Banking Awareness of 18, 19 and 20 May 2022

Topic: Appointments

1. Rajiv Ranjan and Sitikantha Pattanaik have been appointed by RBI as executive directors.

• They have been appointed as executive directors with effect from May 1, 2022.
• Rajiv Ranjan will also serve as an ex-officio member of the Monetary Policy Committee.
• As Executive Director (ED), Sitikantha Pattanaik will look after the Department of Economic and Policy Research.
• As Executive Director (ED), Rajiv Ranjan will take care of the Monetary Policy Department.

Topic: Appointments

2. S S Mundra appointed as new Chairman of BSE.

• Board of Directors of BSE has approved his appointment. His appointment is subject to the approval of SEBI.
• He will replace Justice Vikramajit Sen.
• He worked as RBI deputy governor till July 2017. He was also RBI's nominee on the Financial Stability Board (G20 Forum).
• BSE (Bombay Stock Exchange):
  • BSE is India’s premier exchange. It is the world’s fastest Stock Exchange with a speed of 6 microseconds.
  • It is the first stock exchange to get approval from SEBI. It launched its SME platform on 13th March 2012.
  • It was established in 1875. It is also the oldest stock exchange in Asia. It is located in Mumbai.

Topic: Banking System

3. New Development Bank (NDB) has opened its regional office in GIFT City.

• The office will cater to infrastructure and sustainable development needs in Bangladesh and India.
• NDB’s regional office in Gujarat International Finance Tec-City (GIFT City) will work in close coordination with the NDB Headquarters at Shanghai, China.
• New Development Bank (NDB):
  • In July 2014, the Agreement establishing the NDB was signed. The Agreement entered into force in July 2015. NDB became fully operational in February 2016.
  • It is a multilateral development bank set up by BRICS. It is headquartered in Shanghai, China. Its President is Marcos Prado Troyjo.
  • It aims to mobilize resources for development projects in BRICS, emerging economies, and developing countries.

Topic: RBI

4. RBI rejected six out of eleven applications for bank license.

• RBI received four applications for setting up of universal banks and rejected all of them.
• RBI received seven applications for setting up of small finance banks (SFBs) and rejected two of them.
• The rejected applicants for SFBs are VSoft Technologies and Calicut City Service Co-operative Bank.
• Four applicants found unsuitable under Guidelines for ‘on tap’ Licensing of Universal Banks are listed below.
  • UAE Exchange and Financial Services
  • Repatriates Cooperative Finance and Development (REPCO) Bank
  • Chaitanya India Fin Credit Pvt Ltd
  • Pankaj Vaish and others
• RBI last time permitted IDFC Bank and Bandhan Bank to set up universal banks in 2014.

Topic: Indian Economy/Financial Market

5. A Nidhi company should have Net Owned Fund of ₹20 lakh and minimum paid-up capital of ₹10 lakh.

• Corporate Affairs Ministry has amended Nidhi Rules 2014 and the amended rules have come into effect from April 19, 2022.
• As per amended rules, a Public Company incorporated as a Nidhi should first get itself declared as a Nidhi by the Central Government.
• The amended rules provide that the company should do this by applying in form NDH-4 with a minimum membership of 200 and Net Owned Fund of ₹20 lakh within the period of 120 days of its incorporation.
• As per Nidhi (Amendment) Rules, 2022, if Central Government conveys no decision in 45 days of application filed by company in form NDH-4, approval would be deemed as granted.
• Company Law Committee made recommendations for regulation of Nidhi companies. The 11-member committee is led by Rajesh Verma.
• About Nidhi Company:
  • Nidhi Company is a type of Non-Banking Financial Company. It is formed to borrow and lend money to its members.
  • A Nidhi Company needs approval under Companies Act. It does not need the licence from RBI.
  • It is regulated by the RBI for deposit taking and by the Ministry of Corporate Affairs (erstwhile Department of Company Affairs) for operational matters and for deployment of funds.

Topic: Appointments

6. The appointment of Pieter Elbers as Chief Executive Officer of IndiGo has been announced.

• He will join IndiGo as CEO on or before October 1. His appointment is subject to regulatory approvals.  
• He will replace Ronojoy Dutta who will retire on September 30. 
• IndiGo is largest airline in India. It is an Indian low-cost airline headquartered in Gurgaon.

Topic: Indian Economy/Financial Market

7. S&P Global Ratings has reduced India’s growth projection for the current fiscal from 7.8% to 7.3%.

• In its Global Macro Update to Growth Forecasts, S&P said inflation remaining higher for long is a concern.
• In December 2022, S&P has kept India’s GDP growth for 2022-23 fiscal at 7.8%.
• S&P has kept CPI or retail inflation in the current fiscal at 6.9%.

• Finance Minister Nirmala Sitharaman said that Indian economy is expected to achieve 8.9% GDP growth this fiscal.
• She chaired 7th Annual Meeting of Board of Governors of New Development Bank (NDB), a multilateral development bank.

Topic: Indian Economy/Financial Market

8. Outward forex remittances under RBI’s Liberalised Remittance Scheme (LRS) reached an all-time high level in FY22.

• $19.61 billion were sent abroad in the previous financial year.
• This is more than pre-Covid high of $18.76 billion remitted in FY20.
• In FY21, outward remittances decreased to $12.68 billion during Covid-19 pandemic restrictions.
• Under RBI’s Liberalised Remittance Scheme, resident individuals can remit up to $2,50,000 per financial year.
• Remittances towards travel contributed highest to outward remittances in FY22.
• In April 2022, producers’ inflation rate based on Wholesale Price Index (WPI) stood at nearly 15%. In March, it stood at 14.55%.
• WPI inflation has remained in double digit for 13 consecutive months.
• Inflation rate based on WPI Food Index increased from 8.71% in March to 8.88% in April. 

Topic: Taxation System

9. Supreme Court has ruled that GST Council’s recommendations are not binding on the Union and States.

• Supreme Court also rejected the levying of Integrated Goods & Services Tax (IGST) on ‘Ocean Freight’.
• This will bring relief for importers as levy of reverse charge on ocean freight is now unconstitutional after the judgment.
• Supreme Court bench ruled that regarding ‘recommendations’ of the GST Council as binding would disrupt fiscal federalism.
• In fiscal federalism, both the Union and the States are conferred equal power to legislate on GST.
• The bench comprised of Justices Dhananjaya Y Chandrachud, Surya Kant, and Vikram Nath.
• The bench said that Parliament intended the recommendations of the GST Council to only have a persuasive value.
• The bench said that this is indicated by deletion of Article 279B and the inclusion of Article 279(1) by the Constitution Amendment Act 2016.
• Under Article 279A of the Constitution, the GST Council makes recommendation to the Union and the States on issues such as model GST law, principles of levy, and apportionment of GST levies on interstate supplies, GST rates etc.

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