Banking Awareness of 24 and 25 January 2023

Topic: RBI

1. The deadline for banks to renew agreements for already existing safe deposit lockers has been extended by RBI by a year.

• Banks are now required to gradually complete renewal process of agreements for already existing safe deposit lockers by 31 December, 2023.
• Further, RBI has asked banks to permit operations in lockers which became frozen due to earlier deadline of 1 January, 2023.
• RBI said that banks should ensure that 50% and 75% of their current customers have signed the renewed agreements by 30 June 2023 and 30 September 2023, respectively.
• RBI said Model Agreement drafted by the Indian Banks’ Association (IBA) need to be revised to fully comply with revised instructions. IBA should circulate revised version to all banks by 28 February 2023.

Topic: RBI

2. RBI has directed SBM Bank (India) Ltd to stop all transactions under the LRS till further orders.

• RBI has directed it to stop the transactions with immediate effect and said its action is based on supervisory concerns observed in the bank.
• As part of the LRS, all resident individuals, including minors can freely remit up to $2,50,000 per financial year (April – March).
• Liberalised Remittance Scheme (LRS) is not available to corporates, partnership firms, HUF, Trusts etc.
• LRS was introduced on February 4, 2004. It was introduced with a limit of $25,000. Its limit has been revised.
• Mumbai-headquartered SBM Bank (India) Ltd commenced operations on December 1, 2018.
• It commenced operations as 1st universal bank in India to get a banking licence from RBI through wholly-owned subsidiary (WOS) route.
• It is a part of SBM Group, which is based in Mauritius.

Topic: Banking System

3. NARCL has acquired Jaypee Infratech from lenders.

• This is National Asset Reconstruction Company Ltd.’s first stressed asset.
• NARCL has acquired exposure to Jaypee Infratech aggregating about ₹9,200 crore at a 55% haircut. Haircut means reduction in the value of an asset.
• IDBI Bank was the lead bank for the consortium of lenders with an exposure of ₹3,750 crore.
• It received ₹253 crore, which is 15% of the ₹1,687.50-crore recovery in cash.
• It received ₹1,434.5 crore (85% of recovery) in the form of security receipts.
• Other lenders will get cash and security receipts based on their exposure to the company.
• National Asset Reconstruction Company Ltd (NARCL) was set up by banks in 2022. It is aggregating and consolidating stressed assets above ₹500 crore each for their resolution. Public sector banks hold majority stake in it.
• Along with NARCL, India Debt Resolution Company Ltd (IDRCL) was set up for resolving these stressed assets. Private sector banks hold majority stake in it.

Topic: Appointments

4. Sarabjit Anand has been appointed as Chief Technology and Operations Officer (CTOO) by Standard Chartered Bank.

• SV Shivshanker has been appointed by the UK-based bank as Head of Human Resources for India and South Asia.
• Both the appointments are effective from January 2023.
• Standard Chartered Bank is a multinational bank. It is headquartered in the United Kingdom.

Topic: MoUs/Agreements

5. Punjab National Bank and Aadhar Housing Finance Ltd have signed a co-lending agreement.

• The co-lending agreement has been signed to offer home loans at competitive interest rates.
• Through the agreement, the parties aim to reach out to a large section of society for providing easy and convenient home finance solutions to customers.
• RBI’s co-lending framework provides a tool for the Banks and NBFCs/HFCs to collaborate to provide affordable solution to unserved and underserved sections of society.
• Aadhar Housing Finance Ltd is one among the largest affordable housing finance companies in India.
• Punjab National Bank (PNB):
  • It is the second-largest Public Sector Bank of India. It was established in 1894. Its tagline is The Name You Can Bank Upon.
  • Its headquarters is located in New Delhi. K G Ananthakrishnan is its Non-Executive Chairman. Atul Kumar Goel is its MD & CEO.

Topic: Banking System

6. AU Small Finance Bank has launched SwipeUP platform.

• With the help of this platform, credit cardholders of any bank can get an upgraded card instantly.
• Other bank credit cardholders can upgrade their card to one of AU credit cards.
• SwipeUP platform allows cardholders to compare their existing credit cards within seconds.
• Cardholders can then upgrade to a new card with a higher credit limit, cashback, and reward points matching their lifestyles.
• The cards issued in SwipeUp platform are not similar to current credit cards being offered by AU Small Finance Bank.
• Their plastic is biodegradable. They offer high value proposition to customers.
• 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: RBI

7. RBI said that the sovereign green bonds issued by the Indian government will not have any restrictions on foreign investment.

• RBI said such securities will be counted as specified securities under the fully accessible route.
• Earlier this month, RBI had announced an auction of 160 billion rupees ($1.93 billion) of sovereign green bonds in two tranches. Half of it is set to be issued on 25 January 2023.
• Solar, wind and small hydropower projects will be funded from the proceeds.
• The proceeds will be used to fund other public sector projects which help in reducing the carbon intensity of the economy.
• The securities which do not have any restrictions on holdings by foreign investors come under the fully accessible route.

Topic: Indian Economy/Financial Market

8. Government of India bought back bonds maturing in 2024 with RBI in cash-neutral deal.

• While buying bonds maturing in 2024, government also issued bonds maturing in 2032 worth a similar quantum.
• The government bought back 6.18% bonds maturing in 2024 worth 226.10 billion rupees ($2.78 billion). It bought the bonds at a price of 98.62 rupees.
• It issued 8.28% bonds maturing in 2032 worth 210.26 billion rupees to the RBI at 106.05 rupees.
• Before this, government had switched bonds worth over 820 billion rupees this financial year. This is below its target of 1 trillion rupees.
• In a cash-neutral deal, sale and purchase of securities results in zero net cash.

Topic: Indian Economy/Financial Market

9. India’s foreign trade data between April and November month of 2022-23 has been significantly revised.

• Total merchandise exports in the first eight months of 2022-23 are now kept at $298.3 billion.
• The total merchandise exports are nearly $12 billion higher than original monthly data.
• The imports in these eight months are now estimated at $493.5 billion. Imports are nearly $1.7 billion higher than initial numbers.
• The trade deficit between April and November month of 2022-23 is $10 billion lower.
• Sharpest revision has been seen in the import data for September 2022.
• Import data for September 2022 has been revised from an earlier estimate of $61.1 billion to the year’s highest number at $64.7 billion.
• September now holds the record of worst monthly trade deficit of $29.23 billion for India.
• According to earlier data, July 2022 was having the worst goods trade deficit on record. July’s deficit is now kept at $25.6 billion.
• The second and third highest monthly deficits in merchandise trade has been recorded in October and August 2022 at $27.4 billion and $26.8 billion, respectively.
• The sharpest revision in exports has been recorded for August and November at $3.1 billion and $2.8 billion, respectively.
• Trade deficit refers to the amount by which a country’s imports are higher than its exports during a given time period.

Topic: Miscellaneous

10. World Economic Forum (WEF) Annual Meeting 2023 was held at Davos in Switzerland.

• The heads of member countries discussed various issues including the Russia-Ukraine conflict and climate change.
• 56 finance ministers, 19 central bank heads, 30 trade ministers, and 35 foreign ministers attended the meeting. More than 1,500 leaders from 700 organizations took part in the meeting.
• The 53rd annual meeting of WEF has been organized under theme of ‘Cooperation in a Fragmented World’ from 16-20 January.
• The major outcomes of the meeting are given below:
  • A new network of online regulators from the United Kingdom, Australia, Ireland and Fiji has been launched to create synergy and protect end users.
  • WEF and UAE signed a collaboration agreement on the TradeTech initiative.
  • More than 50 countries launched a Coalition of Trade Ministers on Climate. It will promote cooperation in the global response to the climate crisis, trade and sustainable development.
  • WEF and Maharashtra Institution for Transformation (MITRA) signed an agreement to work on urban transformation, providing strategic and technical direction to the Maharashtra government.
  • Nine leading industrial clusters in China, Indonesia, Japan, Spain and the US joined ‘Transitioning Industrial Clusters towards Net Zero’ initiative of WEF.
  • WEF launched its first thematic centre on healthcare and life sciences in Telangana.
  • The Global Battery Alliance has been also launched to facilitate the rapid scaling of sustainable, circular and responsible battery value chains.
  • The First Movers Coalition member’s number has increased from 35 to 70. Canada and the UAE become government partners.

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