1 May: The banking infrastructure of India is seeing major reforms. Reserve Bank of India (RBI) has directed all banks, financial institutions, and regulated entities to submit applications for authorisations, licenses, and regulatory approvals through the PRAVAAH portal only.
PRAVAAH — Platform for Regulatory Application, Validation and Authorization — is a web-enabled secure platform made operational on 28 May 2024, to make the process of approval simpler and transparent. As much as getting nearly 4,000 applications till now, there were still institutions that continued to make offline applications. Ease and standardization are for which the RBI has made PRAVAAH mandatory.
At the same time, the government has sanctioned the “One State-One Regional Rural Bank” policy. From May 1, 15 Regional Rural Banks (RRBs) will be merged, bringing the number down from 43 to 28. The merger is intended to consolidate IFSC and MICR codes, enhancing the speed of transactions and making the loan process simpler.
Account-holders in consolidated banks will experience some changes, such as revised bank names, new IFSC codes, and possibly new passbooks or cheque books. But their deposits, savings, fixed deposits, recurring deposits, and loans will be untouched.
Significantly, Baroda UP Bank, Aryavart Bank, and Prathama UP Gramin Bank have been merged into a new bank called Uttar Pradesh Gramin Bank in Uttar Pradesh. Such mergers have also occurred in Bihar, Gujarat, West Bengal, and other states.
In a concurrent development, the Supreme Court has directed the Central Bureau of Investigation (CBI) to conduct seven preliminary inquiries into the suspected collusion among financial institutions and builders, specifically under subvention schemes in Noida, Greater Noida, Gurugram, and other locations.
The Court specifically targeted Supertech for a special inquiry, citing its involvement in 21 projects and financial transactions with more than 19 banks. The Court described this as a “regulatory failure” because banks were advancing full loans at the outset in tripartite agreements, even before construction was initiated, putting the buyers on the hook when builders defaulted.
A Special Investigation Team (SIT) will be constituted, comprising CBI and state police officials, to investigate further. RBI, NHB, and urban authorities will also have to appoint nodal officers for access to documents and inter-agency coordination. Such buyers will continue to receive interim legal protection according to earlier orders.
