Banking Awareness -RBI, SBI, PO, IBPS Exam – November 2019

Table of Contents

RBI concerned about growing stress in Mudra loans

NPA ratio or bad loans as a percentage of MUDRA loans were at 2.68% in 2018-19
Pradhan Mantri MUDRA Yojana (PMMY) was launched in April 2015 for providing loans up to ₹ 10 lakh to non-corporate, non-farm small/micro enterprises.
Shishu : covering loans upto 50,000/-
Kishor : covering loans above 50,000/- and upto 5 lakh
Tarun : covering loans above 5 lakh and upto 10 lakh
The Indian Railway Institute of Financial Management (IRIFM) has been set up in Hyderabad, Telangana.
This new entity is set up to impart professional training in management of railway finances. The project was conceived and constructed by Rail Vikas Nigam Limited (RVNL) at a cost of Rs 85 crore.

OECD predicts India’s GDP growth rate in 2020 at 6.2%

Organisation for Economic Cooperation and Development (OECD) has made the following GDP growth rate predictions for India:
2019- 5.8%
2020- 6.2%
2021- 6.4%

BofAML predicts India’s GDP growth rate for FY20 at 5.8%

Bank of America Merrill Lynch (BofAML) has predicted India’s GDP growth rate for 2019-20(FY20) at 5.8%

Nomura cuts GDP prediction for India to 4.9% for FY20; 6.1% for FY21

Japanese brokerage firm Nomura has cut its GDP forecast for India to 4.9 percent for FY20.
For 2020-21 (FY21) : 6.1%.

SBI’s economic research team revised India’s FY20 GDP forecast

The economic research team from the State Bank of India (SBI) has revised India’s Gross Domestic
Product(GDP) to 5% for the Fiscal Year 2020.
It expects the growth rate to pick up in FY 2021 to 6.2%.

Moody’s revises India GDP forecast to 5.6 % in 2019

Moody’s Investors Service has revised its GDP growth rate prediction for India for Calender Year 2019 to 5.6%
India’s GDP growth rate prediction for 2020 as per Moody’s- 6.6%.
India’s GDP growth rate prediction for 2021 as per Moody’s- 6.7%.

Fitch

Fitch Ratings slashed India’s GDP growth forecast in the current fiscal to 5.5 per cent
GDP expansion will pick up to 6.2 per cent in the next financial year (2020-21)

World Bank

For 2019 – 2020 : 6%
Country would expected to gradually recover to 6.9 percent in 2021 and 7.2 per cent in 2022

Asian Development Bank (ADB)

ADB lowered India’s growth forecast to 6.5 per cent for the current fiscal.
India is expected to rebound to 7.2 per cent growth in fiscal 2021

S&P slashes India growth forecast for FY20 to 6.3%

FY 2019-20 : 6.3%
FY 2020-21 : 7%

RBI sharply cuts GDP growth forecast

Reserve Bank of India (RBI) cut its economic growth forecast for 2019-20 to 6.1 per cent.
The GDP growth will recover to 7 per cent in 2020- 21

India Ratings

India Ratings and Research (Ind-Ra), a part of Fitch group, lowered India’s gross domestic product (GDP) forecast for the financial year 2019-20 to 6.1%

National Council of Applied Economic Research (NCAER)

India’s gross domestic product (GDP) growth for 2019-20 at 4.9 per cent

International Monetary Fund (IMF)

The International Monetary Fund (IMF) cut its projections for India’s growth to 6.1 per cent for 2019-20 the economic growth to recover to 7 per cent in the financial year 2020-21 (FY21).
ADB Provides $490 Million for to Upgrade Madhya Pradesh Roads
The Asian Development Bank (ADB) has approved a
$490 million loan as part of a $904 million public–private partnership (PPP) project to improve about 1,600 kilometers (km) of state highways and major district roads in Madhya Pradesh, India.
India Inked $91 Million Loan with ADB for Comprehensive Water Management in Karnataka
The project will help to modernize the Vijayanagara Channel irrigation systems, prepare river basin management plans in the Krishna river basin that will help improve irrigation water use efficiency and contribute to improving sustainable water security in Karnataka.

ADB Provides $451 Million to Strengthen Power Connectivity in Tamil Nadu

The Asian Development Bank (ADB) has approved a $451 million loan to strengthen power connectivity between the southern and northern parts of the Chennai–Kanyakumari Industrial Corridor (CKIC) in Tamil Nadu, India.
The state is aiming to develop the northern Chennai–Tiruchirappalli area of CKIC as a manufacturing center while targeting the relatively poor southern Madurai–Thoothukudi portion for the development of renewable energy-based power generation because of the availability of wind and solar resources.

ADB Provides $200 Million to Upgrade Rural Roads in Maharashtra State

The Asian Development Bank (ADB) has approved a loan of $200 million to upgrade rural roads to all- weather standards in 34 districts of India’s Maharashtra State to better connect rural areas with markets and services.

ADB $350 Million Loan to Upgrade State and District Roads in Chhattisgarh

This project will support the state government’s strategy by rehabilitating or upgrading two state highways and 23 major district roads totaling about 850 kilometers (km) in length. The selected roads will be widened from single or intermediate lane width to two to four lanes.

ADB to Provide Largest Ever Non-sovereign Loan to Fund Railway Track Electrification in India

The Asian Development Bank (ADB) has signed an agreement to provide $750 million equivalent in Indian Rupees in long- term financing—the largest single non-sovereign loan ever committed by ADB—to Indian Railway Finance Corporation (IRFC) to fund the Railways Track Electrification Project, as part of a broad modernization program that will help India’s railway sector transition to electric power and away from dependence on fossil fuels.

Odisha Integrated Irrigation Project for Climate Resilient Agriculture

World Bank/ IBRD loan: $165 million
Terms: Maturity= 13.5 years; Grace= 6 years
Project Description: The project will support smallholder farmers in Odisha, strengthen the resilience of their production systems as well as diversify and improve the marketing of their produce, for increased income.

First Resilient Kerala Program Development Policy Operation

WB Credit: $250 million
Project Description: The program development objective is to enhance the State of Kerala’s resilience against the impacts of natural disasters and climate change.

Andhra Pradesh Health Systems Strengthening Project

WB Loan: $328 million
Terms: Maturity = 23.5 years ; Grace period = 6 years
Project Description: The project aims to improve the quality and responsiveness of public healthcare services in Community Health Centers and Primary Health Centers across all 13 districts in the state of Andhra Pradesh benefitting around 53 million people.

World Bank’s 300 million USD plan to Develop Kolkata

The World Bank has submitted a master plan to develop logistics infrastructure of Kolkata metropolitan area. The bank is to invest 300 million USD in the project.
The focus of the project is to be on construction of rail, road, industrial parks. The aim of the project is to improve competitiveness, increase employment.

AIIB to invest 100 million USD in solar and wind projects in India

The Asian Infrastructure Investment Bank (AIIB) which is headquartered at Beijing expects an investment of 100 million USD in India in a year.
The foreign investment is to enter India through the bank in Wind and solar projects.
AIIB has approved 500 million USD for Mumbai suburban rail infrastructure project
Bangalore Metro & Asian Infrastructure Investment Bank (AIIB) – 2300 CRORE LOAN (335 million USD)

Why Liquidity crunch in NBFC?

Interview / Essay writing question
The Asset-Liability Mismatch (ALM) issue ILFS Failure

Insolvency and Bankruptcy Code 2016

Insolvency: Insolvency refers to a financial state of an individual or an organization where these entities are not able to repay the debts that they owe to their creditors. It is the state where the borrower finds himself not being able to fulfill his obligations towards the lenders.
Now, these lenders can either be financial creditors (ones you have taken money from) or operational creditors (ones that have provided you with a service).
Bankruptcy: Bankruptcy is an official announcement by a person that he is incapable of repaying the debtors. To be precise, bankruptcy is the official declaration of insolvency. Under the IBC, only insolvent individuals are allowed to pursue this course of action.
The Government recently empowered RBI to refer stressed NBFCs and HFCs with assets worth of at least Rs 500 crore to insolvency courts after notifying Section 227 of the Insolvency and Bankruptcy Code.
Prior to this, the only resolution framework available for stressed NBFCs was liquidation and with this DHFL is set to become the first HFC to go to a bankruptcy court.
Inclusion of NBFCs into the bankruptcy code is credit positive for banks (NBFCs’ biggest source of funds) because IBC provides for the orderly resolution of a stressed NBFC company,” – Moody’s
Section 227 of IBC empowers the government to notify, in consultation with financial sector regulators, for insolvency and liquidation proceedings.
The section specifies that on the Reserve Bank can initiate the bankruptcy process for an NBFC/HFC
Non-banking financial companies (NBFCs) and housing finance companies have been under stress ever since Infrastructure Leasing and Financial Services Ltd (IL&FS) defaulted on loan repayments last year, which subsequently, prompted the Centre to replace the company’s board of directors with members chosen by the government
As per the new rules, only a regulator will be allowed to refer a non-bank lender or housing financier to a bankruptcy tribunal, unlike in the case of companies that can approach a tribunal on their own, or can be dragged into one either by lenders or operational creditors
The bankruptcy tribunal will appoint an administrator who will try to stitch together a turnaround plan. The administrator will be nominated by the regulator, such as the Reserve Bank of India (RBI) in the case of non-bank lenders and housing financiers.
The new rules say that the registration or the licence of the financial services provider will not be suspended or cancelled during the bankruptcy resolution process.
In case a turnaround of the financial institution is not possible, before deciding to liquidate it, the tribunal will listen to the views of the regulator.
The new rules address an important regulatory gap by bringing in certain classes of financial institutions under the scope of IBC.

RBI supersedes DHFL board, to initiate insolvency proceedings

The Reserve Bank of India superseded the board of debt- laden Dewan Housing Finance Corporation Limited (DHFL) as it intends to shortly initiate the process of resolution of the company under the insolvency and bankruptcy rules.
The company is all set to become India’s first financier to land up in bankruptcy courts.
The move comes after the Centre on November 15 empowered the central bank to refer stressed NBFCs and HFCs having assets worth at least Rs 500 crore to insolvency court.
R Subramaniakumar, ex-MD and CEO of Indian Overseas Bank has been appointed as the administrator.
DHFL is one of India’s top defaulters, and owes close to Rs 1lakh crore ($14 billion) to its debtors, which include banks and mutual funds.

Karnataka Gramin Bank initiates ‘mobile ATMs’ in rural areas

The Karnataka Gramin Bank (KGB) has launched ‘mobile ATMs’ in Kalaburagi, among several other districts in the Karnataka.
The special vehicle includes an ATM and a screen to show videos of different banking schemes.
The mobile ATMs will go to the doorsteps of the farmers and make them aware of the banking schemes and digital operating systems. A bank official would be present in the van, who will provide information regarding the digital operating systems and schemes.

No transaction charge on NEFT payments from Jan 2020, RBI tells banks

As per the report titled “Furthering Digital Payments” released by the Reserve Bank of India (RBI)
From January 2020, banks can no longer charge savings bank account holders for online transactions in the NEFT system.
The Reserve Bank of India (RBI) has now mandated banks to do this.

Bajaj Allianz General Insurance launches ‘Farmitra’ mobile app for farmers

Bajaj Allianz General Insurance has launched a new mobile app called ‘Farmitra’ for the ease of farmers. This app intends to help the farmers needs and address their worries. It also resolves with relevant information, which they can use in optimizing their farming practices.
The app ‘Farmitra’ provides services for even those who are not customers of Bajaj Allianz.
Besides crop insurance, the farmers can buy other covers from the private insurer and also obtain information like weather forecasts and market price of crops and locators for agriculture inputs.
The application is currently implemented in 6 states, namely Rajasthan, Madhya Pradesh, Uttar Pradesh, Karnataka, Maharashtra and Haryana.

Sumant Kathpalia to be MD, CEO of IndusInd Bank

Sumant Kathpalia has been selected by the private sector lender IndusInd Bank as the new MD & CEO of the bank.
Kathpalia will succeed Romesh Sobti, the current MD & CEO of the bank. Sobti will be retiring in March 2020.
IndusInd Bank – We Make You Feel Richer HQ – Mumbai
The Reserve Bank of India has announced the opening of first cohort under the Regulatory Sandbox (RS) with ‘Retail Payments’, as its theme.
This first round of experimentation, which is likely to commence in the first half of 2020, would entail the regulators along with the shortlisted companies working towards creating ‘ frictionless’ solutions in the field of feature phone, contactless and online based payment services

What is Regulatory Sandbox (RS)

A regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing.

Exim Bank gives $30 million line of credit to Ghana

The Export-Import (Exim) Bank has provided a $30 million line of credit to Ghana for potable water project in the country.
Exim Bank has entered into an agreement with Ghana for a line of credit (LoC) of $30 million (about Rs 210 crore) for financing rehabilitation and up-gradation of potable water system in Yendi, Ghana.

RBI raises cap on borrowing from MFIs to Rs 1.25 lakh in rural areas

The Reserve Bank of India (RBI) increased the household income limits for borrowers of NBFC-MFIs from Rs 1 lakh to Rs 1.25 lakh for the rural areas with an aim to strengthen credit to those in the bottom of the economic pyramid.
Similarly, the limit has been increased from Rs 1.6 lakh for urban or semi-urban areas to Rs 2 lakh

MSTC ties up with Allahabad Bank to develop e-auction platform

MSTC Ltd (Metal Scrap Trade Corporation Limited) signed an agreement with Allahabad Bank for the development of a dedicated e-Auction platform directly linked with the Indian Banking Association’s portal (https://ibapi.net) for sale of non-performing assets (NPAs) through the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest) Act.
The e-Auction platform will be a one-of-a-kind solution, where a bidder once registered, will be able to participate in auctions for all banks. This move will help the banks monetise NPAs through a streamlined process, thereby, increasing revenue generation.
MSTC is a Kolkata-headquartered Miniratna Category-I public sector undertaking engaged in domestic and international trading. It specialises in the international trade of ferrous input materials and has imported millions of tonnes of ferrous melting scrap, old ships for breaking, sponge iron, hot briquetted iron, re-rollable scrap, etc.

Vreedhi Financial Services receives an NBFC licence from RBI

Vreedhi Financial Services (VFS) has secured a non-banking finance company licence from the Reserve Bank of India.
It’s objective is to provide credit and other services to micro- enterprises operating in tier two-three cities and small towns.

LIC allows revival of lapsed policy of over 2 years

State-owned Life Insurance Corporation (LIC) permitted its policyholders to revive their lapsed policies of over 2 years, a move that will help improve persistency ratio.
The policies that have lapsed for more than two years and were not allowed to be revived earlier can also be revived now.
After the IRDAI Product Regulation 2013, which came into effect from January 1, 2014, revival period was restricted to two consecutive years from the date of first unpaid premium

NCDEX ties up with NSE Indices to launch AGRIDEX, India’s first Agri Index

National Commodity and Derivatives Exchange (NCDEX) has launched India’s first agri index — ‘NCDEX Agridex’, for easy reference to price variations in agricultural commodities.
The NCDEX Agridex will finally fulfill the dream to serve benchmark for the Indian agriculture ecosystem.
The French Development Agency (AFD) and the Government of Assam signed a 50 million euro project agreement (total budget of 62.5 million euro) towards supporting the state government’s initiative to restore Assam’s forest ecosystems and preserve their biodiversity. Read

UNDP Green Climate Fund: India gets 43 million USD to boost climate in 3 coastal states

With the help pf 43 million USD from the United Nations Development Programme (UNDP), India has begun the project that will positively impact over 10 million people living on the coastline.
The funds are to be obtained from the Green Climate Fund that was established under United Nations Convention on Climate Change (UNFCCC).
The 6-year project will help to build climate resilient livelihoods of 1.7 million people
The coastal states that are to benefit from the fund are Maharashtra, Andhra Pradesh and Odisha.
Under the project, the plan is to sequester minimum of 3.5 million tons of carbon dioxide in the next 30 years.
The project will also restore 15,000 hectares of coral reefs, mangroves, salt marshes and sea marshes

ICICI Bank launched ‘Maha Loan Dhamaka’ to provide on-the- spot loan approvals

ICICI bank plans to organise 2,000 such ‘Maha Loan’ camps across the country in rural and semi-urban locations and on the company premises in the current fiscal.
The first camp was inaugurated at Deesa in Banaskantha district, Gujarat.

RBI enhances scope of Special Non-Resident Rupee accounts

The Reserve Bank of India (RBI) has enhanced scope of ‘Special Non-resident Rupee’ (SNRR) accounts by allowing persons residing outside India to open such accounts for purposes such as

external commercial borrowing (ECB),
trade credit and and
Trade (Export/ Import) Invoicing, in domestic currency.

The step is taken to popularize cross-border transactions in Indian rupee (INR).

BHIM UPI goes international; QR code-based payments demonstrated at Singapore FinTech Festival

A pilot demonstration of the Bharat Interface for Money (BHIM) united payments interface (UPI) QR-based payments begun at the Singapore FinTech Festival 2019.
Conducted through a live transaction at a merchant terminal on November 13, this is the payment system’s first approach to the international market.
This QR code-based system would allow anyone with a BHIM app to scan the Singapore Quick Response Code (SGQR) at NETS terminals for payments in Singapore.
The project is being jointly developed by the National Payments Corporation of India (NPCI) and Network for Electronic Transfers (NETS) of Singapore. It is targeted to go live by February 2020.
Moreover, by February 2020, it is also expected that all RuPay cards, including domestic ones, will be acceptable in Singapore.
A memorandum of understanding (MoU) was also inked between Trade Promotion Council of India (TPCI) and Monetary Authority of Singapore (MAS) for working towards access of TPCI dashboard to Business sans Borders (BSB).

What is Business sans Borders (BSB)?

It is a hub for connecting trade platforms of small and medium enterprises (SMEs) and is currently running a pilot with SMEs in Southeast Asia and India. It is a project conceived by Monetary Authority of Singapore and Singapore’s Infocomm Media Development Authority (IMDA).

FICCI signed MoU with Singapore Fintech Association

Federation of Indian Chambers of Commerce and Industry (FICCI) signed a memorandum of understanding with Singapore Fintech Association (SFA) as part of the growing Singapore-India fintech ecosystems.
The MoU was signed during the Fourth edition of Singapore Fintech Festival, the world’s largest financial technology platform along with Singapore Week of Innovation and Technology conducted from November 11-13, 2019.

Fitch raises India’s FY20 fiscal deficit forecast to 3.6% of GDP

Fitch Solutions on Wednesday raised India’s fiscal deficit forecast to 3.6 percent of the GDP for this fiscal year(FY2020), from 3.4 percent previously, due to weak revenue collections resulting from sluggish economic growth and government’s sweeping corporate tax rate cut.

Dhanlaxmi Bank MD, CEO T. Latha resigns

Private sector lender Dhanlaxmi Bank managing director (MD) and chief executive officer (CEO) T. Latha has resigned due to personal reasons.
Headquarters: Thrissur Tagline – Tann. Mann. Dhan.

Arun Alagappan takes over as MD of Cholamandalam Investment

The Board of Directors of Cholamandalam Investment and Finance Company has appointed Arun Alagappan as the Managing Director of the Company.
Alagappan is a promoter and a member of the Murugappa family, and has been the Executive Director of the Company since August 2017.

IRDAI asks Reliance Health Insurance to stop selling new policies

The Insurance Regulatory and Development Authority of India (IRDAI) has asked Reliance Health Insurance Company (RHCIL) to stop selling new policies and transfer the entire policyholders’ liabilities to the authority
Reliance Health Insurance is part of Anil Ambani’s Reliance Group, which is facing major liquidity issues.
According to IRDAI, Reliance Health Insurance , which commenced operations in October, 2018, has not been able to maintain the required solvency margin since June, 2019.

Merger of BNP Paribas mutual fund & Bank of Baroda (BOB) mutual fund gets CCI nod

The Competition Commission of India (CCI) approves merger of the BNP Paribas (BNPP) Mutual Fund and the Baroda (BOB) Mutual Fund, under Section 31(1) of the Competition Act, 2002

Moody’s revises India’s economic outlook to “negative” from “Stable”

The American financial service company Moody’s has downgraded India’s economic outlook to “Negative” from “Stable”.
This downgrade was due to slow growth in the economy.
It also predicted that slow growth would be prolonged and would also have debt rises.

Muthoot Finance to acquire IDBI Mutual Fund for Rs 215 crore

Muthoot Finance Ltd, the largest gold loan non-banking finance company in the country, entered into a definitive agreement to acquire IDBI Asset Management Ltd and IDBI Mutual Fund Trustee Company Ltd.
Muthoot Finance will purchase 100 per cent equity shares of IDBI Asset Management and IDBI MF Trustee for a total consideration of Rs 215 crore.