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Last Updated: April 2, 2020 9 hours ago

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  • RBI introduced relief measures to deal with coronavirus pandemic

    9 hours ago
    The Reserve Bank of India (RBI) has announced relief measures for state governments, exporters. The Central Bank also provides relief to banks' capital concerns.  RBI Measures: 1) RBI extended the deadline for realization and repatriation period of export which is made up to or on 31 July. The period of export has been relaxed for up to 15 months from 9 months (at present).  The move by RBI will enable exporters to realize their receipts within the extended period. It will also provide greater flexibility to exporters to negotiate future contracts with buyers abroad. 2) RBI constituted an advisory committee to review ways and means limits for states and Union Territories (UTs). As per the committee's report, it has been decided to increase the ways and means limit by 30% from the existing threshold for all states/UTs.  The move is expected to cause the relief to state governments to get through the pandemic. The revised limits by the Central Bank came into force with effect from 1 April and will be valid till 30 September 2020. 3) RBI cancelled the counter-cyclical capital buffer for banks for a period of one year. RBI's framework views the credit-to Gross domestic product (GDP) gap as the main indicator, along with other supplementary indicators.  The counter-cyclical capital buffer framework was introduced by RBI in 2015. The framework aimed to build up capital that may be used by them to maintain the flow of credit in difficult times. The framework aimed to prevent banks from indiscriminate lending in periods of excess credit growth.

    Merger of 10 PSBs into 4 comes into from 1 April

    2 days ago
    The Reserve Bank of India (RBI) announced that the merger of 10 state-run banks into four lenders came into effect on 1 April amid the lockdown triggered by coronavirus outbreak. The branches of merging banks will operate as of the banks in which the banks have been amalgamated. Highlights: ♦ On 4 March 2020, GoI announced the amalgamation schemes for 10 state-owned banks into four as part of its consolidation plan. The move aimed to create bigger size stronger banks in the public sector. ♦ The amalgamation of 10 PSBs into four Banks include: (i) United Bank of India and Oriental Bank of Commerce (OBC) into Punjab National Bank (PNB) (ii) Syndicate Bank into Canara Bank (iii) Corporation Bank and Andhra Bank into Union Bank of India (iv) Allahabad Bank into Indian Bank ♦ The customers of the merging banks will be treated as customers of the banks in which these banks have been merged. Benefit: The major objective of the merger is to achieve India's vision to make a $5 trillion economy. The merger will reduce the lending cost and enhance the capacity in order to increase credit. It will also improve the ability to raise market resources.

    ADB to invest $100 mn in NIIF FOF

    3 days ago
    Asian Development Bank (ADB) has joined the Government of India (GOI) and Asian Infrastructure Investment Bank (AIIB) as an investor under the instruments of the National Investment and Infrastructure Fund (NIIF) of India. Under the move, ADB will invest $100 million equivalent in the NIIF Fund of Funds (FOF).  ADB's investment: ♦ With the investment now made by ADB into the NIIF platform, the FOF has now secured $700 million in commitments. NIIF's FOF is targeted at India-focused PE fund managers who rely on international investors for large-scale fundraising. ♦ The FOF invests in various sectors and strategies through third-party managed funds. FOF is committed to three funds, aggregating to over $350 million (Rs.2,600 crores), that focus on green energy and climate, middle-income and affordable housing and entrepreneur-driven mid-market growth companies, operating across diversified sectors.  NIIF FOF: NIIF FOF was established in 2018. The main objective of NIIF FOF is to create a vehicle to provide India-focused private equity fund managers with a go-to institutional investor operating at scale and based in India.

    RBI to implement Mega Bank Consolidation Plan on 1 April

    4 days ago
    The Reserve Bank of India (RBI) stated that the schemes for the merger of 10 state-run banks into four lenders will come into force from 1 April. RBI also stated that the branches of merging banks will operate as of the banks in which the banks have been amalgamated. The banks sought to defer the merger schemes of lenders due to the lockdown triggered by coronavirus outbreak. Union Finance Minister Nirmala Sitharaman announced that the megabank consolidation plan would take effect from 1 April 2020 despite the COVID-19 pandemic. Background: On 4 March, the government of India notified the amalgamation schemes for 10 state-owned banks into four as part of its consolidation plan. The move aimed to create bigger size stronger banks in the public sector. The amalgamation of 10 PSBs into four Banks include: (i) Oriental Bank of Commerce (OBC) and United Bank of India into Punjab National Bank (PNB) (ii) Syndicate Bank into Canara Bank (iii) Andhra Bank and Corporation Bank into Union Bank of India (iv) Allahabad Bank into Indian Bank

    RBI announced 3 month moratorium on repayment of term loans means for borrowers

    6 days ago
    The Reserve Bank of India (RBI) has announced that all banks and Non-bank financial institutions (NBFCs) have been permitted to allow a moratorium of 3 months on repayment of term loans outstanding on 1 March 2020. As per RBI's move, the tenure or time period of the loans will be increased by 3 months.  Highlights: ♦ All lending institutions including banks and NBFCs will allow a moratorium on loan repayments for 3 months.  ♦ A moratorium of this kind generally implies that the Equated monthly installments (EMI) repayment of loans of individuals will not be deducted from their bank accounts till the moratorium period is over.  ♦ The loan EMI payments will resume only when the moratorium time period of 3 months expires.  ♦ RBI stated that the moratorium will enable the borrowers to balance the economic fallout from COVID-19.  Note: Moratorium period, also known as EMI holiday, is the time during which an individual does not have to pay an EMI on the loan taken. These breaks are offered to help individuals facing temporary financial difficulties to plan their finances better.

    Cabinet approved the continuation of recapitalization of RRB scheme

    8 days ago
    The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi approved to continue the process of recapitalization of Regional Rural Banks (RRBs). Highlights: The Cabinet approved to provide minimum regulatory capital to RRBs for another year, that is, up to 2020-21 for those RRBs which are unable to maintain minimum Capital to Risk-weighted Assets Ratio (CRAR) of 9% which was set as per the regulatory norms prescribed by the Reserve Bank of India (RBI). The CCEA also approved the RRB's to utilize Rs.670 crore as central government share for the scheme of Recapitalization of RRBs that are subject to the condition that the release of the Central Government’s share will be contingent upon the release of the proportionate share by the sponsor banks. Earlier, it was decided that 50% of the total recapitalization support of Rs.1340 crore will be shared by the government. Background: RBI introduced disclosure norms for CRAR of RRBs with effect from March 2008. Based on the recommendation of Dr. K.C. Chakrabarty chaired the committee, a Scheme for Recapitalization of RRBs was approved by the Cabinet on 10 February 2011.  As per the scheme, the National Bank for Agriculture and Rural Development (NABARD) will identify the RRBs that require recapitalization assistance to maintain the mandatory CRAR of 9%. The scheme will provide recapitalization support of Rs.2,200 crore to 40 RRBs. Also, an additional amount of Rs.700 crore will be given as a contingency fund to meet the requirement of the weak RRBs, particularly in the North-Eastern and Eastern Region.

    RBI extends restrictions on PMC Bank for three more months

    12 days ago
    Reserve bank of India extended the regulatory restrictions on Punjab and Maharashtra Cooperative Bank (PMC) Bank by another three months. The central bank also added that it has been in talks with various authorities for the quick sale of securities and recoveries of loans. The validity of the directive dated 23 September 2019, stands modified from 23 March 2020 to 22 June 2020. RBI imposed restrictions on PMC bank under Section 35A of the Banking Regulation Act. This was aimed at preventing a run on the bank that could end up endangering the stability of the entire financial system because of a contagion effect.These curbs were put in place after the central bank saw gross under-reporting of bad loans, financial irregularities by the bank’s officials, and failure of internal controls and systems. RBI superseded the board and the management of the bank and appointed an ex-RBI official as the administrator at the bank.RBI has offered a plan where depositors can invest in a bond called innovative perpetual deposit instrument (IPDI) with a lock-in period of 10 years.The extension of the restrictions comes at a time when RBI and government put in place a bailout package for Yes Bank in no time, while it still has not succeeded in doing so in the case of PMC due to the constraints of dual regulation. Regulation of urban cooperative banks is split between the RBI and the Registrar of Co-operative Societies. In contrast, that of smaller co-operative banks are divided between National Bank for Agriculture and Rural Development (Nabard) and RCS. RCS reports to the central government.

    DBS Bank, Bharti AXA join hands for insurance plan covering Covid-19

    12 days ago
    DBS Bank India tied-up with Bharti AXA to roll out a complimentary insurance plan covering all medical conditions. The plan would cover all medical conditions, including Covid-19, and up to 10 days of hospitalization, with a cover of Rs 5,000 per day, for 30 days, DBS Bank India said in a release. DBS customers can purchase health insurance products that are currently offered on the digibank app through their general insurance partners. The bank is conducting periodic meetings with its insurance partners to ensure seamless and end-to-end online access to these facilities and improvisation to the products.The guarantee of payments for hassle-free hospitalization and arrangement of emergency medical evacuation for NRIs with dependents in the country.

    RBI chalks out contingency plan for smooth functioning of services

    12 days ago
    Reserve Bank of India (RBI) put in place a contingency plan to ensure that crucial information technology (IT) services for the delivery of digital banking, treasury services.It includes measures to prepare for anticipated disruptions, ensure smooth flow of operations and staffing, identify critical resources, and form crisis management groups while keeping all staff insulated from exposure to the virus. NEFT This plan launched to ensure continuity of critical services like National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), e-Kuber for government transactions, and so on. The BCP ensures that all critical functions of the financial system continue to be available to individuals, businesses, and governments under all circumstances. Central Bank RBI has created a team of 37 officials comprising key personnel from essential functions like debt management, reserve management, monetary operations, and 113 officials from service providers, and moved them to a hotel near the primary data center (DC). The central bank’s DC runs critical systems that operate payments across different segments. Typically, around 600 personnel of third-party service providers are deployed at DCs for various IT and non-IT services, apart from 60 officials from the bank. As per the plan, the RBI team and hotel staff isolated to ensure their safety and health.RBI made similar arrangements at other DCs to run systems with the maximum services possible. The central bank also asked other banks to put in place BCPs to prevent any disruptions of services.

    SBI reduced FD rates, MCLRs rates for a second time in a month

    15 days ago
    State Bank of India (SBI) has announced a reduction in its Marginal Cost of Funds based Lending Rates (MCLR) upto15 basis points (bps) across tenors. This is the second time the lender is announcing the rate cut in its fixed deposit (FD) interest rates. This is the second reduction in a month and the tenth cut in the current fiscal year. Highlights: ♦ SBI has reduced retail term deposits (less than Rs.2 crore) by 10 to 50 bps for a few tenors. The new rates for home loans and FDs took effect from 10 March. ♦ The one-year MCLR reduced to 7.75% from 7.85% with effect from 10 March 2020.  ♦ EMIs on eligible home loan accounts that are linked to MCLR will come down by around Rs.7 per 1 lakh on a 30-year loan. It also said that EMIs on car loans would also be reduced by Rs.5 per 1 lakh on a seven-year loan.  ♦ SBI's FD rates have been reduced by 10-50 bps due to adequate liquidity in the system. It had reduced the interest rates applicable to retail term deposit by 10 bps for maturities of one year and above, and by 50 bps for the rates up to 45 days. SBI also reduced FD rates by 15 bps for deposits with tenors of 180 days and above.

    RBI to use swap transactions, LTRO to infuse liquidity

    15 days ago
    The Reserve Bank of India (RBI) has announced that, in the wake of the epidemic Covid-19, the central bank would use Forex swap and long-term repo operations (LTROs) to mitigate the effects of the Covid-19 on the Indian Economy.  Highlights: ♦ RBI will conduct a sell/buy swap auction worth $2 billion to provide dollar liquidity. RBI also stated that it would not hesitate to persist with LTROs to infuse long-term rupee liquidity, amounting to Rs.1 lakh crore. ♦ RBI is to undertake another six-month US dollar sell/buy swap auction that aggregates to $2 billion on 23 March. The move by RBI aims to provide liquidity to the foreign exchange market. ♦ RBI is to conduct LTRO in multiple tranches of appropriate sizes up to a total amount of Rs.1 lakh crore at the policy repo rate. It aims to counterbalance the domestic liquidity effects of the swap and to improve monetary policy transmission further.

    The 39th GST Council meeting was held

    18 days ago
    The 39th GST Council meeting was held under the Chairmanship of Union Finance & Corporate Affairs Minister Smt Nirmala Sitharaman on 14 March in New Delhi. Union Minister of State for Finance and Corporate Affairs Anurag Thakur, along with Finance Ministers of States/UTs and seniors officers of the Ministry of Finance, participated in the meeting. Highlights: ♦ The officials discussed the issues faced by the taxpayers in the GST system. A summary of the recently observed IT issues, and the way forward to resolve them was submitted. ♦ The meeting focused on smoothening the rollout of the new return system and ensured the transition to the new return system is made in an incremental manner.  ♦ The meeting addressed the compliance-related issues so that the problem of tax evasion and gaming of the system due to non-linking of FORM GSTR-1 and FORM GSTR-3B is addressed immediately.  ♦ The officials stated that in order to tackle and prevent the gaming of the system, implementation of Aadhaar authentication and spike rules would be initiated. GST Council: GST Council governs the tax rates, rules, and regulations in the country. It is chaired by the Finance Minister of India. The council consists of the finance ministers of the central government and all the states. 

    RBI revised exposure limits for UCBs

    19 days ago
    Reserve Bank of India (RBI) revised exposure limits for urban cooperative banks (UCBs) to a single borrower and a group of borrowers to 15% and 25%, respectively, of tier-I capital.  Highlights: ♦ Previously, the UCBs were permitted to have exposures of up to 15% and 40% of their capital funds to a single borrower and a group of borrowers, respectively.  ♦ The revised exposure limits will be applicable to all types of fresh exposures taken by UCBs, and they will have to bring down their existing exposures, which are in excess of the revised limits, by 31 March 2023.  ♦ The preceding financial year will be considered for the purpose of fixing the exposure limits, tier-I capital as on 31 March.  ♦ Tier-I capital will remain the same as that prescribed for computation of capital adequacy of UCBs. The banks can have at least 50% of their aggregate loans and advances comprising loans of not more than 0.2% or Rs.25 lakh of their tier 1 capital, as per the borrower.

    SBI announced rate cuts on FD

    22 days ago
    State Bank of India (SBI) has announced a rate cut of the fixed deposit rates across multiple tenors for general customers and senior citizens. It has reduced a rate cut up to 50 basis points (bps) in some tenors, and for some tenors, it has announced a reduction of 10 bps.  Highlights: ♦ The new rates were made effective from 10 March.  ♦ The fixed deposit (FD) rate for a period of 7 days to 45 days has been reduced to 4% from the earlier 4.50%, while it has been reduced to 4.50% from 5% for senior citizens.  ♦ For the FD rates for 1 year to less than 2 years, 2 years to less than 3 years, 3 years to less than 5 years, and 5 years to up to 10 years tenors, the rates have been reduced by 10 bps.  ♦ For general customers, the interest rate has been reduced to 5.90% from the earlier 6%. For senior citizens, in this case, it has been reduced to 6.40% from 6.50%. ♦ The last rate cuts on FDs were made applicable on 10 February.

    Centre imposes withdrawal limit for depositors of Yes Bank

    24 days ago
    The government of India has imposed a withdrawal limit of Rs.50,000 for depositors of Yes Bank for one month. The notification regarding this was issued by the Ministry of Finance. The cap will be in effect till 3 April. GoI has allowed a few exemptions in cases like higher education, medical emergency, marriage, and unavoidable emergency for the limit on withdrawal. RBI's announcement: Reserve Bank of India (RBI) stated that Yes Bank's board has superseded for a period of 30 days that owes to a serious deterioration in the financial position of the bank. Former Chief Financial Officer (CFO) of SBI Prashant Kumar has been appointed as administrator for Yes Bank. RBI assured depositors of Yes Bank that their interest would be fully protected. RBI stated that it would explore and draw up a scheme for the bank's reconstruction or amalgamation in terms of the provisions of the Banking Regulation Act. Yes Bank scam: The founder of crisis-hit Yes Bank Rana Kapoor was arrested by the Enforcement Directorate (ED) on 7 March for the alleged bank scam worth Rs.4,300 crore. Prevention of Money Laundering Act (PMLA) was filed against him.

    NABARD infused Rs 1.46 lakh crore in the rural banking system during current

    28 days ago
    National Bank for Agriculture and Rural Development (NABARD) has infused Rs.1.46 lakh crore in the rural banking system during the current fiscal. The bank stated that it had given Rs.66,397 crore in short-term credit and Rs.6,704 crore in long-term credit to rural cooperative banks.  Regional rural banks (RRB) have availed Rs.14,141 crore in short-term credit and Rs.8,417 crore in long-term credit. Also, other small finance banks have obtained long-term refinance of Rs.37,895 crore. Short-term refinance is essentially production credit, and long-term refinance aimed at supporting sectors like dairy, poultry, fishery, farm mechanization, irrigation, and non-farm sectors, etc.

    Cabinet approved amalgamation of PSBs with effect from 1 April

    29 days ago
    The Union Cabinet led by Prime Minister Narendra Modi approved the consolidation of ten Public Sector Banks (PSBs) into four. The amalgamation of the PSBs will be effective from 1 April 2020.  The banks include: (i) amalgamation of Oriental Bank of Commerce (OBC) and United Bank of India into Punjab National Bank (PNB) (ii) amalgamation of Syndicate Bank into Canara Bank (iii) amalgamation of Andhra Bank and Corporation Bank into Union Bank of India (iv) amalgamation of Allahabad Bank into Indian Bank Highlights: ♦ The amalgamation is aimed to create seven large PSBs with scale and national reach, with each amalgamated entity having a business of over Rs.8 lakh crore. The move is expected to help create banks with a scale that can be compared to global banks and capable to compete effectively in India and globally.  ♦ It will lead to cost benefits, which should enable the PSBs to enhance their competitiveness and positively impact the Indian banking system. ♦ The consolidation will provide impetus to amalgamated entities by increasing their ability to support larger lending and greater financial capacity.  ♦ It will also enable the banks to improve their cost efficiency and risk management, and thus, boosting the goal of financial inclusion through wider reach. ♦ It will lead to adopting technologies across the amalgamating banks, access to a wider talent pool, and a larger database. 

    RBI directed banks to link all new floating rate loan

    35 days ago
    The Reserve Bank of India (RBI) directed banks to link all the new floating-rate loan to medium enterprises with external benchmark. It will be effective from 1 April 2020. The floating rate loans of the micro and small enterprises are already linked with external benchmarks. Aim: The move by RBI is aimed to further strengthen the monetary policy transmission. The benefits of a reduction in key lending rates can be passed on to medium enterprises. Highlights: ♦ The external benchmarks will include RBI repo rate, Treasury bill yields, and the market interest rate published by the Financial Benchmark India Private Ltd (FBIL). ♦ The floating rate loans to micro and small enterprises, personal and retail loans have already been linked to external benchmarks. ♦ RBI states that the monetary policy transmission has improved in respect of the sectors where new floating rate loans have been linked to external benchmarks.

    RBI lifted its ban on Bandhan Bank

    36 days ago
    The Reserve Bank of India (RBI) lifted its ban on Bandhan Bank after considering the efforts made by the Bank to comply with the licensing conditions on 25 February. Now, the Bank can expand its branch network.  Background: In September 2018, RBI had banned Bandhan Bank from expanding its network as the Bank failed to reduce the promoters' stake to 40% from close to 82% within the stipulated three-year time frame of commencing operations. The Bank has not complied with the licensing condition on dilution yet. But considering the efforts taken by the private lender, the ban was lifted by the RBI. Bandhan bank ensured at least 25% of the total number of banking outlets opened during a financial year are opened in unbanked rural centres.  Bandhan Bank: Established on: 23 August 2015 Founded by: Chandra Shekhar Ghosh Headquarters: Kolkata, West Bengal Chairman: Dr. Anup Kumar Sinha MD & CEO: Chandra Shekhar Ghosh Currently, the bank has 4,288 banking outlets, including branches. The Bank shares closed at Rs.403.85 on BSE, down 1.15% from the previous close.

    NABARD approves Rs.400 crore to boost infrastructure in JK

    37 days ago
    National Bank for Agriculture and Rural Development (NABARD) sanctioned an amount of Rs.400.64 crore to the Union Territory of Jammu & Kashmir during the current financial year. The aim is to boost the infrastructure in rural areas. The funding is a part of the NABARD's 'Rural Infrastructure Development Fund (RIDF)-Trench XXV' which aims at augmenting rural infrastructure. Background: ♦ Earlier in 2020, NABARD has sanctioned Rs.209.87 crore for the construction of 82 rural roads and 3 bridges.  ♦ A road length of 291kms has been proposed to be constructed benefiting 9.15 lakh people in 19 districts of UT of J&K.  ♦ The construction of roads and bridges will provide all-weather improved connectivity to 461 remote villages.  ♦ A sum of Rs.143.66 crore has been sanctioned for the implementation of 38 water supply schemes.   ♦ The schemes are expected to benefit over 3.54 lakh people across 86 villages in 17 districts of UT of J&K.  ♦ Similarly, NABARD has also sanctioned an amount of Rs.47.11 crore towards improving the Animal and Sheep Husbandry sectors.

    RBI unveiled a 2019-24 National Strategy for Financial Inclusion

    40 days ago
    The Reserve Bank of India (RBI) unveiled a National Strategy for Financial Inclusion 2019-24. The RBI's Strategy is aimed at providing access to formal financial services in an affordable manner. It aims to promote financial literacy among customers.  Formed by: The Financial Inclusion Advisory Committee of the RBI in consultation with the Government of India, Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), and Pension Fund Regulatory and Development Authority of India (PFRDA) provided the National Strategy for Financial Inclusion 2019-24. National Strategy for Financial Inclusion 2019-24: ♦ National Strategy for Financial Inclusion method recommends many ways in which the objective can be fulfilled.  ♦ It suggested methods to provide access to financial service provides in every village within a range of 5 km. ♦ Every adult registered under Pradhan Mantri Jan Dhan Yojana (PMJDY) should be enrolled in insurance, pension schemes.  ♦ The public credit registry should be made fully operational by March 2022. The strategy directed to strengthen the digital financial services to facilitate less-cash society. ♦ Every new entrant should be given information on government livelihood programme.

    NESFB began its service and operation

    44 days ago
    North East Small Finance Bank (NESFB) which is the first small bank of North India has started its services on 16 February. On 31 March 2017, Rashtriya Gramin Vikas Nidhi (RVGN) (North East) Microfinance Limited received the Small Finance Bank License from the Reserve Bank of India (RBI).  North East Small Finance Bank (NESFB): ♦ Assam's finance minister Himanta Biswa Sarma and TATA Trust chairman Ratan Tata launched the first 28 branches of NESFB.  ♦ Tata has invested Rs.40 crore through his investment arm RNT Associates in the bank. ♦ North East Small Finance Bank Ltd has a net worth of Rs.300 crore. ♦ The bank is supported by the infusion of funds from domestic and overseas investors. ♦ The bank will carry out banking services in remote and unbanked areas of India's eight northeastern states and in West Bengal.

    SEBI approves proposal to segregate investment advisory, distribution services

    45 days ago
    The Securities and Exchange Board of India (SEBI) approved the proposal to segregate investment advisory and distribution services. Under this, individual investment advisors cannot provide distribution services to clients.  Highlights: ♦ An individual or a company should opt either providing advisory services or distribution services for investment products including portfolio management products, mutual funds, and alternative investment funds from now.  ♦ SEBI also announced that it is to introduce an upper limit on the fees charged to clients by investment advisers. ♦ It will provide enhanced eligibility criteria for registration as an investment advisor, including net worth, qualification and experience requirements.  ♦ The aim is to facilitate the use of the latest fintech innovations in capital markets.

    SEBI introduces a system to track client securities

    48 days ago
    The Securities and Exchange Board of India (SEBI) has introduced an in-house system to track the movement of client securities that are collected as collateral by brokers.  New Tracking system: ♦ SEBI has developed the in-house capabilities to track the movement of client securities collected by the broker as collateral online.  ♦ It will raise alerts with exchanges if diversion of clients' securities is noticed. ♦ So far, three 'mismatch reports' has been forwarded to the stock exchanges for reconciliation with members. SEBI: Formed on: 12 April 1988 Headquarters: Mumbai, Maharashtra Chairman: Ajay Tyagi SEBI is the regulator for the securities market in India. It was established through the SEBI Act, 1992.

    FCXV form Group on Defence and Internal Security

    49 days ago
    The Fifteenth Finance Commission (FCXV) has formed a 5-member Group on Defence and Internal Security under the Chairmanship of N K Singh. The announcements were made after the commission held the 6th meeting of its advisory council to seek views on the report of the panel for 2020-21 and on the outlook for nominal Gross domestic product (GDP) growth for 2020-21 to 2025-26. Group on Defence and Internal Security: ♦ The group will examine whether a separate mechanism for funding of defence and internal security is necessary.  ♦ It will also find a way to implement such a mechanism. The group comprises of: Chairman: Shri N.K. Singh, Chairman, Fifteenth Finance Commission Members: Shri A. N. Jha, Member, Fifteenth Finance Commission Secretary, Ministry of Home Affairs Secretary, Ministry of Defence Secretary (Expenditure), Ministry of Finance

    BoB, UBI cuts lending rates by 5-10 bps

    51 days ago
    State-owned lender Bank of Baroda (BoB) and Union Bank of India (UBI) has lowered their lending rates by 5-10 basis points (bps).  BoB has reduced its one-year Marginal Cost of Funds based Lending Rate (MCLR) by 10 bps to 8.15% and one-month MCLR by 5 bps. The announced new rates will come into effect from 12 February.  Also, UBI has reduced its 3-month MCLR rate by 5 bps to 7.80% from 7.85%. The one-year MCLR capital remains unchanged at 8.10%. The revised rates will come into effect from 11 February 2020. The Bank has recently reduced its home loan interest rates for different categories of borrowers by up to 30 bps from 8.20% to 7.90%. Bank of Baroda: Established on: 20 July 1908  Nationalized on: 19 July 1969 Headquarters: Vadodara, Gujarat Chairman: Hasmukh Adhia MD & CEO: Sanjiv Chadha Bank of Baroda is a government-owned International banking and financial services company. It is the second-largest bank in India, next to the State Bank of India (SBI). Union Bank of India: Established on: 11 November 1919 Headquarters: Mumbai, Maharashtra MD & CEO: Shri Rajkiran Rai G. UBI is one of the Indian state-owned banks in India.

    RBI to create digital payments index

    54 days ago
    The Reserve Bank of India (RBI) is to create a digital payments index (DPI) by July 2020. This index will indicate the level of digitalization prevailing in the country.  Digital Payments Index (DPI): ♦ DPI will help the regulator and government to understand the adoption of digital payments in the country. ♦ The DPI by RBI will be based on multiple parameters. ♦ It will reflect the penetration and deepening of various digital payment modes ♦ It is expected that DPI's benchmark will reflect the progress of digitization in the country. ♦ The government and central bank have been working on enabling the adoption of cashless payment modes that include, digital mobile wallets, debit and credit cards, internet banking and the Unified Payments Interface (UPI) system. ♦ DPI data will have a classification of urban, semi-urban and rural geographies to analyze the kind of digital payments that are gaining acceptance.

    SBI announces rate cut in FDs

    54 days ago
    State Bank of India (SBI) has announced a cut in retail fixed deposits (FD) rates. The rate cut will be effective from 10 February. The move by SBI is due to the surplus liquidity in the system.  SBI rate cut: ♦ SBI realigned its interest rate on Retail Term Deposits which is less than Rs.2 crores and Bulk Term Deposits of Rs.2 crores and above.  ♦ SBI reduced the Term Deposit rates by 10-50 basis points (bps) in the Retail segment and 25-50 bps in the Bulk segment. ♦ It reduced the FD rates across all tenors except for those with a maturity period of 7 days to 45 days. ♦ SBI announced a rate cut of FDs that are maturing in 46 days to 179 days by 50 bps. ♦ For FDs maturing in 180 days to 210 days and 211 days to less than 1 year, an interest rate of 5.50% will be given. ♦ It also offered senior citizens an additional 50 bps interest rate across all tenures.

    Repo rate remains unchanged as per the 6th bi-monthly monetary policy statement

    55 days ago
    The Reserve Bank of India (RBI) released the 6th bi-monthly monetary policy statement for 2019-20 on 6 February. The Monetary Policy Committee (MPC) which was led by Governor Shaktikanta Das from 4-6 February. Highlights: ♦ The Central Bank has kept the repo rate unchanged at 5.15%.  ♦ The reverse repo rate was decided to remain unchanged at 4.90%.  ♦ RBI is to maintain an accommodative policy stance to ensure that inflation remains within the target.  ♦ GDP growth forecast for the financial year 2020-21 (FY21) has been projected at 6%. ♦ RBI will conduct new one-year and three-year repos worth Rs.1 lakh crore. It aims to ensure better monetary policy transmission by enabling banks to reduce lending rates. ♦ It stated that inflation is now expected to go down. ♦ RBI will not cut interest rates before June. ♦ To boost best practices on security, customer protection, and pricing, RBI is to introduce a framework for establishing a Self-Regulatory Organisation (SRO) for the digital payment system by April 2020.  ♦ The committee has decided to extend the Cheque Truncation System (CTS) to all over India. RBI Policy Rates: Policy Repo Rate: 5.15% Reverse Repo Rate: 4.90% Marginal Standing Facility Rate: 5.40% Bank Rate: 5.40% Reserve Ratios: Cash Reserve Ratio (CRR): 4% Statutory Liquidity Ratio (SLR): 18.25%

    I-T department introduced e-calculator to compare due income tax under new, old regime

    56 days ago
    The Income-Tax (IT) Department has unveiled an e-calculator on 6 February 2020. The e-calculator will help the individuals to estimate their tax liability if they opt for the new tax slabs, without claiming deductions and exemptions, for Income tax return (ITR) filing which was announced in the recent Budget. e-calculator: ♦ The e-calculator is provided with a comparative table to compare taxes in the old and the new tax regime ♦ It can be used by the resident individuals for the financial year 2020-21 ♦ The e-calculator is available on the official e-filing website of the department ♦ The web portal is used for filing electronic ITRs by individuals and various other categories of taxpayers. ♦ The taxpayers can punch in their estimated annual income from all sources, total eligible deductions, and exemptions. They can also compare and see what will be their total taxable income if they continue in the old regime or opt for the new one. ♦ The calculator has been designed in a way that will take into account eligible exemptions and deductions. Background: As per the new personal income tax regime, a 5% tax is levied on an annual income between Rs.2.5 lakh to Rs 5 lakh. The tax rate rises to 10%, 15%, 20% and 25% for every Rs.2.5 lakh addition. A 30% tax is charged for income over Rs.15 lakh. The new regime was announced by the Union Finance Minister Nirmala Sitharaman in the Budget speech on 1 February 2020. Note: In India, the taxpayers are in three age categories: a normal citizen who are below 60 years, a senior citizen who is between 60 and 79 years, a super senior citizen who is above 79 years

    Cabinet approved amendments to bring cooperative banks under RBI regulation

    56 days ago
    The Union Cabinet approved the proposal to amend the Banking Regulation Act. The move comes after the Punjab and Maharashtra Co-operative (PMC) Bank crisis.  Amendment to Banking Regulation Act: ♦ The amendment will bring the cooperative banks under the regulatory mechanism of the Reserve Bank of India (RBI).  ♦ It will ensure greater accountability and transparency in the functioning of cooperative banks. ♦ The cooperative banks need to fulfill regulatory requirements set for scheduled commercial banks. ♦ The amendment will give RBI the power to take control of weak co-operative banks.  ♦ As per the proposed amendment, the cooperative bank should take RBI approval for the appointment of the CEO and do audits as per RBI guidelines. Background: In September 2019, RBI has imposed a ban on the operation of PMC bank. The PMC bank was not allowed to issue loans or open fixed deposit accounts after a multi-crore scam. The withdrawal limit was set to Rs.50,000. 

    Union Budget Highlights 2020-2021 presented by Finance Minister Nirmala Sitharaman

    61 days ago
    Union Budget 2020 presented by Finance Minister Nirmala Sitharaman to revive economic growth and boost people's income. The Budget is based on three themes namely: ♦ Aspirational India ♦ Economic development ♦ Caring society Union Budget 2020 was presented by Finance Minister Nirmala Sitharamanin, a bid to revive economic growth and boost people's income. The Budget is based on three themes - aspirational India, economic development for all, and caring society. The Finance Minister began her speech by saying that the Budget 2020-21 is for boosting income and improving the purchasing power of people. The fiscal deficit is estimated at 3.8 percent(revised estimate for 2019-20)of the gross domestic product in the current financial year, and the government aims to lower it to 3.5 percent (budget estimate for 2020-21) in the fiscal year ending March 2021. She proposed Rs 69,000 crore to the healthcare sector and Rs 12,300 crore to Prime Minister Narendra Modi's flagship cleanliness program Swachh Bharat Mission. Finance Minister earmarked another Rs 3.6 lakh crore towards the supply of piped water to households. Highlights Of Union Budget 2020: The income tax for those earning between Rs 5 lakh and Rs 7.5 lakh will be cut to 10 percent from 20 percent. The income tax for those earning between Rs 7.5 and Rs 10 lakh will be cut to 15 percent from 20 percent. The income tax for those earning between Rs 10 and Rs 12.5 lakh will be cut to 20 percent from 30 percent. The income tax for those earning between Rs 12.5 lakh and Rs 15 lakh will be cut to 25 percent from 30 percent. 30 percent tax rate will still be applicable for those earning above Rs 15 lakh. There will be no tax for those earning Rs 5 lakh and Rs 690 billion will be spent on healthcare spending. Village Storage Scheme: Women, SHGs to regain their position as Dhaanya Lakshmi.NABARD to map and geo-tag agri-warehouses, cold storages, reefer van facilities, etc. Warehousing in line with Warehouse Development and Regulatory Authority (WDRA) norms: State governments who undertake the implementation of model laws (issued by the Central government) to be encouraged. Livestock: Doubling of milk processing capacity to 108 million MT from 53.5 million MT by 2025. Artificial insemination to be increased to 70% from the present 30%. MNREGS to be dovetailed to develop fodder farms. Foot and Mouth Disease, Brucellosis in cattle and Peste Des Petits ruminants (PPR) in sheep and goat to be eliminated by 2025. Deen Dayal Antyodaya Yojana: Around 0.5 crore households mobilized with 58 lakh SHGs for poverty alleviation. Education and Skills New Education Policy to be announced soon. National Police University and National Forensic Science University proposed for policing science, forensic science, and cyber-forensics. Degree level full-fledged online education program by Top-100 institutions in the National Institutional Ranking Framework. Up to 1-year internship to fresh engineers to be provided by Urban Local Bodies. The budget proposes to attach a medical college to an existing district hospital in PPP mode. Special bridge courses to be designed by the Ministries of Health, and Skill Development. Transport: 100 more airports are planned by 2024 Over 6,000 km of highways in 12 lots will be monetized by 2024 One major airport will be privatized 16-POINT ACTION PLAN FOR FARMERS The government is committed to doubling farmers' income by 2022 to allocate Rs 2.83 lakh crore for agriculture and rural sectors such as irrigation. Schemes that encourage manufacturing of mobile phones, electronic equipment, and semiconductor packaging be introduced Private sector to build Data Centre Parks throughout the country will be encouraged 80 billion rupees over five years to be provided for quantum technologies and applications Milk processing capacity to be doubled by 2025.

    Today Current Affairs: RBI appoints Executive Director Janak Raj as member of MPC

    64 days ago
    Reserve Bank of India (RBI) appoints its Executive Director, Janak Raj, as a member of the Monetary Policy Committee (MPC). The Monetary Policy Committee takes decisions based on a majority vote. Raj replaces M D Patra recently promoted as Deputy Governor of the RBI. The decision to appoint Janak Raj taken at the 581st meeting of the central board held in Mumbai. The RBI Governor Shaktikanta Das heads the MPC. Monetary Policy Committee (MPC) The committee is responsible for fixing the benchmark interest rate in India. The meetings of the Monetary Policy Committee held at least four times a year. Founded: October 2016

    Today Current Affairs: Central Banks approve reduced fees for UPI RuPay Payment

    65 days ago
    Central Banks in India approve that they will not charge a part of the fees on Unified Payments Interface UPI and RuPay card transactions as long as the merchant discount rate MDR remains zero following the government announcement. The move was discussed and approved in the NPCI steering committee meeting. NPCI to remove multiple charges like interchange fees, payments service provider (PSP) fee, and switching fees.A bank, which used to get MDR from merchants for facilitating the payments, would pay interchange fees to the issuer bank and then pay a switching fee to the network NPCI along with a price to PSPs like PhonePe or Google-Pay. Most banks have stopped ATM expansion and might also allocate less money towards POS (point-of-sale) expansion. The MDR becoming zero, it was inevitable that the interchange fee also becomes zero, industry experts. Unified Payments Interface It is an instant real-time payment system developed by the National Payments Corporation of India facilitating inter-bank transactions.  Formed: 11 April 2016

    SEBI to use AI to curb market manipulations

    69 days ago
    The market regulator, Securities, and Exchange Board of India (SEBI) have announced that it is to monitor and analyze social media posts to keep a tab on possible market manipulations. The announcement was made by SEBI Chairman Ajay Tyagi on 23 January 2020. AI & ML: ♦ SEBI will acquire capabilities that involve the use of artificial intelligence (AI), machine learning (ML), big data analytics and natural language processing tools to spot market manipulation.  ♦ It will create a data lake project to augment analytical capabilities. ♦ It has also floated a tender to acquire the technology. ♦ It is also expected that AI and ML to bring a potential paradigm shift in the securities market landscape. ♦ AI & ML tools are being increasingly deployed in fund management, trading, supervision and surveillance functions in the capital markets.

    RBI increased VEE limit for FPI to Rs.1,50,000 crore

    69 days ago
    The Reserve Bank of India (RBI) reopened the allotment of the investment limit under the revised Voluntary Retention Route (VRR) for debt investments by foreign portfolio investors (FPIs) from 24 January. RBI has increased the investment limit under VRR to Rs.1,50,000 crore from the Rs.75,000 crore, with a minimum retention period of three years. The move aims to attract more foreign funds into the country. History: In March 2019, the RBI introduced a separate channel named 'Voluntary Retention Route'. The channel was aimed to enable FPIs to invest in debt markets in India. Under the move, investments through VRR are free of the macro-prudential, if the FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a specified period. The RBI has already invested Rs.54,300 crore under the previous scheme.  Reserve Bank of India (RBI): Established on: 1 April 1935 Headquarters: Mumbai, Maharashtra Governor: Shaktikanta Das Policy Repo Rate: 5.15% Reverse Repo Rate: 4.90% Marginal Standing Facility Rate: 5.40% Bank Rate: 5.40% Cash Reserve Ratio (CRR): 4% Statutory liquidity ratio (SLR): 18.25%

    Challa Sreenivasulu Setty as the MD of SBI

    70 days ago
    The government appointed Challa Sreenivasulu Setty as the Managing Director (MD) of the State Bank of India (SBI) on 20 January 2020. He is appointed for a period of three years. The proposal of the Department of the Financial Services for the appointment of Setty was approved by the Appointments Committee of the Cabinet (ACC). His appointment will be with effect from the date of his taking over the charge of the post or until further orders. Challa Sreenivasulu Setty: Challa Sreenivasulu Setty is currently serving as the deputy managing director (DMD) of the SBI. He was responsible for resolving the stressed assets portfolio across India in different sectors such as Power, Oil, Infra, Auto, and Telecom. In 1988, he joined as Probationary Officer in SBI's Ahmedabad Circle. He was specialized in the area of Credit and Stressed Asset Management. He has around 3 decades of experience in various functional areas of Banking. He held various positions at SBI such as VP & Head (syndications) in SBI, New York Branch, DGM in Commercial Branch, Indore, GM & RH, Corporate Account Group (CAG), Mumbai Branch, CGM, CAG and last assignment as DMD (SARG).

    ICICI Bank launch of a Cardless Cash Withdrawal Facility

    72 days ago
    ICICI Bank announced the launch of a 'Cardless Cash Withdrawal' facility from its ATMs on 21 January 2020.  Cardless Cash Withdrawal: ♦ ICICI Bank's Cardless Cash Withdrawal service will allow customers to withdraw cash from over 15,000 ATMs of the bank by raising a request on its mobile banking app, iMobile.  ♦ ICICI customers can now withdraw cash without using a debit card at ATMs.  ♦ Cardless Cash Withdrawal service can be used for self-withdrawal. ♦ It has a daily transaction limit of Rs.20,000.  ♦ The service from iMobile enables customers to withdraw cash securely and conveniently for everyday usage and purchases.  ICICI Bank Limited: Founded on: 5 January 1994 Headquarters: Mumbai, India Chairman: Girish Chandra Chaturvedi MD & CEO: Sandeep Bakhshi In terms of market capitalization (m-cap) is the second-largest bank in India. 

    ITI to launch its FPO to raise around Rs.1,600 crore

    72 days ago
    State-owned Indian Telephone Industries (ITI), the telecom equipment maker, has announced that it is to launch its follow-on public offering (FPO) on 24 January 2020. It will raise around Rs.1,600 crore follow-on public offer (FPO).  FPO Issue: ♦ The FPO announced by ITI comprises of fresh issue of up to 180 million equity shares. An additional issue constituting up to 1.8 million shares will be reserved for employees. ♦ ITI's FPO issue will close on 28 January 2020.  ♦ The FPO issue aims to utilize the net proceeds for funding its working capital requirements for FY2020 and Rs.607.30 crore to repay loans, in full or partially, taken by the company. ♦ The net issue will have more than 75% allocation to qualified institutional buyers, around 15% to non-institutional bidders and around 10% to retail individual bidders. Note: FPO: An FPO is a process by which a company already listed in exchange issues or new shares to investors/existing shareholders. Companies use FPO to diversify their equity base.

    Mastercard to invest $1 bn in India over 5 years towards tech development

    75 days ago
    Global payments company Mastercard planned to invest nearly $1 billion in India over the next five years. The proposed investment will be made over five years in our India operations includes an R&D facility at Pune and another center at Vadodara. The facilities catered to the company's global operations, of which Vadodara provided the backend multiple payment support. Khanna noted that Mastercard, as a technology-driven global entity, was keen to evolve by offering more customer-centric and value-added services using the digital platform. The company is also working closely with technology and financial startups in the country by focusing on the innovation and digital payments matrices under its flagship Start Path program,  Mastercard  Mastercard launched its Team Cashless India program to engage with merchants and consumers across the country to create awareness about the benefits of digital payments. The company targetting at equipping 10 million merchants in India with digital payment acceptance capabilities in the near future. Apart from roping in top cricketer Mahendra Singh Dhoni to augment its reach. The awareness among the general public and also merchants with regards to the digital payments space, including their consumer and merchant rights. Nearly 92 percent of the merchants in India fell under the micro category, which offers a vast potential for the growth of the digital payments universe. The category grew 6-7 percent in 2018-19 over the previous financial year 2017-18. Mastercard's global payments processing network comprises consumers, financial institutions, merchants, governments, and businesses in more than 210 countries and territories.

    RBI directs issuers to provide a facility to switch on, off cards

    77 days ago
    The Reserve Bank of India (RBI) has directed banks and other card-issuing companies to provide a facility to customers to switch on and off their debit or credit cards.  The move by RBI aims to enhance the security of digital transactions. It assumes significance amid rising instances of cyber fraud. New instructions: ♦ RBI observed the volume and value of transactions made through cards have increased manifold. ♦ It stated that all cards at the time of issue or re-issue, physical and virtual, should be enabled for use only at contact-based points of usage, ATMs, and Point-of-Sale (PoS) devices, within India. ♦ It also suggested the card issuers to enable set or modify transaction limits, within the overall card limit, if any, set by the issuer, for all types of transactions including domestic and international at PoS/ATMs/online transactions/contactless transactions. It should be provided on a 24x7 basis through multiple channels. ♦ The channels must include mobile applications, ATMs, internet banking, and interactive voice response. ♦ RBI instructed the issuers to decide, based on their risk perception, whether to disable the card not present, domestic and international, transactions, card-present in international transactions, and contactless transaction rights. ♦ The existing cards that were never used for online, international or contactless transactions will be mandatorily disabled for this purpose. ♦ The new instructions by RBI are not mandatory for prepaid gift cards, and those used at mass transit systems.

    SBI cuts FD rates by 15 bps

    78 days ago
    State Bank of India (SBI) has reduced the fixed deposit rates. It reduced the FD rates by 15 basis points (bps) on long-term deposits maturing in 1 year to 10 years. The deposit rate reduction will help the bank to retain its net interest margins since SBI had reduced lending rates in December. Fixed Deposit rate cut: ♦ For deposits below Rs.2 crore, SBI will now offer 6.10% as compared to 6.25% for all maturities of 1 year to 10 years.  ♦ Senior citizens will continue to get 50 bps higher than the card rate. ♦ Whereas, the deposits maturing in 7 days to 1 year, the bank has kept the rates unchanged.  ♦ The new rates came into effect from 10 January 2020. ♦ SBI's move is to cut the fixed deposit rates at a time when consumer price index-based inflation shot up to 5 years high of 7.35%. The FD rates of SBI are: ♦ For 7 days to 45 days 4.50% ♦ For 46 days to 179 days 5.50% ♦ For 180 days to 210 days 5.80% ♦ For 211 days to less than 1 year 5.80% ♦ For 1 year to less than 2 years 6.10% ♦ For 2 years to less than 3 years 6.10% ♦ For 3 years to less than 5 years 6.10% ♦ For 5 years and up to 10 years 6.10%

    RBI to impose fines on banks with poor progress

    79 days ago
    The Reserve Bank of India (RBI) is to impose heavy penalties on banks, and stipulate higher provisioning for stressed loans. RBI announced it earlier on 7 June 2019. For the first time, RBI has said that the chief executive officers (CEOs) and senior management of banks can also be held liable for lack of progress. The fresh set of guidelines will be in the public domain by the end of March. New guidelines: ♦ The new guidelines are expected to usher in a stricter compliance regime. ♦ The RBI indicated that banks can start the resolution of stressed loans less than Rs.1,500 crore without waiting for a formal notification.  ♦ It also mentioned that the 7 June 2019 circular was only applicable for stressed accounts in excess Rs.2,000 crore.  ♦ RBI review of 7 June circular notes Inter-creditor Agreement (ICA) (of 13 banks) yet to be signed for exposures amounting to Rs.3,610 crore ♦ Embedded frauds will be monitored as it might hold up stressed loan resolution ♦ It highlighted the number of frauds of Rs.50 crore and above in H1 FY20 rose to 398 involving Rs.1.056 trillion up from 322 cases and Rs.61,759 crore in FY19 Note: Outlier frauds are defined as those in excess of Rs.1,000 crore. Such fraud cases have increased up to 21 cases and Rs.44,951 crore up from 4 cases and Rs.6,505 crore in FY19

    RBI launched the Aadhaar-based Video Customer Identification Process

    83 days ago
    The Reserve Bank of India (RBI) launched the Aadhaar-based Video Customer Identification Process (V-CIP) on 9 January 2020. The aim of the move is to allow banks and other lenders to remotely complete Know Your Customer (KYC) of customers on videos.  V-CIP: ♦ RBI has allowed consent-based video-based KYC as an option to establish a customer's identity.  ♦ It is expected that it will make the process easier for banks and other regulated entities to adhere to the RBI's KYC norms. ♦ It moves with a view to leveraging the digital channels for the Customer Identification Process (CIP) by Regulated Entities (REs). ♦ RES has been encouraged to take the assistance of the latest available technology like Artificial Intelligence (AI) and face matching technologies, to ensure the integrity of the process and the information furnished by the customer. ♦ This consent-based method will be an alternate method of establishing the customer's identity, for customer onboarding. ♦ This approval by RBI was a long-standing industry demand for several years as many banks, especially digital NBFCs and fin-tech startups, as it will reduce the costs of physically reaching out to customers in remote locations where they did not otherwise have branches.

    HDFC Bank unveiled myApps application to boost digital payments

    83 days ago
    In a first, HDFC Bank launched myApps application on 9 January 2020. The app aims to boost digital payments in India.  myApps: ♦ myApps is a customized suite of banking products. ♦ The app will benefit urban local bodies, housing societies, local clubs and gymkhanas, and religious institutions.  ♦ It will allow institutions to customize their branding and content.  ♦ Using the app one can publish their application on the Google PlayStore or Apple AppStore in the name of the institution.  ♦ myApps is free to all members of each institution without any monthly subscription charges.  ♦ Members can pay monthly bills or fees and make an online booking for different facilities via myApps. ♦ The organization will get easy access to reports on payments, facilities booked by members, requests and complaints registered by users.  ♦ The app can be customized in over 20 languages starting with Hindi and English. ♦ The move by HDFC bank aims to help organizations to entirely digitize their ecosystem through myApps.  ♦ Currently, HDFC Bank is offering four types of applications namely, mySociety, myClub, myPrayer, and myCity.

    RBI allows select banks in India to offer forex rates 24X7 to Indian Clients

    86 days ago
    The Reserve Bank of India (RBI) has permitted the select banks in India can offer forex rates to Indian clients round the clock, which is 24X7. Now the select banks can work beyond the inter-bank market hours, which now run from 9 am to 5 pm.  Benefits: ♦ The move will allow the Indians to hedge their foreign exchange risks at any time of the day.  ♦ It will make the offshore currency markets in Dubai and Singapore less attractive for Indian investors.  ♦ RBI has also decided to accept the recommendation of the task force on the offshore rupee market. Hence it permits the authorized dealers Category-I banks to offer foreign exchange prices to users at all times either by a domestic sales team or through their overseas branches. ♦ This allows transactions with person resident outside India, through their foreign branches and subsidiaries can be undertaken beyond onshore market hours. ♦ It benefits the bank's clients to manage overnight currency risk as they can now hedge beyond local market hours.

    NPCI launched the Vajra Platform for a fast and secure platform

    86 days ago
    The National Payments Corporation of India (NPCI) launched the Vajra Platform to make payments fast and secure. The platform is based on blockchain technology. Aim: The main objective of the Vajra Platform is to provide automated clearing and settlement of payments and drastically reduce the need for manual reconciliation.  Features: ♦ Vajra Platform uses distributed ledger technology (DLT) ♦ The platform uses a permissions model in order to ensure that only approved parties are a part of the network ♦ Payment companies can apply and register to be a part of the network ♦ After getting the approval, the companies can deploy the platform using an application programming interface (API) that will be provided by NPCI. Benefits: The benefits of the Vajra Platform: ♦ Near real-time clearing and settlement of transactions ♦ Minimal reconciliation of transactions ♦ Improved security and reduced operational and financial risks ♦ Legitimate audit trail as DLT is incorruptible ♦ Vajra Platform will  be used for Aadhaar authentication by the Unique Identification Authority of India (UIDAI)

    RBI revised its framework for UCBs

    86 days ago
    The Reserve Bank of India (RBI) has revised its Supervisory Action Framework (SAF) for urban co-operative banks (UCBs). The move is to expedite the resolution of UCBs experiencing financial stress. The revised framework released by the RBI on 6 January 2020. It stipulates the thresholds for various parameters that could trigger corrective action by the UCBs or a supervisory action by RBI.  Reason: The move comes after the scam in Punjab and Maharashtra Cooperative (PMC) Bank that caused distress to over 9 lakh depositors. Revised SAF: ♦ As per the revised SAF, a UCB may be placed under SAF when its Net nonperforming assets (NPA) exceed 6% of its net advances, its Capital to Risk (Weighted) Assets Ratio (CRAR) falls below 9%.  ♦ When a UCB incurs losses for two consecutive financial years or has accumulated losses on its balance sheet, it will be placed under SAF.  ♦ The type of action would depend on the severity of stress.  ♦ RBI will undertake different actions like the imposition of all-inclusive directions under section 35A of the Banking Regulation Act, 1949, as applicable to co-operative societies. ♦ Cancellation of banking license may be considered by RBI will be continued normal functioning of the UCB is no longer considered to be in the interest of its depositors. ♦ Supervisory action already taken by RBI under the earlier SAF will be reviewed and revised instructions, if any, will be issued to the UCBs concerned.

    Piyush Goyal inaugurated NSE Knowledge Hub in New Delhi

    87 days ago
    Commerce and Industry & Railways Minister Piyush Goyal inaugurated the National Stock Exchange (NSE) Knowledge Hub in New Delhi on 6 January 2020. The hub will provide an Artificial Intelligence (AI) powered learning ecosystem which will assist the Banking, Financial services, and insurance (BFSI) sector.   NSE Knowledge Hub: ♦ The new AI hub created by NSE is expected to fill in the gaps of the fintech hub and help the financial sector to move into the future. ♦ It will enhance skills and help academic institutions to prepare future-ready talent for the financial service industry.  ♦ It is also available on mobile and attempts to bring together world-class content and learners through this platform. ♦ It will help India in building next-generation skills and capabilities in the BFSI sector.  ♦ It is expected that the use of AI will ensure that the skill upgradation is affordable and accessible and helps in the creation of a workforce that is adequate for the requirements of the sector.  ♦ It will strengthen and empower those who work in the BFSI sector and will benefit investors and the financial services to give world-class services through knowledge, innovation and value- addition. Note: AI and Machine Learning will contribute around $1 trillion by 2035. NSE can tap the potential of AI and use it as a tool to create a workforce in the BFSI sector in India.

    India extends LOC to Cuba for financing solar parks

    87 days ago
    India has extended a line of credit (LOC) of $75 million to Cuba for financing solar parks. The announced was made by the Reserve Bank of India (RBI). The move comes following the agreement signed between Export-Import Bank of India (Exim Bank) and Banco Exterior De Cuba on 16 July 2019 that came into effect from 12 December 2019.  Banco Exterior De Cuba is a nominated agency of the Cuban government. The agreement was signed for the purpose of financing the installation of 75 MW Photovoltaic Solar Parks in the Republic of Cuba.  Agreement: ♦ Under the LOC, the terminal utilization period is 5 years after the scheduled completion date of the project.  ♦ According to the agreement, financing of export of eligible goods and services from India would be allowed subject to their being eligible for export under the Foreign Trade Policy. ♦ Out of the total credit by Exim Bank under the agreement, goods, works, and services of the value of at least 75% of the contract price can be supplied by the seller from India. The remaining 25% of goods and services may be procured by the seller from outside India.

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