Amendments in the FEMA, 1999
RBI Updates September 2023
1. Responsible Lending Conduct – Release of Movable / Immovable Property Documents on Repayment/ Settlement of Personal Loans
On September 13, 2023, RBI vide Notification RBI/2023-24/60 DoR.MCS.REC.38/01.01.001/2023-24, issued directions concerning the release of movable/immovable properties of borrower/s after full repayment/settlement and closure of loan account. This notification is addressed to all Commercial Banks (including Small Finance Banks and Regional Rural Banks, excluding Payments Banks), Local Area Banks, Primary (Urban) Co-operative Banks, State Co-operative Banks and District Central Co-operative Banks, NBFCs (including HFCs) and Asset Reconstruction Companies (together Regulated Entities/REs).
The REs are directed to:
- Release all the original movable/immovable property documents and remove charges registered with any registry within 30 days after full repayment/settlement of the loan account;
- Give the borrower an option to collect all the original movable/immovable property documents either from the banking outlet/branch where the loan account was serviced or any other office of the RE where the documents are available, as per her / his preference;
- Mention the timeline and place of return of original movable/immovable property documents in the loan sanction letters;
- Have a well-laid-out procedure for the return of original movable/immovable property documents to the legal heirs in the event of the demise of the sole borrower or joint borrowers;
- Communicate to the borrower reasons for the delay in case of failing to release original movable/immovable property documents or failing to file a charge satisfaction form with the relevant registry within 30 days after full repayment/ settlement of the loan.
- Compensate the borrower at the rate of ₹5,000/- for each day in case where the delay in point (e) above is attributable to the RE;
- Assist the borrower in obtaining duplicate/certified copies of the movable/immovable property documents and shall bear the associated costs, in addition to paying compensation as indicated at point (f) above, in case of loss/damage to original movable/immovable property documents, either in part or in full.
These Directions shall apply to all cases where the release of original movable /immovable property documents falls due on or after December 1, 2023.
The link for the aforesaid Notification is as follows:
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NOTI60936A9DFA85554DD1BF77BCF4611AA69D.PDF
2. Data Quality Index for Commercial and Microfinance Segments by Credit Information Companies
RBI vide notification dated June 27, 2014 inter-alia set out a common Data Quality Index (DQI) for assessing the quality of data submissions by Credit Institutions (CIs) to Credit Information Companies (CICs) and improving the same over a period of time and currently the DQI is being used for data submitted under the consumer segment
On September 13, 2023, RBI vide Notification RBI/2023-24/62 DoR.FIN.REC.39/20.16.056/2023-24 (“the Notification”) to enable further implementation of DQI, decided that CICs shall prepare DQIs for Commercial and Microfinance segments also, as advised in the notification and as per the criteria prescribed in the annexures to the notification.
The link for the aforesaid Notification is as follows:
https://rbidocs.rbi.org.in/rdocs/notification/PDFs/DATAQUALITYINDEX7E29729A4D4643E99DFE5340F305143E.PDF
3. Draft Master Direction on Treatment of Wilful Defaulters and Large Defaulters
On September 21, 2023, RBI vide Notification DoR.SIG.FIN.REC.xx/20.16.003/2023-24 issued the Draft of Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, 2023 (“the Directions”).
The primary objective of the Directions is to provide for a non-discriminatory and transparent procedure for classifying a borrower as a wilful defaulter by the lenders. The directions also aim to put in place a system to disseminate credit information about wilful defaulters for cautioning lenders to ensure that further institutional finance is not made available to them.
The Directions expand the scope for Regulated Entities which can classify borrowers as wilful defaulters, broaden the definition of wilful default, refine the identification process, and mandate a review and finalization on wilful default aspects within six months of an account being classified as a non-performing asset. It also addresses the treatment of wilful default loans sold to Assets Reconstruction Companies and their status under the Insolvency and Bankruptcy Code.
The link for the aforesaid Notification is as follows:
https://rbidocs.rbi.org.in/rdocs/Content/PDFs/DRAFTMDWILFULDEFAULTERSF5BC955D0C8B4105BB9838A9645EEE03.PDF
4. Master Direction - Reserve Bank of India (Prudential Regulations on Basel III Capital Framework, Exposure Norms, Significant Investments, Classification, Valuation and Operation of Investment Portfolio Norms and Resource Raising Norms for All India Financial Institutions) Directions, 2023
On September 21, 2023, the RBI was satisfied that it is necessary and expedient in the public interest and the interest of financial sector policy to do, vide Notification RBI/DoR/2023-24/105 DoR.FIN.REC.40/01.02.000/2023-24 issued the Reserve Bank of India (Prudential Regulations on Basel III Capital Framework, Exposure Norms, Significant Investments, Classification, Valuation and Operation of Investment Portfolio Norms and Resource Raising Norms for All India Financial Institutions) Directions, 2023 (“the Directions”).
These Directions shall apply to the All India Financial Institutions (AIFIs) regulated by the Reserve Bank, viz. the Export-Import Bank of India (EXIM Bank), the National Bank for Agriculture and Rural Development (NABARD), the National Bank for Financing Infrastructure and Development (NaBFID), the National Housing Bank (NHB) and the Small Industries Development Bank of India (SIDBI).
The Directions shall be applicable latest w.e.f. April 01, 2024.
The link for the aforesaid Notification is as follows: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/105MDPRUDENTIALREGULATIONSAIFISCF490815D13A4EE9BD3D48B79DD89285.PDF
5. Display of information - Secured assets possessed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002
On September 25, 2023, RBI vide Notification DoR.FIN.REC.41/20.16.003/2023-24 clarified that the Regulated Entities (REs) which are secured creditors as per the SARFAESI should display information on their website in the format prescribed in this Circular concerning the borrowers whose secured assets have been taken into possession by the REs. The first such list shall be displayed on the website of REs within 6 months from the date of this notification, and the list shall be updated every month.
The link for the aforesaid Notification is as follows: https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NOTI63D6F589F933804ED992EBCFF30F5CCD5E.PDF