INTEGRATED OMBUDSMAN SCHEME, 2021

 The appointment of Ombudsman or the Deputy Ombudsman, as the case may be, shall
be made for a period not exceeding three years at a time.
 The Reserve Bank shall establish the Centralised Receipt and Processing Centre at any
place as may be decided by it to receive the complaints filed under the Scheme and
process them.
 There is no limit on the amount in a dispute that can be brought before the
Ombudsman for which the Ombudsman can pass an Award. However, for any
consequential loss suffered by the complainant, the Ombudsman shall have the power
to provide a compensation up to Rupees 20 lakh, in addition to, up to Rupees One lakh
for the loss of the complainant’s time, expenses incurred and for harassment/mental
anguish suffered by the complainant.
 The Ombudsman shall send to the Deputy Governor, Reserve Bank of India, a report, as
on March 31st every year, containing a general review of the activities of the office
during the preceding financial year.
 The Regulated Entity shall, on receipt of the complaint, file its written version in reply to
the averments in the complaint enclosing therewith copies of the documents relied
upon, within 15 days before the Ombudsman for resolution.
 There shall be no right of appeal to the Regulated Entity in respect of the Award issued
on account of non-response or non-furnishing of information sought within the
stipulated time. There shall not be any right of appeal to a Regulated Entity for an Award
issued for non-furnishing of documents/information.
 The Executive Director-in charge of Consumer Education and Protection Department of
RBI would be the Appellate Authority under the Scheme.
 Scheme under Section 35A of the Banking Regulation Act, 1949 (10 of 1949), Section 45L
of the Reserve Bank of India Act, 1934 (2 of 1934), Section 18 of the Payment and
Settlement Systems Act, 2007 (51 of 2007) and Section 11 of the Credit Information
Companies (Regulation) Act, 2005 (30 of 2005.
THE RECOVERY OF DEBTS AND BANKRUPTCY ACT, 1993 (DRT)

 It extends to the whole of India including the State of Jammu and Kashmir and UT of
ladakh.
 The Act is applicable to cases where the amount of debt due to any bank or financial
institution defined under the Act or a consortium of banks or financial institutions is
Rs.20 lakh or more.
 The Central Government shall, by notification, establish one or more Tribunals, to be
known as the Debts Recovery Tribunal.
 A person shall not be qualified for appointment as the Presiding Officer of a Tribunal
unless he is, or has been, or is qualified to be, a District Judge.
 The Presiding Officer of a Tribunal shall hold office for a term of five years from the date
on which he enters upon his office and shall be eligible for reappointment, provided that
no person shall hold office as the Presiding Officer of a Tribunal after he has attained the
age of sixty-five years.
 A person shall not be qualified for appointment as the Chairperson of an Appellate
Tribunal] unless he
 is, or has been, or is qualified to be, a Judge of a High Court; or
 has been a member of the Indian Legal Service and has held a post in Grade I of
that service for at least three years; or
 has held office as the Presiding Officer of a Tribunal for at least three years.
 The Chairperson of an Appellate Tribunal shall hold office for a term of five years from
the date on which he enters upon his office and shall be eligible for reappointment,
provided that no person shall hold office as the Chairperson of a Appellate Tribunal after
he has attained the age of seventy years.
 Where an appeal is preferred by a person referred to in section 21 of the Act, such
appeal shall not be entertained by the Appellate Tribunal unless such person has
deposited with the Appellate Tribunal seventy five per cent of the amount of debt so
due from him.
 Every appeal under sub-section (1) shall be filed within a period of thirty days from the
date on which a copy of the order made, or deemed to have been made, by the Tribunal
is received by him.
THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT
OF SECURITY INTEREST ACT, 2002
 It extends to the whole of India including the State of Jammu and Kashmir and UT of
ladakh.
 The provisions of this Act apply to outstanding loans above Rs.1 lakh, which are
classified as NPAs. The SARFAESI Act isn’t applicable for:
 The NPA loan accounts amounting to less than 20% of the principal and interest.
 Money or security issued under the Indian Contract Act or the Sale of Goods Act,
1930.
 Any rights of the unpaid seller under Section 47 of the Sale of Goods Act, 1930.
 Any conditional hire-purchase, sale, lease or any other contract in which no
security interest has been created.
 Any properties that are not liable to attachment or sale under Section 60 of the
Code of Civil Procedure, 1908.
 The Supreme Court held that cooperative banks established under State law or multi-
State level societies come within the ambit of the SARFAESI Act, 2002.
 NBFCs with asset size of Rs.100 crores or more are eligible NBFCs that are covered under
the SARFAESI Act to enforce security interest on debts amounting to at least Rs.50 lacs
 Not applicable to agricultural lands

Open Market Operations

 Open market operations or OMOs are conducted by the Reserve Bank of India (RBI) by
way of sale and purchase of G-Secs (government securities) to and from the market with
an objective to adjust the rupee liquidity conditions in the market on a durable basis.
 When the Reserve Bank feels that there is excess liquidity in the market, it resorts to
sale of securities thereby sucking out the rupee liquidity. Similarly, when the liquidity
conditions are tight, RBI may buy securities from the market, thereby releasing liquidity
into the market.
 The public debt office (PDO) of RBI, acts as the registry and central depository for G-
Secs.
Liquidity Adjustment Facility
 A liquidity adjustment facility (LAF) is a tool used in monetary policy, primarily by the
Reserve Bank of India (RBI) that allows banks to borrow money through repurchase
agreements (repos) or to make loans to the RBI through reverse repo agreements.
 This arrangement is effective in managing liquidity pressures and assuring basic stability
in the financial markets.
 The RBI introduced the LAF as a result of the Narasimham Committee on Banking Sector
Reforms (1998)
 Bids will be received for a minimum amount of Rs.5 crore and in multiples of Rs. 5 crore
thereafter.
 All Scheduled Commercial Banks (excluding Regional Rural Banks) and Primary Dealers
(PDs) having Current Account and SGL Account with Reserve Bank, Mumbai will be
eligible to participate in the Repo and Reverse Repo auctions.

The Monetary Policy Framework

 In May 2016, the RBI Act, 1934 was amended to provide a statutory basis for the
implementation of the flexible inflation targeting framework.
 Inflation Target: Under Section 45ZA, the Central Government, in consultation with the
RBI, determines the inflation target in terms of the Consumer Price Index (CPI), once in
five years and notifies it in the Official Gazette. Accordingly, on August 5, 2016, the
Central Government notified in the Official Gazette 4 per cent Consumer Price Index
(CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with
the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent. On
March 31, 2021, the Central Government retained the inflation target and the tolerance
band for the next 5-year period – April 1, 2021 to March 31, 2026.
 Section 45ZB of the RBI Act provides for the constitution of a six-member Monetary
Policy Committee (MPC) to determine the policy rate required to achieve the inflation
target.
 Members:
  Governor of the Reserve Bank of India—Chairperson, ex officio;
 Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy—
Member, ex officio;
 One officer of the Reserve Bank of India to be nominated by the Central Board—
Member, ex officio;
 Prof. Ashima Goyal, Professor, Indira Gandhi Institute of Development Research —
Member;
 Prof. Jayanth R. Varma, Professor, Indian Institute of Management, Ahmedabad—
Member; and
 Dr. Shashanka Bhide, Senior Advisor, National Council of Applied Economic
Research, Delhi—Member.
 Members referred to at 4 to 6 above, will hold office for a period of four years or until
further orders, whichever is earlier.
 The MPC is required to meet at least four times in a year. The quorum for the meeting of
the MPC is four members.
Instruments of Monetary Policy
There are several direct and indirect instruments that are used for implementing
monetary policy.
 Repo Rate: The interest rate at which the Reserve Bank provides liquidity under the
liquidity adjustment facility (LAF) to all LAF participants against the collateral of
government and other approved securities.
 Standing Deposit Facility (SDF) Rate: The rate at which the Reserve Bank accepts
uncollateralised deposits, on an overnight basis, from all LAF participants. The SDF is
also a financial stability tool in addition to its role in liquidity management. The SDF
rate is placed at 25 basis points below the policy repo rate. With introduction of SDF
in April 2022, the SDF rate replaced the fixed reverse repo rate as the floor of the
LAF corridor.
 Marginal Standing Facility (MSF) Rate: The penal rate at which banks can borrow, on
an overnight basis, from the Reserve Bank by dipping into their Statutory Liquidity
Ratio (SLR) portfolio up to a predefined limit (2 per cent). This provides a safety valve
against unanticipated liquidity shocks to the banking system. The MSF rate is placed
at 25 basis points above the policy repo rate.
 Liquidity Adjustment Facility (LAF): The LAF refers to the Reserve Bank’s operations
through which it injects/absorbs liquidity into/from the banking system. It consists of
overnight as well as term repo/reverse repos (fixed as well as variable rates), SDF
and MSF. Apart from LAF, instruments of liquidity management include outright
open market operations (OMOs), forex swaps and market stabilisation scheme
(MSS).
 LAF Corridor: The LAF corridor has the marginal standing facility (MSF) rate as its
upper bound (ceiling) and the standing deposit facility (SDF) rate as the lower bound
(floor), with the policy repo rate in the middle of the corridor.
 Main Liquidity Management Tool: A 14-day term repo/reverse repo auction
operation at a variable rate conducted to coincide with the cash reserve ratio (CRR)
maintenance cycle is the main liquidity management tool for managing frictional
liquidity requirements.
 Fine Tuning Operations: The main liquidity operation is supported by fine-tuning
operations, overnight and/or longer tenor, to tide over any unanticipated liquidity
changes during the reserve maintenance period. In addition, the Reserve Bank
conducts, if needed, longer-term variable rate repo/reverse repo auctions of more
than 14 days.
 Reverse Repo Rate: The interest rate at which the Reserve Bank absorbs liquidity
from banks against the collateral of eligible government securities under the LAF.
Following the introduction of SDF, the fixed rate reverse repo operations will be at
the discretion of the RBI for purposes specified from time to time.
 Bank Rate: The rate at which the Reserve Bank is ready to buy or rediscount bills of
exchange or other commercial papers. The Bank Rate acts as the penal rate charged
on banks for shortfalls in meeting their reserve requirements (cash reserve ratio and
statutory liquidity ratio). The Bank Rate is published under Section 49 of the RBI Act,
1934. This rate has been aligned with the MSF rate and, changes automatically as
and when the MSF rate changes alongside policy repo rate changes.
 Cash Reserve Ratio (CRR): The average daily balance that a bank is required to
maintain with the Reserve Bank as a per cent of its net demand and time liabilities
(NDTL) as on the last Friday of the second preceding fortnight that the Reserve Bank
may notify from time to time in the Official Gazette.
 Statutory Liquidity Ratio (SLR): Every bank shall maintain in India assets, the value of
which shall not be less than such percentage of the total of its demand and time
liabilities in India as on the last Friday of the second preceding fortnight, as the
Reserve Bank may, by notification in the Official Gazette, specify from time to time
and such assets shall be maintained as may be specified in such notification (typically
in unencumbered government securities, cash and gold).
 Open Market Operations (OMOs): These include outright purchase/sale of
government securities by the Reserve Bank for injection/absorption of durable
liquidity in the banking system.
 Market Stabilisation Scheme (MSS): MSS is used when there is high liquidity in the
system. The issued securities are government bonds and they are called as Market
Stabilisation Bonds (MSBs). Thus, the bonds issued under MSS are called MSBs.
These securities are owned by the government though they are issued by the RBI.

Policy Repo Rate 6.25%

Standing Deposit Facility Rate 6.00%
Marginal Standing Facility Rate 6.50%
Bank Rate 6.50%
Fixed Reverse Repo Rate 3.35%
CRR 4.50%
SLR 18.00%

Monetary Policy Stances

 Hawkish Monetary Policy Stance: In order to keep inflation in check, the Hawkish
stance favours high-interest rates. Because of the high-interest rates, borrowing
(taking loans from banks) will become less attractive.
 Dovish Monetary Policy Stance: This monetary policy stance involves low-interest
rates. Low-Interest Rates would entice consumers to take credit (loans) from Banks
and other sources.
 Accommodative Monetary Policy Stance: Accommodative monetary policy is
implemented to allow the money supply to rise in line with national income and the
demand for money. This is also known as “easy monetary policy”.
 Neutral Monetary Policy Stance: The policy rates neither stimulate (speed up) nor
restrain (slowdown) economic growth through taxation and government spending.
Economic conditions are just right. The Key Policy Rates are neither increased nor
decreased.

15th Finance Commission:

 The 15th Finance Commission was constituted by the President of India in November
2017, under the chairmanship of NK Singh. Its recommendations will cover a period
of five years from the year 2021-22 to 2025-26.
 Vertical Devolution (Devolution of Taxes of the Union to States): The 15th Finance
Commission’s recommendation to maintain the States’ share in the divisible pool of
taxes to 41% for the five-year period starting 2021-22.
 Horizontal Devolution (Allocation Between the States): For horizontal devolution, it
has suggested 12.5% weightage to demographic performance, 45% to income, 15%
each to population and area, 10% to forest and ecology and 2.5% to tax and fiscal
efforts.
Priority Sector Lending Targets:
Some points:
Eligible categories under priority sector:
 Loans against pledge/hypothecation of agricultural produce (including warehouse
receipts) for a period not exceeding 12 months subject to a limit up to ₹75 lakh
against NWRs/eNWRs and up to ₹50 lakh against warehouse receipts other than
NWRs/eNWRs.
 Loans up to ₹5 crore per borrowing entity to FPOs/FPCs undertaking farming with
assured marketing of their produce at a pre-determined price.
 Loans for the following activities will be subject to an aggregate limit of ₹2 crore per
borrowing entity: Corporate farmers FPOs.
 UCBs are not permitted to lend to co-operatives of farmers.
 Loans up to ₹5 crore to co-operative societies of farmers for purchase of the produce
of members (Not applicable to UCBs).
 Loans up to ₹50 crore to Start-ups, as per definition of Ministry of Commerce and
Industry, Govt. of India that are engaged in agriculture and allied services.
 Loans for Food and Agro-processing up to an aggregate sanctioned limit of ₹100
crore per borrower from the banking system.
 Loans for agriculture infrastructure will be subject to an aggregate sanctioned limit
of ₹100 crore per borrower from the banking system.
 Loans up to ₹2 lakh to individuals solely engaged in Allied activities without any
accompanying land holding criteria.
 Loans to individuals for educational purposes, including vocational courses, not
exceeding ₹ 20 lakh will be considered as eligible for priority sector classification.
 Loans to individuals up to ₹35 lakh in metropolitan centres (with population of ten
lakh and above) and up to ₹25 lakh in other centres for purchase/construction of a
dwelling unit per family provided the overall cost of the dwelling unit in the
 metropolitan centre and at other centres does not exceed ₹45 lakh and ₹30 lakh
respectively.
 Loans up to ₹10 lakh in metropolitan centres and up to ₹6 lakh in other centres for
repairs to damaged dwelling units conforming to the overall cost of the dwelling
unit.
 Bank loans to HFCs (approved by NHB for their refinance) for on-lending, up to ₹20
lakh for individual borrowers, for purchase/construction/ reconstruction of
individual dwelling units or for slum clearance and rehabilitation of slum dwellers,
 Bank loans up to a limit of ₹5 crore per borrower for setting up schools, drinking
water facilities and sanitation facilities including construction/ refurbishment of
household toilets and water improvements at household level, etc. and loans up to a
limit of ₹10 crore per borrower for building health care facilities including under
‘Ayushman Bharat’ in Tier II to Tier VI centres.
 Bank loans up to a limit of ₹30 crore to borrowers for purposes like solar based
power generators, biomass-based power generators, wind mills, micro-hydel plants
and for non-conventional energy based public utilities, viz., street lighting systems
and remote village electrification etc., will be eligible for Priority Sector classification.
For individual households, the loan limit will be ₹10 lakh per borrower.

UCB classifications
 Tier 1 - All unit UCBs and salary earner’s UCBs (irrespective of deposit size), and all
other UCBs having deposits up to ₹100 crore;
 Tier 2 - UCBs with deposits more than ₹100 crore and up to ₹1000 crore;
 Tier 3 - UCBs with deposits more than ₹1000 crore and up to ₹10,000 crore;
 Tier 4 - UCBs with deposits more than ₹10,000 crore.

MSME Classifications
 Micro enterprise: where the investment in plant and machinery or equipment does
not exceed 1 crore rupees and turnover does not exceed 5 crore rupees.
 Small enterprise: where the investment in plant and machinery or equipment does
not exceed 10 crore rupees and turnover does not exceed 50 crore rupees.
 Medium enterprise: where the investment in plant and machinery or equipment
does not exceed 50 crore rupees and turnover does not exceed 250 crore rupees.

Types of ATM

 Green Label ATMs: for agricultural transactions

 Orange label ATMs: for transaction shares
 Yellow label ATMs: for E-commerce
 Pink label ATMs: for women banking
 RBI important reports:
Annual
 Report on Trend and Progress of Banking in India 2020-21
 Operations and Performance of Commercial Banks
 Developments in Co-operative Banking
Half-Yearly
 Financial Stability report
 Monetary Policy Report
 Report on Foreign exchange reserves

Mobile Aided Note Identifier (MANI)

 The MANI App was launched on January 01, 2020, for aiding visually impaired
persons to identify the denomination of Indian Banknotes.
 This App, which identifies the denomination of banknotes through audio notification
in Hindi and English, is now capable of notifying the banknote denomination in 11
other languages.
 This mobile application does not authenticate a note as being either genuine or
counterfeit.