Banking Awareness of 28 and 29 December 2022

Topic: Appointments

1. Baskar Babu Ramachandran’s reappointment as the MD & CEO of Suryoday Small Finance Bank has been approved by RBI.

• RBI has approved his reappointment for three years effective January 23, 2023.
• Suryoday Small Finance Bank was originally incorporated as Suryoday Micro Finance Pvt Ltd at Chennai in 2008.
• It was later converted into a public limited company as Suryoday Micro Finance Ltd in 2015.
• RBI granted Suryoday Micro Finance in-principle and final approval to establish an SFB in October 2015 and August 2016, respectively.
• Suryoday Small Finance Bank started its business with effect from January 23, 2017.

Topic: Reports and Indices

2. According to RBI’s report, the percentage of NPAs recovered by scheduled commercial banks (SCBs) increased from 14% in FY21 to 18.4% in FY22.

• ₹89,661 crore were recovered by SCBs in FY22 against ₹4,87,062 crore involved.
• In FY21, the SCBs had recovered ₹64,229 crore against ₹4,56,274 crore involved, RBI said in its recent report on ‘Trend and Progress of Banking in India 2021-22’.
• Out of ₹89,661 crore recovered in FY22, 53% were recovered via the IBC route, 30.5% via SARFAESI Act, 13.5% via DRTs and 3% via Lok Adalats.
• RBI said in its latest report number of cases referred under Lok Adalats and SARFAESI Act grew by 336% and 335%, respectively.
• In the report, RBI said that the IBC mechanism was the leader in terms of the amount involved.
• Over time, sales of stressed assets to asset reconstruction firms have gradually dropped.
• In 2021–2022, only 3.2% of GNPAs (gross non-performing assets) from the last year were sold to ARCs, according to the report.
• As per RBI, gross NPA ratio of banks has declined to 5% as of September 2022 from the peak level of 9% in 2017-18.
• RBI in its report on Trend and Progress of Banking in India for 2021-2022 said that in case of Public Sector Banks (PSBs), written-off loans mainly contributed to the reduction in NPAs.
• In case of private banks, the primary driver for asset quality improvement was upgradation of loans.
• As per RBI data, gross NPAs were at 5.8% as of March 2022. They were lower than 7.3% in the year ago period.
• Over the same period, the net NPA ratio improved from 2.4% to 1.7% as per RBI data.
• The share of large borrowal accounts (having a total exposure of ₹5 crore and above) in total NPAs also declined.
• RBI said the share of special mention accounts-0 (SMA-0) increased for both PSU and private banks as of March 2022. SMA-0 includes loans that are overdue for 0-30 days.
• The report said the share of SMA-1 and SMA-2 loans declined to their lowest levels since March 2016 for all account. SMA-1 includes principal or interest payment overdue between 31-60 days and SMA-2 includes principal or interest payment overdue between 61-90 days.

Topic: RBI

3. The amount of penalties imposed by RBI on banks and NBFCs in FY22 more than doubled to ₹65.32 crore according to a RBI report.

• RBI had imposed penalties worth ₹31.36 crore on 61 regulated entities (banks and NBFCs) in FY21.
• Instances of imposition of penalty by RBI on banks and NBFCs increased about three times to 189 in FY22.
• During 2021-22, the average per instance penalty was the highest for private sector banks. This was the lowest for co-operative banks.
• In FY22, RBI imposed penalty worth ₹29.39 crore on 16 private sector banks.
• It imposed penalties worth ₹17.55 crore and ₹12.10 crore on 13 public sector banks and 145 co-operative banks, respectively,
• In 2021-22, main reasons for imposition of penalties include non-compliance with exposure and IRAC (income recognition and asset classification) norms, frauds classification and reporting, and violation of cyber security framework guidelines.
• RBI formed the Enforcement Department in April 2017 to separate enforcement action from supervisory process.
• The aim of enforcement is to ensure compliance by regulated entities.

Topic: Miscellaneous

4. The Centre and Asian Development Bank (ADB) have signed a $125 million loan.

• The loan is to develop climate-resilient sewage collection and treatment in three cities in Tamil Nadu.
• It is also to develop drainage and water supply systems in three cities in Tamil Nadu.
• The loan covers Coimbatore, Madurai and Thoothukudi.
• The loan is third and last tranche of the $500 million multi-tranche financing facility (MFF) approved by ADB in 2018 to build infrastructure across 10 cities in Tamil Nadu.
• The loan will help in the development of two sewage treatment plants in Coimbatore.
• Climate-resilient stormwater drainage system will be developed in Thoothukudi.
• In Madurai, the commissioning of 813 km of new water supply distribution pipelines will be supported.
• Asian Development Bank (ADB):
  • It is a regional development bank established in 1966.
  • Members: 68 countries
  • Headquarters: Mandaluyong, Philippines
  • Current President: Masatsugu Asakawa 

Topic: Reports and Indices

5. The aggregate amount involved in banking frauds decreased by about 46% to ₹19,485 crore in H1FY23.

• As per RBI data, this amount stood at ₹36,316 crore in the year ago period.
• The number of frauds in the first half of the current financial year increased by 33% to 5,406.
• The number of frauds stood at 4,069 in the year ago period according to RBI’s Report on Trend and Progress of Banking in India 2021-22.
• The total amount involved in frauds in FY22 was nearly 56% lower at ₹60,389 crore against ₹1,37,828 crore in FY21.
• However, the number of frauds in FY22 was increased by about 24% at 9,102 against 7,358 in FY21.
• The report said the number of fraud cases reported by private sector banks was more than those reported by public sector banks for the second consecutive year in 2021-22.

Topic: Banking System

6. MSME Prerana programme has been launched by Indian Bank in Rajasthan.

• MSME Prerana is Indian Bank’s business mentoring programme for MSME entrepreneurs.
• It aims at empowering MSME Entrepreneurs through skill development and capacity-building training in their local languages.
• The training program is in partnership with M/s Poornatha & Co.
• M/s Poornatha & Co designs entrepreneurial development programs in vernacular languages through online interactive sessions & case studies.
• Indian Bank has already conducted this online program in 7 languages across 10 states.
• Union Minister of Finance Nirmala Sitharaman launched the Indian Bank’s flagship program ‘MSME Prerana’ on 6th Oct, 2020.
• MSMEs in India are regulated under the Micro, Small and Medium Enterprises Development Act, 2006.
• Indian Bank:
  • It was founded in 1907. It was nationalized in 1969.
  • Its headquarters are in Chennai. Shanti Lal Jain is its MD & CEO.
  • From 1 April 2020, Allahabad bank has been merged with Indian Bank.
  • Tagline- Your Own Bank

Topic: Reports and Indices

7. The number of regular employees in CPSEs has declined by nearly 10,000 in one year as per a government publication.

• The number of regular employees in Central Public Sector Enterprises (CPSEs) have come down from 8.51 lakh in FY21 to over 8.41 lakh in FY22.
• The number of contractual employees has increased by nearly 48,000 in FY22.
• The number of women employees has declined by over 3,800.
• The publication is titled ‘Public Enterprises Survey 2021-22’. It has been prepared by the Department of Public Enterprises.
• It covered 389 CPSEs which includes 248 operating ones.
• Net profit of profit-making CPSEs increased from ₹1.89-lakh crore in FY21 to ₹2.64-lakh crore in FY22. This is an increase of 39.85%.
• ONGC, Indian Oil Corporation, Power Grid, NTPC and Steel Authority of India Ltd are top five CPSEs with highest net profits.
• The net loss of loss-incurring CPSEs stood at ₹0.15-lakh crore.
• BSNL, MTNL, Air India Assets Holding Ltd, Eastern Coalfields Ltd & AllianceAir Aviation Ltd are major loss-making CPSEs.

Topic: Banking System

8. SBI, Axis Bank and ICICI Bank will go live on 'Rupay Credit card on UPI' by March 2023.

• Currently, three public sector banks are live on this feature. They are Union Bank of India, Indian Bank, and Punjab National Bank.
• Private sector Bank HDFC Bank is also live on the RuPay credit card segment on UPI platform.
• RBI permitted linking of credit cards to UPI in June.
• RuPay is a technology platform. It provides end-to-end security solutions for online financial transactions. It does not provide credit cards.
• Only banks can issue credit cards.  Whenever a person will use RuPay credit card, the bank will use the technology network of RuPay.
• RuPay credit cards typically have lower Merchant Discount Rate (MDR) than Mastercard or Visa credit cards. MDR is a fee paid by merchants to banks for processing payments.
• National Payments Corporation of India has said the users of the RuPay credit card won’t be charged on UPI for transactions up to Rs 2,000.

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