RESERVE BANK OF INDIA : IMPORTATNT CHANGES MADE IN JULY 2021 BY NILISHA PRIYA MENDONCA@LEXCLIQ

RESERVE BANK OF INDIA : IMPORTATNT CHANGES MADE IN JULY 2021

People will witness changes in banking services and other areas from  1 st  July 2021,  which will have a direct effect on the lives of common people. Apart from banking services, these changes will also impact those who haven’t filed their income tax returns.

The changes include free transactions that are carried out by users of banks at  ATMs.

Here is a list of changes which will come into effect from July 1:

  1. SBI revises charges for ATM cash withdrawals:The customers of State Bank of India (SBI) will have four free cash withdrawals from the bank’s ATM as well as branches. The largest public lender in the country will charge ₹15 plus GST on each transaction after the free transactions.
  2. LPG cylinder prices to be changed:The prices of liquefied petroleum gas (LPG) cylinders is decided on the first day of every month. Though no such official announcement is made by the oil companies, it is widely expected that the prices will be revised on July 1. LPG is a non-renewable source of energy and is extracted from crude oil and natural gas.
  3. TDS for not filing income tax:From next month, the government has decided to impose a higher tax deducted at source (TDS) rate for those who have not deposited income tax returns (ITR) for the last two years. The rule will be applicable on taxpayers whose TDS deducted each year exceeds ₹50,000. This has been inserted in the income tax rules by Finance Act, 2021.
  4. IFSC code of Syndicate Bank to be changed:The account holders of Syndicate Bank will get new IFSC codes as the bank has merged with Canara Bank. The latter has appealed to all the account holders of Syndicate Bank to get the new IFSC codes so that transactions can be done smoothly.
  5. Account holders of two banks to get new cheque books:Andhra Bank and Corporation Bank have been amalgamated into Union Bank of India. The latter has asked the users of the two banks to get new cheque books with security features. Their existing cheque books will become invalid. Andhra Bank and Corporation Bank were amalgamated into Union Bank on April 1, 2020.

Increased cheque book usage charges:The savings bank holders of SBI will have limited free cheque leaf usage from July 1. The bank has released new guidelines according to which an account holder can only use 10 cheque leafs in a financial year.

RBI allows loans up to Rs 5 crore to other banks’ directors without board approval:

The Reserve Bank of India (RBI) on Friday i.e. on 23 july 2021 said that banks without their boards’ approval can sanction personal loans up to Rs 5 crore to directors of other banks.  Before the limit was upto 25 L. Unless sanctioned by the board of directors/ management committee, banks should not grant loans and advances aggregating Rs 5 crore and above to any relative other than spouse and minor/ dependent children of their own Chairmen/ Managing Directors or other directors.

Reserve Bank of India recently told that on examination of the issues, it was felt that the threshold of Rs25 lakh which was in 1996, needed an revision to reflect the increase in general prices since that time, encourage professionals with expertise to join the Boards and reduce the cases requiring approval at the board/ management committee level without diluting the regulatory intent. The increased threshold will be applicable for grant of only ‘personal loans’ to any director of other banks

Personal loans refer to loans given to individuals and consist of consumer credit,  loans given for creation or enhancement of immovable assets like houses, and loans given for investment in financial assets, such as shares, debentures, etc. and education loans.

For borrowing worth Rs 5 crore and above, prior approval from the board or the management committee of the financing bank will be required, if the loan is being sanctioned to:

  1. Any relative other than spouse and minor/dependent children of their own chairpersons, managing director or other directors. Any relative other than spouse and minor/dependent children of chairpersons, managing director
  2. Any company in which any of the relatives other than spouse and minor or dependent children of chairpersons, managing director or other directors is interested as a major shareholder or as a director or as a guarantor
  • Any firm in which any of the relatives other than spouse and minor or dependent children of chairpersons, managing director or other directors is interested as a partner or guarantor

This rule was applicable to loans, to directors of other banks including associated companies and firms, loans to relatives of a bank’s own directors, including associated companies and firms and loans to relatives of directors of other banks, including associated companies or firms.

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