Banking Awareness of 11, 12 and 13 February 2024

Topic: Banking System

1. All scheduled commercial banks saw a decrease in current account deposits from 10.43 percent of total deposits in 2022 to 10.13 percent in 2023.

• This is according to the RBI's report on the development and trend of Indian banking.
• Banks' net interest margins suffer from lower current account balances.
• The just-in-time (JIT) concept has been adopted by the Cente for the release of money for all payments, including those made under programmes that are funded centrally.
• The current account's available float has decreased as a result.
• SBI has already diversified its alternatives for increasing current account deposits, therefore it is not at risk.
• It changed its emphasis to industry, trade, and commerce in order to increase current accounts.
• The average amount of excess cash held by the government is ₹3.9 lakh crore after December 2023 monetary policy.
• Bank customers who need to make a lot more daily withdrawals and business transactions can create interest-free current accounts. To be used, these accounts must have a minimum balance.

Topic: Banking System

2. An NCGTC forensic audit of Bandhan Bank looking into loan evergreening.

• ₹23,300 crore worth loans under guarantee schemes were examined for evergreening and to look for fake accounts.
• A forensic investigation is presently taking place at Bandhan Bank.
• This is due to concerns about the evergreening of loans and fake loan accounts hanging over several portfolios protected by credit guarantee schemes.
• The forensic investigation is started by the National Credit Guarantee Trustee Company (NCGTC).
• This pertains to loans made under credit guarantee schemes totaling ₹23,300 crore.
• The auditor must conduct data analytics on the portfolio in order to spot loans that are being used as window dressing or as evergreening.
• The investigation would not be confined only to accounts labelled as non-performing assets (NPA), but also the complete loan portfolio under credit guarantee schemes.  
• These comprise loans totaling 2,500 crore insured by the government's Emergency Credit Line Guarantee Scheme (ECLGS) and 20,800 crore covered by the Credit Guarantee Fund for Micro Units (CGMFU).
• In FY20–21, Bandhan Bank paid out approximately ₹1,950 crore under ECLGS and obtained insurance of ₹20,800 crore under CGFMU.
• Of this, the clients have reimbursed around 85% of it, with 88% of the remaining portfolio carrying provisioning.
• In December 2022, the bank submitted a claim of ₹917 crore, which it got. In Q2 of FY24, it made an additional claim of ₹1,296 crore.
• With CGFMU, the highest allowable claim is 15% of the loans in the portfolio's crystallised value.
• However, with ECLGS, there is no cap on claimable amounts, and it doesn't involve payment of premium.
• National Credit Guarantee Trustee Company Ltd (NCGTC):
  • It was set up by the Department of Financial Services, Ministry of Finance, Government of India.
  • It was set up as a common trustee company to operate and manage various credit guarantee trust funds.
  • It was incorporated on March 28, 2014 with a paid up capital of ₹10 crore.

Topic: Appointments

3. Anand Radhakrishnan has been named CEO by Sundaram Asset Management.

• Anand has previously worked for the organization for eight years.
• He was Franklin Templeton India's Managing Director and CIO (Equity) before that.
• June 2024 will see the retirement of current managing director Sunil Subramaniam.
• In July 2024, Radhakrishnan will assume the role of Managing Director.

Topic: Indian Economy/Financial Market

4. In January 2024, India's steel exports reached 0.9 million tonnes (mt), up over 30% month over month and 43% year over year.

• According to preliminary data from the Steel Ministry, the nation was still a net importer for the first ten months of the fiscal year (April through January).
• This was despite a slowdown in imports and an increase in outbound shipments.
• During the 10-month period, imports totaled 6.8 mt, up 38% YoY, and outpaced exports, which came in at 5.5 mt, by 1.3 mt, or 3.6%.
• During the same period last year, imports were 5 mt and exports were 5.4 mt.
• The recent increase in steel costs worldwide has brought domestic prices nearly to parity.
• Imports will be restricted as a result during the January–March time (Q4 FY24).
• India broke a nearly six-month streak of decreasing exports in January, achieving a small profit of 0.1 million metric tons in net steel exports.
• Imports of finished steel were 0.8 million tons, down 14% month over month (December to January) but up 29% year over year.
• Prices have increased globally by $100–120 in Europe and roughly $40 in China.
• According to data from the Ministry, the import of non-alloyed steel was 0.6 mt in January 2024, up 45% YoY but down 12% MoM.
• Imports of stainless and alloyed steel decreased by 23% MoM to 0.14 mt, and by 13% YoY.
• Non-alloyed steel imports rose 69% YoY to 5 mt during the 10-month period (April to January).
• The segment that includes both non-alloyed and stainless steel saw a 14% decline to 1.8 mt.
• Important non-alloyed steel offers had a 53% YoY increase in exports to 0.8 mt, while a 33% MoM gain was also observed.
• On a month-to-month basis, non-alloyed steel shipments was relatively stable, although they decreased year over year (by an estimated 20%).
• During the 10-month period, non-alloyed steel exports were 5 mt, up 51% YoY, and non-alloyed and stainless steel exports were 0.4 mt, down 71%.

Topic: Indian Economy/Financial Market

5. Due to increase in factory production, the economy doubled and retail inflation rate decreased.

• Data released on February 12 showed that the Indian economy showed signs of resilience at the beginning of the year, with increased industrial production and a decline in inflation.
• Industrial production growth accelerated to 3.8% in December after falling to an eight-month low of 2.4% in November.
• While the consumer price index (CPI)-based retail inflation fell to a three-month low of 5.1% in January.
• The latest factory output points to a pickup in manufacturing pace in December after a slowdown.
• In the April-December period, factory output expanded by 6.1%, compared to the 5.4% figure in the same period last year.
• December inflation fell to 5.1% from 5.7% in November due to a slow rise in prices of food items like cereals, milk and milk products, fruits, pulses, and spices.
• It remains above the central bank's target of 4% but remains within the tolerance range of 2-6% for the fifth consecutive month.
• Overall, food inflation fell to 8.3% in January from 9.53% in December, led by a sharp rise in prices of vegetables and other food items such as pulses, spices, and cereals.
• Food inflation, measured by the Consumer Food Price Index, accounts for about half of the total consumer price basket.
• It was 8.7% in November, 6.61% in October and 6.62% in September.

Topic: Corporates/Companies

6. Paytm E-commerce has changed itself to Pai Platforms.

• On 8 February, the Registrar of Companies gave official approval to rebranding.
• The name of Paytm E-Commerce Private Limited has been changed to Pai Platforms Private Limited.
• Elevation Capital is the largest shareholder in the Pai Platforms.
• Paytm E-commerce has also acquired the Bitsila, a key seller platform operating with the ONDC.
• Innobits Solutions Private Limited operates under the name of Bitsila. It was launched in 2020.

Topic: RBI

7. RBI gave approval to Juspay, Zoho, and Decentro for payment aggregator business.

• On February 6, two FinTech startups, Juspay and Decentro, received the license to operate as payment aggregators.
• Juspay serves as a payment gateway, running the technology stack for e-commerce payments.
• Decentro is a technology company that enables e-commerce and other consumer-facing players to provide financial services like lending, KYC, and other services.
• On February 2, Zoho, a software-as-a-service startup, also got a payment aggregator license.
• Zoho is the first enterprise Saas company to get payment aggregator approval from RBI.
• In March 2020, RBI had issued the first guidelines on payment aggregator licenses.
• In December 2023, Razorpay, Cashfree, and Open Financial were the first group of players to get regulatory approval.
• Zomato, DigiO, Google, and Tata Digital are other major players to get the payments license.

Topic: Banking/Financial/Govt Schemes

8. PM-SVANidhi increased the annual income of street vendors by Rs 23,000.

• According to a study, the first tranche of 10,000 provided under the PM-SVANidhi has increased the annual income of 23,460 street vendors.
• This study was carried out by the Centre for Analytical Finance of the Indian School of Business (ISB).
• PM SVANidhi was launched in 2020 to help street vendors resume their livelihoods impacted by the Covid-19 lockdown.
• PM-SVANidhi portal shows that 60.65 lakh first-term loans, 16.95 lakh second-term loans and 2.43 lakh third-term loans have been disbursed.
• This study covered 5,141 vendors across 100 urban local bodies in 22 states.
• As per the report, 95% of those surveyed said that the PM-SVANidhi loan was their first-ever bank loan. 72% of the surveyed people said that it was their first business loan.
• 94% of those beneficiaries who had availed the first loan of Rs 10,000. As per the study, 13.9% of all the loans disbursed had been declared as non-performing assets (NPAs).
• The NPAs were the highest during the Covid-19 pandemic and declined over time.
• The study found that after the launch of PM SVANidhi, there had been no significant improvement in the street vendors getting formal credit from other sources.
• According to the survey, there hasn't been much of an improvement in street sellers receiving credit from other sources.

Topic: Miscellaneous

9. NITI Aayog planned the economic transformation of four cities.

• The NITI Aayog has prepared the economic transformation vision of Mumbai, Surat, Varanasi, and Visakhapatnam. It will help India to become a developed economy by 2047.
• NITI Aayog is preparing a vision document to develop India's economy of USD 30 trillion by 2047.
• The vision document comprises various aspects of development, including economic growth, social progress, environmental sustainability, and good governance.
• NITI Aayog officials have taken steps to take the GDP of the Mumbai Metropolitan Region (MMR) to USD 300 billion by 2030.
• NITI Aayog is also planning to prepare economic planning for 20-25 more cities.

Topic: Banking System

10. India's UPI services have been launched in Sri Lanka and Mauritius and RuPay card services in Mauritius.

• On February 12, the country's UPI services were launched in Sri Lanka and Mauritius by PM Narendra Modi.
• Mauritius PM Pravind Jugnauth and Sri Lankan President Ranil Wickremesinghe joined Modi at the virtual ceremony at the launch.
• This launch will enable the availability of UPI settlement services for Indian citizens travelling to Sri Lanka and Mauritius, as well as Mauritian citizens travelling to India.
• This initiative symbolizes India's growing role in FinTech innovation and its commitment to share its progress with partner countries.
• The National Payments Corporation of India (NPCI) has developed UPI and RuPay.
• UPI is an instant real-time payment system facilitating inter-bank transactions through mobile phones. It was developed in 2016.
• RuPay is a global card payment network from India with wide acceptance at shops, ATMs, and online. It was launched in 2014.

Read Banking Awareness PDF - 11, 12 and 13 February 2024