Banking, Financial and Economic Awareness

Half Yearly (Jan - June 2021)
2021 Book

Banking Awareness

Topic: Indian Economy

1. Union Cabinet gives approval to investment of 4,400 crore rupees in ECGC Ltd.

  • Union Cabinet has given approval to an investment of 4,400 crore rupees in ECGC Ltd in five years (from FY 2021-2022 to FY 2025- 2026) to support exporters and banks.
  • Union Cabinet has also given approval to the listing of Export Credit Guarantee Corporation Ltd. (ECGC Ltd) through IPO on the Stock Exchange.
  • Capital infusion and Initial Public Offering (IPO) of ECGC Ltd will raise ECGC’s underwriting capacity to support more exports.
  • ECGC Ltd has plans to increase its maximum liabilities from 1.00 lakh crore rupees to 2.03 lakh crore rupees by 2025-26.
  • Union Cabinet has also approved the extension of Foreign Trade Policy (2015-20) up to 31st March.
  • Union Cabinet has also decided to release Rs 56,027 crore in September 2021 to liquidate all pending arrears.
  • Government has also given its approval to the continuation of National Export Insurance Account (NEIA) scheme and infusion of 1,650 crores Grant-in-Aid over five years (from FY 2021-2022 to FY 2025-2026).
  • NEIA will help project exports worth up to 33,000 Crore rupees. It will also help create 2.6 lakh new jobs, including around 12,000 in the formal sector.
  • Government started National Export Insurance Account (NEIA) to facilitate medium and long-term exports. In 2006, NEIA Trust was set up for maintaining and operating NEIA.

ECGC Ltd:

  • It is wholly owned by Government of India. It was created in 1957.
  • It works under the administrative control of the Ministry of Commerce & Industry. It is managed by a Board of Directors.
  • Board of Directors comprises of representatives from Government, RBI, banking, and insurance and exporting community.

Topic: RBI

2. Indian Overseas Bank (IOB) taken out of PCA framework.

Indian Overseas Bank (IOB) is a Chennai-headquartered public sector bank (PSB). Its current CEO is Partha Pratim Sengupta.

Prompt Corrective Action (PCA) Framework:

  • Capital to risk-weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA) are trigger points for the applicability of the PCA framework.
  • If the bank's CRAR, net NPA and RoA are not within decided limits, banks are required to take urgent steps to lower NPAs and prevent the creation of new NPAs.
  • PCA does not apply to cooperative banks and non-banking financial companies (NBFCs).

Topic: RBI

3. RBI permits banks to use alternative reference rate in place of LIBOR.

  • RBI has permitted banks to use any other widely accepted/alternative reference rate (ARR) in place of the London interbank offered rate (LIBOR).
  • Banks that deal in foreign exchange have been permitted to use ARR in place of LIBOR for interest payable in respect of export/import transactions.
  • In a statement on August 17, RBI Governor Shaktikanta Das said that banks will be allowed to extend export credit in foreign currency using any other widely accepted ARR in the currency concerned.
  • On June 8, 2021, RBI advised banks and other regulated entities that they should stop entering into new contracts that use LIBOR as a reference rate. RBI advised them to adopt any ARR by December 31, 2021.

London Inter-bank Offered Rate (LIBOR) is a benchmark rate for various financial instruments. It will be discontinued from December 2021.

Topic: Banking System

4. NPCI and YES Bank entered into partnership to launch a contactless payments solution, RuPay On-the-Go.

  • National Payments Corporation of India (NPCI) and YES Bank have entered into a partnership to launch a contactless payments solution, RuPay On-the-Go.
  • With the help of RuPay On-the-Go, customers will be able to make small and large value transactions from the accessories they wear every day.
  • RuPay On-the-Go is an interoperable, open-loop solution. Customers can use it at RuPay contactless-enabled point of sale (PoS) at retail outlets and pay up to Rs 5,000 without the PIN.
  • However, customers need to tap and input their PIN for payments above Rs 5,000.

YES Bank is a Mumbai headquartered Indian private sector bank. Its CEO is Prashant Kumar. 

National Payments Corporation of India (NPCI):

  • It was formed in 2008 by the Reserve Bank of India (RBI) and Indian Banks’ Association (IBA).
  • It is a “Not for Profit” Company headquartered in Mumbai.

Topic: Banking System

5. AI-powered virtual assistant 'Mattu' launched by Muthoot Finance.

  • AI-powered virtual assistant 'Mattu' has been launched by Muthoot Finance.
  • Muthoot Finance has joined hands with Senseforth.ai, a leader in Conversational AI technology to launch 'Mattu’.
  • 'Mattu’ is available on the website and mobile app. It enables users to apply for loans and address concerns.
  • It also enables users to perform transactions like checking account balances, paying gold loan interest, availing loan top-ups, making part payments, etc.
  • Muthoot Finance customers can chat or speak with 'Mattu’ in both English and Hindi. It is also available on WhatsApp.

Topic: Regulatory Bodies/Financial Institutions

6. SEBI makes risk management rules for mutual funds stricter.

  • Securities and Exchange Board of India (SEBI) has made risk management rules for mutual funds stricter.
  • SEBI said that under new rules chief risk officer should be appointed and risk management committees should be created.
  • It also said that the new rules mandate maintaining of metrics such as investment risk, liquidity risk and credit risk for each scheme.
  • As per SEBI, mutual fund houses should adhere to new risk management rules from January 1. SEBI said that fund houses should review their compliance every year.
  • SEBI has earlier banned Kotak Mahindra Asset Management from launching any fixed maturity plans (FMPs) for 6 months. It has fined Kotak Mahindra Asset Management for breaking rules.
  • SEBI has also banned Franklin Templeton in India in June from launching new debt schemes for 2 years.

Topic: Corporates /Companies

7. HCL Technologies (HCL) establishes 5G Open Radio Access Network (O-RAN) lab in India.

  • HCL Technologies (HCL) has established 5G Open Radio Access Network (O-RAN) lab in India.
  • 5G open RAN lab will enable global telecom industry players to transition to a 5G network.
  • The lab will support telecom service providers with multi-vendor options in moving to a more open, intelligent, virtualised and fully interoperable 5G mobile network.

HCL Technologies Limited is an Indian IT company and a subsidiary of HCL Enterprise. It is headquartered in Noida. Roshni Nadar is chairman of HCL Technologies.


 

 

 

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