Banking, Financial and Economic Awareness

Half Yearly (Jan - June 2021)
2021 Book

Banking Awareness

Topic: RBI

1. Monetary penalty of ₹79 lakh imposed on Apna Sahakari Bank, Mumbai.

  • Monetary penalty of ₹79 lakh has been imposed on Apna Sahakari Bank, Mumbai.
  • The penalty has been imposed for non-compliance with RBI’s directions on non-performing asset (NPA) classification.
  • Further, the bank has not complied with RBI directions on payment of interest on deposits lying in current accounts of deceased individual depositors.
  • Apna Sahakari Bank is popularly known as “Apna Bank”. It is a multi-state cooperative bank.

Topic: RBI

2. RBI keeps minimum ticket size to issue securitization notes at Rs 1 crore.

  • RBI has kept the minimum ticket size to issue securitization notes at Rs 1 crore.
  • The central bank has issued master directions for the securitization of standard assets.
  • These master directions will apply to all scheduled commercial banks. They will not apply to regional rural banks, all-India term financial institutions, small finance banks, and NBFCs.
  • RBI has provided Minimum Retention Requirement (MRR) for different asset classes in Master Direction Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021.
  • The MRR will be 5% of the book value of loans being securitized for underlying loans with an original maturity of 24 months or less.
  • The MRR will be 10% of the book value of loans being securitized in the case of loans with an original maturity of over 24 months.
  • In the case of residential mortgage-backed securities, MRR for originator will be 5 % of book value of the loans being securitized regardless of the original maturity.

Topic: Reports and Indices

3. Indian cryptocurrency market expected to reach up to $241 million by 2030 in India.

  • Indian cryptocurrency market is expected to reach up to $241 million by 2030 in India.
  • Indian cryptocurrency market is expected to reach up to $2.3 billion by 2026 globally.
  • As per the study on “Crypto Industry in India”, more and more young Indian investors are adopting cryptocurrencies such as Bitcoin, Ethereum, and Polygon to make investments.
  • The study on “Crypto Industry in India” is done by the National Association of Software and Services Companies (Nasscom) and industry partner WazirX.
  • As per the report, the industry is increasingly attracting new start-ups with over 60% States in India emerging as CryptoTech adopters and over 15 million retail investors.
  • As per the report, Bitcoin, Smart Contracts, Decentralised Finance, The Wave of Tokenisation, Non-Fungible Tokens, Rise of CryptoTech Capital and Central Bank Digital Currencies would be seen as seven key trends driving the growth of CryptoTech in India.

Topic: Corporates/Companies

4. Centre selects Aceware FinTech Services for digital on-boarding of street vendors in Kerala.

  • Central government has selected Aceware FinTech Services as a partner for the special drive for digital on-boarding of street vendors in Kerala.
  • Union government has launched drive as part of PM Street Vendor’s Atma Nirbhar Nidhi (PM SVANidhi).
  • Under the drive, the Centre aims to bring 8.68 lakh street vendors on-board across the country.
  • The drive aims to fasten on-boarding of street vendors on UPI QR code and help them to start accepting and making digital payment transactions.
  • IT ministry along with the housing and urban affairs has launched the drive to on-board street vendors to start accepting and making digital payments in 223 cities across the country.

Topic: RBI

5. RBI permits banks to sell fraud loans to Asset Reconstruction Companies (ARCs).

  • RBI has permitted banks to sell loan exposures classified as fraud to Asset Reconstruction Companies (ARCs).
  • RBI has issued the guidelines for transfer of loan exposure, including stressed loans.
  • Stressed loans, which are in default for over 60 days or classified as NPAs can be transferred to ARCs. This will include loan exposures classified as fraud.
  • As of now, if an account is declared fraud, banks are required to set aside 100% of the outstanding loan as a provision. Under the new rules, banks can hope to recover part of the loan.
  • As per RBI, transfer of stressed loans of more than Rs 100 crore negotiated between lenders and permitted acquirers, including ARCs, should be followed by an auction through the Swiss Challenge method.
  • In Swiss Challenge method, the price bilaterally negotiated for the sale of a stressed asset is the floor price for inviting counter-proposals from other buyers.
  • As per new guidelines, loans can be transferred after a maximum holding period of three months for the loans with tenor up to 2 years.
  • In the case of loans with a tenor of over 2 years, loans can be transferred only after the maximum holding period of six months.

Topic: Taxation

6.  18% GST on managerial and leadership services by corporate office to its group companies/construction sites registered in different states.

  • Maharashtra bench of Authority for Advance Ruling (AAR) has ruled that GST on managerial and leadership services by the corporate office to its group companies/construction sites registered in different states would be 18%.
  • B G Shirke Construction Technology Pvt Ltd had gone to AAR to know whether such services would be considered as 'supply of service'.
  • AAR has ruled that such services would be considered as 'supply of service' and would be taxable under GST.
  • The ruling would mean an additional levy of 18 % GST on inter-company services in the form of managerial and leadership services.

Topic: Regulatory Bodies/Financial Institutions

7. PFRDA decides that entities should have minimum ₹1-lakh crore assets under custody for eligibility.

  • Pension Fund Regulatory & Development Authority (PFRDA) has decided that entities should have minimum ₹1-lakh crore assets under custody for eligibility.
  • The entities are required to have minimum ₹1-lakh crore assets under custody in order to be eligible for becoming custodians of securities for the National Pension System (NPS) and other schemes under the regulatory ambit of PFRDA.
  • Applicants for a Custodian licence are required to have registered with SEBI for the past five years on the date of application.
  • As per Request for Proposal (RFP) issued by PFRDA, licence for Custodian will be valid for five years. PFRDA can appoint more than one custodian.
  • Earlier, StockHolding Corporation of India (SHCIL) was the only one that performed the role of the custodian in the pension market.

Topic: Miscellaneous

8. Commerce Ministry decides to deactivate all importer-exporter codes (IECs) not updated after January 2005.

  • Commerce Ministry has decided to deactivate all importer-exporter codes (IECs) not updated after January 2005.
  • All such IECs will be deactivated with effect from October 6. IEC is a business identification number mandatory for exports or imports.
  • Importer -Exporter Code (IEC) is granted by the Director-General of Foreign Trade (DGFT).   
  • In August 2021, DGFT has asked all IEC holders to ensure that details in their IEC are updated electronically every year during April-June period.
  • Any IEC where an online updation application has been given but is pending with the DGFT RA (regional authority) for approval will not be deactivated.

 

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