Department of Financial Services: Trade Notice Issued to Enable Smooth Functioning of Banking and Insurance Related Operations

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A.  In view of the COVID-19 situation, the Department of Financial Services issued a trade notice on 12 March 2020 listing the steps it has taken to ease the global disruption caused to banking and insurance related operations. Public Sector Banks (PSBs) have been given the following directions:

i.  To immediately set up special cells that will provide comprehensive assistance to industry segments and MSME units affected by COVID-19 and to process requests for assistance with appropriate sensitivity;

ii.  Customers should be informed about all documents/procedural requirements upfront, in a one-time effort. Further, banks shall accept self-certifications as far as possible to ensure that procedural deficiencies do not inhibit fund remittance;

iii. Identify opportunities for import substitution/ramping up of production to counteract the inevitable impact of the pandemic. If units require support in this regard, all necessary assistance shall be rendered.

B.  Insurance Development Authority of India (IRDAI) has been requested to assess/review the existing insurance products/policies to ensure that the policy covers loss due to abnormal delay in delivery of shipments (where such delay is due to COVID-19) . Additionally, and against this background, IRDAI has been asked to permit necessary modification to the terms and conditions of the policy.

On 16 March 2020, the Reserve Bank of India (RBI) followed suit with its press release on “Operational and Business Continuity Measures”. The RBI directed all banks and financial institutions to do as follows:

i.  Design and implement strategies and monitoring mechanisms to control the spread of COVID-19 within the organization – this will include directions to the staff, quarantine policy and travel policies;

ii.  Revisit and revise business continuity plans in the context of the current pandemic and ensure that critical services can continue without disruptions;

iii.  Instructing, sensitizing and training staff with the latest reliable information;

iv.  Encourage and promote a shift to digital banking services among customers.

These two notices show one common purpose – a commitment from regulators to ensure non-disruption of internet and banking services despite the determined spread of COVID-19. Since high-speed (and affordable) internet and a robust banking system are both crucial to any economy, the sustained maintenance of such infrastructure, even during a lock-down, can go a long way towards minimizing the destructive impact of the pandemic on lives and livelihoods.

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