Banking Awareness of 19, 20 and 21 September 2023

Topic: Indian Economy/Financial Market

1. India Ratings & Research (Ind-Ra) has raised India’s GDP growth forecast for FY24 to 6.2%.

• It has raised GDP (Gross Domestic Product) growth forecast from 5.9 per cent to 6.2 per cent.
• The GDP growth forecast has been revised due to the government’s capital expenditure and deleveraged balance sheets of India Inc and banks.
• Subdued global commodity prices and the prospect of private capital expenditure picking up are also the reasons for the revision in GDP growth forecast.
• Ind-Ra estimated the private final consumption expenditure to grow 6.9% in FY24 as against 7.5% in FY23.
• Government and the Reserve Bank of India (RBI) expect growth would be 6.5%. In FY23, Indian economy grew by 7.2%.
• S&P Global Market Intelligence has also revised India’s growth forecast for FY24.
• It has revised growth forecast to 6.6% because of strong growth in the April-June quarter.
• India’s GDP forecast for 2023-24 was raised by Organization for Economic Cooperation and Development (OECD) from 6% to 6.3%.
• Earlier, Fitch Ratings revised growth forecast for the current fiscal year, from 6% to 6.3%.

Topic: Regulatory Bodies/Financial Institutions

2. SEBI imposes ₹6 crore fine on former promoters of DHFL for disclosure lapses.

• The penalties totaling ₹6 crore have been imposed on 15 entities, including Kapil Wadhawan and Dheeraj Wadhawan.
• The penalties have been imposed for flouting disclosure norms in the case of Dewan Housing Finance Corp Ltd (DHFL).
• In its order, Securities and Exchange Board of India (SEBI) said the fines need to be paid jointly within 45 days.
• As per the SEBI, the promoters suppressed the names of three companies, which were directly or indirectly being held by the promoters of DHFL.
• These three companies were shown as public shareholders rather than as part of DHFL's promoters and promoter group.
• SEBI noted that the entities being promoter or promoter group and PACs (Persons Acting in Concert) having control over DHFL violated provisions of Substantial Acquisition of Shares and Takeover (SAST) rules.

Topic: Indian Economy/Financial Market

3. According to C Rangarajan, former Governor, RBI, there is a need to increase Gross Fixed Capital Formation (GFCF).

• According to C Rangarajan, there is a need to increase GFCF from current level of 29% to 32% of Gross Domestic Product (GDP) to achieve higher growth rate.
• In his address at the 13th Convocation of ICFAI Foundation for Higher Education (IFHE), he said if we achieve a 7% rate of growth continuously over the next two decades or more, India may almost touch the status of a developed economy.
• He said, “If we maintain the incremental capital output ratio (ICOR) between four and five we can comfortably achieve a seven percent growth”.
• Incremental capital output ratio (ICOR) is a reflection of efficiency with which we use capital.

Topic: Miscellaneous

4. Non-life insurers’ premium declined 3.7% in August 2023.

• This has happened after 10 months of growth. In the year-ago period, premium had grown by 11.9%.
• The growth declined because of decrease in the crop insurance and liability segments.
• In comparison to last year, the fire segment continued to record unsatisfactory results.
• There has been an increase in the market share of private non-life insurance companies from 62% in FY23 and 59% in FY22 to 65% for FY24.
• Gross direct premium underwritten for August 2023 was driven largely by health and motor insurance.
• For the financial year so far, growth stood at 11.7%. It was lower than 18.6% for the corresponding period in the previous year.
• Within non-life insurers, premiums for general insurers increased 12.8%.
• Premium growth for standalone health insurers slowed down to 25.7 per cent from 28.1% on a y-o-y basis.
• The premiums of specialised PSU insurers declined 68.4% against a rise of 15.2% in August 2022.
• Crop insurance premiums of Agriculture Insurance Company declined by over 60%.
• CareEdge expects the non-life insurance market to grow 13-15% in the medium term.
• The health insurance market is on track to cross the ₹1-lakh crore threshold in FY24.

Topic: Reports and Indices

5. The number of deposit-taking NBFCs has reached at a record low level of 34 in FY23 as per data from RBI’s Handbook of Statistics on the Indian Economy for FY23.

• The number of deposit-taking NBFCs was 69 in pre-pandemic FY20, and 254 a decade ago.
• The sharpest decline was in FY19. In FY19, the number of deposit-taking NBFCs more than halved to 81 from 168 in FY18.
• Only NBFCs and HFCs, registered with RBI as deposit-taking entities, can accept public deposits.
• Public deposits can only be accepted by NBFCs and HFCs that have registered with the RBI as deposit-taking organisations.
• Only entities with investment grade ratings are included in this.
• Since more than 15 years ago, the RBI has not permitted any new NBFCs to receive public deposits.
• As per RBI data, Banks’ exposure to NBFCs has grown 35.1% year-on-year to ₹14.2 lakh crore as of June 2023.
• In turn, NBFCs’ share in overall bank credit increased to 9.9% from 8.5% a year ago.
• Total public deposits of NBFCs make up a small portion of their borrowings.
• The amount of outstanding deposits has steadily increased from ₹7,085 crore at the end-FY13 to ₹50,022 crore at the end-FY20.

Topic: Banking System

6. NIM declined to an all-time low of 1.5-1.75% for the wholesale banking business.

• This means a profitability erosion of over 100-120 basis points over the last five years.
• Even after RBI increased repo rate by 250 basis points since May 2022, well-rated corporates (having a credit rating of A and above) continue to access bank loans at benchmark rate.
• The corporates with credit rating of AAA and above continue to access bank loans at 7.25 - 7.75%.
• Those with A and above rating access debt at 7.5 - 8.75%.
• Banks have intensified their focus on corporate business other than lending in order to reduce the burden on profitability.
• Banks have intensified their focus on broad basing the transaction business, increasing non-fund based lending activities such as letter of credit and bill discounting.
• They have increased their focus in offering a bouquet of corporate account services namely salary accounts of employees, credit cards and insurance products.
• NIM or net interest margin is the measure of profitability. It is the difference between the income a bank receives on loans and the interest it pays on deposits.

Topic: Taxation

7. India’s net direct tax collection during the period between April 1 and September 16, 2023, was Rs 8.65 lakh crore.

• This is 23.51% higher than the corresponding period of last year. This is 47.45% of the full-year budget estimate of Rs 18.23 lakh crore.
• This (Rs 8.65 lakh crore) includes corporate income tax (CIT) at Rs 4,16,217 crore and personal income tax (PIT) including Securities Transaction Tax (STT) at Rs 4,47,291 crore.
• In the last financial year, the Direct Tax collection of seven lakh 416 crore rupees was recorded.
• A robust growth of 18.29% has been recorded in the Gross Direct Tax collections so far this financial year.
• Gross Direct Tax collection for this financial year so far was over nine lakh 87 thousand crore rupees.
• Gross Direct Tax collection for the last financial year was over eight lakh 34 thousand crore rupees.
• The Advance Tax collections for this financial year till mid-September were three lakh 55 thousand crore rupees with a growth of 20.73%.
• This comprises CIT at Rs 2.80 lakh crore and PIT at Rs 74,858 crore.
• The Advance Tax collections for the corresponding period last financial year were recorded at two lakh 94 thousand 433 crore rupees.
• According to the Finance Ministry, the government has issued tax refunds worth Rs 1.22 lakh crore during the current financial year.
• Gross tax collection refers to tax collection before adjusting refunds.

Topic: Miscellaneous

8. Ministry of Finance announced welfare measures for LIC agents and employees.

• The welfare measures are related to the amendments to LIC (Agents) Regulations, 2017, Enhancement of Gratuity Limit, and Uniform Rate of Family Pension.
• LIC has more than 13 lakh agents and more than 1 lakh regular employees.
• The measures which have been approved for LIC agents and employees are as follows:
• The government has decided to increase the gratuity limit from ₹ 3 lakh to ₹ 5 lakh for LIC agents.
• The term insurance cover for the agents has been increased from ₹ existing 3,000-10,000 rupees to ₹ 25,000-150,000.
• Family pension will be provided at a uniform rate of @30% for the welfare of the families of LIC employees.
• Reappointed agents will be eligible for renewal commissions, thereby providing them with increased financial stability.

Topic: Miscellaneous

9. UNESCO has included Shantiniketan in its World Heritage list.

• During the 45th session of the World Heritage Committee underway in Saudi Arabia, the decision to include Santiniketan in the list was taken.
• Shantiniketan was established in 1901 by Maharshi Debendranath Tagore, father of Nobel laureate Rabindranath Tagore.
• Shantiniketan is located in Birbhum district of West Bengal.
• Shantiniketan has become 41st UNESCO World Heritage Site in India.
• It has become third UNESCO World Heritage Site in West Bengal after the Sundarbans National Park and the Darjeeling Mountain Railways.
• Hoysala Temples of Karnataka become India’s 42nd UNESCO World Heritage site.
• Hoysala Temples of Belur, Halebid, and Somnathapura in Karnataka have been added to the UNESCO World Heritage list.
• Hoysala Temples is also known as the ‘Halebidu’ temple. These were built in the 12th and 13th centuries by the Hoysala kings.
• These temples are dedicated to Shiva and Vishnu. It has themes from Vaishnavism and Shaktism as well as images from Jainism.
• Hoysala temple architecture is of Hybrid or Vesara style as their unique style seems between Dravida and Nagara styles.

Topic: Miscellaneous

10. Union Cabinet approved a bill to provide reservations for women in Parliament and state assemblies.

• The Union Cabinet has approved a bill granting 33% reservation for women in Lok Sabha and state assemblies.
• As per the bill, one-third of the seats in the Lok Sabha and state assemblies will be reserved for women candidates.
• The bill proposes sub-reservation within the 33 percent quota for Scheduled Castes (SCs), Scheduled Tribes (STs), and Anglo-Indians.
• The reserved seats will be rotated after each general election.
• The special session of Parliament is being held between 18 and 22 September.
• PM Modi proposed to name the old Parliament House as 'Samvidhan Sadan'.
• As the proceedings of Parliament shifted to the new building on 19 September, the Prime Minister announced the new name of the old Parliament House, which would be called "Samvidhan Sadan" (Constitution House).
• This decision was accepted by both the Lok Sabha Speaker and the Rajya Sabha Chairman.
• On the other hand, the new Parliament House has been named "Parliament House of India".
• British architects Sir Edwin Lutyens and Herbert Baker designed the old Parliament Building.

Read Banking Awareness PDF - 19, 20 and 21 September 2023