šŸ“ˆšŸ’° RBI Updates Made Simple: 2024 Guidelines, Monetary Policy & Key Changes

šŸ¦ RBI Guidelines (2024)

1. Inoperative Accounts & Unclaimed Deposits

  • What Changed?
    • Accounts inactive forĀ 1-10 yearsĀ must be labeled ā€œinoperative.ā€
    • Banks must trace customers/heirs and settle claims.
  • Why It Matters?
    ā†’ Prevents fraud and ensures rightful owners get their money.

2. Asset Reconstruction Companies (ARCs)

  • New Rule: ARCs must joinĀ Credit Information Companies (CICs)Ā and share data regularly.
  • Goal: Improve transparency in loan recovery.

3. Gold & Silver Trading (India International Bullion Exchange)

  • Update: Indian banks can now trade gold/silver globally via IIBX.
  • Impact: Boosts Indiaā€™s role in the global bullion market.

4. Bulk Deposits

Bank TypeBulk Deposit Threshold
Commercial Banksā‚¹3 crore or more
Local Area Banksā‚¹1 crore or more
  • Purpose: Track large deposits to manage liquidity risks.

šŸ“Š RBI Monetary Policy (Key Points)

1. Inflation Target

  • Goal: Keep CPI inflation atĀ 4%Ā (can swing betweenĀ 2-6%).
  • Why?Ā To stabilize prices and boost economic growth.

2. Repo Rate & Policy Stance

  • Repo Rate:Ā 6.5%Ā (unchanged).
  • Stance:Ā NeutralĀ (no strict tightening/easing).
    ā†’ RBI will act based on economic conditions.

3. Liquidity Adjustment Facility (LAF)

ToolPurposeHow It Works
RepoInject moneyBanks borrow from RBI using securities as collateral.
Reverse RepoAbsorb moneyBanks park excess funds with RBI for short-term returns.
  • Goal: Balance money supply to control inflation.

4. GDP & Inflation Forecast (FY25)

  • GDP Growth:Ā 7.2%
  • CPI Inflation:Ā 4.5%

šŸ“œ Regulatory Initiatives (2024)

1. Foreign Exchange Rules

  • Update: Export/import firms can openĀ multiple INR current accounts.
  • Benefit: Smoother cross-border transactions.

2. Capital Adequacy for Trading

  • Basel III Alignment: Banks must hold more capital for trading risks.
  • Trading Book: Includes stocks, bonds, and other short-term assets.

3. Credit Card Rules

  • Key Change: Customers canĀ choose card networksĀ (Visa, Mastercard, etc.).
  • Digital Shift: Banks can issue e-cards instead of plastic.

4. Climate Risk Management

  • New System: RBI is building aĀ Climate Risk Info SystemĀ to protect banks from environmental shocks (e.g., floods, droughts).

šŸ’³ RBIā€™s Payment System Upgrades

1. UPI for Feature Phones

  • Limit Increased: ā‚¹5,000 ā†’ ā‚¹10,000 (UPI123Pay).
  • Goal: Boost digital payments in rural areas.

2. RTGS/NEFT Safety

  • New Feature: VerifyĀ beneficiary nameĀ before transferring funds.
    ā†’ Reduces fraud and errors.

3. Note Sorting Machines

  • Rule: Banks must useĀ BIS-certified machinesĀ by May 2025.
    ā†’ Ensures counterfeit notes are detected.

šŸ“š Financial Sector Updates

1. Pension Fund Security

  • PFRDA Update: Two-factor Aadhaar authentication for pension systems.
    ā†’ Prevents unauthorized access.

2. Treasury Bills & Bulk Deposits

  • Focus: Better tracking of large deposits and short-term govt. securities.

ā“ FAQ: Exam/Interview Cheat Sheet

Q: What is the repo rate?

A: The rate at which RBI lends to banks (6.5%).

Q: Whatā€™s the inflation target?

A: 4% (with a 2-6% range).

Q: Why did RBI revise bulk deposit rules?

A: To monitor large transactions and manage liquidity risks.

šŸŽÆ Key Terms to Remember

IIBX: India International Bullion Exchange.

CIC: Credit Information Company.

Basel III: Global banking safety standards.

LAF: Liquidity Adjustment Facility.