Banking Awareness of 29 and 30 June 2023

Topic: Banking System

1. Kotak Mahindra Bank has launched the facility of linking its RuPay Credit Card with UPI apps.

• The private sector lender has introduced this facility in collaboration with National Payments Corporation of India (NPCI).
• After linking their credit cards, customers of Kotak Mahindra Bank can carry out transaction through UPI apps.
• The customers can chose from seven RuPay credit cards and they can scan QR codes or start the transaction on PoS (Point of Sale) throughout the country.
• Kotak RuPay Credit Card-UPI linkage will also provide customers an interest-free credit period of up to 50 days.
• Canara Bank has become India’s first Public Sector Bank to allow UPI payments to merchants through RuPay Credit Card.
• Canara Bank has introduced this facility in association with the National Payments Corporation of India (NPCI).
• The facility is available in the ‘Canara ai1’ Banking Super App of the Bank.
• Customers of Canara Bank can now make UPI payments to merchants from their RuPay Credit Cards in addition to their bank accounts.
• Only merchant payments are presently permitted through this facility of UPI payments using a RuPay Credit Card.
• Person-to-Person, Card-to-Card, or Cash-Out Transactions will not be allowed for UPI payments from RuPay Credit Cards.

Topic: Reports and Indices

2. The insured deposit ratio of public sector banks was 51.3% at the end of March 2023 said the Financial Stability Report.

• The insured deposit ratio of private sector banks was 36.6% according to the Financial Stability Report.
• The insured deposit ratio of public sector banks was higher than that of private sector banks at the end of March 2023 said the Financial Stability Report.
• This indicates that public sector banks have more deposits within the present deposit insurance limit of ₹5 lakh and private sector banks have more deposits above the ₹5-lakh limit. 
• Overall, the insured deposit ratio was higher for cooperative banks (64.9%). It was followed by commercial banks (45.2%).
• Urban co-operative banks, State co-operative banks and district central co-operative banks come under cooperative banks.
• Public sector banks, private sector banks, foreign banks, small finance banks, payment banks, regional rural banks and local area banks come under co-operative banks.
• As per the Financial Stability Report, 98.1% of the total number of deposit accounts (300 crore) were fully insured. 46.3% of assessable deposits were fully insured.

Topic: Miscellaneous

3. Digital transformation solutions provider UST has become innovation vendor for Project Rosalind.

• Project Rosalind is an experiment in application programming interface (API) prototypes for central bank digital currencies (CBDC).
• It has been started by the Bank for International Settlements (BIS) and the Bank of England (BoE) via the BIS Innovation Hub London Centre.
• UST collaborated with BIS and BoE to develop an API layer and to explore a range of use cases for the CBDC ecosystem.
• UST also partnered with Quant to provide the underlying infrastructure and blockchain platform. Quant is a blockchain for finance pioneer.

Topic: Banking/Financial/Govt Schemes

4. Government has authorized all public sector banks and four private sector banks to operate the Mahila Samman Savings Certificate, 2023.

• The four private sector banks are ICICI Bank, Axis Bank, HDFC Bank Ltd and IDBI Bank.
• In the starting, Mahila Samman Savings Certificate was made available through post offices.
• Government has announced the scheme in the Union Budget this year.
• Finance Minister Nirmala Sitharaman had announced Mahila Samman Savings Certificate will be made available for a two-year period up to March 2025.
• Under this, deposit facility up to Rs 2 lakh will be offered in the name of women or girls for a tenor of 2 years at a fixed interest rate of 7.5%, with partial withdrawal option.

Topic: Reports and Indices

5. RBI has informed that the GNPA ratio of scheduled commercial banks fell to a 10-year low of 3.9%.

• In March 2023, the gross non-performing assets (GNPA) ratio of Scheduled Commercial Banks (SCBs) has come down to a 10-year low of 3.9% and the net non-performing assets (NNPA) ratio has declined to 1%.
• It is expected to fall further to 3.6% by March 2024.
• On 28 June 2023, RBI has released the 27th issue of Financial Stability Report in which these things have come to the fore.
• Gross and net NPAs have come down from 11.5% and 6.1% in March 2018 to 3.9% and 1% in March 2023.
• SCBs has strengthened their capital base with a historic high level of capital-to-risk-weighted assets ratio of 17.1% and common equity Tier 1 capital ratio of 13.9% in March 2023, according to the report.
• At the bank group level, the GNPA ratio of public sector banks (PSBs) may increase from 5.2% in March 2023 to 6.1 % in March 2024.
• The GNPA ratio of private sector banks may increase from 2.2% in March 2023 to 3.8% in March 2024.
• The GNPA ratio of foreign banks may increase from 1.9% in March 2023 to 2.6% in March 2024.
• The provisioning coverage ratio (PCR) increased to 74.0%. The profit after tax of SCBs recorded a growth of 38.4% in 2022-23.
• India’s credit-to-GDP gap remains negative since March 2013 as per the FSR.
• The system-level capital to risk-weighted assets ratio (CRAR) in March 2024, under baseline, medium and severe stress scenarios, is projected at 16.1%, 14.7% and 13.3%, respectively.
• Stress tests are an assessment of the resilience of banks’ balance sheets to unforeseen shocks in the macroeconomic environment.

Topic: Reports and Indices

6. Gross NPA ratio of credit card receivables for public sector banks increased from around 10% a year ago to 18% as of March 2023 according to RBI Financial Stability Report.

• The gross NPA ratio for private banks was stable at 1.9%. The gross NPA ratio for foreign banks stood at 1.8% against the year-ago period.
• The gross NPA ratio for commercial banks was largely stable at 2.0%.
• The report said there has been an overall improvement in asset quality in respect of personal loans.
• The report said the impairments in the credit card receivables segment have increased marginally.
• Credit card receivables formed a smaller part of PSU banks’ personal loans portfolio at 0.1%.
• Credit card receivables formed higher share of 10.1% for private banks and 15.3% for foreign banks.
• Credit card receivables formed 4.8% of commercial banks’ personal loans portfolio as of March FY23.
• Impairments in education loans remained high at 5.8%.
• According to the RBI report, bank retail loans saw a Combined Annual Growth Rate (CAGR) of 24.8% from March 2021 to March 2023.
• Total Special Mention Accounts (SMA) Ratio falling to 2.3% in March 2023 from 4.2% in March 2021.
• GNPA ratio of unsecured retail loans declined from 3.2% in March 2021 to 2% in March 2023.

Topic: Banking System

7. The merger of HDFC Bank and HDFC will create a bank that will rank 4th in equity market capitalisation.

• It will rank fourth in equity market capitalisation, behind JPMorgan Chase & Co, Industrial and Commercial Bank of China., and Bank of America Corp, as per data compiled by Bloomberg.
• The merger will be effective from 01 July, 2023. It is valued at about $172 billion.
• The new HDFC Bank will have 120 million customers and more than 1,77,000 employees. It will increase its branch network to more than 8,300.
• HDFC Bank will also leave behind State Bank of India (market capitalisation of about $62 billion) and ICICI Bank (market capitalisation of about $79 billion).

Topic: Banking/Financial/Govt Schemes

8. Finance Ministry has deferred the implementation of new mechanism of Tax Collected at Source (TCS) on Liberalised Remittance Scheme (LRS) beyond a certain threshold from July 1 to October 1.

• Finance Ministry has also announced that no TCS will be applicable on international credit card spending abroad.
• However the rate to be applicable from 01 October will not be changed.
• Credit card spending above ₹7 lakh in foreign currency domestically will attract TCS.
• Transactions through international credit cards while being overseas would not be counted as LRS.
• Government has postponed the implementation of its May 16 e-gazette notification.
• Till September 30, earlier rates (as before amendment by the Finance Act 2023) will continue to apply.

Topic: Infrastructure and Energy

9. India has now become the country with the second largest highway network after the United States.

• 1.45 lakh kms of the network of national highways in India, is now the second-largest network in the world after the United States.
• The network of national highways in India was 91,287 kms in 2013-14.
• Union Minister for Road Transport & Highways Nitin Gadkari said that it has been increased by 59% in the last nine years of the Modi government.
• Revenue from tolls increased to Rs 41,342 crore in FY23 from Rs 4,770 crore in 2013-14.
• The aim of the government is to increase toll revenue to Rs 1,30,000 crore by 2030.
• The use of FASTags has helped to bring down the waiting time at toll plazas to 47 seconds, and various measures are underway to bring it down to less than 30 seconds.
• The 4-lane NH has almost doubled from 18,371 km to 44,654 km in 2013-14.

Topic: MoUs/Agreements

10. The Gujarat government has signed MoU with Micron Technology.

• This MoU is for establishing a semiconductor assembly and test facility at Sanand in the Ahmedabad district.
• It was signed at Gandhinagar in the presence of CM Bhupendra Patel and Union Electronics and IT Minister Ashwini Vaishnaw.
• Under the project, the Central Government will offer 50% fiscal support for the total project cost to Micron Technology.
• The Gujarat government will provide incentives representing 20% of the total project cost.
• The plant is expected to create five thousand direct employment opportunities in Gujarat.
• Phase 1 of the plant will become operational by the end of 2024.
• Micron Technology:
  • It is an American chipmaker firm.
  • It is headquartered in Boise, Idaho, United States.
  • Its CEO is Sanjay Mehrotra.

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