Banking Awareness of 10, 11 and 12 August 2022

By Priyanka Chaudhary | Last Modified: 13 Aug 2022 13:42 PM IST
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Topic: RBI

1. Guidelines for digital lending have been issued by RBI.

  • RBI’s guidelines are applicable to RBI-regulated entities and lending service providers engaged by them to extend various permissible credit facilitation services.
  • As per RBI, digital loans must be credited directly to the bank accounts of borrowers and not through any third party.
  • RBI also said that digital lending entities and not the borrowers should pay the fees or charges payable to Lending Service Providers (LSPs) in the credit intermediation process.
  • RBI said the borrower must be provided a standardised Key Fact Statement (KFS) before executing the loan contract.
  • It also said all-inclusive cost of digital loans in the form of Annual Percentage Rate (APR) is required to be disclosed to the borrowers.
  • Banks and LSPs engaged by them must have a nodal grievance redressal officer to address digital lending-related complaints.
  • New norms do not allow automatic increase in credit limit without the explicit consent of the borrower.
  • RBI constituted a Working Group on ‘digital lending including lending through online platforms and mobile apps’ (WGDL) on January 13, 2021.
  • The regulator/ controlling authority of entities authorised to carry out digital lending but not regulated by RBI may consider formulating rules/regulations on digital lending based on the recommendations of WGDL.

Topic: Awards and Prizes

2. Muthoot Finance has won ‘best growth performance award’ at Dun & Bradstreet’s 22nd edition of ‘India’s Top 500 Companies’ corporate awards.

  • Dun & Bradstreet’s top-500 list identifies private and public sector Indian enterprises across 60 sectors on the basis of income, net profit, net worth and other financial parameters.
  • “ESG: The only way for sustainable and responsible growth” was the theme for the event of this year. 
  • Dun & Bradstreet is a business decisioning data and analytics provider.
  • Muthoot Finance is the largest gold loan Non-Banking Financial Company (NBFC) in India. It is headquartered in Kochi, Kerala.

Topic: Reports and Indices

3. India is ranked seventh in the list of top 20 global economies for digital currency ownership.    

  • According to United Nations, 7.3% of India’s population owns digital currency.
  • UN said use of cryptocurrency increased globally at an unprecedented rate during the Covid-19 pandemic.
  • United Nations Conference on Trade and Development (UNCTAD) said in 2021, developing countries accounted for 15 of the top 20 economies in terms of the share of the population that owns cryptocurrencies.
  • Top six countries are Ukraine (12.7% population), Russia (11.9% population), Venezuela (10.3% population), Singapore (9.4% population), Kenya (8.5% population) and the US (8.3% population).
  • UNCTAD has published three policy briefs. In policy briefs, it said private digital currencies are an unstable financial asset that can bring social risks and costs.
  • One of the policy briefs is titled “All that glitters is not gold: The high cost of leaving cryptocurrencies unregulated”.
  • Another brief is titled “The cost of doing too little too late: How cryptocurrencies can undermine domestic resource mobilisation in developing countries”.

IBPS RRB Officer Scale 3 Financial Awareness Test Series

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Topic: Banking/Financial Schemes

4. Finance Ministry has modified its earlier notification on APY and disallowed income tax payers from enrolling in APY from October 1, 2022.

  • According to the Finance Ministry’s notification, any citizen who is or has been an income-tax payer, shall not be eligible to join APY from October 1, 2022.   
  • If a subscriber who joined on or after October 1, 2022 is subsequently found to have been an income tax payer on or before the date of application, the APY account shall be closed.
  • The accumulated pension wealth till date would be given to the subscriber.
  • Atal Pension Yojana (APY) was launched on May 9, 2015. It was operationalized on June 1, 2015.
  • It is open to all citizens of India between 18-40 years of age, having a savings account in a bank or post-office.
  • It is a voluntary scheme. It is a periodic contribution-based pension scheme. Under it, the subscriber would receive pension at 60 years of age.
  • Each subscriber will receive a Central Government guaranteed minimum pension from ₹1,000 to ₹5,000 per month, after the age of 60 years until death, depending on the contribution chosen.
  • In case of the death of the subscriber, same pension will be given to the spouse, until the death of the spouse.

Topic: RBI

5. The licence of Pune-based Rupee Co-operative Bank has been cancelled by RBI.  

  • The co-op bank will stop carrying on banking business, with effect from 22 September 2022.
  • Commissioner for Cooperation and Registrar of Cooperative Societies, Maharashtra has also been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
  • RBI cancelled the licence because bank does not have adequate capital and earning prospects and its continuance is prejudicial to interests of depositors.
  • The bank did not comply with various provisions of the Banking Regulation Act, 1949.
  • On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of ₹5 five lakh only from Deposit Insurance and Credit Guarantee Corporation (DICGC).  
  • RBI has imposed fine on 8 urban cooperative banks for non-compliance with various norms. Their names are given below.

Mehsana Urban Co-operative Bank, Gujarat (Rs 40 lakh fine)

Indapur Urban Cooperative Bank, Maharashtra (Rs 7 lakh fine)

Warud Urban Co-operative Bank, Maharashtra

Yavatmal Urban Co-operative Bank, Maharashtra

Jila Sahakari Kendriya Bank Maryadit, Chhindwara (Madhya Pradesh)

Chhattisgarh Rajya Sahakari Bank Maryadit, Raipur (Chhattisgarh) (Rs 25 lakh fine)

Garha Co-operative Bank Limited, Guna (Madhya Pradesh)

Goa State Co-operative Bank, Panaji

Topic: RBI

6. Government has re-nominated four part-time, non-official Directors on the Central Board of RBI.

  • Their names are Satish Kashinath Marathe, Swaminathan Gurumurthy, Revathy Iyer, and Sachin Chaturvedi.
  • Marathe and Gurumurthy have been re-nominated for a further period of four years with effect from August 11, 2022, or until further orders, whichever is earlier.
  • Iyer and Chaturvedi have been re-nominated for a further period of four years after completion of their present tenure on September 18, 2022, or until further orders, whichever is earlier.
  • Currently, there are 13 directors on the central board of RBI.

Topic: Miscellaneous

7. Web3.0 Discovery Fund has been launched by cryptocurrency exchange CoinSwitch.

  • Web3.0 Discovery Fund is corporate venture capital initiative of CoinSwitch.
  • CoinSwitch will invest in early-stage startups building blockchain solutions for Web3.
  • Web3 Discovery Fund will curate portfolio startups. It will also provide single-window access to investor partners Tiger Global, Ribbit Capital and others.
  • Autonomy Network have entered into an agreement with T-Hub to build a Web3 community in Hyderabad, Telangana.
  • Autonomy Network built ‘no-code’ infrastructure. It makes easy to create NFTs (Non-Fungible Tokens) without doing any coding.   
  • Web3 refers to World Wide Web-based on blockchain technology. Ethereum co-founder Gavin Wood coined the term "Web3" in 2014.

Topic: Reports and Indices

8. As per CAG report, aggregate loss of all four PSU insurers was ₹26,364 crore in the health insurance portfolio in last five years.

  • The report provides the loss of ₹26,364 crore for the period during 2016-17 to 2020-21.
  • The report finds out that PSU insurers' market share in the health insurance business is declining continuously.
  • The four PSU insurers are New India Assurance Company Limited (NIACL), United India Insurance Company Limited (UIICL), Oriental Insurance Company Limited (OICL) and National Insurance Company Limited (NICL).
  • The health insurance business is the second largest line of business of the PSU insurers. The first one is motor insurance business.
  • The report says that IT systems in PSU insurers lacked appropriate validation checks and controls.
  • This has resulted in lapses such as multiple settlement of claims, excess payment over and above the sum insured etc.

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