Banking Awareness of 27 and 28 June 2023

Topic: Indian Economy/Financial Market

1. India’s Current Account Deficit declined to 1.3 billion dollars (0.2% of GDP) in the January-March quarter of the last fiscal year (FY23).

• Moderation in the trade deficit and an increase in services exports caused the decline in Current Account Deficit (CAD).
• A deficit of 2% of GDP was recorded in the current account balance for fiscal 2022-23.
• The trade deficit widened to $265.3 billion in 2022-23 from $189.5 billion a year ago.
• As per the data released by RBI, net services receipts increased on the back of an increase in net earnings from computer services.
• The decline in CAD in the January-March quarter of last fiscal was chiefly due to a moderation in the trade deficit from $71.3 billion in the preceding quarter to $52.6 billion.
• In the January-March period, private transfer receipts increased to $28.6 billion.
• Net Foreign Direct Investment (FDI) stood at USD 6.4 billion in Q4 2022-23. It was higher than USD 2.0 billion in Q3 2022-23. It was lower than a year ago (USD 13.8 billion).
• Net Foreign Portfolio Investment (FPI) recorded an outflow of $1.7 billion. It was driven by equity segment.
• Net External Commercial Borrowings (ECBs) recorded an inflow of $1.7 billion during Q4. Net ECBs recorded an outflow of $2.5 billion during the Q3 of 2022-23.
• Net invisible receipts were higher in 2022-23 because of rise in net exports of services and net private transfer receipts.
• Net FDI inflows stood at $28 billion in 2022-23. Net FDI inflows in 2022-23 were lower than $38.6 billion in 2021-22.
• The fiscal year 2022-23 also saw decline of $9.1 billion of the foreign exchange reserves (on a BoP basis).

Topic: Reports and Indices

2. Funding winter has removed 19 start-ups from ASK Private Wealth Hurun India Future Unicorn Index 2023.

• However, the funding to 230 start-ups making the index increased 6% to $18.8 billion as of end of May.
• The number of Unicorns in the ASK Private Wealth Hurun India Future Unicorn Index 2023 has decreased marginally from 84 to 83.
• The number of Gazelles in the ASK Private Wealth Hurun India Future Unicorn Index 2023 is stable at 51.
• The number of Cheetahs in the ASK Private Wealth Hurun India Future Unicorn Index 2023 has increased from 71 to 96.
• Only 3 Indian start-ups turned into Unicorns this year against 24 last year. 8 Gazelles were demoted to Cheetahs.
• E-commerce, fintech, and SAAS comprise 42% of the Future Unicorn Index.
• Hurun Research Institute has classified start-ups into three categories given below.
  • Unicorns (valuation of $1 billion)
  • Gazelles (valuation of $500 million and to become Unicorn in three years)
  • Cheetahs (valuation of $250 million and to become Unicorn in 5 years)
• The term ‘funding winter’ refers to the period when it is difficult for start-ups to get the funding.
• Funding winter is an extended period characterized by decreased capital inflows towards startups.
• Funding winter has been observed globally throughout 2022. It is likely to continue in 2023. The years 2020 and 2021 were good years to get funds.

Topic: Banking System

3. Centralised Pool Buy-Out and Co-Lending Cell has been launched by Bank of India to boost priority sector lending.

• The Cell is housed in the Bank of India’s Mumbai headquarters.
• It will be equipped with an end-to-end digital underwriting system to onboard pool buy-out and co-lending of loans in partnership with non-banking finance companies (NBFCs).
• It will enable seamless integration between the Bank and multiple NBFCs.
• Centralised Pool Buy-Out and Co-Lending Cell will onboard loan assets under Retail, MSME and the Agriculture segment.
• Bank of India:
  • It was founded in 1906. It is headquartered in Mumbai. It is a public-sector bank. 
  • It is a founder member of SWIFT (Society for Worldwide Inter Bank Financial Telecommunications).
  • Rajneesh Karnatak is its MD & CEO. Relationship beyond Banking is its tagline.

Topic: RBI

4. Swaminathan J took charge as the RBI Deputy Governor on 26 June 2023.

• As Deputy Governor, he will look after six departments.
• They are Consumer Education and Protection Department, Department of Supervision, Financial Inclusion and Development Department, Inspection Department, Premises Department and Rajbhasha Department.
• On 21 June 2023, he was appointed RBI Deputy Governor.
• He was the Managing Director (Corporate Banking and Subsidiaries) of the SBI.
• The last time an SBI MD was made a RBI Deputy Governor was in 2001.
• In 2001, Vepa Kamesam was appointed RBI Deputy Governor from July 1, 2001 to December 23, 2003.

Topic: RBI

5. RBI has put a monetary fine of about ₹25 lakh each on the 4 Credit Information Companies (CICs) presently functioning in the country.

• RBI has imposed the fine for non-compliance with provisions of CICs (Regulation) Act, 2005 and the CIC Rules, 2006.
• Monetary penalty of ₹26 lakh has been imposed on TransUnion CIBIL.
• The monetary penalty on CRIF High Mark Credit Information Services and Experian Credit Information Company of India is ₹25.75 lakh and ₹24.75 lakh, respectively.
• The monetary penalty of ₹24.25 lakh has been imposed on Equifax Credit Information Services.
• RBI has also imposed a monetary penalty of ₹30 lakh on Standard Chartered Bank-India for non-compliance with provisions of the 'RBI (Know Your Customer (KYC)) Directions, 2016'.

Topic: Taxation

6. The income tax department has made changes in disclosure norms for charitable institutions claiming I-T exemption.

• The changes to the Income Tax Rules will become effective from 01 October 2023.
• According to the changes introduced, charitable institutions will now be required to disclose whether their activities are charitable, religious or religious cum charitable.
• The changes to the Income Tax Rules also include a declaration.
• Under the declaration, the charitable institution will be required to provide details of donations received from a person in excess of ₹2 lakh in a single day.
• The details include the name of the payer, address, amount of payment and PAN (if available).
• Under the Income Tax law, tax exemption is granted to income of charitable institutions, religious trusts, and medical and educational institutions.
• However, they must seek registration from the I-T department.

Topic: Appointments

7. Rajat Verma has been appointed as Managing Director of DBS Bank India.

• Rajat Verma was with HSBC Bank as Managing Director and Country Head of Commercial Banking, India.
• He will take the place of Niraj Mittal, who has become country head of DBS Australia.
• He will lead the growth of the institutional banking franchise for DBS Bank in India.
• DBS Bank is a Singaporean multinational banking corporation. Surojit Shome is Managing Director and CEO of DBS Bank India.

Topic: Reports and Indices

8. India ranked 40th spot in the 2023 global competitiveness index.

• International Institute for Management Development (IMD) has published the latest World Competitiveness Rankings.
• Denmark, Ireland, and Switzerland ranked in the top three places on the 64-nation list.
• Singapore ranked 4th and the Netherlands ranked fifth in the top five ranking.
• The rest of the top 10 are Taiwan, Hong Kong, Sweden, the USA, and the UAE, respectively.
• India dropped 3 places to rank 40 but is still in a better position than between 2019-2021 when it was ranked 43 for three consecutive years.
• IMD World Competitiveness Center produces ranking annually.
• The ranking measures the competitiveness of 64 nations with the help of four factors given below:
  • Economic performance
  • Government efficiency
  • Business efficiency
  • Infrastructure
• The IMD World Competitiveness Yearbook (WCY) was first published in 1989. It is a comprehensive annual report and worldwide reference point on the competitiveness of countries.

Topic: Indian Economy/Financial Market

9. Centre approved Rs 56,415 crore to 16 states under 'Special Assistance to States for Capital Investment 2023-24' scheme.

• Centre has approved Rs 56,415 crore for capital investment. The scheme was announced in the Budget for 2023-24.
• These states include Arunachal Pradesh, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Mizoram, Odisha, Rajasthan, Sikkim, Tamil Nadu, Telangana, and West Bengal.
• State governments are being provided special assistance in the form of 50-year interest free loan up to an overall limit of Rs 1.3 lakh crore during the financial year 2023-24.
• The scheme has eight parts. Part-I is the largest with grant-like special capex facility.
• In part-I of the scheme, states are being allocated the funds in proportion to their share of central taxes as per the award of the 15th Finance Commission.
• Other parts of the scheme are either linked to reforms or are for sector-specific projects.
• As per Bank of Baroda (BoB) report, 14 states have achieved less than 75% of capex targets in FY23.
• Many states like Andhra Pradesh, Maharashtra, UP and Kerala have failed to meet the target of actual capital expenditure (capex) on various fronts.
• Only four states-Karnataka, Sikkim, Arunachal Pradesh and Bihar have over achieved and crossed the 100% mark.
• Two others states Jharkhand and Madhya Pradesh attain 98% mark.
• Eleven states achieved 80% of capex targets in FY23. The other states have registered lower-than-average achievement rates.
• UP and Maharashtra had an outlay of Rs 2.19 lakh crore which is 29.2% of the total capex of these 25 states.
• Andhra Pradesh with 23% performed worst. Tripura, Nagaland and Haryana had less than 50% achievement rate.
• Andhra Pradesh and Punjab were the only states which had exceeded their fiscal deficit target.

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