Banking Awareness of 3, 4 and 5 August 2024

Topic: RBI

1. Since calendar year 2014, the RBI has revoked the licenses of 78 Urban Cooperative Banks (UCBs).

• 46% of these come from Maharashtra, as per documents tabled in Parliament.
• Till July 2024 only, licenses of ten UCBs were revoked.
• Two of them are located in each Uttar Pradesh, Karnataka, and Maharashtra, respectively.
• Gujarat, Rajasthan, Assam, and Andhra Pradesh each have one of them.
• 14 UCB licenses were revoked in 2023, while 12 UCB licenses were revoked in 2022.
• When total numbers from 2014 are considered, Maharashtra tops the list with 36 licenses lost by cooperative banks.
• Karnataka (8 banks) and Uttar Pradesh (14 banks) follow Maharashtra.
• Since 2014, not a single State Cooperative Bank (StCB) or District Central Cooperative Bank (DCCB) has been closed in the rural cooperative banking sector.
• By March 31, 2026, UCBs must gradually adhere to the RBI's Priority Sector Lending (PSL) target of 75% of adjusted net bank credit (ANBC) or the credit equivalent amount of off-balance sheet exposure (CEOBSE).
• Based on their Tier-I capital, UCBs are required to follow prudential exposure limits of 15% for a single borrower/party and 25% for a group of related borrowers/parties.
• Furthermore, up to a limit of ₹1 crore per borrower/party, at least 50% of their loans must be in quantities that don't exceed ₹25 lakh or 0.2% of Tier-capital.

Topic: Banking System

2. Write-offs in scheduled commercial banks (SCBs) have declined by over 27% over the last five years.

• The write-offs in scheduled commercial banks declined to over ₹1.70 lakh crore at the end of FY 2023-24 from over ₹2.34 lakh crore in FY 2019-20.
• With the exception of FY23, all four years saw a decrease.
• The main causes of the fall are thought to be improved recovery, fewer non-performing assets, and greater oversight of doubtful accounts.
• Between the fiscal years 2014–15 and 2022–23, PSBs recovered ₹1.61 lakh crore from written-off loans, against an overall loan write-off of ₹10.42 lakh crore.
• In terms of loans to "Large Industries and Services," SCB’s write-offs have decreased in all but one of the previous five years.
• The amount was ₹1.59 lakh crore in FY20, about ₹70,000 crore was written off in FY22.
• The amount written off increased to be about ₹1 lakh crore in FY23, while it was only approximately ₹71,000 crore in FY24.
• NPAs, including those for which complete provisioning has been made after four years, are written off from the balance sheet of the bank in accordance with RBI norms and bank board-approved policy.
• Write-offs do not release borrowers from their repayment obligations.
• In written-off loan accounts, the process of recovering past due amounts from the borrower continues.
• The banks sets aside a specific percentage of the loan amount for loan provisioning.
• Depending on the business sector and the borrower's ability to repay the loan, Indian banks typically provision for loans at a minimum of 5% and a maximum of 20%.
• As per the Basel-III norms, provisioning requirement is 100% in the case of non-performing assets. 

Topic: Reports and Indices

3. India’s services PMI stood at 60.3 in July.

• The seasonally adjusted HSBC India Services Business Activity Index stood at 60.3 in July.
• Its value declined only little from 60.5 in June. Its value was above the neutral mark of 50.0 for the thirty-sixth straight month.
• The HSBC India Composite Output Index stood at 60.7 in July. This was a marginal decline from 60.9 in June.
• The index is prepared based on responses from purchasing managers of 400 companies.
• Services has a share of over 53% in Gross Value Added (GVA).

Topic: Infrastructure and Energy

4. US became India’s second largest supplier of liquefied natural gas (LNG) in 2023.

• With accounting for 3.09 million tonnes (MT), the US overtook the UAE as India's second-largest LNG supplier in 2023.
• In the pre-pandemic period (2019–2021), the US supplied India with 1.8 MT of LNG.
• In 2021, this amount grew to 3.86 MT, according to the World LNG Report 2024.
• The International Gas Union (IGU) published the World LNG report 2024 earlier this month.
• In 2023, the United States also became the greatest LNG exporter in the world.
• India's top LNG supplier over a five-year span (2019–2023) was Qatar.
• The percentage of African countries that India imports LNG from has decreased.
• LNG is becoming more popular as a fuel substitute in the move to renewable energy.

Topic: Miscellaneous

5. Bharat Manufacturing Fund has been launched by PNB MetLife India Insurance Company Ltd.

• It is a new fund option within its Unit Linked Insurance Plan (ULIP) category.
• Policyholders have the option to invest in the manufacturing industry through the fund.
• The fund is accessible from August 1 to August 15, 2024, during the New Fund Launch period, with a starting unit price of ₹10.
• Clients can use any of the current PNB MetLife ULIPs to invest in the Bharat Manufacturing Fund.
• These include the PNB MetLife Goal Ensuring Multiplier, PNB MetLife Smart Platinum Plus and PNB MetLife Mera Wealth Plan.

Topic: Taxation

6. Up to July 31st, a record 7.28 crore income tax returns (ITRs) were filed for the fiscal year 2024–25.

• As per the Finance Ministry, this is 7.5% more than the total income tax returns for 2023–2024 filled till July 31, 2023.
• This year, a growing percentage of taxpayers have chosen the New Tax Regime.
• 5.27 crore of the 7.28 crore ITRs filed for year 2024–25 were filed under the New Tax Regime, compared to 2.01 crore under the Old Tax Regime.
• Approximately 72% of taxpayers have chosen to use the new tax regime, with the remaining 28% still using the old tax regime.
• On July 31 this year, nearly 69.92 lakh ITRs were filed in a single day, marking the peak of ITR filing activity.
• Additionally, up till July 31st, the Department received 58.57 lakh ITRs from first-time filers. This suggests that the tax base is getting broader.
• To motivate taxpayers to file their ITRs as soon as possible, targeted outreach activities were conducted on social media.
• Digital platforms featured educational videos in twelve regional languages, in addition to Hindi and English.

Topic: Indian Economy/Financial Market

7. Government allowed automatic 100% foreign direct investment in aircraft maintenance, repair, and overhaul (MRO).

• The government has declared that imports of aviation parts, testing equipment, tools, and toolkits will be subject to a standard 5% IGST rate.
• This will apply regardless of their HSN categorization as long as certain specified conditions are met.
• Government has extended the period for export of goods imported for repairs from six months to one year.
• Additionally, the period of time that items may be reimported for warranty repairs has been increased from three to five years.
• Royalties were abolished in the New MRO Guidelines, which went into effect on September 1, 2021.
• These guidelines made the land allotments for MROs in AAI airports more transparent and definite.
• Beginning on April 1, 2020, the GST rate on MRO has been lowered from 18% to 5% with a full Input Tax Credit.
• Beginning on April 1, 2020, subcontracts from overseas original equipment manufacturers (OEMs) to domestic MRO are regarded as "exports" and are subject to zero-rated GST.

Topic: Infrastructure and Energy  

8. Eight important National High-Speed Road Corridor Projects has been approved by the Cabinet.

• The projects with a length of 936 km at a total capital cost of Rs 50,655 crore are aimed at improving logistics efficiency, reducing congestion and enhancing connectivity across the country.
• Implementation of these 8 projects will generate around 4.42 crore man-days of employment directly and indirectly.
• The brief description of the project is as follows:

Topic: Miscellaneous

9. India is the 2nd largest aluminum producer in the World.

• India is the 2nd largest aluminum producer, 3rd largest lime producer and 4th largest iron ore producer in the world.
• As per the data, primary aluminium production in FY 2024–25 (April-June) registered a growth of 1.2% over the corresponding period last year.
• The production of iron ore has increased from 72 MMT in FY 2023–24 (April-June) to 79 MMT in FY 2024–25 (April-June).
• Limestone production increased from 114 MMT in FY 2023–24 (April-June) to 116 MMT in FY 2024–25 (April-June).
• The production of manganese ore has increased by 11% to 1.0 MMT in FY 2024–25 (April-June).
• Iron ore and limestone account for about 80% of the total MCDR mineral production by value.
• In FY 2023–24, Production of iron ore was 275 million metric tons (MMT) and limestone was 450 MMT.

Topic: Summits/Conferences/Meetings

10. 32nd International Conference of Agricultural Economists (ICAE) inaugurated by Prime Minister Modi in New Delhi on 3 August.

• On August 2, this triennial conference began and will conclude on 7 August.
• After 65 years, the International Association of Agricultural Economists (ICAE) is being held in India.
• This year, the theme of conference is "Transformation Towards Sustainable Agri-Food Systems."
• The aim of this conference is to address the urgent need for sustainable agriculture in the face of global challenges such as climate change, depletion of natural resources, rising production costs and conflict.
• ICAE 2024 will serve as a platform for young researchers and leading professionals to present their work and network with global peers.
• It aims to enhance research collaborations, shape policy, and highlight India’s agricultural advancements, including digital and sustainable practices.

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