We at Finakon track the regulatory changes. We also use AI to create a summary. We are providing a quick overview of the RBI circulars on a weekly basis on our website. The summary is neither exhaustive nor comprehensive. For accurate information, users shall refer to the original circular of the regulator. Finakon shall not be responsible for inferences drawn based on the summary provided.

Strengthening of AePS(Aadhar Enabled Payment System)

AePS, managed by NPCI(National Payment Corporation of India), facilitates secure, interoperable transactions via Aadhaar authentication and supports nationwide financial inclusion.

Recent AePS frauds, mainly from identity theft and credential breaches, highlight the need to strengthen its security to protect customers and maintain trust.

The acquiring bank must perform due diligence on all ATOs(AePS Touchpoint Operator) before onboarding as per RBI guidelines and regularly update their KYC details.

• The acquiring bank should continuously monitor ATO activities and set operational parameters based on their risk profile, including location, type, and transaction patterns, within its fraud management framework.
• Operational parameters for ATOs should be periodically reviewed to address emerging fraud trends
• The acquiring bank must implement system-level controls to ensure technological integrations, such as APIs, are used solely for AePS operations

Floating Rate Loans – Pre-payment Charge Norms(MSEs and Individuals)

Affordable credit is crucial for Micro and Small Enterprises(MSEs), but RBI found inconsistent pre-payment fees and restrictive clauses by lenders (Regulated Entities ), prompting new rules to enhance borrower’s choice and transparency. These apply to all commercial banks (except payment banks), cooperative banks, NBFCs, and All India Financial Institutions.

Key Guidelines:

1. No Pre-payment Charges:

   • Non-business Loans to Individuals – No charges, regardless of co-obligants.
   • Business Loans to Individuals & MSEs:
     • No charges by: Commercial Banks (excluding Small Finance Banks(SFBs), Regional Rural Banks(RRBs), Local Area Banks(LABs)), Tier 4 Urban Co-op Banks, NBFC-ULs, All India Financial Institutions (AIFIs).
     • Loans ≤ ₹50 lakh – No charges by: SFBs, RRBs, Tier 3 Urban Co-op Banks, State/Central Co-op Banks, NBFC-MLs.

Conditions: Applies regardless of source/amount, no lock-in, applies to floating-rate at pre-payment time.

1. Others: Charges as per RE’s policy – on prepaid amount (term loans) or up to sanctioned limit .
2. No Charges If: Borrower gives timely non-renewal notice and closes on due date.
3. Regulated Entity-Initiated Pre-payment: No charges allowed.
4. Disclosure: All charges must be stated in sanction letter, loan agreement, and Key Facts Statement(KFS). Hidden charges are prohibited.
5. No Retrospective Fees: Previously waived charges cannot be reinstated.

Read the circular here

Depositor Education and Awareness (DEA) Fund Scheme 2014: Revised Guidelines

The Depositor Education and Awareness (DEA) Fund, set up by the RBI, uses unclaimed deposits inactive for 10+ years to promote financial literacy and protect depositor interests through education and awareness initiatives.

The DEA Fund Scheme, 2014 outlines procedures for transferring unclaimed amounts and submitting claims. Guidelines issued since 2014 have now been reviewed for consolidation and simplification.

1. Registration: Banks must register on e-Kuber’s DEA Fund module with two email IDs; non-members register via sponsor banks. Registration is mandatory for transfers and claims.
2. Authorised Signatories: Banks appoint up to 10 signatories with certified board resolution. All updates require full revised lists with signatures submitted to RBI.
3. Transfers: Monthly transfers of unclaimed amounts and interest via e-Kuber after legal compliance. Member and sponsor banks must submit accurate details and codes.
4. Transfer & Claim Windows: Transfers allowed once monthly during last 5 working days; claims submitted once monthly during first 10 working days. Non-members use sponsor banks to carry out their remittances and claims.
5. Claims Refund:
   1. Banks repay customers, then claim refunds
   2. Claims require auditor-certified forms submitted within 3 days
   3. RBI reviews and credits approved claims monthly
   4. Banks hold claim accuracy responsibility
   5. Customer details are audited but not submitted with claims
   6. KYC compliance mandatory
   7. RBI sets interest rates on unclaimed deposits transferred to the fund
6. Returns Submission:

• Form I: Monthly auto-generated statements verified and submitted online; discrepancies require rectification forms
• Rectification Forms: Submitted within 2 weeks with auditor certification
• Form III: Half-yearly reconciliation certificates with auditor sign-off, submitted with first claim of the period
• Annual Certificate: Yearly auditor-certified outstanding amount report by Sept 30 with Unique Document Identification Number (UDIN)
• All returns sent as certified originals and PDFs to RBI

7. Audit: Banks maintain auditor-verified customer-wise deposit details. Returns are audited annually by statutory auditors.
8. Contact Updates: Banks must promptly email updated contact info to de******@*****rg.in in prescribed format.
9. Disclosure: Transferred unclaimed liabilities shown as contingent liabilities in Schedule 12 and disclosed in Notes to Accounts.