Banking Awareness of 25, 26 and 27 January 2024

By Priyanka Chaudhary | Last Modified: 27 Jan 2024 17:57 PM IST
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Topic: Banking System

1. The ICRA has updated its forecast for bank credit growth in FY24, moving it up from 12.8–13% to 14.9–15.3%.

  • An incremental growth of ₹20.4-20.9 lakh crore has been predicted for the 14.9-15.3% growth in bank credit in FY24.
  • This will be the largest incremental bank credit growth ever, according to ICRA.
  • ICRA added that this would be higher than the previous peak in FY23 of ₹18.2 lakh crore (a YoY rise of 15.4%).
  • Additionally, it is anticipated that corporate bond issuances will surpass ₹8.7 lakh crore in FY23 and reach a record high of ₹9.6-9.9 lakh crore in FY24.
  • Bond issuances are estimated to be at ₹9.6-9.9 lakh crore in FY24 and ₹10.0-10.5 lakh crore in FY25.
  • Corporate bond outstanding is estimated at ₹44.7 lakh crore as of December 2023.
  • This is estimated to grow at 5-7% to ₹45.2-45.5 lakh crore by March 2024 and ₹47.7-48.5 lakh crore by March 2025.
  • ICRA said bank credit growth could be at 11.7-12.6% or ₹19-20.5 lakh crore in FY25 due to challenges in deposit mobilization.
  • Incremental bank credit growth reached nearly ₹16.9 lakh crore in the nine-month period ended December 2023.
  • The increase has been driven by 33% growth in retail and 23% in the NBFC segment as of November 18, 2023.
  • Deposit mobilisation is expected to moderate to ₹19.4-20 lakh crore in FY25.
  • Asset Under Management (AUM) growth for NBFCs has also been raised from the earlier estimate of 13-15% to 14-16% for FY24. It is expected that this will moderate to 13-15% in FY25.

Topic: RBI

2. Zomato has received final approval from RBI to operate as online payment aggregator.

  • It has received the approval from RBI on 24 January.
  • It will run the payment aggregator through its wholly-owned subsidiary Zomato Payments Private Limited.
  • Stripe has also received final approval from RBI to operate as online payment aggregator.
  • International financial infrastructure provider Stripe received the approval on 15 January.
  • With the addition of Zomato and Stripe, total 11 entities have now obtained RBI’s final approval to operate as online aggregators in India.
  • In December 2023, payment gateways Razorpay and Cashfree received final approval from RBI to operate as payment aggregators.
  • Google Pay, expense management platform Enkash and neo-banking startup Open Financial have also received approval.
  • In 2023, Zomato (a food aggregator) had partnered with ICICI Bank to launch its UPI offering, called Zomato Pay.
  • Now, Zomato Payments can facilitate e-commerce transactions through its platform.
  • The incorporation of Zomato Payments Private Limited, a wholly-owned subsidiary, was disclosed by Zomato in August 2021.
  • Indian multinational restaurant aggregator and food delivery company, Zomato, is headquartered in Gurugram, Haryana. Blinkit and Urbanspoon are its subsidiaries.
  • Stripe is an Irish-American multinational financial services and software as a service company.

Topic: Corporates/Companies

3. Krutrim has become India's first $1 billion AI startup.

  • It is the first Indian AI startup with a valuation of $1bn. It has become a unicorn after securing $50m in funding.
  • Krutrim is developing data centers for the AI ecosystem.
  • It ultimately aims to create servers and super computers for the AI ecosystem.
  • It is founded by Ola founder Bhavish Aggarwal.
  • In December 2023, OpenHathi was launched by Generative AI startup Sarvam.
  • OpenHathi is its first open-source Hindi large language model (LLM).

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Topic: RBI

4. RBI has revised eligibility norms for Urban Co-operative Banks (UCBs).

  • The revised norms are concerned with the inclusion of UCBs in the second schedule of the Reserve Bank of India Act, 1934.
  • RBI aims to bring UCBs within the purview of an updated regulatory framework.
  • Under the revised norms, the banks are required to maintain a capital to risk weighted asset ratio of at least 3%.
  • The banks should be devoid of regulatory and supervisory concerns.
  • For inclusion, tier 3 and tier 4 primary (urban) co-operative banks, which meet specified criteria and are financially sound and well-managed, will be eligible.
  • The revised norms have become effective from the date of the circular, January 17, 2024.
  • Eligible UCBs will require copy of resolution passed by the Annual General Body/Board of Directors to make an application to RBI for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934.
  • Eligible UCBs will also require major financial details of the bank together with copies of the published balance sheet for the last three years.
  • These norms for inclusion have been issued under clause (a) of sub-section (6) of section 42 of the Reserve Bank of India Act, 1934.

Topic: Banking/Financial/Govt Schemes

5. A viability gap funding scheme worth Rs 8,500 crore has been approved by Union Cabinet for promoting coal gasification.

  • Total outlay of Rs 8,500 crore will be offered as financial aid for coal gasification projects under three categories.
  • With a Rs 4,050 crore budget, Category I focuses on government PSUs for a maximum of three projects.
  • A grant of Rs 1,350 crore or 15% of the project's capital expenditure (capex), whichever is less, may be awarded to any project falling under this category.
  • Rs 3,850 crore is allotted to Category II, which combines government PSUs with the private sector.
  • Each project falling under this category would be granted Rs 1,000 crore, or 15% of capital expenditure.
  • Notably, in association with NITI Aayog, one project will be chosen via a tariff-based bidding procedure.
  • With a budget of Rs 600 crore, Category III is dedicated to demonstration projects and small-scale product-based gasification plants.
  • 15% of the total cost, or Rs 100 crore, will be awarded to qualifying projects that produce 1500 Nm3/hr of synthetic gas and have a minimum capital expenditure of Rs 100 crore.
  • The authority to amend the modalities of the scheme has been granted to the Empowered Group of Secretaries (EGoS), chaired by the coal secretary.
  • However, overall outlay will be maintained within Rs 8,500 crore.
  • A transparent and competitive bidding procedure will be used to choose the entities that fall under categories II and III.
  • The chosen entity will get the funding in two equal installments.
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Topic: Banking System

6. Canara bank is targeting a 60:40 ratio of RAM to corporate mix by March 2026.

  • It intends to increase exposure to its RAM (Retail, Agriculture, and MSME) portfolio.
  • As of now, the ratio of RAM to corporate stands at 56:44.
  • The bank’s MD and CEO, K Satyanarayana Raju, said more focus on RAM will also support in improving Net Interest Income (NII) and the quality of interest.
  • The CEO said in Q3, RAM credit increased by 14.56% to ₹5,30,444 crore against 4,63,038 crore in December 2022.
  • Canara Bank:
    • It was founded in July 1906. It is headquartered in Bengaluru.
    • Recently, the government has merged Syndicate bank with Canara bank.

Topic: Miscellaneous

7. The setting up of two coal gasification plants in West Bengal and Odisha approved by Cabinet.

  • Coal India Limited (CIL) will set up two coal gasification plants with the aim of achieving the target of 100 MT coal gasification by the year 2030 and fulfilling India's twin objectives of self-reliance and energy independence.
  • In the joint venture of CIL and GAIL, the total investment for the proposed coal-to-synthetic natural gas in the Sonpur Bazari area of Eastern Coalfields Limited in West Bengal will be Rs 13,52 crore.
  • In the CIL and BHEL joint venture, the proposed coal-to-ammonium nitrate at Mahanadi Coalfields Limited in the Jharsuguda district of Odisha will be worth Rs 11,782 crore.
  • These projects will be operational by 2028-29.
  • The proposal for equity investment for setting up a coal-to-synthetic natural gas project through a joint venture between CIL and Gas Authority of India Limited (GAIL) has also been approved by the Center.
  • The setting up of a coal-to-ammonium nitrate project through a joint venture between CIL and Bharat Heavy Electricals Limited (BHEL) has also been approved by the Centre.

Topic: Corporates/Companies

8. RBI has approved LIC’s application to take over a 9.99% aggregate holding of paid-up share capital in HDFC Bank.

  • In an exchange filing, Life Insurance Corporation of India (LIC) informed about this under Regulation 30 of the SEBI Listing Regulations.
  • LIC had earlier applied to acquire voting rights in the HDFC Bank.
  • The approval granted by RBI is subject to compliance with the relevant provisions of the Banking Regulation Act, 1949.
  • It is also subject to RBI’s Master Direction and Guidelines on Acquisition and Holding of Shares or Voting Rights in Banking Companies dated January 16, 2023.
  • The approval is also subject to provisions of the Foreign Exchange Management Act 1999 and the provisions of the regulations issued by the Securities and Exchange Board of India.
  • As per RBI regulations, LIC will have to acquire the 9.99% stake within a year. It will have to ensure that its holding never crosses the 9.99% mark.

Topic: Banking System

9. The merger of Fincare Small Finance Bank with AU Small Finance Bank (SFB) has been approved by CCI.

  • In October 2023, the board of the bank had approved the merger.
  • The proposed merger received shareholders’ approval in November 2023.
  • After approval from the Competition Commission of India (CCI), the approval of RBI is awaited.
  • The merged entity should become effective from February 1, 2024, subject to necessary approvals.
  • It is expected that the share exchange ratio for the amalgamation will be 579 equity shares of AU SFB for every 2,000 equity shares of Fincare SFB.

Topic: Corporates/Companies

10. ONGC got approval from the Petroleum Ministry to form a green energy subsidiary.

  • Oil and Natural Gas Corporation (ONGC) received approval from the Petroleum and Natural Gas Ministry to form a subsidiary company for green energy and gas business.
  • The subsidiary will be involved in businesses related to green hydrogen, hydrogen blending, renewable energy including solar, wind and hybrid, bio-fuels and bio-gas business and liquefied natural gas (LNG).
  • The name of the subsidiary company has been proposed as ‘ONGC Green Limited’.
  • The ONGC board also gave its in-principle nod for the formation of a joint venture with NTPC Green Energy Limited (NGEL).
  • The joint venture will be engaged in the business of offshore wind energy and other renewable energy.
  • ONGC Videsh received a five-year $420 million loan from DBS Bank and Bank of Baroda on 18 January.
  • Oil and Natural Gas Corporation Limited (ONGC) is an Indian central public sector undertaking under the ownership of the Ministry of Petroleum and Natural Gas.

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