Banking Awareness of 21, 22 and 23 September 2022

Topic: Indian Economy/Financial Market

1. Inflation rate based on CPI-AL and CPI-RL increased to 6.94% and 7.26% respectively in August 2022.

• Inflation rate based on CPI-AL and CPI-RL stood at 6.60% & 6.82% respectively in July, 2022.
• Inflation rate based on CPI-AL and CPI-RL stood at 3.90% and 3.97% respectively during August 2021.
• All-India Consumer Price Index Number for Agricultural Labourers and Rural Labourers (Base: 1986-87=100) for August, 2022 increased by 9 points each to stand at 1140 and 1152 points respectively.
• The food group contributed mainly to the rise in general index of Agricultural Labourers and Rural Labourers.
• Food inflation increased to 6.16% for agricultural labourers and 6.21% for rural labourers in August, 2022.
• It stood at 5.38% & 5.44% respectively in July, 2022. It was 2.13% & 2.32% respectively in August 2021.
• Jammu and Kashmir and Uttar Pradesh recorded maximum increase in the CPI-AL (15 points each).
• The maximum increase in the Consumer Price Index Numbers for Rural Labourers (CPI-RL) was experienced by Jammu & Kashmir (17 points).
• CPI-AL for fuel and light only increased slightly from 1263 in July to 1267 points in August.
• CPI-RL for fuel and light increased from 1255 in July to 1259 points in August.

Topic: MoUs/Agreements

2. A FinTech Co-operation Agreement has been signed between Monetary Authority of Singapore (MAS) and International Financial Services Centres Authority (IFSCA).

• The purpose of agreement is to facilitate regulatory collaboration and partnership in FinTech technology.
• The sharing of information will be an important aspect of the agreement.
• Two authorities will share non-supervisory related information on innovation in financial products and services.
• They will facilitate discussions on emerging FinTech issues. They will participate in joint innovation projects.
• The agreement builds on Memorandum of Understanding on Supervisory Co-operation signed between MAS and IFSCA in July 2022.
• Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated financial regulator.
• International Financial Services Centres Authority (IFSCA):
  • It was set up on April 27, 2020. Its headquarters is located at GIFT City, Gandhinagar in Gujarat.
  • It is a statutory authority. Its chairperson is Injeti Srinivas. It was established to regulate all financial services in International Financial Services Centres (IFSCs).

Topic: RBI

3. RBI Governor launched three key digital payment initiatives at Global Fintech Fest 2022 held in Mumbai.

• These initiatives are RuPay Credit Card on Unified Payments Interface (UPI), UPI Lite, and Bharat BillPay Cross-Border Bill Payments.
• RBI had announced the linking of RuPay credit cards to UPI in the June monetary policy.
• RuPay credit cards will be linked to a Virtual Payment Address, that is, UPI ID. This will directly enable safe payment transactions.
• Customers of Punjab National Bank (PNB), Union Bank of India, and Indian Bank will be the first to be able to use RuPay Credit Card on UPI with BHIM App.
• With UPI Lite enabled on BHIM App, users will be able to make small-value transactions in a near-offline mode.
• The upper limit of a UPI Lite payment transaction will be ₹200.
• The total limit of UPI Lite balance for an on-device wallet will be ₹2,000 at any point in time.
• Eight banks are live with this feature. These banks are Canara Bank, HDFC Bank, Indian Bank, Kotak Mahindra Bank, Punjab National Bank, State Bank of India, Union Bank of India and Utkarsh Small Finance Bank.
• Federal Bank with UAE’s Lulu Exchange will be the first to go live with Bharat BillPay Cross-Border Bill Payments.
• People who live outside of India but maintain a house in India would find it easier to pay their bills with the help of Bharat BillPay Cross-Border Bill Payments.
• RBI Governor Shaktikanta Das said massive growth of 427% has been recorded in UPI transactions from March 2020 to August 2022.
• The number of UPI QR code-enabled payment acceptance points has grown by about 90 million (up 86 % YoY) to reach 200 million at the end of July 2022.
• He spoke about the recently-issued digital lending guidelines.
• He spoke about enormous amounts of consumer data being generated and leveraged by a few entities (the so-called Big Tech) by virtue of their huge customer base.
• Big Tech companies such as Google, Amazon, and WhatsApp are already involved in India’s payment ecosystem.
• Global Fintech Fest (GFF) 2022:
  • It was the third edition of Global Fintech Fest. It was held from September 19th-22nd, 2022 in Mumbai. 
  • It was organized by the National Payments Corporation of India, Payment Council of India, and Fintech Convergence Council.
  • The theme for GFF 2022 is 'Creating A Sustainable Financial World - Global | Inclusive | Green'.

Topic: RBI

4. RBI has decided to remove Central Bank of India from Prompt Corrective Action Framework (PCAF).

• This decision was taken after the Central Bank of India showed improvement in various financial ratios, including minimum regulatory capital and net non-performing assets (NNPAs).
• The Central Bank of India's net profit increased by 14.2% to Rs 234.78 crore in the first quarter of the current fiscal year, compared to Rs 205.58 crore in the same period of the previous fiscal year.
• Once these restrictions are lifted, the bank can disburse the loan without any restrictions.
• In June 2017, RBI had decided to keep the Central Bank of India under the ambit of PCA. This ban has been lifted after about 5 years.
• The bank was placed on the PCA watch list due to the high level of net NPAs on the bank and low return on assets.
• Apart from the Central Bank, the RBI had also placed the Indian Overseas Bank and UCO Bank on the watch list for violation of PCA norms.
• Indian Overseas Bank and UCO Bank were removed from the PCA in September 2021.
• Prompt Corrective Action Framework (PCAF):
  • PCA norm is applied in case the bank does not comply with the regulatory provisions relating to capital to risk-weighted assets ratio (CRAR), net NPA, and return on assets (RoA).
  • Once placed in the PCA purview, that bank is barred from giving open loans in many ways and has to work within a variety of restrictions.

Topic: RBI

5. Maharashtra-based Laxmi Cooperative Bank license has been cancelled by RBI.

• RBI cancelled the license of the Laxmi Cooperative Bank because it does not have adequate capital and earning prospects.
• RBI said that the bank has failed to comply with the requirements of the Banking Regulation Act, of 1949 and its continuation is unfavorable to the interests of its depositors.
• As per the bank data, around 99% of the depositors are entitled to receive the full amount of their deposits from the deposit insurance and credit guarantee corporation (DICGC).
• The bank has been prohibited from conducting the business of banking with effect from 22 September 2022.
• Upon liquidation, every depositor is entitled to receive a deposit insurance claim amount of up to 5 lakh rupees.
• RBI has prohibited Mahindra & Mahindra Financial Services (M&M Financial) from carrying out any recovery or repossession activity through outsourcing arrangements, till further notice.
• However it is allowed to carry out recovery or repossession activities through its own employees.
• As per RBI, outsourcing is defined as an NBFC’s use of a third party to carry out activities that would normally be undertaken by the NBFC itself.

Topic: MoUs/Agreements

6. Defence Ministry has signed an MoU with Bank of Baroda, HDFC Bank under SPARSH- System for Pension Administration initiative.

• This MoU has been signed to cover seventeen lakh defence pensioners.
• According to Defence Secretary Dr Ajay Kumar, 17 lakh pensioners out of the total 32 lakh defence pensioners will be added to SPARSH by the end of this month.
• Remaining pensioners will be brought under SPARSH at the earliest.
• The Ministry said MoU will onboard over 14,000 bank branches as Service Centres to provide an effective medium for pensioners to perform profile update requests, register grievances and seek redressal.
• SPARSH is an initiative of the Ministry of Defence. It aims at providing a comprehensive solution to the administration of pensions to the Defence pensioners.

Topic: Banking/Financial Schemes

7. Cabinet approved modifications in the “Programme for Development of Semiconductors and Display Manufacturing Ecosystem in India”.

• The government will provide financial support of 50% of the Project Cost under the modified programme to establish Semiconductor Fabs.
• Under the modified programme, fiscal support of 50% of Capital Expenditure will be provided for setting up compound semiconductors/ sensors / Discrete semiconductors fabs and ATMP/OSAT.
• Earlier the PLI benefits were between 30-50% of project cost depending on categories.
• Uniform fiscal support of 50% has now been provided across categories of the scheme.
• Union Cabinet has also approved Production Linked Incentive Scheme Tranche-2 on ‘National Programme on High-Efficiency Solar PV Modules’.
• Tranche-2 scheme of High-Efficiency Solar PV Modules has been approved with an outlay of 19,500 crore rupees for achieving manufacturing capacity of Giga Watt scale.
• The aim of the National Programme on High-Efficiency Solar PV Modules is to build an ecosystem for manufacturing high-efficiency solar PV modules in India.
• One benefit expected from the scheme is that about 65,000 MW per annum manufacturing capacity of fully and partially integrated, solar PV modules would be installed.
• Another benefit expected from the scheme is that it will bring a direct investment of around Rs. 94,000 crore.
• It will generate direct employment for around 2 lakh persons and indirect employment for around 8 lakh persons.
• The scheme is expected to bring about import substitution of approximately Rs.1.37 lakh crore.

Topic: Corporates/Companies

8. Corporate Affairs Ministry (MCA) has revised the cap on the fees that could be paid by corporates for impact assessment.

• It has also provided clarity on the entities through which CSR obligations could be fulfilled.
• Corporates can now pay more than ₹50 lakh for impact assessment.
• In January 2021, impact assessment was made mandatory for companies with a CSR budget of ₹10 crore or more in a fiscal year and projects with outlays of ₹1 crore or more.
• As per the rules, companies cannot carry out a self-assessment on the impact of their CSR spend.
• The impact assessment has to be carried out by an independent agency.
• Expenses on impact assessment were capped at 5% of total CSR spending or ₹50 lakh, whichever is lower.
• Under the revised norms, expenses on impact assessment are capped at 2% of total CSR spend or ₹50 lakh, whichever is higher.
• MCA has also said that companies shall have CSR Committee even in cases where the amounts transferred to ‘unspent CSR account’ is less than ₹50 lakh.     
• In 2020-21, India Inc had spent about ₹24,865 crore towards CSR.

Topic: Appointments

9. PR Ravi Mohan’s reappointment as the Chairman of ESAF Small Finance Bank has been approved by RBI.

• His reappointment is for a further period of three years from December 21.
• He has previously worked as a chief general manager in the department of banking supervision of the Reserve Bank of India.
• He was a resident advisor in financial sector supervision with the International Monetary Fund.
• ESAF Small Finance Bank is a Kerala based Small Finance Bank (SFB).

Topic: Regulatory Bodies/ Financial Institutions

10. Insolvency and Bankruptcy Board of India (IBBI) has imposed 0.25% regulatory fee on corporate insolvency resolution plans (CIRP).

• IBBI has also imposed a regulatory fee of 1% on third-party service providers and professionals appointed by IPs.
• The 0.25% regulatory fee will come into effect from October 1.
• It will be applied on the realisable value to creditors under the resolution plan.
• It will be applied only in those cases where the amount of the resolution plan exceeds the liquidation value.
• IBBI has imposed regulatory fee to reduce dependence on the Centre’s grants-in-aid.

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