Banking Awareness of 13, 14 and 15 March 2024

Topic: Reports and Indices

1. SCBs' ownership of Central and State government securities has decreased significantly during the previous decade up until FY23.

• In its report, the economic research department of Bank of Baroda has revealed this this decrease in Scheduled commercial banks' (SCBs') ownership.
• The largest holders of state and central government securities are still SCBs.
• Their percentage did, however, significantly decrease from 45.1% in FY13 to 35.7% in FY23.
• According to the report, as of September 2023, it stands at 36.6%.
• The share of insurance firms and "others" has significantly improved.
• Insurance businesses' percentage share increased from 20.7% in FY13 to 26.3% in FY23.
• In FY23, the percentage of "others" increased to 14.6% from 9.6% in FY13.
• From 13.1% in FY13 to 9.7% in FY23, the RBI's share has decreased.
• Foreign Portfolio Investors' (FPIs') percentage has decreased from 1.3% to 0.9%.
• As of March 2023, the aggregate outstanding ownership of government debt for the Center and States was ₹146-lakh crore.
• By the close of FY13, this had only reached ₹42 lakh crore. This means a 13.4% annual growth rate (CAGR basis).
• The total outstanding amount as of September 2023 is ₹155-lakh crore.
• The Center's net borrowings increased by 8.5% (CAGR) between FY13 and FY23.
• State borrowings has increased by 13.5% during the same time.
• The outstanding amount of ownership of general government securities is expected to rise to ₹162-163-lakh crore by March 2024-end.

Topic: Banking System

2. National Payments Corporation of India (NPCI) has given its approval to One97 Communications.

• It has been given permission by NPCI to use the "multi-bank" model of third-party application provider (TPAP) on the UPI platform.
• One97 will be served by four banks acting as PSP (payment system provider) banks.
• Axis Bank, HDFC Bank, State Bank of India, and Yes Bank are these banks.
• For both new and current UPI merchants for One97 Communications, Yes Bank will serve as the merchant acquisition bank.
• This will make it possible for current users and merchants to carry out AutoPay mandates and UPI transactions.
• Paytm Payments Bank currently handles the routing of all UPI transactions for the Paytm platform.
• Paytm announced in February 2024 that it has moved its nodal accounts to Axis Bank.
• According to NPCI guidelines and TPAP licensing requirements, license holders who are large must have a "multi bank model."
• Additionally, they must be affiliated with up to ten sponsor banks, but no less than three.
• Those that process more than 5% of the UPI ecosystem's monthly volume or value are considered large TPAP licence holders.
• After PhonePe and Google Pay, Paytm Payments Bank ranked as the third-biggest UPI payment platform as of February 2024.

Topic: RBI

3. RBI has stopped Federal Bank and South Indian Bank from issuing new co-branded credit cards.

• RBI’s action is in line with the norms issued on March 7.
• The banks will continue to offer credit cards to new and current customers in the non-co-branded segment.
• The banks will also continue to provide service current co-branded cardholders.
• South Indian Bank only provides a co-branded credit card with OneCard.
• Federal Bank has three co-branded tie-ups with OneCard. It has a travel card with Scapia. It has third tie up with neo bank Fi.
• Other than co-branded tie-ups, Federal Bank has key credit card variants on its own. These are Celesta, Imperio and Signet.
• In accordance with RBI guidelines from March 7, co-branded cards must clearly state that they were issued as part of a co-branding agreement.
• Additionally, the co-branding partner is prohibited from promoting or advertising the co-branded card as its own product.
• All marketing and promotional materials must prominently include the name of the card issuer.
• Information about transactions made using the co-branded card cannot be accessed by the co-branding partner.
• With the exception of serving as the first point of contact for complaints, it shouldn't be involved in any procedures or controls once the card is issued.

Topic: RBI  

4. RBI has imposed a penalty of Rs 1.40 crore on Bank of India.

• RBI has imposed penalty for non-compliance with its directions on ‘Interest Rate on Deposits’, ‘Customer Service in Banks’, ‘Interest Rate on Advances’ and others.
• The penalty is also for non-compliance with RBI’s directions on ‘Central Repository of Information on Large Credits (CRILC) - Revision in Reporting’, and ‘Membership of Credit Information Companies (CICs)’.
• The penalty is also for contravention of provisions of Credit lnformation Companies Rules, 2006 (ClC Rules).
• Monetary penalty of Rs 29.55 lakh has been imposed by RBI on Bandhan Bank.
• RBI has imposed this penalty for non-compliance with directions relating to Interest Rate on Deposits.
• RBI also placed a penalty of Rs 13.60 lakh on Indostar Capital Finance.

Topic: MoUs/Agreements

5. Asian Development Bank (ADB) and central government have signed a $23 million loan agreement.

• The loan agreement is to improve access to quality fintech education, research, and innovation at the GIFT-City.
• This project will establish an International Fintech Institute (IFI) to strengthen fintech education.
• IFI will be established to boost start-up success rates, and drive fintech research and innovation.
• The IFI will be established in collaboration with globally reputed institutes and universities.
• It will offer industry-aligned fintech training programmes that meet international standards.
• It will also collaborate with industry to support the growth of fintech start-ups.
• It will also collaborate with venture capital funds to support the growth of fintech start-ups.
• Promoting Research and Innovation through Development of Fintech Institute at GIFT-City Project will help establish a state fintech readiness index.

Topic: Indian Economy/Financial Market

6. India's industrial output growth declined to 3.8% in January.

• It accelerated to 4.24% in December. Growth in the manufacturing sector dropped to 3.2% from 4.5% in December.
• For the second time in the last three months, consumer non-durables output declined.
• Output of consumer non-durables decreased by 0.3%.
• The production of electricity and mining both increased to 5.6% and 5.9%, respectively.
• The production of consumer durables increased by 10.9%.
• Production of consumer durables increased due to base effect.
• The output of capital goods increased by 4.1% in January.
• The growth rate for intermediate products increased to 4.8% in January.
• But in January, the growth rate for primary commodities decreased to 2.9%.
• The construction and infrastructure goods growth rate decreased to 4.6% in January.
• Out of the 23 manufacturing segments that are tracked by the National Statistical Office to compute the Index of Industrial Production (IIP), eight have shown decline in January.
• Computers, electronics and optic products recorded the steepest fall of 11.9% in January.
• On the other hand, other transport equipment segment grew 25.3% in January.

Topic: Indian Economy/Financial Market

7. Inflation remained stable at 5.09% in February compared to 5.1% in January.

• Measured by the Consumer Price Index (CPI), India's benchmark inflation number remained stable between January and February.
• The headline retail inflation number came in at 5.09% in February compared to 5.1% in January 2024.
• This modest easing comes amid efforts by the Reserve Bank of India (RBI), with the government ordered to maintain retail inflation at 4%.
• Inflation in February 2023 stood at 6.44%, indicating a significant decline from the previous year.
• Food inflation in the CPI basket rose slightly to 8.66% in February from 8.3% in the previous month, National Statistics Office data showed.
• This is largely a reflection of the sharp rise in prices of eggs, fish, and meat, inflation in this category rose from 1.6% in January to 5.7% in February.
• Inflation of vegetables also increased to 30.3% in February from 27.1% in January.

Topic: Regulatory Bodies/Financial Institutions

8. SEBI notified the regulations for small and medium real estate investment trusts.

• The Securities and Exchange Board of India (SEBI) issued guidelines for the creation of Small and Medium Real Estate Investment Trusts (SM REITs).
• SEBI issued regulations to amend the REIT Regulations 2014. The investment managers of such REITs should have a minimum net worth of ₹20 crore.
• SM REIT is allowed to gather funds starting from ₹50 crore by issuing units to a minimum of 200 investors.
• These funds will be used for acquiring and managing real estate assets. The ownership of these assets will be structured through one or more schemes.
• The minimum subscription amount for an SM REIT's initial offering is ₹10 lakh per investor.
• The investment manager is mandated to retain a minimum of 5% of the total outstanding units in each scheme.
• SM REIT schemes may raise funds from Indian and foreign investors through the issuance of units.

Topic: Banking/Financial/Govt Schemes

9. Electric Mobility Promotion Scheme 2024 has been announced by the Heavy Industries Ministry.

• The scheme has been announced to accelerate the adoption of Electronic Vehicles (EVs) in India.
• Under the scheme, a total outlay of 500 crore rupees will be implemented for 4 months.
• The scheme will be implemented from 1st of April until July.
• Under the scheme, only electric two-wheelers (e-2W) and electric three-wheelers (e-3W) will be eligible.
• Registered e-rickshaws, e-carts and L5 automobiles will also be eligible.
• L5 is a three wheeled motor vehicle with maximum speed of more than 25 kmph.
• Additionally, it has engine capacity of more than 25 cc if fitted with a thermic engine. It has motor power of more than 0.25 kW if fitted with electric motor.
• Only EVs fitted with advanced batteries will be subject to incentives under the scheme.
• The scheme is expected to help over 3 lakh 72 thousand EVs.
• It is expected to promote faster adoption of electric vehicles.
• Further, it will provide impetus to the green mobility as well as development of the EV manufacturing eco-system in India.

Topic: Banking System

10. The private banks’ share in total deposits has increased from 25% in 2017-18 to 34% as of December 2023.

• Higher interest rates and better customer relationship management have helped it increase.
• On the other hand, public sector banks’ share in total deposits has decreased to 59%.
• It stood at 66% at the end of the financial year 2017-18 as per RBI data.
• Deposits of private sector banks have also grown at a faster rate compared with public sector banks.
• Deposits of private sector banks grew by 135% to Rs 68.4 trillion as of December 2023 from Rs 29 trillion as of March 2018.
• The deposits of public sector banks grew by 40% to Rs 116.5 trillion as of December 2023 from Rs 76.5 trillion as of March 2018.
• Private sector banks have also ensured ease of doing banking transactions with the help of technology.

Read Banking Awareness PDF - 13, 14 and 15 March 2024