The Weekly Obiter

REGULATORY REQUIREMENTS FOR ISSUE OF PRE-PAID PAYMENT INSTRUMENTS BY CO-OPERATIVE BANKS: RBI: MAY 25, 2017

June 08, 2017

In pursuance of the previous Circular No. UBD.CO.BPD.PCB.Cir.No.65/09.69.000/2013-14 dated May 27, 2014, the Reserve Bank of India through its recent Circular No. DCBR.CO.LS.(PCB/RCB).Cir.No.5/07.01.000/2016-17 has further permitted the co-operative banks satisfying the criteria prescribed in the previous circular to issue Open System Prepaid Payment Instruments (PPIs). The matter has been revisited and it has been decided by the RBI to permit all licensed co-operative banks having their own ATM network to issue semi-closed PPIs, provided there are no restrictions on acceptance or repayment of deposits banks should comply with the following additional regulatory requirements for this purpose:
a. The bank should be Consumer and Business Services (CBS) compliant ;
b. Capital-to-Risk weighted Assets Ratio (CRAR) should not be less than 10% in the current and preceding financial year;
c. Gross Non–Performing Assets (NPAs) should be less than 7% and net NPAs should not be more than 3% in the current and preceding financial year;
d. Assessed net-worth should be more than Rs.25 crore as per the last RBI inspection;
e. There should not be any default in the maintenance of Cash Reserve Ratio/Statutory Liquidity Ratio (CRR/SLR) during the current and preceding financial year;
f. The bank should have made a net profit in the preceding financial year;
g. Presence of two professional directors on the board of the bank and prevalence of systems and control as under:
i. internal inspection / audit system for all the branches and the Head Office.
ii. concurrent audit system in all major branches.
h. Satisfactory adherence to Know Your Customer/ Anti Money Laundering (KYC / AML / Combating Financing of Terrorism guidelines issued by the Reserve Bank from time to time;
i. No monetary penalty should have been imposed on the bank in last two financial years and during the year of submitting the application;
J. The bank shall have satisfactorily implemented a comprehensive board approved policy on customer grievance redressal mechanism which includes escalation matrix for resolution of customer complaints.
 

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