GK Update – Important MoUs signed by the RBI

Dear
Readers,

The Reserve Bank of India (RBI) has
recently signed MoUs with a series of international banks and this could be an
important topic in your examination.

The countries in this list range from Africa,
Asia to the Americas. These agreements are expected to strengthen RBI’s policies
on foreign banking, and will also be likely to promote better cooperation. This
article will look at some of the important MoUs signed by the RBI in the past
few months and their purposes.

1. Sri Lanka

·
The Reserve Bank of India
and the Central Bank of Sri Lanka (CBSL) signed a Special Currency Swap
Agreement.

·
With this agreement, the
CBSL will be able to draw up to USD 1.1 billion for a maximum period of six
months. This will be a special addition to the already existing Currency Swap
Agreement framework for both the countries.

·
Prime Minister of India,
Mr. Narendra Modi had announced in March a USD 1.5 billion currency swap deal
with Sri Lanka.

·
This pact is expected to
help in stabilizing the exchange rates vis a vis macroeconomic fundamentals and
fluctuations in other currencies.

2. United States of America

·
India and the USA signed
an agreement on sharing tax information. The RBI has asked all the banks and
financial organizations to implement the Foreign Account Tax Compliance Act
(FATCA).

·
This will allow both the
sides to track assets nationals which either country holds in the other. It
will not be necessary to report back to their respective home countries.

·
This is likely to help
the Internal Revenue Service (IRS) acquire access to undisclosed assets
Americans. This will include those NRIs who are US residents on hold in India.

·
Tax authorities of India
will be able to access details of American assets of Indians, even those which
may not have been reported. This would greatly help them to tackle the issue of
black money.

·
With the official
sanction on this agreement, the fear of American organizations pressing a
FATCA-approved 30% penal withholding tax on payments made to Indian clients,
will no longer persist.

·
This agreement is
expected to increase tax transparency and consequently lead to higher equity
into the direct tax regime.

3. Nepal

·
The
RBI signed an MoU with Nepal Rastra Bank (NRB) on “Supervisory Cooperation and
Exchange of Supervisory Information”.

·
This
agreement was signed by Mr. Narayan Prasad Paudel, Executive Director of Nepal
Rastra Bank and Mrs. Meena Hemchandra, Executive Director of the RBI.

·
With
each of the international MoUs, the RBI is following its policy of promoting
greater cooperation and sharing supervisory information.

4. Seychelles

·
The RBI and the Central
Bank of Seychelles (CBS) signed an MoU on “Exchange of Information and Mutual
Assistance in Banking Sector Supervision”.

·
This agreement was
signed by Mr. C. Edmond, First Deputy Governor, CBS and Mr. S.S. Mundra, Deputy
Governor, RBI.

5. Maldives

·
The RBI has inked an MoU with Maldives Monetary
Authority (MMA) on “Supervisory Cooperation and Exchange of Supervisory
Information”.

·
The pact was signed by Ms. Neeza Imad, Assistant
Governor – Financial Stability, MMA and Mr. S.S. Mundra, Deputy Governor, RBI.

6.
Botswana

·
The Reserve Bank of India signed a
Memorandum of Understanding with Bank of Botswana on “Supervisory Cooperation
and Exchange of Supervisory Information”.

·
This was signed between Mr. Andrew
M. Motsomi, Director of Banking Supervision, Bank of Botswana and Mrs. Parvathy
V. Sundaram, Chief General Manager-in-Charge, Department of Banking Supervision
of the RBI.

·
The RBI has now signed twenty-eight
such MoUs, one Letter of Supervisory Cooperation and one Statement of Cooperation.

These
are the most recent Memorandums of Understanding signed by the RBI, and
questions about these could be crucial in your exam. If you understand the
basic details behind these deals, you will be able to attempt questions on this
with greater ease.

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