Banking Awareness of 15, 16 and 17 January 2023

Topic: Miscellaneous

1. Institute of Chartered Accountants of India (ICAI) has released an audit standard for sustainability information.

• It is first ever audit standard on sustainability information.
• It has been released to help ICAI’s members provide reasonable as well as limited assurance on such information by the reporting entities.
• Sustainability reporting standards board of ICAI has issued the first-ever assurance standard on sustainability information.
• SEBI is considering introduction of a “mandatory audit” of the Business Responsibility and Sustainability Reporting (BRSR) reports.
• Top 1,000 listed companies are mandated to furnish BRSR reports as part of their annual reports for FY22-23.
• In December 2019, SEBI had extended the Business Responsibility Reporting (BRR) requirement to the top 1,000 listed companies by market capitalization from financial year 2019-20.
• ICAI has also issued 16 social audit standards (SAS). These 16 SAS will be applicable to social enterprises that will get listed on the social stock exchange.
• These SAS cover themes like hunger, poverty, malnutrition, inequality, healthcare, education, gender equality, environmental sustainability, etc.
• These 16 SAS will be mandatory for social auditors registered with the Institute of Social Auditors of India (ISAI).

Topic: Indian Economy/Financial Market

2. Wholesale inflation declined to 4.95% in December.

• This is 22-month low level of wholesale inflation (Producers’ inflation based on Wholesale Price Index).
• As per data released by Commerce & Industry Ministry, WPI-based inflation declined to 4.95% in December against 5.85% in November.
• This decline is primarily due to fall in prices of food articles, crude petroleum, mineral oils, food products, textiles and chemicals & chemical products.
• Inflation in food articles was (-) 1.25% during December. In fuel and power, it was 18.09% during December.
• Inflation in manufactured products was 3.37% during December.
• Primary articles inflation declined to a 23-month low level of 2.4%. Manufacturing inflation declined to a 25-month low level of 3.4% in December.
• A report prepared by ICRA projected the WPI inflation to print between 4.5-4.9% in January.

Topic: Indian Economy/Financial Market

3. India’s imports from Russia increase 400% (year-on-year) in April-December 2022 to $32.88 billion.

• Russia has become India’s fourth largest source of imports in April-December 2022.
• This is mainly due to rise in sourcing of discounted crude from the Russia. Crude accounted for about two-third of Russian imports.
• In 2021-22, Russia was India’s eighteenth largest import partner. It accounted for $9.86 billion of imports.
• In April-November 2022, Russian crude supply to India was worth $19.23 billion. It became third largest supplier after Iraq at $24.39 billion and Saudi Arabia at $20.65 billion.
• India’s goods exports to Russia declined 14.22% in April-November 2022 to $1.87 billion.
• China was India’s top import source in April-December 2022. Imports have shown an increase of 11.9% (year-on-year) to $75.87 billion.
• Exports to China during the same period declined 35.58%. Trade deficit in the first nine months of this fiscal increased to $64.84 billion.

Topic: Indian Economy/Financial Market

4. India’s goods exports in December 2022 declined to $34.48 billion.

• Goods exports in December 2022 declined at a rate of 12.2 % (year-on-year).
• Items such as petroleum products, gems & jewellery, engineering goods, cotton yarn & fabrics, coal, and meat & dairy have pulled down good exports.
• Goods exports have declined as recessionary trends in major developed country markets continued to affect demand.
• India’s goods imports also declined in December 2022. It declined at a lower rate of 3.4% to $58.24 billion.
• Trade deficit for April-December 2022 increased to $ 218.94 billion from $136.45 billion in April-December 2021.
• Exports of electronic goods have shown a growth of 51.56 % to $16.67 billion during April –December 2022.
• Exports of petroleum products have also shown a high growth of 52.15 % during the period to $ 70.28 billion.
• India’s top export destination in April-December 2022 was the US. UAE was the second largest export destination. Netherlands was at third spot.
• China was India’s fourth largest export destination in the April-December 2022.
• India’s overall exports in April to December 2022 are estimated to show a positive growth of 16.11% over the same period last year.
• As per the estimates, India’s overall exports are likely to be 568.57 billion US dollar as against 489.69 billion US dollar in the corresponding period of 2021.
• Overall imports in April to December 2022 are estimated to show a growth of 25.55% over the same period last year.
• Overall imports are estimated to be 686.70 billion dollar as compared to 546.95 billion US dollar over the same period of last year.
• Ministry of Commerce and Industry said that India’s overall export remained at 61.82 billion US dollar in December 2022.
• India’s overall export in December 2022 exhibited a negative growth of 5.26% over the same period last year.
• India’s overall import in December 2022 is estimated to be 73.80 billion US dollar.
• It exhibited a negative growth of 1.95% over the same period last year. 
• The top exports of India are refined petroleum, packaged medicaments, diamonds, rice, and jewellery.
• The top imports of India are crude petroleum, gold, diamonds, and petroleum gas.

Topic: Reports and Indices

5. RBI released the report titled “State Finances: A Study of Budgets of 2022-23”.

• According to the report, States’ gross fiscal deficit (GFD) is budgeted to decrease from 4.1% of GDP in 2020-21 to 3.4% in 2022-23.
• The report says states’ debt is budgeted to ease to 29.5% of GDP in 2022-23 as against 31.1% in 2020-21.
• It is still higher than 20% recommended by FRBM Review Committee, 2018 (Chairman: Shri N. K. Singh).
• In 2022-23, States have budgeted higher capital outlay than in 2019-20, 2020-21 and 2021-22.
• According to the report, highly skewed monthly distribution of capital outlay by States is a cause for concern.
• The report said in last 5 years, States could spend only a third of their full-year spending during H1 (April-September).
• The report said that more than a quarter of the total spending was undertaken in the last month (March). This suggests a residual approach to spending.
• In April-October 2022, capital outlay of the States registered a year-on-year growth of 0.9%.
• More than 40% of the total capital expenditures made by all States are collectively accounted for by Uttar Pradesh, Maharashtra, Madhya Pradesh, Karnataka, and Tamil Nadu.
• States’ quality of expenditure appears to be inversely related to their level of indebtedness. It is measured in terms of RECO (Revenue Expenditure to Capital Outlay) ratio.
• According to the report, the likely reversion to the old pension scheme (OPS) by some States is a major risk.
• Chhattisgarh, Rajasthan, Punjab, and Himachal Pradesh have so far restored the OPS for government employees.
• The report is an annual publication that provides information, analysis and an assessment of the finances of State governments for 2022-23.
• The theme of this year’s Report is “Capital Formation in India - The Role of States”.

Topic: Appointments

6. The name of Debadatta Chand has been recommended by FSIB for the post of MD & CEO in Bank of Baroda.

• Financial Services Institutions Bureau (FSIB) has also recommended Rajneesh Karnatak for the post of MD & CEO in Bank of India.
• Rajneesh Karnatak is currently Executive Director in Union Bank.
• The tenure of Bank of Baroda CEO Sanjiv Chadha has been extended till June 30.
• Chadha’s three year period of appointment as Bank of Baroda CEO expires on January 19.

Topic: RBI

7. RBI issued directions on “Acquisition and Holding of Shares or Voting Rights in Banking Companies”.

• RBI allowed promoters to hold 26% of the paid-up share capital or voting rights of a bank after the completion of 15 years from commencement of its business.
• In the time before completion of the 15 years, the promoters may be allowed to hold a higher percentage of shareholding as part of licensing conditions.
• Before the completion of 15 years, promoters of banking company may also be allowed to hold a higher percentage as part of the shareholding dilution plan submitted by the banking company and approved by the RBI with such conditions as deemed fit.
• Reserve Bank may also permit higher shareholding of promoters on a case-to-case basis.
• While allowing higher shareholding, RBI may impose conditions as deemed fit.
• The concerned banking company is required to furnish its comments after considering all relevant aspects along with a copy of the relevant board resolution and information specified in the directions to the RBI within 30 days.   
• According to the guidelines, a banking company shall continuously monitor that the following persons are ‘fit and proper’ on an ongoing basis:
  • Its major shareholders who have completed the approved acquisition.
  • Those applicants for whom comments have been provided by the concerned banking company to the Reserve Bank for approval to have major shareholding.
  • Those applicants who have been approved by the Reserve Bank to have major shareholding but are yet to complete the approved acquisition.
• Protean eGov Technologies, formerly NSDL e-Governance Infrastructure, has got the RBI’s approval for its wholly-owned subsidiary to operate as an account aggregator.

Topic: Taxation

8. GST should not be paid on government incentive to banks for promoting RuPay debit cards and low value BHIM-UPI transactions.

• Currently, an incentive is paid by government to banks as a percentage of the value of RuPay Debit card transactions and low-value BHIM-UPI transactions up to Rs 2,000.
• Under the Payments and Settlements Systems Act 2007, banks and system providers are prohibited from charging any amount from a person making or receiving payments through RuPay Debit cards or BHIM.
• Incentives under the Incentive scheme for promotion of low-value BHIM-UPI transactions and RuPay Debit Cards are in the nature of subsidy and thus not taxable.
• In December, UPI achieved a record of 782.9 crore digital payment transactions with a value of Rs 12.82 lakh crore.

Topic: Appointments

9. Sekhar Rao has been appointed as an additional Director to take up the role of Executive Director of the Karnataka Bank.

• He has been appointed for a period of three years effective from the date of taking charge.
• His appointment is subject to approval of the shareholders.
• Karnataka Bank is a Scheduled Commercial Bank based in Mangaluru, Karnataka. It is a private sector bank.
• Mahabaleshwara M. S is its MD and CEO. P. Pradeep Kumar is its Part-Time Non-Executive Chairman.

Topic: Reports and Indices

10. Oxfam International released India supplement of its inequality report on the first day of annual meeting of the World Economic Forum.

• Oxfam International said that if India’s ten richest people are taxed at 5%, this would fetch money to bring children back to school.
• India’s richest one percent own more than 40% of the country’s total wealth.
• The bottom half of the population together share just 3% of wealth.
• Oxfam International added that a one-off tax on unrealized gains from 2017–2021 on Gautam Adani could have raised Rs 1.79 lakh crore.
• This would be enough to employ over five million Indian primary school teachers for a year.
• According to the report titled ‘Survival of the Richest’, taxing India’s billionaires once at 2% on their entire wealth would fulfill the requirement of Rs 40,423 crore for the nutrition of malnourished in the country for the next three years.
• The report added a one-time tax of 5% on the 10 richest billionaires in India is more than 1.5 times the fund estimated by the Health and Family Welfare Ministry and the Ministry of Ayush for the year 2022-23.
• According to the report, female workers earn only 63 paise for every 1 rupee a male worker earns.
• This gender inequality is even more in case of Scheduled Castes and rural workers.
• The report combines qualitative and quantitative information to explore the impact of inequality in India.
• Oxfam said the wealth of billionaires in India have increased by 121% or Rs 3,608 crore per day in real terms since the beginning of the pandemic in November 2022.
• About 64% of the total Rs 14.83 lakh crore in GST came from bottom 50% of the population in 2021-22. Only 3% of Goods and Services Tax (GST) came from the top 10%.
• As per Oxfam, total number of billionaires in India increased from 102 in 2020 to 166 in 2022.
• The combined wealth of 100 richest of India has reached USD 660 billion (Rs 54.12 lakh crore).
• This is an amount that could fund the Union Budget for more than 18 months.
• Oxfam cited a nationwide survey by Fight Inequality Alliance India (FIA India) in 2021 and said that it found that over 80% of the people in India support tax on rich.
• It added over 90% participants demanded budget measures such as universal social security, right to health to combat inequality.
• Oxfam also called for inheritance, property, and land taxes, as well as net wealth taxes.
• The annual meeting of the World Economic Forum started on 16 January in Davos, Switzerland. Its theme is 'Cooperation in a Fragmented World'.

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