Banking Awareness of 22, 23 and 24 April 2023

Topic: Banking System

1. Scheduled Commercial Banks’ credit growth moderated to 15% as on 24 March 2023.

• The SCB’s credit growth moderated from the peak of 17.8% recorded in October 2022.
• The credit growth moderated because of unfavourable base effects and tapering of the credit offtake momentum.
• According to the RBI article titled ‘State of the Economy’, retail loans segment was the major driver of overall credit growth. Retail loans was followed by the services sector.
• Non-banking finance companies (NBFCs) largely contributed to credit growth to the services sector.
• Bank credit growth has recorded double-digit growth across all population groups (rural, semi-urban, urban and metropolitan).
• According to the article, aggregate deposits with banks increased by 9.1% year-on-year as on 24 March, 2023.
• Scheduled Commercial Banks’ credit-deposit (C-D) ratio stood at 75.8% as on 7 April 2023.
• The incremental C-D ratio reached below 50% around the onset of the pandemic. It increased to 142.2% in November 2022. It moderated to 110% as on 7 April, 2023.

Topic: RBI

2. RBI has given AU Small Finance Bank (SFB) permission to deal in foreign exchange.

• RBI has granted AU Small Finance Bank licence to act as Authorized Dealer Category-I (AD-I) under section 10 of FEMA, 1999.
• However, RBI’s permission is subject to compliance of applicable regulations.
• Reappointment of Sanjay Agarwal as MD and CEO of AU SFB has been recently approved by RBI for three years.
• The reappointment is valid with effect from April 19 till April 18, 2026.
• The reappointment of Uttam Tibrewal as the whole-time director has also been approved by RBI for three years.
• AU Small Finance Bank (SFB):
  • It was founded in 1996 as AU Financiers (India) Ltd.
  • In 2017, AU Financiers (India) Ltd became a small finance bank.
  • It is headquartered in Jaipur. Its chairman is Raj Vikash Verma.

Topic: Reports and Indices

3. India accounts for one-fifth of private equity inflows into the Asia-Pacific.

• Private equity (PE) and venture capital (VC) inflows into India reached beyond $61 billion in 2022.
• India’s share of investments in the Asia-Pacific region increased to a fifth from less than 15% a year ago.
• As per the India Private Equity Report 2023 of Bain & Company, current year will be a one of cautious optimism with momentum in sectors driven by domestic consumption and export.
• PE and VC investment declined 15-30% across most regions.
• Over 2,000 deals were transacted in 2022. Venture capital and growth equity accounted for almost 90% of deals.
• $1-billion investments slowed. Exits slowed to $24 billion from an all-time high of $36 billion in 2021.
• Traditional sectors dominated the share of exits greater than $100 million.
• Healthcare and manufacturing showing the largest increase in exit value.

Topic: Taxation

4. Wooden ice-cream sticks and spoons will attract Goods & Services Tax (GST) at the rate of 12%.

• Karnataka’s Authority for Advance Rulings (KAAR) has held this recently.
• KAAR held that wooden ice-cream sticks and spoons are tableware made of wood.
• Various wood and bamboo products attract either 12% or 18% GST depending upon the classification.
• The AAR observed that wooden sticks and wooden spoons are made of specific wood and thus they are qualified to be articles of wood.
• The petitioner argued that the articles in question should be classified as HSN 4421 91 90 (Harmonised System of Nomenclature).
• 4421 pertains to other articles of wood like cloth hangers, spools, cops, bobbins etc., for cotton machinery, jute and other machinery. It also covers parts of wood.
• The AAR said that the more specific classification of the products would be 4419 90 90.
• 4419 90 covers tableware and kitchenware of other wood i.e. other than bamboo wood.

Topic: Banking System

5. To facilitate the merger, RBI allows HDFC Bank flexibility on priority lending.

• RBI has permitted HDFC Bank to meet priority sector lending norms after the merger with HDFC in a gradual manner, up to three years.
• The RBI stated that for the first year, the adjusted net bank credit could be determined by taking into account one-third of HDFC's existing loans as of the merger's effective date.
• Over the period of the following two years, consideration will be given equally to the remaining two-thirds of the HDFC portfolio.
• According to the current rules, a bank is required to lend 40% of the adjusted net bank credit to the priority sectors such as agriculture and micro-enterprises.
• However, HDFC Bank must comply with regulatory requirements like cash reserve ratio (CRR), statutory liquidity ratio (SLR) and liquidity coverage ratio (LCR) after the merger.
• The merger of HDFC Bank and HDFC was announced in April 2022.

Topic: Indian Economy/Financial Market

6. $12.51 billion spent by Indians on foreign travel in April-February of FY23.

• This is an increase of 104% compared to the same period of the last year as per the data released by RBI.
• In April-February of FY2022, domestic travelers spent $6.13 billion on international donations under the RBI’s LRS for resident individuals.
• Under the Liberalised Remittances Scheme (LRS), Indian residents can remit up to $250,000 every financial year.
• In February 2023, Indians spent $1.07 billion on overseas travel. This was 9.2% higher compared to February 2022.
• In January 2023, Indians spent $1.49 billion on travelling to foreign destinations.
• Spending on international destinations fell by 28% in February 2023.
• International travels formed close to 52% of the total outward remittances under LRS for resident individuals during April-February of fiscal 2023.

Topic: Reports and Indices

7. India has achieved 38^th rank on World Bank’s Logistics Performance Index (LPI) 2023.

• India’s rank has improved by 16 places from 54th in 2014 to 38th.
• India was ranked 44th on LPI in 2018. So, India’s rank has improved by 6 places on World Bank's Logistic Performance Index (LPI) 2023.
• In the infrastructure sector, India’s rank improved from 52nd in 2018 to 47th in 2023.
• In international shipments, India’s rank moved up to 22nd place in 2023 from 44th in 2018.
• India improved by four places to 48th in logistics competence and equality.
• India’s ranking improved by 17 places in timelines and by three places in tracking and tracing.
• As per the report, the average dwell time for containers during May and October 2022 was three days for India and Singapore.
• The average dwelling time was much better than in some of the industrialised countries.
• The dwell time for US and Germany was seven days and ten days, respectively.
• As per the report, dwell time in eastern port of Visakhapatnam declined from 32.4 days in 2015 to 5.3 days in 2019.
• The most efficient and highest ranked LPI countries as per the 2023 LPI are Singapore and Finland.
• Logistics Performance Index (LPI) covers 139 countries. It measures the ease of establishing reliable supply chain connections. It covers six key dimensions as given below:

Topic: Awards and Prizes

8. PM Gati Shakti national master plan initiative received the award for excellence in public administration.

• Prime Minister Narendra Modi presented the award for excellence in public administration to PM Gati Shakti national master plan initiative.
• This award is conferred for excellence in public administration for the effective implementation of priority programmes.
• This award was instituted to recognise the extraordinary and innovative work done by districts and organisations of the central and state governments for people's welfare.
• This initiative of Ministry of Commerce and Industry has received the award in innovation category.
• A GIS enabled national master plan digital platform has also been developed.
• Data related to land records, ports, forest, schools, railway stations, water bodies, telecom towers, and highways are available on the portal of this initiative.
• PM Gati Shakti National Master Plan:
  • It was launched in October 2021.
  • It was launched for the integrated and planned development of critical infrastructure projects to reduce logistics costs.
  • It will help in developing infrastructure in different fields including transport and productivity.
  • It will also lead to the development of many future economic zones.

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