Banking Awareness of 16, 17 and 18 November 2024

Topic: RBI

1. A framework for reclassifying FPI as foreign direct investment (FDI) has been released.

• Framework has been introduced by the RBI and SEBI that permits foreign portfolio investors (FPIs) to reclassify their holdings as FDI if they exceed the 10% investment limit.
• This categorisation is not allowed in industries where foreign direct investment is prohibited, and it requires government clearances and compliance with reporting deadlines.
• According to RBI's operational framework for reclassifying foreign portfolio investments into FDI, FPIs who have fully diluted investments in a firm that exceed the permissible limit of 10% of its total paid-up equity capital are not required to sell their shares.
• According to the RBI, any FPI who invests beyond the allowed limit may choose to sell their shares or reclassify them as foreign direct investment.
• This is subject to the terms specified by the RBI and SEBI within five trading days of the date the trades causing the breach were settled.
• For reclassification, such FPI shall report the entire investment held by it within timelines specified under the Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019.

Topic: Miscellaneous

2. At about ₹59 per person, panchayats' own-source revenue (OSR) is still low.

• According to government data, the average tax revenue received by rural local governance organisations (panchayats) between 2017 and 2022 was only ₹59 per person.
• Only ₹5,118.98 crore was raised as OSR by the panchayats between 2017 and 2022, according to data published by the Panchayati Raj ministry.
• Gujarat received the most OSR of any state, totalling ₹829.75 crore.
• Kerala collected ₹802.95 crore, the second-highest amount among states.
• Third place went to Andhra Pradesh, which raised ₹791.93 crore.
• Andhra Pradesh occupied the third position. It raised ₹791.93 crore.
• With ₹1,635 in taxes collected per person, Goa topped the list in terms of the per capita OSR raised by the panchayats.
• Puducherry, which raised ₹757 per capita, came after Goa.
• A total of around ₹2.36 lakh crore (2021–22 to 2025–26) has been allocated by the 15th Finance Commission to rural bodies.
• "Tied Grants" comprise around 60% of this, and they cover things like rainwater collection, drinking water delivery, sanitation, and maintenance services.
• "Untied Grants" for enhancing essential services make up about 40% of this.
• The states may give panchayats permission to impose taxes, levies, tolls, and fees in order for them to generate OSR.

Topic: MoUs/Agreements

3. National Housing Bank (NHB) signed separate MoUs with 116 Primary Lending Institutions (PLIs).

• The MoUs were signed for implementation of the Interest Subsidy Scheme (ISS) under the Pradhan Mantri Awas Yojana -- Urban 2.0 (PMAY-U 2.0).
• The MoUs were signed at the National Workshop on Pradhan Mantri Awas Yojana (U) 2.0.
• PLIs with whom MoUs were signed include public and private sector banks, housing finance companies, regional rural banks, small finance banks and co-operative banks.
• During the workshop, the Unified Web portal-ISS- was launched by National Informatics Centre (NIC) and Ministry of Housing & Urban Affairs.
• PM Modi launched PMAY-U 2.0 on 17 September 2024. It will provide financial help to 1 crore urban poor and middle-class families in the coming five years.
• Pradhan Mantri Awas Yojana (Urban) Mission was launched on 25th June 2015.
• It intended to provide housing for all in urban areas by year 2022.

Topic: Reports and Indices

4. As of March-end 2024, the total amount of outstanding municipal bonds was ₹4,204 crore, according to an RBI report.

• This was just 0.09% of all existing corporate bonds, according to an RBI report.
• According to the RBI's report on municipal finances, "the majority of municipal bonds are privately placed with select investors and this limits the investor base."
• The RBI's report on municipal finances states that public bond issues were offered in Ahmedabad (in 1998 and 2019) and Indore (in 2023).
• According to the report, boosting investor trust and increasing market participation depend heavily on municipal organisations' financial performance and credit ratings improving.
• The outstanding municipal bonds were worth 0.01% of GDP at ₹4,204 crore as of March 31, 2024, compared to 0.03% of GDP at ₹1,100 crore on March 31, 2005.
• "Unlike the initial development phase, all bonds issued since 2016-17 are taxable," the report stated.
• According to the report, financing for municipal bonds has recovered in recent years.
• Officials from the RBI's Department of Economic and Policy Research have prepared the report.
• In the United States, municipal green bonds were first issued in 2014.
• In 2021, Ghaziabad Nagar Nigam issued municipal green bonds of ₹150 crore to establish a tertiary water treatment plant, marking the first of the municipal green bond issuance in India.
• Indore in 2023 and Ahmedabad and Vadodara in 2024 came next.

Topic: Taxation

5. Telangana has provided 100% exemption from road tax and registration fees for Electric Vehicles (EVs).

• This has been done to reduce pollution and promote sustainable transportation.
• The new Electric Vehicle (EV) policy is being implemented in the state from 18 November 2024.
• Regardless of the number of vehicles registered, electric buses purchased and registered in Telangana for the first two years, until December 31, 2026, are also completely exempt from road tax and registration fees for the entire life of the EVs.
• But only the Telangana State Road Transport Corporation is allowed to operate them.
• Buses owned by any industry and used solely for the transportation of its own employees are similarly exempt, as long as they aren't being utilized for commercial purposes.

Topic: Corporates/Companies

6. NITI Aayog’s Women Entrepreneurship Platform (WEP) has partnered with Urban Company to support women MSMEs.

• Under its award to reward initiative, NITI Aayog’s WEP launched a pilot program with Urban Company.
• The pilot program has been launched to support women MSMEs to scale up their businesses in the beauty and wellness sector.
• The program is focused on providing support to women entrepreneurs owning local salons and parlors.
• The training will be offered to women entrepreneurs across six key ecosystem needs of entrepreneurial growth.
• These are skilling, legal and compliance, access to finance, market, and business development services along with mentorship and networking.
• According to Mission Director of WEP Anna Roy, this collaboration with Urban Company is a key step toward creating a strong and healthy ecosystem for women in the beauty and wellness sector.
• Award to reward is a WEP flagship initiative to support and recognize women entrepreneurs.

Topic: Indian Economy/Financial Market

7. India's GDP is expected to rise at 6.5–7% until FY 2026–2027, according to S&P Global Ratings.

• In its most recent global bank outlook report, S&P Global Ratings predicted that India's GDP will expand by 6.5% to 7% per year during the next three fiscal years, ending in 2027.
• Infrastructure development and rising consumption will be the main drivers of this GDP growth.
• The report states that the resilience of India's financial institutions will be supported by structural improvements and promising economic prospects.
• According to the report, improved bank capitalisation and increased demand should accelerate the growth of bank loans.
• In the medium run, the financial system will be strengthened by the RBI's regulatory crackdown.
• Last month, RBI Governor Shaktikanta Das also predicted that real GDP growth in India will likely reach 7.2% in FY 2024–2025.
• However, the S&P Global analysis noted that growth linked to capital expenditures could be delayed by outside factors.
• S&P Global Ratings is a division of S&P Global. It is a leading credit rating agency.

Topic: Awards and Prizes

8. Hyderabad Airport won global recognition for digital innovations.

• At the 'Airport Excellence Awards' held during the Saudi Airport Exhibition 2024, GMR Hyderabad International Airport Limited (GHIAL) has received international accolades for its advancements in digital innovation.
• On November 12, the awards ceremony was held at the Riyadh International Convention and Exhibition Centre (RICEC), celebrating leading global innovations in the aviation industry.
• GHIAL's 'Digital Twin' received the award in the Innovation & Technology and Facility Management categories.
• One of GHIAL’s other innovations, the ‘Smart Shopping Trolley’, was adjudged the runner-up in the Airport Revenue Management category.
• The digital twin at RGIA creates a virtual replica of the physical airport.
• Through real-time data integration from CCTV, sensors and IoT devices, this advanced model offers a holistic, data-driven view of airport operations, from terminal functionality to passenger flow and resource management.

Topic: Appointments

9. Arvinder Singh Sahney has been appointed Chairman of Indian Oil Corporation with effect from November 13.

• He replaced Director (Marketing) V. Sathish Kumar, who was holding the additional charge of Chairman after the completion of the tenure of S.M. Vaidya.
• Before to this appointment, he was the Petrochemical Vertical Head of the National Oil Marketing Company.
• Mr. Sahney has over three decades of experience in the Refinery and Petrochemical sector.
• Indian Oil Corporation Limited (IOC):
  • It is a Maharatna PSU that was formed in 1959. It is the largest commercial oil company in India.
  • Headquarters of IOC: New Delhi

Topic: Banking System

10. State Bank of India has sought $1.25 billion in India's biggest bank loan in 2024.

• State Bank of India is looking to raise up to $1.25 billion for a five-year loan, which would be the largest dollar-denominated loan from India's financial sector in 2024.
• CTBC Bank, HSBC Holdings PLC and Taipei Fubon Bank are arranging the five-year loan, which carries an interest margin of 92.5 basis points over the risk-free secured overnight financing rate.
• SBI is raising this facility for general corporate purposes through its branch in Gujarat International Finance Tec-City, the country's newest financial hub.
• In 2024, State Bank of India is joining a growing list of local borrowers raising foreign currency loans, with non-banking financial companies (NBFCs) or "shadow banks" leading the way due to tighter domestic regulations.
• Despite a surge in activity, India’s dollar debt has fallen 27% this year to $14.2 billion, weighed down by low borrowings from large companies, according to data compiled by Bloomberg.
• According to data compiled by Bloomberg, the state bank raised a $750 million, three-year loan in July.

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