Banking Awareness of 18 and 19 August 2023

Topic: RBI

1. RBI has removed the need of a sponsor of IDF-NBFCs.

• Earlier, IDF-NBFC was to be sponsored by a bank or an NBFC-Infrastructure Finance Company (NBFC-IFC).
• RBI said the shareholders of IDF-NBFCs shall be subjected to scrutiny as applicable to other NBFCs, including NBFC-IFCs.
• Further, the mandate to enter into a tripartite agreements for investments in the Public Private Partnership (PPP) infrastructure projects having a project authority has been made optional by RBI.
• Now, IDF-NBFCs shall have net-owned funds of at least ₹300 crore.
• They shall have capital-to-risk weighted assets ratio (CRAR) of 15% with minimum tier-1 capital of 10%.
• They can raise funds through rupee or dollar-denominated bonds with at least a five-year maturity.
• They can also raise funds through shorter tenor bonds and commercial papers up to 10% of their total outstanding borrowings.
• RBI has allowed IDF-NBFCs to raise money via external commercial borrowings.
• However such borrowings shall have minimum tenor of five years. ECB loans should not be sourced from foreign branches of Indian banks.
• RBI has fixed single borrower exposure limits for IDF-NBFCs at 30% of tier-1 capital.
• For single group or borrower party the limit has been fixed at 50%.
• NBFCs are eligible to sponsor IDF-MFs with prior approval of RBI.
• Infrastructure Development Funds-NBFCs (IDF-NBFCs) are non-deposit taking NBFCs.
• They refinance post commencement operations date (COD) infrastructure projects that have completed minimum 1 year of commercial operations.

Topic: RBI

2. RBI has asked the banks to provide borrowers the option to switch from floating to fixed interest rate.

• RBI said the banks and other lenders shall implement personal loan instructions by 31 December, 2023.
• They will have to implement personal loan instructions for both existing as well as new loans by December 31, 2023.
• Personal loans will have both categories of fixed and floating interest rates.
• The borrowers should be provided an option to switch over to a fixed rate according to the board-approved policy of regulated entities.
• The number of times a borrower will be allowed to switch during the tenor of the loan should be specified in the policy.
• As per RBI, personal loans are loans given to individuals. They consist of the following.
  • Consumer credit
  • Education loan
  • Loans given for the creation/ enhancement of immovable assets (e.g., housing, etc.)
  • Loans given for investment in financial assets (shares, debentures, etc.)

Topic: Appointments

3. The appointment of P.R. Seshadri as MD and CEO of South Indian Bank has been approved by RBI.  

• His appointment will be for three years with effect from 01 October.
• Meeting of Board of Directors will be convened to approve his appointment.
• The approval of shareholders will be obtained after that.
• Seshadri has earlier served as MD & CEO of The Karur Vysya Bank.
• South Indian Bank is a private sector bank. It is headquartered in Thrissur, Kerala. Murali Ramakrishnan is its MD & CEO. It was founded in 1928.

Topic: Regulatory Bodies/Financial Institutions

4. Competition Commission of India (CCI) has imposed a penalty of ₹40 lakhs on Axis Bank.

• The penalty has been imposed for the bank’s failure to notify CCI on its 9.91% stake acquisition in CSC e-governance.
• No notice was given to CCI on the Axis-CSC e-Governance acquisition.
• Axis Bank shall pay the penalty within 60 days from August 9.
• A merger cannot become affective unitil passing of 210 days from the date of notifying the CCI or until the approval by CCI, whichever is earlier.
• If companies fail to notify CCI, then this is called as ‘gun jumping’.
• Axis Bank is the third-largest private sector bank in India that is headquartered in Mumbai. Its MD & CEO is Amitabh Chaudhry.
• Competition Commission of India (CCI):
  • CCI was formed on 14 October 2003 under the Competition Commission Act, 2002.
  • It aims to eliminate practices that affect competition in the Indian market and protect the interests of the consumers. Ravneet Kaur is its chairperson.

Topic: RBI

5. RBI launched the UDGAM portal to track unclaimed deposits.

• For tracking unclaimed deposits across multiple banks in one place, the UDGAM portal has been launched by RBI.
• RBI launched UDGAM (Unclaimed Deposits – Gateway to Access information) as part of its statement on Development and Regulatory Policies.
• RBI is encouraging people to identify and approach their respective banks to claim unclaimed deposits.
• RBI is running public awareness campaigns from time to time to spread awareness among people about the number of unclaimed deposits.
• The UDGAM portal has been developed by Reserve Bank Information Technology Pvt Ltd (ReBIT), Indian Financial Technology & Allied Services (IFTAS) and participating banks.
• This portal will help users either claim the deposit amount or make their deposit accounts operative at their respective banks.
• Currently, users could access the details of their unclaimed deposits from seven banks.
• These banks are Central Bank of India, DBS Bank India Limited, Dhanlaxmi Bank Limited, Punjab National Bank, South Indian Bank Limited and State Bank of India.

Topic: Appointments

6. Kamlesh Varshney and Amarjeet Singh have been appointed as whole-time members of SEBI.

• The Appointments Committee of the Cabinet (ACC) has approved the appointment of Kamlesh Varshney and Amarjeet Singh.
• Varshney is a joint secretary at the revenue department in the Finance Ministry.
• Amarjeet Singh is an executive director at the Securities and Exchange Board of India (SEBI).
• Both Varshney and Singh have been appointed for three years from the date of assumption of charge or until further orders, whichever is earlier.
• The vacancies have been created due to the retirement of S K Mohanty and Ananta Barua.

Topic: Banking System

7. Karnataka Vikas Grameena (KVG) Bank has launched banking services on WhatsApp.

• Shreekant M Bhandiwad Chairman of Karnataka Vikas Grameena Bank, launched WhatsApp banking services.
• With the help of WhatsApp banking services, customers will be able to seamlessly connect with the bank.
• They will be able to avail a number of banking services through the WhatsApp banking channel.
• Customers can know the balance in their account, last five transactions and information about bank deposits/loan products, the rate of interest and digital products.
• WhatsApp banking would be available 24X7, including on holidays.
• Karnataka Vikas Grameena Bank is an Indian Regional Rural Bank sponsored by Canara Bank. It is headquartered in Dharwad, Karnataka.

Topic: Indian Economy/Financial Market

8. Moody’s has affirmed a Baa3 rating on India’s long-term local and foreign-currency sovereign ratings.

• It has retained the outlook at stable. It has affirmed short-term local currency rating at P-3. 
• The international rating agency said that India’s economy is likely to continue to grow rapidly by international standards.
• According to Moody’s, India continues to be weighed down by high debt burden and weak debt affordability.
• India’s fiscal strength remains a key weakness. It balances high economic strength, the agency noted.
• Moody’s expects India’s economic growth to outpace all other G20 economies.

Topic: Indian Economy/Financial Market

9. India’s imports of paper and paperboard increased by 39% in Q1 of FY24.

• As per the latest data issued by the Directorate General of Commercial Intelligence & Statistics (DGCI&S), the imports increased by 39% at 409 thousand tonnes in Q1FY24 over 294 thousand tonnes in Q1FY23.
• Paper and paperboard imports has increased 25% in entire FY23 over FY22.
• In value terms, the imports increased by about 28% during the quarter (Q1FY24) to stand at ₹3,153 crore.
• In Q1FY24, imports from ASEAN have increased 198% in volume terms. In the same quarter, imports from China have grown by 37% in volume terms.
• Imports of all grades of paper have accelerated in Q1FY24. The highest increase of 214% seen in imports of uncoated writing and printing paper.
• Indonesia, Singapore, and China are the top import sources of uncoated writing and printing paper.
• China, Japan and South Korea are the top import sources of coated paper and paperboard.

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