Banking Awareness of 21, 22 and 23 October 2023

Topic: Reports and Indices

1. Term deposit rates have increased to their highest levels in last five years as per RBI’s latest monthly bulletin.

• As on October 6, 2023, term deposit rates of over one-year tenor are in the 6-7.25% range.
• As on October 7, 2022, they were in the 5.45-6.10 per cent range.
• Funds are flowing from low-yielding current account savings account (CASA) to higher-interest bearing term deposits.
• During May 2022 to August 2023, the weighted average domestic term deposit rate (WADTDR) on fresh deposits increased by 233 bps (basis points).
• During the same time, WADTDR on outstanding deposits increased by 157 bps as per the report.
• One basis point is equal to one-hundredth of a percentage point.
• WADTDR on fresh deposits has declined in recent months.
• WADTDR on outstanding term deposits continue showing the repricing at higher rates.
• As per RBI officials, highest issuances of certificates of deposits (CDs) in September during the current financial year reflect the structural liquidity mismatch in the banking system.
• Fund mobilisation through issuances of CDs has increased from ₹ 3.08 lakh crore last year to ₹ 3.31 lakh crore during 2023-24 (up to October 6).

Topic: Awards and Prizes

2. Kerala Gramin Bank has won four Assocham awards.

• It has won awards at the 18th Assocham Annual Summit & Awards on Banking & Financial Sector Lending Companies.
• This was named “Bharat @ 100: Financial Transformation in Amrit Kaal” and held in Mumbai.
• The Bank was conferred with the titles of winner in Best Digital Initiative, Best Customer Experience, Best Risk and Cyber Security Initiatives.
• The bank was the runner up in Outstanding Financial Performance.
• C. Jayaprakash, Chairman received the awards on behalf of the bank.
• Kerala Gramin Bank (KGB):
  • It is an Indian Regional Rural Bank (RRB). It was founded in 2013.
  • It is headquartered in Malappuram, Kerala. It is sponsored by Canara Bank.

Topic: Banking Systems

3. Ashok Vaswani’s appointment as MD & CEO of Kotak Mahindra Bank has been approved by RBI.

• His appointment is with effect from the date of taking charge, which shall not be later than January 1, 2024.
• RBI has approved appointment of Ashok Vaswani for a period of three years.
• Vaswani was Chief Executive Officer of Barclays Bank, UK. Presently, he is President of Pagaya Technologies Ltd.
• Kotak Mahindra Bank:
  • It is India’s 3rd largest private sector bank by market capitalisation.
  • It was founded in 2003. It is headquartered in Mumbai. Uday Kotak is its founder.

Topic: MoUs/Agreements

4. DP World and Cochin Port Authority signed two MoUs for capacity expansion at the port.

• As part of first MoU, DP World will implement Phase I of a Free Trade Warehousing Zone (FTWZ) at Cochin Port.
• The second MoU will see DP World enhance its cargo handling facilities at International Container Transshipment Terminal.
• The projected Cochin Integrated Business Park, which will be owned and run by DP World, will be Kerala's first Free Trade Warehousing Zone when it is fully operational.
• This would also be the first one to be co-located alongside a terminal in the country.
• DP World presently operates five container terminals in India. They are two in Nhava Sheva, one each in Mundra, Cochin and Chennai.

Topic: Indian Economy/Financial Market

5. According to an IMF official, India will contribute 18% of global growth in five years.

• According to a senior International Monetary Fund (IMF) official, India’s share in global economic growth will increase by 2 percentage points in 5 years.
• Indian economy is projected to grow faster in the coming years.
• Presently, India and China’s contribution to global growth is 50%. Out of this, India’s contribution is 16%. China contributes to the rest.
• Krishna Srinivasan, Director, IMF Asia & Pacific Department said that the Asia Pacific region’s economy will grow by 4.6% in 2023 and by 4.2% in 2024.
• Recently, India’s growth estimate was revised upwards by the IMF to 6.3% in FY24.
• In the Regional Economic Outlook for Asia and the Pacific, IMF projected the growth in Asia-Pacific will increase from 3.9% in 2022 to 4.6% in 2023.
• Srinivasan said the Government of India was likely to meet its 5.9% fiscal deficit target in FY24.
• He added state government’s deficit is expected to be 2.8% of GSDP. This is below the deficit target of 3%.
• He added for every 10% increase in oil prices, global GDP declines by 0.15%.

Topic: Awards and Prizes

6. REC Limited received Golden Peacock Award in Risk Management.

• A Maharatna Central Public Sector Enterprise, REC Limited, has been awarded Golden Peacock Award for its exceptional performance in risk management.
• The award has been given by the Institute of Directors (IOD).
• The Golden Peacock Award in Risk Management has been given to REC Limited for its commitment in implementing effective risk assessment strategies.
• Effective risk assessment strategies contributed in the growth of REC Limited and make it resilient in a competitive business environment.
• REC Limited has been selected by a jury panel headed by former Chief Justice of India, Justice M. N. Venkatachaliah.
• The Golden Peacock Award was established by the Institute of Directors (IOD) in 1991.
• It has emerged as an internationally acclaimed standard for corporate excellence.
• REC Limited:
  • It was established in 1969 which focus on Power Sector Financing and Development across India.
  • It provides financial assistance to state electricity boards, state governments, and central and state power utilities.
  • It is engaged in projects related to Generation, Transmission, Distribution and Renewable Energy.

Topic: Indian Economy/Financial Market

7. India’s tax-to-GDP ratio rises for the third year in row.

• For the past two-and-a-half years, the Central government’s tax collections have increased faster than the nominal GDP for the last two-and-a-half years.
• The trend of growing taxes shows that taxes will grow faster than GDP for a few more years.
• Within direct taxes, income tax growth has shown much higher buoyancy.
• As per the Finance Ministry, it is the combined effect of demonetisation and GST and the intensive efforts of the tax departments.
• After demonetisation, the Income tax department made a list of new taxpayers and found loopholes in the tax system.
• GST made a positive impact on indirect taxes as now companies prefer to buy from and sell to companies that are in the tax bracket.
• Tax exemptions allowed on EPFO and insurance premiums have been capped over the last few years.
• India’s direct tax-to-GDP ratio was an average of 5.5% from FY12 to FY21. It was 5.97% in FY 22 and 6.08% in FY 23.

Topic: RBI

8. A pilot program started by the Reserve Bank of India (RBI) for the wholesale digital rupee in the call money market.

• On October 19, the central bank has started a wholesale pilot program of a Central Bank Digital Currency (CBDC) in the call money market.
• The call money market is where banks borrow or lend money to each other for the short term, usually one day, at market-determined rates.
• The pilot program is to be offered through nine banks (four public sector banks and five private sector banks) that are already part of the G-Sec pilot project.
• It includes the State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC.
• This is the second case for testing wholesale CBDC.
• Earlier in November 2022, RBI had launched wholesale CBDC pilot for settlement in the secondary government securities market.
• Later in December 2022, the RBI had launched the retail CBDC pilot for P2P and P2M transactions.

Topic: Corporates/Companies

9. European Commission (EC) issues notice to Meta under the Digital Service Act (DSA) of the European Union (EU).

• EC has requested information from Meta about the actions it has taken to adhere to its obligations related to risk assessments and mitigation strategies to protect election integrity.
• European Commission has also issued notice to TikTok under DSA.
• European Commission has also asked Meta and TikTok to share the actions they have taken regarding the amplification and dissemination of disinformation and illegal content after the terrorist attacks by Hamas.
• Meta and TikTok are required to provide the Commission with the requested information by 25 October 2023 for inquiries on crisis response.
• Meta and TikTok are required to provide the Commission with the requested information by 8 November 2023 for inquiries about preserving election integrity and minors online.
• The European Commission is part of the executive of the European Union. It is headquartered in Brussels, Belgium.
• Meta (formerly Facebook) is an American multinational technology conglomerate. It is based in Menlo Park, California.
• TikTok is a short-form video hosting service owned by ByteDance, a Chinese internet technology company. Its Chinese counterpart is Douyin.

Read Banking Awareness PDF - 21, 22 and 23 October 2023