| Banks will now be fined ~ 1 crore for violating every single norm |
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Mumbai, 19 April The Reserve Bank of India ( RBI) will now be able slap a penalty of ₹ 1 crore on banks if they breach a single norm. If more than one norm is breached, then the fine will be multiples of ₹ 1 crore. Earlier, the fine was ₹ 5 lakh for asingle violation. The new norm came into effect after Section 46 of the Banking Regulation Act was amended in the winter session of Parliament. However, the new penalty will be only charged if a norm is found to have been violated after the amendment was notified. It will not be applicable retrospectively. In the past, there were instances of RBI slapping apenalty of ₹ 55 lakh, which means the bank was found violating the norms 11 times. Fines have been imposed for contravening various norms such as know- your- customer (KYC), anti money- laundering and on foreign exchange derivatives, among others. Before imposing the fine, RBI has to serve a showcause notice to banks. A fine is imposed if the regulator is not satisfied with the reply to the showcause notice. Last week, the Indian operations wing of US- based lender JPMorgan was fined ₹ 5 lakh for violating norms related to risk management and inter- bank dealings in 2012. JPMorgan is primarily involved in investment banking and corporate finance activity in India, through its only branch in Mumbai. It had applied to open one more branch in the country. Last October, RBI slapped apenalty of ₹ 30 lakh on ICICI B |
| Clubbing allowances, basic pay for PF deduction on cards |
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New Delhi, 19 April Decks have been cleared for clubbing of allowances with basic pay for provident fund (PF) deductions under the Employees' Provident Fund Organisation ( EPFO) scheme, amove that will increase savings but reduce take- home pay of 50 million subscribers. A review committee, constituted to look into the nittygritty of clubbing of allowances with basic pay for PF deductions, has supported the idea for enhancing the social security benefit under the EPF scheme run by the EPFO. "The committee's suggestion would be vetted by the labour ministry and would be put before the EPFO's apex decision making body, the Central Board of Trustees (CBT), for taking final call on it," a trustee and Secretary Bharatiya Mazdoor Sangh B N Rai said. "On the issue of clubbing of wages, even the employers' representatives supported the view that all such allowances which are regularly and uniformly paid to workers should form part of basic pay for PF deductions," said Rai, who was the member of the review panel. The suggestions of the committee have been already sent to labour ministry for scrutiny, EPFO officials said. On November 30, the outgoing Central Provident Fund Commissioner R C Mishra brought out a notification to club all allowances which are regular in nature, with basic pay. The notification had said: "All such allowances which are ordinarily, necessarily and uniformly paid to the employees are to be treated as the basic wages". The notification was an effort to check the practice of splitting of wages by employers to reduce their provident fund obligations. However, the notification was put in abeyance following reports which criticised the move of the retirement fund body. The government later constituted a committee to look into the matter. |
| PFRDA tightens investment norms for private pension fund managers |
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New Delhi, 19 April Tightening its norms for the private sector, in the National Pension System (NPS), the Pension Fund Regulatory and Development Authority ( PFRDA) has barred fresh investments in equity mutual funds and exchangetraded funds ( ETFs) from the corpus. It has also asked these fund managers to restrict their single- industry exposure to 15 per cent of NPS investments under all schemes. PFRDA had issued these clarifications after pension fund managers had sought clarity on certain clauses of the investment management agreement for the private sector. "In terms of the revised investment guidelines for private sector NPS, fresh investments in equity- related mutual funds and ETFs are disallowed," PFRDA said in a circular dated April 17. According to PFRDA data, fund managers allowed to offer NPS are LIC Pension Fund Limited, SBI Pension Funds, UTI Retirement Solutions, ICICI Prudential Pension Funds Management, Kotak Mahindra Pension Fund and Reliance Capital Pension Fund. As on March 2, NPS had 4.5 million subscribers and a corpus of ₹ 28,400 crore. About 0.2 million subscribers are from the private sector, while 2.7 million are from central/ state governments. A total of 1.58 million subscribers are served by NPSLite, which is designed to ensure ultra- low administrative and transactional costs. On the debt securities front, PFRDA said securities selected for investments should have aresidual maturity period of at least three years from the date of investment by the pension fund manager. On the industry exposure of pension fund managers, PFRDA said this should be restricted to 15 per cent of all NPS investments, under all schemes. It added investments in equity should be restricted to five per cent ( sponsor group companies) and 10 per cent ( nonsponsor group companies) of the market value of a companys paid- up equity capital. On rated asset- backed securities, PFRDA said these would be eligible for investments under 'asset class- C' ( credit risk bearing fixed income instruments), provided these have a residual maturity of not less than three years and an investment grade rating from at least two rating agencies. DIFFERENT BALLGAME |Fresh investments in equity mutual funds and exchange- traded funds barred |Fund managers to restrict single- industry exposure to 15% of NPS investments under all schemes |Securities selected for investments should have aresidual maturity period of at least 3 years from the date of investment by pension fund manager |Asset backed securities would be eligible for investments under asset class- C, provided |
Company Secretary, Chennai
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