Banking Awareness of 1 and 2 May 2024

Topic: RBI

1. Updated Guidance Note on Operational Risk Management and Operational Resilience for lenders has been released by RBI.

• This note has been prepared on the basis of the Basel Committee on Banking Supervision (BCBS) principles documents released in March 2021.
• This note is applicable to regulated entities (REs), which include all commercial banks, all non-banking financial companies (NBFCs), all co-operative banks and All India Financial Institutions (AIFIs).
• The earlier Guidance Note of October 2005 has now been repealed. It applied only to scheduled commercial banks.
• According to RBI, up until recently, the main operational risks that REs faced were caused by vulnerabilities associated with the growing reliance on and quick adoption of technology for financial services and intermediation.
• The increased dependence of the financial sector on third-party providers, notably technology service providers, has brought attention to how crucial operational risk management and operational resilience are becoming.
• The "Three lines of defence model" is provided in the note.
• A business unit serves as the first line of defence in this model.
• The second line of defence is the organisational operational risk management function, which includes the compliance function.
• The audit function forms the third line of defence.

Topic: Taxation

2. GST collection in April 2024 crossed ₹2 lakh crore for the first time since its introduction on July 1, 2017.

• Goods and Services Tax (GST) reached an all-time high of ₹2.10 lakh crore in April 2024. It has shown a growth of 12.4% over the year.
• After accounting for refunds, the net GST revenue for April 2024 stood at ₹1.92 lakh crore.
• This is a 17.1% growth when compared to the same period last year.
• Collection in April is related with services availed and goods consumed in March.
• The Central Goods and Services Tax (CGST) was Rs 43,846 crore, while the State Goods and Services Tax (SGST) stood at Rs 53,538 crore.
• The highest GST has been recorded due to a strong increase in domestic transactions and imports.
• Domestic transaction increased by over 13%, import transactions increased by over 8%.
• The previous highest level was registered in April 2023 at Rs 1.87 lakh crore.
• GST revenues have seen an approximate growth of 13% per annum on average.

Topic: Reports and Indices

3. Manufacturing PMI declined to 58.8 in April 2024.

• Manufacturing PMI in April saw 2nd fastest improvement in operating conditions in three-and-a-half years.
• It was supported by strong demand conditions, which led to expansion of output.
• Manufacturing PMI stood at 59.1 in March 2024.
• PMI Manufacturing report said that the pace of job creation was moderate. It was the quickest since September 2023.
• The PMI is prepared by S&P Global. It is named as HSBC PMI.
• It is released much ahead of the government data. It gives a quick insight of industrial activity in private sector.
• It is prepared based on the responses of purchasing executives of 400 companies.

Topic: Taxation

4. Government has reduced windfall tax on crude petroleum.

• It has lowered windfall tax on domestically produced crude oil from ₹9,600 per tonne to ₹8,400 per tonne with effect from 01 May 2024.
• This tax is levied in the form of Special Additional Excise Duty (SAED).
• Government has kept SAED on the export of diesel, petrol and jet fuel or ATF at nil.
• The new rates have become effective from 1 May 2024. India first imposed windfall profit taxes on July 1, 2022.
• Government reviews the tax rates every fortnight based on average oil prices in the previous two weeks.

Topic: Appointments

5. Hitesh Sethia’s appointment as MD and CEO of Jio Financial Services has been approved by Ministry of Corporate Affairs (MCA).

• MCA has approved his appointment for three years from 15 November 2023.
• However, this approval is subject to the condition that he holds a valid Employment Visa throughout his tenure in India.
• The MCA letter said the MCA approval is under and in respect of the provisions of the Companies Act 2013.
• It should not be considered as covering any requirement of security clearance.  
• In July 2023, Hitesh Sethia was appointed as MD and CEO of Reliance Strategic Investments Limited (RSIL), which is now renamed Jio Financial Services.

Topic: Indian Economy/Financial Market

6. International Monetary Fund (IMF) has increased India’s FY24 GDP growth forecast to 7.8%.

• As per IMF, Indian economy is predicted to grow by 6.8% in the current fiscal year. As per IMF, public investment will drive this growth.
• Growth forecast for India has been revised upward by IMF from its January forecast of 6.5% to 6.8%.
• As per IMF report, India and Philippines have been the source of repeated positive growth surprises.
• IMF has kept its FY25 inflation forecast for India at 4.6% with a further decrease to 4.2% in FY26.
• As per IMF, India is expected to become world’s fourth largest economy in 2025.
• As per IMF, India is nominal GDP is likely to be more than Japan’s in 2025, one year earlier than IMF’s earlier projection of 2026.
• As per IMF latest forecast, India’s GDP is likely to reach $4.34 trillion in 2025 and surpass Japan’s $4.31 trillion.
• As per IMF, India is expected to overtake Germany to become the world’s 3rd largest economy by 2027.

Topic: Appointments

7. Justice PS Dinesh Kumar assumed the office of the presiding officer of the Securities Appellate Tribunal (SAT).

• Justice PS Dinesh Kumar, former Chief Justice of the High Court of Karnataka, has taken over as the presiding officer of the Securities Appellate Tribunal.
• Dheeraj Bhatnagar, retired Principal Chief Commissioner of Income Tax, Delhi has been appointed as the technical member of SAT.
• The tenure of both members will be four years.
• Justice Tarun Agarwala retired from the presiding officer post on December 29.
• A SAT bench consists of three members including a presiding officer, judicial member and a technical member.
• The tribunal was without a presiding officer or a judicial member for three months.
• SAT hears appeals against orders passed by the Securities and Exchange Board 2of India, the Insurance Regulatory and Development Authority of India and the Pension Fund Regulatory and Development Authority.

Topic: World Economy

8. US Federal Reserve has kept key interest rate unchanged at 5.25 to 5.50% for the sixth straight time.

• US Federal Reserve decided unanimously to keep the benchmark lending rate unchanged after a two-day Federal Open Market Committee (FOMC) meeting.
• It cited a lack of further progress towards its two percent inflation target.
• For months, US Federal Reserve has kept its benchmark lending rate at a high level to control price increases. But inflation has increased.
• US Federal Reserve is the central bank of United States. Jerome Powell is its chairperson.

Topic: Indian Economy/Financial Market

9. India's core sector growth declined to 5.2% in March.

• The growth of the core sector has slowed to 5.2% in March from 7.1% in February.
• In March, coal (8.7 per cent), crude oil (2 per cent), natural gas (6.3 per cent) and steel (5.5 per cent) declined.
• The output of refinery products (-0.3 per cent) and fertilisers (-1.3 per cent) contracted during March.
• The Output of cement and electricity increased by 10.6% and 8%, respectively, in March.
• The core sector witnessed a growth of 4.2 per cent in March 2023.
• Electricity generation showed a positive growth expansion in March and maintained a robust pace in April.
• In FY24, growth in the core sector stood at 7.5 per cent as compared to 7.8 per cent in FY23.
• During this financial year, all eight constituent sectors registered positive growth.
• The eight core industries account for 40.27 per cent of the weighting of items included in the Index of Industrial Production (IIP).

Topic: RBI

10. Draft framework for electronic trading platforms has been issued by RBI.

• 'Draft Master Direction - Reserve Bank of India (Electronic Trading Platforms) Directions, 2024' is the name of the draft framework.
• It specified that a company applying for authorization to operate as an ETP operator must keep a minimum net worth of Rs 5 crore.
• Such an entity must always maintain the minimum net-worth that is specified.
• Furthermore, the entity must be an Indian corporation.
• If any non-residents own shares in such an entity, their ownership must abide by all relevant laws and rules, such as the Foreign Exchange Management Act of 1999.
• The entity will also need to keep up a strong technological infrastructure.
• A regulatory framework was put in place by the Reserve Bank in October 2018 to allow ETPs to execute transactions in financial instruments under its purview.
• Since then, 13 ETPs operated by 5 operators have been authorised under the framework.
• Any entity, whether resident or not, must register with the Reserve Bank or receive prior authorization before operating an ETP.
• Any electronic system that contracts trades in eligible instruments but is not a recognised stock exchange is referred to as an ETP.
• Securities, money market instruments, derivatives, foreign exchange instruments, and other similar items are all considered eligible instruments.

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