Banking Awareness of 21, 22 and 23 August 2022

Topic: Reports and Indices

1. In recent years, banks in India have made significant progress in adhering to governance standards as per a report of RBI.

• RBI has released the report titled 'Governance, Efficiency and Soundness of Indian Banks'.
• But, the current level of compliance is not adequate to mark the existing governance structure as “socially efficient”.
• This report is based on the individual bank’s annual report from 2008-09 to 2017-18.
• This report used publicly available information on Corporate Good Governance.
• The report states that the Indian banking system was sound from 2008-09 to 2012-13.
• The decline in asset quality and profitability emerged in 2013-14.
• In the last few years, private banks have shown improvement in their soundness position. However, a low level of soundness is still a challenge for public-sector banks.
• It notes that noticeable asymmetries exist in the policy priorities of banks on the dimensions of governance and soundness.
• As per the report, private banks have performed relatively better in adhering to good governance norms relating to audit work, subsequent risk management and board effectiveness.
• Profit-efficient banks are sufficiently sound to keep up capital buffers and absorb shocks, which can reduce destabilizing effects.

Topic: Indian Economy/Financial Market

2. China continues to be the largest source of auto components import in India.

• It accounted for 30% of imports of auto components during FY22.
• However, exports of auto components have shown a 43% growth to ₹1.41-lakh crore ($19.0 billion) in 2021-22 from ₹0.98-lakh crore ($13.3 billion) in 2020-21.
• Imports of auto component into India increased by 33% in 2021-22 to ₹1.36-lakh crore ($18.3 billion) from ₹1.02-lakh crore ($13.8 billion) in 2020-21.

Topic: Indian Economy/Financial Market

3. Finance Ministry has notified new rules and regulations for overseas investment.

• An Indian entity can make investment up to four times of net worth in a foreign entity.
• It is allowed to invest up to 50% of its net worth in overseas portfolio investment.
• As per Foreign Exchange Management (Overseas Investment) Rules 2022, an Indian entity may make Overseas Direct Investment (ODI).
• This may be by buying shares either through subscription, acquisition through bidding or tender procedure by rights issue.
• This may be by allotment of bonus shares, capitalisation, and swap of securities and through merger, demerger, amalgamation or any scheme of arrangement.    
• As per the rules, an Indian Financial institution is allowed to make ODI in a foreign company that is directly or indirectly involved in financial services activity.  
• The Indian entity, however, must have earned a profit over the previous three financial years.
• Excluding banks and insurance companies, non-financial Indian companies can also work with foreign financial companies.
• According to the rules, a resident individual can invest in non-financial companies.
• A resident individual may without any limit acquire foreign securities by inheritance from a person resident in India or from a person resident outside India.
• No limit has been placed on acquiring foreign securities by way of gift from a person resident in India.
• If the gift giver is from abroad, provisions of the Foreign Contribution (Regulation) Act, 2010 will be applicable.
• Indian residents will not be allowed to make ODI in three kinds of foreign entities given below.
  • Foreign entity engaged in real estate activity
  • Foreign entity engaged in gambling in any form
  • Foreign entity dealing with financial products linked to the Indian rupee without specific approval of the Reserve Bank.

Topic: Appointments

4. Revenue Secretary Tarun Bajaj has been given additional charge of the post of Secretary, Ministry of Corporate Affairs (MCA).

• Tarun Bajaj is currently secretary of Department of Revenue, Ministry of Finance.
• He has been given additional charge with immediate effect.
• He has been given additional charge till the appointment of a regular incumbent or until further orders, whichever is earlier.
• Bajaj is a Haryana cadre IAS officer. Erstwhile MCA Secretary Rajesh Verma was last week appointed as Secretary to the 15^th President of India Droupadi Murmu. 

Topic: Corporates/Committees

5. Ministry of Corporate Affairs has approved amalgamation of Bharat Gas Resources Ltd (BGRL) with Bharat Petroleum Corporation Ltd (BPCL).

• Bharat Gas Resources Ltd (BGRL) is a 100 percent subsidiary of Bharat Petroleum Corporation Ltd (BPCL).
• BGRL was incorporated in June 2018. Its main business is gas sourcing and retailing.
• It had been set up to implement city gas distribution networks.
• Bharat Petroleum Corporation Ltd (BPCL) is a Maharatna oil refining and marketing company. Its headquarters are located in Mumbai.

Topic: Corporates/ Companies

6. Overseas fundraising of Indian corporates declined to a seven quarter low level of $3.68 billion in first quarter of FY23.

• Prior to this, Q1 FY21 saw the lowest overseas fundraising in a single quarter. In that quarter, India Inc. raised $3.51 billion.
• India Inc’s offshore borrowing under external commercial borrowing route were at $15.21 billion in the March quarter.
• They were at $8.50 billion during the December 2021 quarter.
• Resource mobilisation through external commercial borrowings (ECBs) has steadily increased over the past few years.

• In April 2022, resource mobilization through ECBs declined to low level of $361.6 million in April. This was the lowest level since November 2016.

Topic: Regulatory Bodies/Financial Institutions

7.  IBBI has suspended Deloitte Touche Tohmatsu India LLP (DTTI) Partner Savan Godiawala for 3 years.

• IBBI has suspended him because of his contravention of IBC provisions in the liquidation cases of Lanco Infratech and Shirpur Power.
• IBBI has also imposed penalty on Godiawala for this reason.
• He is accused of wrongful withdrawal of fees and hiring of related party-DTTI.
• He was Interim Resolution Professional/Resolution Professional/ Liquidator for Lanco Infratech.
• He was Interim Resolution Professional/Resolution Professional for Shirpur Power. He had hired DTTI to provide support services to him.
• Disciplinary Committee of IBBI had found that there was conflict of interest between him and DTTI as he is a Partner in the firm.
• Insolvency and Bankruptcy Board of India (IBBI):
  • It was established on 1 October 2016 under the Insolvency and Bankruptcy Code, 2016.
  • It is responsible for the implementation of the IBC code.
  • It is a unique regulator that regulates a profession as well as process.
  • Chairperson of IBBI: Ravi Mital

Topic: Miscellaneous

8. Muthoot Finance has launched new reward programme, Miligram Reward Programme for its customers.

• In this programme, transactions with the Muthoot Finance will be rewarded with a certain amount of milligram reward points.
• Muthoot Finance has become the first NBFC to launch a new reward programme.
• Customers can take part in this two-year long programme.
• For the first time in India, a loyalty programme will be run in 24 carat gold.
• Every customer referral transaction with the company will earn 20 mg of gold.

Topic: Banking System

9. As per ICRA, Additional Tier I (AT-I) bond issuances by banks will stay at more than ₹20,000 crore in FY23.

• However, they will decline from an all-time high level of ₹42,800 crore in FY22.
• ICRA estimated that banking systems AT-I bonds outstanding may increase to ₹1.1 lakh crore by March 31, 2023.
• In FY22, issuances were mostly driven by rollover requirements.
• Unlike in FY22, issuances by public banks in FY23 are primarily driven by growth requirements.
• ICRA said that yields on recently issued AT-I bonds issued by PSBs ranged from 8.0 to 8.75%.
• It also said that the coupon on the bonds issued recently is greater than the coupon on the bonds issued in FY22.
• ICRA estimated private sector banks (PVBs) account for ₹18,000 crore of the ₹25,300 crore scheduled call option on AT-I bonds during FY23.
• ICRA does not expect materially large issuances from private sector banks in the near term.
• Additional Tier-1 (AT-1) bonds:
  • They are a type of unsecured bonds.
  • AT-1 bonds can be written down or changed into equity if the bank issuing them faces financial difficulty.
  • Banks issue AT-1 bonds to support their minimum capital requirements to fulfill Basel-III norms.

Topic: MoUs/Agreements

10. Axis Bank has signed MoU with Food Corporation of India (FCI).

• Axis Bank has signed the MoU to provide “Ultima Salary Package” to all employees of Food Corporation of India (FCI).
• Ultima Salary Package is a best in class salary account with exclusive benefits and features.
• The bank will offer benefits like personal accident cover of up to Rs 20 lakhs, additional education grant up to Rs 8 lakhs and total permanent disability cover benefit up to Rs 20 lakhs.
• Other benefits are air accident cover of Rs 1 crore, free additional debit card for a family member, 12 EMI waiver on Home Loan and 3 zero balance accounts for family member.
• Axis Bank:
  • It is the third-largest private sector bank in India. It is headquartered in Mumbai, Maharashtra.
  • Its MD & CEO is Amitabh Chaudhary. Rakesh Makhija is its chairman.
  • Badhti Ka Naam Zindaagi is its tagline. It was formerly known as UTI Bank.

Topic: Banking System

11. HDFC Bank has opened its 1^st all-women branch in north Kerala region in Kozhikode.     

• The bank said as on March 31, 2022, women constituted 21.7 per cent of its workforce. Its target is to increase this percentage to 25% by 2025.
• HDFC Bank has launched Vigil Aunty Campaign to promote safe banking.
• It is a social media campaign to educate people on safe banking habits and cyber fraud awareness.
• The bank said Anuradha Menon will be the face of this campaign. Anuradha Menon plays popular character of Lola Kutty on television.
• HDFC Banking is also having a cybersecurity campaign called Mooh Band Rakho.
• Competition Commission of India has recently approved merger of HDFC bank and its parent HDFC Ltd.
• In April 2022, HDFC Ltd announced that it will merge with HDFC Bank.

Read Banking Awareness PDF of 21, 22 and 23 August 2022