months with
repayment of principal and interest in 36 months thereafter.
(c) Additional ECLGS assistance of upto 10% of the
outstanding as on February 29, 2020 to borrowers covered
under ECLGS 1.0, in tandem with restructuring as per RBI
guidelines of May 05, 2021.
31
(d) Current ceiling of Rs. 500 Cr. of loan outstanding for
eligibility under ECLGS 3.0 to be removed, subject to
maximum additional ECLGS assistance to each borrower
being limited to 40% or Rs.200 crore, whichever is lower;
(e) Civil Aviation sector to be eligible under ECLGS 3.0.
(f) Validity of ECLGS extended to 30.09.2021 or till guarantees
for an amount of Rs.3 lakh crore are issued. Disbursement
under the scheme permitted up to 31.12.2021.

June 2021
KEY POLICY RATES

AS
SBICAP which is a subsidiary of theON
State31.05.2021
Bank of India has
Key Rate-As on 31.05.2021 30.04.2021
Policy Repo Rate 4.00% 4.00%
Reverse Repo Rate 3.35% 3.35%
MSF Rate 4.25% 4.25%
Bank Rate 4.25% 4.25%
CRR 4.00% 3.50%
SLR 18.00% 18.00%
Base Rate 7.40-8.80% 7.40-8.80%
MCLR (Overnight) 6.55% - 7.05% 6.55% - 7.05%
Savings Deposit Rate 2.70% - 3.00% 2.70% - 3.00%
Term Deposit Rate > 1 Year 4.90% - 5.50% 4.90% - 5.50%
32
June 2021
UPDATES FROM BANKING

&
FINANCIAL SECTOR
UPDATES FROM
BANKING
&
FINANCIAL
SECTOR
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CoverBankers Plus
page Article
Industry Updates
June 2021
Industry Updates
Strategic disinvestment
& transfer of
management control in
IDBI Bank
The Cabinet Committee on Economic Affairs, chaired by
Prime Minister has recently given its in-principle approval for
strategic disinvestment along with transfer of management
control in IDBI Bank Ltd. The extent of respective
shareholding to be divested by GoI and LIC shall be decided
at the ANNUAL
time of structuring of transaction
SUBSCRIPTION in consultation
CHARGES-RS. 300/- with
Reserve
PublishedBank of India. only and shared through email and
in e-version
Subscribe
Government online at
of India (GoI) and LIC together own more than
94% of equity of IDBI Bank (GoI 45.48%& LIC 49.24%). LIC
is currently the promoter of IDBI Bank with Management
Control and GoI is the co-promoter.
LIC‟s Board has passed a resolution to the effect that LIC may
reduce its shareholding in IDBI Bank Ltd and sell its stake to a
strategic buyer. It is expected that strategic buyer will infuse
funds, new technology and best management practices for
optimal development of business potential and growth of IDBI
Bank Ltd. and shall generate more business without any
dependence on LIC and Government assistance/funds.
Resources through strategic disinvestment of Govt. equity
from the transaction would be used to finance developmental
programmes of the Government benefiting the citizens.
34
Bankers Plus Cover page Article
June 2021 Industry Updates
Industry Updates
India's first Agriculture
Export Facilitation Center
(AEFC)
Mahratta Chamber of Commerce Industries and

Agriculture (MCCIA), in association with the National Bank
for Agriculture and Rural Development (NABARD),
launched India's first Agriculture Export Facilitation Center
(AEFC) in Pune, Maharashtra recently.
The center
ANNUALaims SUBSCRIPTION
to boost Maharashtra's
CHARGES-RS.
agricultural
300/-
and food
Published
exports by indisseminating
e-version only
need-based
and shared information,
through email
providing
and
Subscribe online at
timely guidance and organizing training courses for all the
stakeholders. It will support capacity building by providing
expert guidance on a range of topics like Orchard
Management, Minimum Residue Level (MRL), Branding and
Marketing, Packhouse & Special Export Treatments, Country-
wise Protocols and Quality Parameters, Advance Export
Certifications, Government Export Schemes and others. This
center will provide the capacity building for agri-food exports. It
also act as one-stop-shop for the export of agri-food
productions.
India ranks 13th in the world ranking for agricultural exports.
Presently Maharashtra exports agri-food products worth 30
million USDs. With this initiative, the state aims to take the
export to 100 million USDs in the next few years
35
Cover Bankers Plus
page Article
Industry Updates June 2021
Industry Updates
Cover page Article SIDBI schemes - SHWAS &
AROG for COVID
preparedness
To help the MSMEs with required financial support, SIDBI has

launched SHWAS (SIDBI assistance to Healthcare sector in
War Against Second wave of COVID19) and AROG (SIDBI
Assistance to MSMEs for Recovery & Organic Growth
during COVID19 pandemic), two new quick credit delivery
schemes . The schemes
ANNUAL are devised
SUBSCRIPTION under the guidance
CHARGES-RS. 300/- from
Government of India only
Published in e-version (GoI) and
which facilitates
shared throughfunding for
email and
production and atservices related to supply of oxygen
Subscribe online
cylinders, oxygen concentrators, oximeters and essential
drugs which are essential in the fight against Covid-19.
These schemes envisage 100% funding up to an amount of
Rs. 2 crore to a MSME unit at an interest rate of 4.50%-6%
p.a., sanctioned within 48 hours after receipt of all the
documents / information. The Term Loan under the scheme is
sanctioned for 60 months with a moratorium of 12 months
and WCTL is sanctioned for a period of 18 months.
In March 2020, SIDBI had also launched SIDBI Assistance to
Facilitate Emergency response against corona virus
(SAFE) scheme to provide financial support to all MSMEs
engaged in manufacturing of hand sanitizers, masks, body
suits, ventilators, testing labs, etc.).
36
Industry Updates
NPCI sets up subsidiary –
NPCI Bharat BillPay Ltd
National Payments Corporation of India (NPCI) has recently

set up a wholly-owned subsidiary firm - NPCI Bharat BillPay
Ltd. (NBBL) which came into effect from April 1, 2021.
The new entity offers various recurring payment services to
customers, including bill payments for electricity, telecom,
DTH, Gas, Education fees, water and municipal taxes, NETC
FASTagANNUAL
recharge,SUBSCRIPTION CHARGES-RS.
Loan repayments, 300/-
Insurance, Subscription
Published in e-version
Fees, Hospital, onlyetc
Credit card andat shared
a singlethrough email
Platform with and
the
Subscribe
brand nameonline at
of „Bharat BillPay‟.
Bankers Plus
Limit for overseas
investment by Alternative
Investment Funds
As per prevailing guidelines, SEBI registered Alternative
Investment Funds (AIFs)/Venture Capital Funds (VCFs)
are permitted to invest overseas, with maximum limit of USD
750 million. SEBI has recently enhanced the limit to USD
1,500million without changing other terms and conditions.
37
Industry Updates
June 2021
Constitution of an Industry Updates

Expert Committee on
Investment Funds
The International Financial Services Centres Authority

(IFSCA) has been established as an unified regulator to
develop and regulate financial products, financial services and
financial institutions in the International Financial Service
Centres (IFSCs) in India. IFSC has been actively engaging
with stakeholders to enhance the Global reach of GIFT-IFSC.
ANNUAL SUBSCRIPTION CHARGES-RS. 300/-
IFSCA, in its endeavour to develop a comprehensive and
Published in e-version only and shared through email and
consistent regulatory framework based on global best
Subscribe online at
practices with a special focus on ease of doing business, has
constituted an Expert Committee on Investment Funds
under the Chairmanship of Mr. Nilesh Shah, MD, Kotak
Mahindra Asset Management Co. Ltd to review the Global
best practices and make recommendations to IFSCA on the
future roadmap for the industry.
The committee will work to identify issues that may be critical
for development of the Investment Funds industry at IFSCs
including inter-regulatory issues. It will also make
recommendations with respect to structure of Investment
Funds in IFSC. The Committee comprises of leaders from the
entire Fund Management ecosystem including from areas
such as technology, distribution, legal, compliance, and
operations.
38
Cover Bankers Plus
page Article
Industry Updates
Connected Commerce:
Creating a Roadmap for a
Digitally Inclusive Bharat
NITI Aayog and Mastercard have recently released a report

titled „Connected Commerce: Creating a Roadmap for a
Digitally Inclusive Bharat‟. The report identifies challenges in
accelerating digital financial inclusion in India and provides
recommendations for making digital services accessible to 1.3
billion population.
The reportin highlights
Published e-version key
only issues
and shared
and through
opportunities,
email with
and
Subscribe
inferences online
and atrecommendations on policy and capacity
building across agriculture, small business (MSMEs), urban
mobility and cyber security. Experts from the government,
banking sector, the financial regulator, fintech enterprises and
various ecosystem innovators participated in the discussions
led by NITI Aayog and supported by Mastercard. NITI Aayog
was the knowledge partner in this research study.
Key recommendations in the report include: Strengthening the
payment infrastructure to promote a level playing field for
NBFCs and banks, Digitizing registration and compliance
processes and diversifying credit sources for MSMEs,
Building information sharing systems, including a „fraud
repository‟ etc. The full report can be accessed by clicking
below, Report: Connected Commerce
39
New CEO for National Industry Updates

Asset Reconstruction
Company Ltd
Shri. Padmakumar M Nair, CGM of Stressed Assets

Resolution Group at SBI, is named as CEO of the National
Asset Reconstruction Company Ltd, the proposed „Bad
Bank‟ for taking over stressed assets of Banking system.
The „Bad Bank‟ was proposed in the latest budgetary
announcement. NARCL is set up to consolidate and take over
the existing stressed debt from banking system and clean the
stressed books mainly in PSBs. It will then manage and
Subscribe online at
dispose of the assets to alternate investment funds and other
potential investors for eventual value realization. NARCL will
pay up to 15 per cent of the agreed value for the loans in cash
and the remaining 85 per cent would be government-
guaranteed security receipts. The government guarantee
would be invoked if there is loss against the threshold value. A
loan classified as fraud cannot be sold to NARCL.
Handbook for Loans and Advances

-Urban Cooperative Banks
(Statutory Guidelines & Best Industry Practices)
Rs. 450/- (Including Courier/Postage)
Buy online
www.ramyaedu.com
40
Cover Bankers Plus
page Article
Mission for Integrated

Industry Updates
Development of
Horticulture-
Allocation of funds
Keeping in view the huge potential and role of the horticulture
sector in increasing farmer‟s income, the Government of India
has allocated Rs. 2250 Crore for development of horticulture
sector during 2021-22.To further promote and for holistic
growth of the horticulture sector in the country, the Ministry of
Agriculture and Farmers Welfare has provided an
enhanced allocation of Rs. 2250 Crore for the year 2021-22
for „Mission for Integrated Development of Horticulture‟
Subscribe online at
(MIDH), a centrally sponsored scheme. The Ministry is
implementing MIDH with effect from 2014-15, for realizing the
potential of the horticulture sector covering fruits, vegetables,
root and tuber crops, mushrooms, spices, flowers, aromatic
plants, coconut, cashew and cocoa. The allocation is
significantly higher than the previous year allocation.
With improved practices and incentives provided, horticulture
production has surpassed the agriculture production in the
country. During the year 2019-20, the country recorded its
highest ever horticulture production of 320.77 million tonnes
from an area of 25.66 million hectares. As per the 1st
Advance Estimates for 2020-21 the total horticulture
production in the country is 326.58 lakh MT from an area of
27.17 lakh ha.
41
June 2021
KNOWLEDGE HUB
LIST OF ARTICLES
S.No Title of Article Author Page
No.
1 Managing our Money during Sh.J Subramaniam 43-46
Covid times
2 One person company– Sh. Malladi 47-50
opportunities and challenges Surya Prakasam
3 Pre-pack: Insolvency Sh. Ravi Mishra 51-53
Resolution option for MSMEs
4 Banking in the coming days- Sh. Deepak N S 54-57
Is the brick and mortar
banking setup going to be
extinct?
Disclaimer: The views of the Authors in the articles are their
personal.
42
Bankers Plus
June 2021 Knowledge Hub
Managing our Money

during Covid times
J Subramaniam
The impact of Covid 19 was immediate, merciless and massive. We
have realised that the world was ill-equipped to cope with a pandemic.
We have also realised that the huge global recession, has been far
from equal across countries. The entire world was knocked off its feet.
Individuals who suffered the infection were left gasping for breath with
a deep hole in their pocket. Even those blessed with deeper pockets
could not purchase immunity and an extended life. Individuals who
successfully battled the infection are today physically, emotionally and
financially drained.
We have today realised the importance of our healthy lungs and its
innate capacity to take in the natural nature‟s oxygen. We have now,
hopefully, learnt not to take things for granted.
Covid has also altered the way we approach our savings and spends.
This catastrophe has exposed the holes in our money management
skills and also taught us many financial lessons for the future.
Post covid pandemic, a recent survey by The Hindu publication
revealed the following:
 One in every two salaried or self-employed person has faced either
a pay cut or a job loss.
 A quarter of the respondents had to incur home care and / or
hospitalisation expenses for self / family.
 Only 36.5 per cent had emergency funds as one of the avenues to
tide over a financial crisis.
43
 Three-fourth of the respondents had to cut down discretionary or
unnecessary expenses.
 30 per cent of the flocks are saving more than what they used to
before covid.
It hurts the most when our loved ones falls sick and the resultant
frantic and an all-out effort to ensure the best medical care sets off a
financial spin and strain. This blow, at a time when the large section
of the working population has witnessed pay cuts and job losses
adds to the pressure.
During a covid induces lower turnover regime, for the business class,
fixed costs such as salaries for staff, rent for the showroom premises
as well as interest on working capital loan becomes a significant
burden. Many had no choice, expect for a silent exit. This has further
lead to job losses, resultant family distress and supply chain
disruptions.
Impact of the pandemic on our personal finances:
 Hospitalisation and home care expenses
 Job loss
 Pay cuts
 More spending on food, essentials, hygiene and healthcare
 More spending on subscription services – Wellness, internet
 More spending on home improvement – work space / gadgets
 Opting to purchase car / bike – seeking safety in private travel
than public transport.
Financial jugglery adopted to overcome the financial impact of
covid:
 Using emergency fund set aside for unforeseen circumstances
 Opting for credit card spends / availing higher credit limits
 Informal loans, personal loans, gold loans, other online borrowing
options
 Selling off mutual funds / shares
 Close fixed deposits
44
 PF withdrawal
 Close post-office small savings scheme
 Surrender insurance policies with high premium outgo
 Purchase health cover
 Exercising discretion in spending, including postponing purchases.
Change in our savings pattern post covid outbreak:

 Consciously started a new contingency / emergency fund ( which
was never thought of earlier).
 Purchased a new insurance cover / topped up the existing health
policy / purchased a new term insurance cover.
 Consciously thinking twice before the actual spend (stopped
unmindful spends / window online shopping).
 More averse now, than ever before, to high return – high risk
avenues.
 Re-orienting to safer options like Bank FDs, EPF, Post Office
schemes.
Money lessons from covid:
 Personal Money Management Skills can pull us out of the financial
ICU.
 With money, we can only do 5 activities – Earn, Spend, Invest,
Donate and Borrow. In our lifetime, let us learn to do it responsibly,
wisely and safely.
 During our early working life, we should invest in knowledge and
skill, so that our active income increases. As we grow older, become
less firm, out-dated and unskilled in a techno driven world, our wise
investments made, should generate enough passive income to take
care of our needs and requirements.
45
 Set aside an “emergency fund” is one lesson that resonates
across age groups and work profiles. Starting with a 6 months
expenses thumb rule it can be gradually stretched to 1 to 2 years
expenses. Banks offer flexi deposit products that need-fully toggle
between a high interest fetching term deposit and the moderately
interest fetching saving deposit account. There is the added
convenience of a personalised cheque book and a customised debit
card. Attractive credit card offers and personal accidental insurance
cover are also loaded into the package to make it incentivising and
attractive.
 The young gen can dabble with emergency fund invested in
stocks and mutual funds for easy liquidity. Right choice and a
continuous active monitoring are the two basic requirements. As a
trade-off for a higher return, there is always a down turn risk
possibility of a total ruin. It will leave us venerable and financially
helpless, when an unforeseen dip in the market coincides with the
emergency needs.
 For the self-employed, the mantra is to always plan and uptick an
alternate source of income. Think in terms of creating a basket of
multiple unrelated income earnings.
 Judicious investment in retirement funds with lower risk and
optimal gains.
 Term insurance and health insurance are basic survival tool
kits. Dressing them with adequate toppings or opting for an
increased cover should now be seriously examined.
During this difficult pandemic time, Let‟s make conscious life-style
changes and truly endeavour to be physically, mentally, emotionally,
spiritually and financially prepared, fit and healthy.
About the Author

J Subramaniam is currently working as Chief Manager
(Faculty) in Union Bank of India posted at Bangalore.
46
Bankers Plus
Knowledge Hub June 2021
ONE PERSON COMPANY–

OPPORTUNITIES &
CHALLENGES
Malladi Surya Prakasam
The concept of “One Person Company” pioneers new scope of
business opportunities and particularly amazing possibilities for sole
proprietorships and entrepreneurs who can enjoy the advantages of
limited liability, and the benefit of separate legal entities as well.
Ministry of Corporate Affairs notified the Companies (Incorporation)
Rules, 2014 under the Companies Act, 2013 which provides for the
formation of „One Person Company‟.
“One Person Company” means a company that has only one person
as a member, as per section 2(62) of the Companies Act, 2013. One
Person Company is a combination of the characteristics of a company
and a sole proprietorship.
Salient Features of OPC:
(a) Minimum Requirements of One Person Company:
OPCs requires minimum one shareholder and minimum one director.
The director and shareholder can be the same person. The OPC
should have minimum one nominee. There is no need for any
minimum share capital in OPCs.
(b) OPC‟s provide Freedom for the Professionally skilled person to
adopt the business of his choice.
(c) It is run by individual yet OPCs are a separate legal entity similar to
that of any registered corporate.
(d) The member and nominee should be an Indian Citizen and a
natural person, resident in India.
(e) One person cannot incorporate more than one OPC or become a
nominee in more than one OPC.
47
(f) If a member of OPC becomes a member in another OPC by virtue
of his being a nominee in that OPC then within 180 days, he shall
have to meet the eligibility criteria of being Member in one OPC.
(g) When a Private Company converts into OPC: The private
company has to file Form INC-6 for converting itself into an OPC.
The paid-up share capital of a private company should not be
exceeding Rs.50 lakhs and should not have an average annual
turnover of more than Rs. 2 crore at the time of such conversion into
OPC.
(h) Death / Incapacity of the member of OPC: The company shall
file form INC-4 in case of cessation of the member of OPC on
account of death, incapacity to contract or change in ownership. In
the same form, a user needs to provide details of the new member of
the OPC.
Advantages of OPCs
(a) Lesser Compliance Related burdens compared to other form of
companies.
(b) OPC allows an individual to take risks without risking his/her
assets, hence the person has limited liabilities. In case of
Proprietorship firm, the promoter has unlimited Liability.
(c) On the demise of the original director, the nominee director will
manage the affair of the company till the date of transfer of shares to
legal heirs of the demised member.
(d) Since, OPCs are managed by single person, easier and quicker
decision making process.
48
(e) There is no requirement to hold annual
or extra-ordinary general body meetings.
The resolution shall be communicated and
entered in the minute‟s book and signed and
dated by the member and such date shall
be deemed to be the date of the meeting.
(f) An OPC being an incorporated legal entity, consists of the feature
of perpetual succession and makes it easier for the entrepreneur to
raise capital for business. Therefore, the claims by the Creditors
against the business cannot be pressed against the owner.
(g) Once the maximum term is expired, mandatory rotation of the
auditor is not applicable.
(h) The financial statements of a One Person Company shall be
signed by sole director. As per the Companies Act, Cash Flow
Statement is not a mandatory part of a financial statement for a One
Person Company.
Disadvantages of OPCs
(a) A Minor shall not be eligible to become a member/nominee of the
OPC.
(b) OPC cannot deal with non-banking financial investment activities.
(c) OPC requires lots of paperwork as compared to a sole
proprietorship. These formalities for the incorporation of One Person
Company might make this concept less attractive for individual
entrepreneurs.
(d) As a corporate form, an OPC cannot avail of the tax slab
advantage. In proprietary concern, tax is required to pay according to
income slab i.e. at 10%, 20% or 30% tax rate. But in the case of one
person company, the firm is directly charged 30% income tax. The
high tax rate is a big disadvantage of a one-person company.
(e) A single person is not eligible to incorporate more than a One
Person Company or become a nominee in more than one such
company.
49
Amendments to OPC law pursuant to budget 2021-22:
Followed by the Budgetary announcement made by the finance
minister in February 2021, following amendments in the companies
act-2013 are made with respect to OPCs.
(a) An one-person company (OPC) can be transformed into a public
company or a private company anytime. The restriction on a waiting
period of two years for doing so has been removed.
(b) The threshold limits of paid-up capital and turnover applicable
for OPCs have been removed so that there are no restrictions on
the growth of OPCs. Earlier, the threshold ceilings on the paid-up
share capital of ₹50 lakh/average annual turnover of ₹2 crore was a
primary requisite.
(c) NRIs will also be able to incorporate OPCs in India, which was
not allowed earlier. The amendments for the proposals also reduce
the residency period from 182 days to 120 days for NRIs, for being
considered as a resident in India. This would help several overseas
Indians establish businesses in India.
Conclusion:
The concept of OPC is still evolving in India and still is an unfamiliar
concept for Indian entrepreneurs. It will take some more time for the
OPC concept to catch on. Following the latest relaxations announced
by the Government of India, the concept of OPCs is expected to set
a momentum under start up eco system of the country and benefit
many entrepreneurs who wish to individually start up the business
and to get corporate benefits.
About the Author

Shri. Malladi Surya Prakasam is currently working as
Assistant General Manager (Faculty) in State Bank
Institute of Consumer Banking, Hyderabad
50
Bankers Plus
June 2021 Knowledge Hub
Pre-pack: Insolvency
Resolution option for
MSMEs
Shri. Ravi Mishra
Government of India had recently amended the Insolvency and
Bankruptcy Code(IBC) by way of an ordinance to introduce the Pre-
pack resolution process MSMEs(Micro, Small and Medium
Enterprises), which are highly impacted by Covid-19 pandemic, with
defaults up to Rs.1 crore. The scheme also covers businesses
incorporated as partnerships in addition to companies. The scheme is
available to entities that have neither undergone bankruptcy
proceedings in the preceding three years nor are facing liquidation
orders. The scheme also does not cover business if the major
shareholder is an un discharged insolvent or willful defaulter. This
system of insolvency proceedings has become an increasingly popular
mechanism for insolvency resolution in the UK and Europe over the
past decade.
IBBI also has notified regulations for the process on 9th April, 2021. A
pre –pack is the resolution of the debt of a distressed company
through an arrangement between secured creditors and investors
instead of a public bidding process. Under this system, the corporate
debtor proposes a resolution plan to the secured creditors before the
initiation of Corporate Insolvency Resolution Procedure (CIRP).
During this process , the company will continue to be controlled by the
existing management rather than coming under the control of the
resolution professional thereby avoiding the cost of disruption of
business & continues to retain employees, suppliers, customers etc.
The resolution plan can then be taken for approval by the secured
creditors to the NCLT, provided it is approved by 66 percent of them.
51
Here NCLTs are also required to either accept or reject any pre-pack
insolvency proceeding before considering a petition for CIRP. The
scheme also takes into consideration the issue of operational
creditors as the resolution professional can also allow others to
submit resolution plans . Now the committee of creditors has the
option of choosing an alternative resolution plan if it is found better
than the plan offered by the corporate debtor.
There are several benefits of pre-packs over CIRP. CIRP has taken a
long time for resolution which is also evident from data given by IBBI
that at the end of December 2020, of 1717 cases currently
undergoing the resolution process, 1481 (86.3 percent) have been
going on for more than 270 days , but in contrast to that the pre-
pack scheme has prescribed timelines. It is limited to a maximum of
120 days for the entire process- 90 days for the submission of the
resolution plans, and 30 days for the NCLT to improve them. This
reduction in time limit comes as a blessing for insolvent MSMEs.
Pre-pack also allows for minimal disruption of operations relative to
CIRP. Pre-packs will help corporate debtors to enter into consensual
restructuring with lenders and address the entire liability side of the
company. Thus pre-packs are aimed at providing MSMEs with an
opportunity to restructure their liabilities and start afresh while still
providing adequate protection so that the system is not misused by
firms to avoid making payments to creditors. The process provides
an ameliorative mechanism of resolution of stressed assets for
MSMEs while at the same time ensuring that they are not able to do
any manipulation thus keeping a fair balance to protect the interest of
creditors as well.
Under section 7,9 and 10 of the IBC the disposal of pre-pack
application has been given priority over the CIRP application for the
same stressed MSME , subject to certain conditions. However, in
case of already pending CIRP application , NCLT will need to
dispose them of before considering the pre-pack application for the
relevant debtor.
52
Application of pre-pack solvency in India will require much higher
degree of expertise of insolvency professionals as they have a major
control under such process. Also, creditors will have to develop a
trust not only in such insolvency professionals but also the
framework put into place so that there is cohesion between creditors
at the time of negotiation and approval of plans. At the same time
corporate debtor companies should be aware of their own self worth
as they have to identify and execute proper decisions to undergo
pre-pack insolvency without resorting to desperate acts of litigation to
prevent it. However with the increase in the trend of out of court
settlements , pre-pack solvency could prove as next alternative to
regular CIRP proceedings.
Thus, it is expected that the incorporation of the pre-packaged
insolvency process for MSMEs will alleviate the distress faced by
them due to the impact of the pandemic. It will surely provide an
efficient alternative insolvency resolution framework to MSMEs
for timely, efficient and cost-effective resolution of distress thereby
ensuring positive signal to debt market , employment preservation ,
ease of doing business and preservation of enterprise capital. This
arrangement could unburden the tribunals by reducing the number of
piled up cases leading to swifter disposal of the other cases. This
process adopts a hybrid approach towards the resolution of insolvent
MSMEs balancing the interests of creditors (for banks) on the one
hand and preserving the autonomy of MSMEs on the other hand –
thus a win -win situation for both of them .
About the Author
Shri. Ravi Mishra is currently working as Chief

Manager (Faculty) in Union Bank of India posted at
Gurugram.
53
Bankers Plus
Knowledge Hub June 2021
“Banking in the coming days”

Is the brick and mortar banking
setup going to be extinct?
Deepak N S
Banking in the new millennium has seen transformational changes and
the next decade is all set to accelerate the trend. With the initiation of
the EASE 3.0 which if fact is hovering around the digital mantra and
also the way the digital channels are opening up due to the IMPACT of
the COVID 19.
Globalization of banking which started a few decades back will
accelerate to the new levels in the coming decade. Like all other major
sectors, the growth of the banking industry will be determined by the 5
important mega trends viz. Changing Demographics, New age
workforce, Digitalization of services, Unified and global
marketplace & Regulatory Landscape.
As banks step into the new decade, they need to evolve both in their
product portfolio and working business models. They will need to serve
a new set of customers unbanked in the emerging and developing
economies and the underserved in the developed worlds, and the
hugely and digitally literate new age customers across the globe
actively aided by path breaking technology. Further, the regulatory
landscape emerging in the aftermath of 2008 financial crisis and
constantly adjusting to the new age demands will decide the direction
that Banks will take in the next five to ten years.
In the coming decade, banks will increasingly focus on profitability
rather than revenues. On one hand, banks will introduce new products
more aligned to emerging client needs, on the other they will
deconstruct the existing ones to make them tailor made to customer
needs.
54
Partnership with other financial players, like fintech companies and
outsourcing less profitable businesses, like the back-office functions
that no longer provide competitive advantage will be common
phenomena. The role of bank branches will shift from being delivery
channels to being facilitators of financial services and banking no
longer will be confined to the existing “brick and mortar” model.
Technological Changes Massive Investments in Digital
Transformation as customers become more digital, more demanding
and more tech-savvy, existing bank infrastructure will be unable to
support new modes of engagement and digital expectations. Banks
are expected to redefine their digital roadmap and overcome the silos
created by various channels, such as mobile, data analytics, cloud
etc. into a consolidated digital plan. They are supposed to ensure a
consistent experience across all channels while directing customers
to their channels of choice. Banks will have to implement customer-
centric technology and operational platforms to support a co-
ordinated channel strategy. Cultivating a customer-first culture
throughout the banking industry will be a priority. This is going to be a
playing field where the winner shall be decided based upon path
breaking innovation, flexibility to adapt and successful implementation
of ideas. In response to increasing competitive pressures and
people‟s rising expectations, financial institutions around the world will
have to invest aggressively in digital transformation projects.
Experiences with non-banking industries such as retail and
communications will shape consumers‟ expectations from banks and
credit unions. Blockchain and artificial intelligence (AI) will
continue to disrupt the financial services industry. AI development will
focus on cognitive use in the sales, marketing, investments, wealth
management and compliance sectors of the financial services
industry. This is a critical step in moving from advanced robotic
technologies like machine learning and predictive analytics to real
growth in cognitive computing. With the entire banking industry
shifting to digital channels, digital-only players will pose more and
more challenges to the historical dominance of traditional banks and
credit unions.
55
Banks will also need to master the journey to the edge and think
about how analytics and processing can be done on phones,
wearable devices and static contact points like ATMs to ensure that
customers get the „in the moment‟ experience that will truly delight
them. As all of this plays out, there will be successes and failures.
But, by planning ahead and spending time peering into the future,
banks can avoid the type of rapid reversal of fortunes suffered by
Nokia, Blockbuster, Blackberry, MySpace and Kodak and have a true
technology vision.
Partnership with FinTechs, with their innovative technology based and

convenient offerings, have the potential to nibble into the traditional
customer base of banks whether in payments or small loans. While
banks are heavily regulated, Regulations on FinTechs are almost
nonexistent. Banks can‟t afford to ignore their potential and face the
difficult choice of either competing against them which will call for large
investments in technology and skilled man power or collaborate with
them for mutual benefit. Similarly, there is a huge threat from entities
like Facebook, Amazon, Netflix and Google, which are increasingly
blurring the line between pure technology companies and banks. So,
eventually Bank account may be reduced to a mere holding unit for
parking surplus funds for safety and liquidity needs, while other needs
of the customer are serviced by different FinTechs.
Human Capital Banks will continue to be attractive places to work for
the new generation of employees. However, meeting the high
standards of credit delivery, digital banking and otherwise also, will
require a highly motivated, trained and professional workforce. To
achieve this, it will be necessary to transform employee propositions. A
proper “succession plan” will be needed, for mentoring and nurturing
of future leaders. It won‟t be the paypackage anymore, but compelling
HR policies that will help secure and retain talent.
56
As the income generation gathers pace, retail banking will be one of
the most important segment from where banks will generate
substantial revenue. The opportunities for banks will come on both
sides of the balance sheet. The factors that augur well for robust
retail banking business include a sizable young population with
substantial numbers to the tune of more than 45% in unmarried
category.
The average house-hold size in India is 4.8 persons per house-hold.
With nearly 95% marriage rates in India by age 35. This will fuel
demand for financial products of various kinds and can be promoted
using the aid of technology. On the liability side, banks will have to
provide innovative life cycle based savings products, bank accounts
for various categories of the customer including women, minors, girl
child etc. On the advances side, banks will be lending for consumer
durables, housing, education loans etc. Consolidation in Banking
Industry At the broad industry level, is imminent. Large banks reap
certain advantages in terms of efficiency, risk diversification and
capacity to finance large projects. The efficiency gains resulting from
lower cost of services and higher quality of services are too attractive
to ignore.
I summarize the current and future state of Indian banking by stating
that, there in a need for transformational thinking in all the three key
important aspect of growth and change in any organization i.e. KAS
(Knowledge, Attitude and Skill). This kind shift in our thinking in all
these parameters are required to bring in paradigm shift from
Transactions to Relationships, from mere Advertising to Targeted
Marketing, Brick and Mortar to Targeted Delivery (with special
impetus for digital delivery), Human Resources to Talent
Management and from People Intensive to Digital Intensive.
About the Author

Shri. Deepak N S is currently working as Chief
Manager (Faculty) in Union Bank of India posted at
Aluva.
57
June 2021
Volume II, Issue 2
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Change in our savings pattern post covid outbreak:

About the Author

ONE PERSON COMPANY–

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About the Author

Shri. Ravi Mishra is currently working as Chief