Banking Awareness of 28 and 29 June 2024

Topic: Indian Economy/Financial Market

1. Core sector growth declined to 6.3% in May 2024.

• There was a decline from 6.7% in April to 6.3% in May in the growth in output of eight key infrastructure industries.
• The decline was because of decrease in output of six sectors, which include cement, fertliser, natural gas, refinery products, crude oil and steel.
• In May 2023, a growth of 5.2% was seen in core sector.
• Sectors like natural gas (7.5%), refinery products (0.5%), and steel (7.6%) showed decline.
• The output of fertilisers (-1.7%) and cement (-0.8%) also decreased.
• In May 2024, crude oil output declined by 1.1%. Coal production increased 10.2% and electricity generation rose 12.8%.
• The eight core industries make up 40.27% of the weight of items included in the Index of Industrial Production (IIP).

Topic: RBI

2. RBI released the revised framework for currency swap arrangements with SAARC countries.

• A revised framework for currency swap arrangements with South Asian Association for Regional Cooperation (SAARC) countries has been released by the Reserve Bank of India.
• This revised framework will remain effective from 2024 to 2027.
• Under this framework, the RBI will enter into bilateral swap agreements with those SAARC central banks who want to utilize the swap facility.
• All SAARC member countries can use the currency swap facility.
• Under his framework, a new rupee swap window has been introduced. It will offer various concessions to support swaps in Indian rupees.
• Through a separate USD/Euro Swap Window, RBI will continue to offer swap arrangements in US dollars and euros. It has an overall corpus of $2 billion.
• The SAARC Currency Swap Facility became operational on November 15, 2012, to fund short-term foreign exchange liquidity requirements or balance of payment crises in SAARC countries.

Topic: RBI

3. RBI has increased WMA or financial accommodation for states/UTs to ₹60,118 crore.

• RBI has increased WMA or financial accommodation for states/UTs by 28%.
• The aggregate ways and means advances (WMA) limit for State governments/ Union Territories (UTs) has been increased to ₹60,118 crore.
• The existing limit was ₹47,010 crore. The upward revision in WMA is based on the recommendations made by the Group constituted by RBI.
• The group consisted of select State Finance Secretaries.
• The upward revision in WMA takes into account the expenditure data of the States for the recent years.
• The revised WMA limit is effective from July 1. WMA or financial accommodation is provided by RBI to the States banking with it.
• This helps them deal with temporary mismatches in the cash flow of their receipts and payments.
• Such advances are repayable in not later than three months from the date of making that advance.
• WMAs are of two types. They are normal and special. Normal WMA are clean advances.
• Special WMA are secured advances. They are provided against the pledge of Government of India dated securities.
• As per RBI, Special Drawing Facility (SDF) availed by State Governments/ UTs will remain linked to the amount of their investments in marketable securities, issued by the Government.

Topic: Miscellaneous

4. India got an ‘outstanding outcome’ in FATF mutual evaluation 2023-24.

• India has got an outstanding outcome in Mutual Evaluation carried out during 2023-24 by Financial Action Task Force (FATF).
• India was classified under the regular follow-up category in the Mutual Evaluation Report of India. Only four other G-20 nations have this distinction.
• "Regular follow up" refers to India's need to provide a status report on recommended actions only in October 2027.
• FATF assigns member nations to one of four groups namely, ‘regular follow-up’, ‘enhanced follow-up’, ‘grey list’ and ‘black list’.
• Of the four categories, regular follow-up is the top most category.
• Only 24 nations, including India, are in regular follow-up out of the 177 countries that the FATF and its Regional Bodies (FSRBs) cover.
• At the June 26–28 FATF plenary in Singapore, the Mutual Evaluation Report of India was adopted.
• India had attained a high degree of technical compliance with the FATF's requirements, the plenary concluded.
• India was seeing positive outcomes from its anti-money laundering, countering financing of terrorism (CFT), and counter-proliferation financing regimes.
• FATF noted that in several non-financial sectors, strengthening oversight and implementing preventive measures were areas in need of improvement.
• Delays in completing prosecutions for terrorism funding (TF) and money laundering (ML) must also be addressed by India.
• India must also make sure that the risk-based approach is followed when implementing CFT measures meant to stop the non-profit sector from being misused for TF.
• The Financial Action Task Force (FATF) has acknowledged India's successful efforts to lower ML/TF risks by converting its cash-based economy to a digital one.
• Since 2010, India has been a member in the FATF. Moreover, India is a part of its steering group.
• Founded in 1989, the FATF is an intergovernmental institution.

Topic: Reports and Indices

5. RBI released the 29th issue of the Financial Stability Report (FSR) on 27 June 2024.

• It reflects the collective assessment of the sub-committee of the Financial Stability and Development Council (FSDC).
• As per the report, the capital to risk-weighted assets ratio (CRAR) of scheduled commercial banks (SCBs) stood at 16.8% at end-March 2024.
• The common equity tier 1 (CET1) ratio of SCBs stood at 13.9% at end-March 2024, according to the FSR.
• The FSR says gross non-performing assets (GNPA) ratio of SCB declined to a multi-year low of 2.8% at end-March 2024.
• It also says SCB’s net non-performing assets (NNPA) ratio declined to 0.6% at end-March 2024.
• The FSR says non-banking financial companies (NBFCs) remain healthy.
• Their CRAR was at 26.6%, GNPA ratio was at 4.0% and return on assets (RoA) at 3.3%, respectively, at end-March 2024.
• Credit risk macro stress tests show that SCBs might meet minimal capital requirements, , with the system-level CRAR in March 2025 projected at 16.1%, 14.4% and 13.0%, respectively, under baseline, medium and severe stress scenarios.

Topic: Regulatory Bodies/Financial Institutions

6. SEBI eased delisting norms and tightened influencer’s rules.

• Market regulator SEBI eased norms for companies to delist and raise debt capital.
• SEBI has introduced a fixed price process for delisting frequently traded shares and also introduced a delisting framework for Investment and Holding Companies (IHC).
• SEBI has approved norms to regulate unregistered financial influencers, also referred to as influencers.
• The SEBI Board has approved a proposal to regulate influencers to address the risks associated with influencers.
• The number of influencers giving financial advice on social media platforms has also increased due to increased retail investors’ participation in equity markets.
• SEBI has proposed that brokers and mutual funds should not associate with unregistered influencers.
• India had 154 million trading accounts as of April 2024.

Topic: Corporates/Companies

7. Department of Public Enterprises has awarded "Navratna" status to Mazagon Dock Shipbuilders.

• Mazagon Dock Shipbuilders has become the 18th public sector undertaking of the country to get this status.
• With this, Mazagon Dock Engineers India has joined the companies like CONCOR, Bharat Electronics, Hindustan Aeronautics, RCF, NALCO, NMDC, RVNL, IRCON and IREDA.
• As a Navratna company, Mazagon Dock does not require central government approval for investments up to ₹1,000 crore.
• These companies also have the freedom to invest up to 30% of their net worth within a year, provided it remains within Rs 1,000 crore.
• Navaratna companies are also permitted to form joint ventures, alliances and set up subsidiaries abroad.
• To become a Navaratna company, the PSU must first be a Miniratna company.
• Additionally, the company must report a net profit of Rs 5,000 crore for three consecutive years and maintain an average annual turnover of over Rs 25,000 crore for three years.
• Also, its average annual net worth must be over Rs 15,000 crore for three years.
• In 2024 April, IREDA was granted Navaratna status by the Department of Public Enterprises.

Topic: Reports and Indices     

8. The gross NPA ratio of banks moderated in March 2024, reaching a 12-year low of 2.8%.

• On June 27, the June Financial Stability Report released by the Reserve Bank of India (RBI).
• The report said the gross non-performing asset (GNPA) ratio of scheduled commercial banks, which fell to a 12-year low of 2.8% in March 2024, may further improve to 2.5% by March 2025.
• The GNPA ratio estimate for March 2025 is based on the macro stress test, which is conducted to assess the resilience of banks' balance sheets to unexpected shocks arising from the macroeconomic environment.
• Their net NPA (NNPA) ratio also improved to a record low of 0.6%.
• In the severe stress scenario, the GNPA ratio of public sector banks (PSBs) may increase from 3.7% in March 2024 to 4.1% in March 2025, while it may rise from 1.8% to 2.8% for private sector banks (PVBs) and from 1.2% to 1.3% for foreign banks (FBs).
• Under the baseline scenario, the aggregate capital-to-risk-weighted assets ratio (CRAR) of the 46 major banks is projected to decline from 16.7% in March 2024 to 16.1% by March 2025.
• Under the baseline scenario, the common equity tier 1 (CET1) capital ratio of the select 46 banks could decline from 13.8% in March 2024 to 13.4% in March 2025.

Topic: Banking/Financial/Govt Schemes

9. Union Minister Jitan Ram Manjhi launched two new initiatives on World MSME Day.

• Union Minister Jitan Ram Manjhi launched two new initiatives to boost micro and small businesses' trade using e-commerce.
• MSME Trade Enablement and Marketing (TEAM) initiative has been launched to promote small businesses to participate in online trade using the Open Network for Digital Commerce (ONDC) platform.
• It will help more than 5 lakh micro and small businesses and half of the beneficiaries of this initiative will be women-led businesses.
• The 'Yashaswini' initiative is a mass awareness campaign to support informal women-led businesses by providing them with capital and more trade opportunities.
• The government is focused on access to credit, increased access to markets and e-commerce, enhanced digitization, and the empowerment of women and artisans. 
• Every year on June 27, Micro, Small, and Medium-sized Enterprises (MSMEs) Day is observed.
• The theme of MSME Day 2024 is “Leveraging Power and Resilience of Micro-, Small and Medium-sized Enterprises (MSMEs) to Accelerate Sustainable Development and Eradicate Poverty in Times of Multiple Crises.”      

Topic: Corporates/Companies

10. Union Minister Dr Jitendra Singh announced 'Mini Ratna' status (Category-1) for Central Electronics Limited (CEL).

• Union Minister Dr. Jitendra Singh attended the Golden Jubilee celebration of Central Electronics Limited (CEL) at the Ghaziabad campus.
• He said that CEL has transformed from a loss-making PSU to a dividend-paying PSU. CEL has paid dividends for the third consecutive year.
• The net profit of Central Electronics Limited (CEL) has reached around Rs 58 crores.
• Central Electronics Limited has achieved all performance parameters for the status of Mini RATNA (Category-1).
• Central Electronics Limited:
  • It is an enterprise under the Department of Scientific and Industrial Research (DSIR).
  • It was established in 1974 to commercially use indigenous technologies developed by national laboratories and R&D institutions in the country.
  • It is a pioneer in the country in the field of solar photovoltaic (SPV).

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