Banking Awareness of 4 and 5 August 2023

Topic: Banking System

1. UPI transactions in July 2023 have grown 44% to ₹15-lakh crore.

• UPI transactions in July 2023 reached to record high level both in terms of volume and value.
• The value of total UPI transactions reached ₹15.34-lakh crore. It has grown 4% m-o-m and 44% y-o-y.
• The number of transactions in July 2023 reached a record high level of 996 crore.
• The number was higher by 6.6% from the previous month and 58% compared to July 2022, according to National Payments Corporation of India (NPCI) data.    
• The number of monthly transactions reached beyond the 900-crore in May 2023.
• The growth in the volume of UPI transactions has been above 50% y-o-y.
• According to the RBI’s annual report for 2022-23, UPI-led retail digital payments have shown a growth at a CAGR of 50% in volume and 27% in value between FY17 and FY22.
• As per a report by PwC India, UPI transactions are likely to breach 100 crore transactions per day by FY27.
• Unified Payments Interface (UPI):
  • It is a system that powers multiple bank accounts into a single mobile application.
  • It is developed by the National Payments Corporation of India. It was introduced in April 2016.

Topic: RBI

2. Amalgamation of Navanirman Co-op Urban Bank with Rajadhani Co-op Urban Bank has been approved by RBI.

• The amalgamation has become effective from 3 August 2023. 
• Branches of Navanirman Co-op Urban Bank will operate as part of Rajadhani Co-op Urban Bank.
• Both of the merged banks are Hyderabad based.
• The RBI has sanctioned the scheme of amalgamation in exercise of the powers conferred under Sub-Section (4) of Section 44A read with Section 56 of the Banking Regulation Act, 1949.

Topic: RBI

3. Late submission fees of ₹2,000 crore have been imposed by RBI on four PSUs.

• These PSUs are ONGC Videsh Ltd (OVL), Indian Oil Corp. Ltd, GAIL (India) Ltd, and Oil India Ltd.
• RBI has imposed a late submission fee of ₹500 crore each on them for delayed reporting of their overseas investments.
• State Bank of India is the authorized dealer bank for the foreign transactions of these PSUs.
• The PSUs are trying to get time from RBI to avoid any disruption in operations and for smooth functioning of their overseas subsidiaries.

Topic: Banking System

4. A 16.3% year-on-year (y-o-y) growth has been registered in bank credit in June 2023.

• Credit growth to the services sector increased from 12.8% in June 2022 to 26.7% (y-o-y) in June 2023.
• Credit growth to services have been mainly because of improved credit to ‘non-banking financial companies (NBFCs)’ and ‘trade’, per RBI’s data on sectoral deployment of credit.
• As per RBI, a growth of 20.9% (y-o-y) was recorded in personal loans in June 2023.  This was mainly due to housing and vehicle loans.
• Credit to agriculture and allied activities grew to 19.7% (y-o-y) in June 2023 from 12.9% in June 2022.
• Credit to industry sector declined to 8.1% (y-o-y) in June 2023 from 9.5% a year ago.
• Credit to large industry increased by 6.4%. Credit to medium industries and micro and small industries (MSMEs) declined to 13.2% and 13%, respectively.
• According to RBI’s latest monthly bulletin, personal loans share in total bank credit has increased from 21% in 2017-18 to 28% in 2022-23.
• Data on sectoral deployment of bank credit for June 2023 has been collected from 40 select scheduled commercial banks (SCBs).

Topic: World Economy

5. Fitch has downgraded the U.S. credit rating from AAA to AA+.

• Fitch has become the 2nd major rating agency after Standard & Poor’s to downgrade the United States’ triple-A rating. S&P has cut the top rating of US in 2011.
• Fitch had placed the "AAA" rating of US government debt on watch for a possible downgrade in May.
• Moody’s is now the only key rating company that has kept its top-tier rating for the US economy.
• Canada is rated AAA by two of the ratings companies.
• Fitch said that the cut reflects growing government debt burden after repeated debt-limit standoffs.
• S&P, Moody’s Investors Service and Fitch Ratings are known as Big Three credit-rating agencies.

Topic: Indian Economy/Financial Market

6. Morgan Stanley has recently upgraded the Indian market rating to ‘overweight’.

• The brokerage firm Morgan Stanley upgraded India's markets to the ‘Overweight’ rating from ‘equal weight’.
• Morgan Stanley believes that India's reform and macro-stability support a strong capex and profit outlook.
• The overweight rating of Morgan Stanley means that the Indian economy will perform better in the future.
• The Indian market was upgraded to equal weight from underweight on March 31 2023.
• Morgan Stanley said that the Indian economy is on track to achieve GDP growth of 6.2 per cent.
• India has become the most-preferred market among emerging markets due to foreign inflows, macro stability and a positive earnings outlook.
• Morgan Stanley predicts that the BSE benchmark index, Sensex, will reach 68500 points by December.
• Morgan Stanley has downgraded China’s rating due to the economic slowdown. China’s rating has been cut down to ‘equal weight’.
• It said household debt/GDP in India is just 19%. Household debt/GDP is 48% for China. It said India is at the start of a long wave boom.
• Morgan Stanley is an American multinational financial services company.

Topic: Infrastructure and Energy

7. India’s dependency on imports of oil and gas is likely to increase beyond 80% by FY28.

• In FY23, India’s dependency on imports of oil and gas stood at 78.6%.
• Presently, India’s refining capacity is 253.9 million tonnes per annum (mtpa).
• Refining capacity of Indian refineries is likely to increase by about 56 mtpa by the year 2028.
• To reduce India’s oil dependence on imported crude oil, government has adopted a five–pronged strategy. It comprises of following steps.
  • Increasing domestic production of oil and gas
  • Promoting energy efficiency and conservation measures
  • Giving thrust on demand substitution
  • Promoting biofuels and other alternate fuels/ renewables
  • Promoting EV charging facilities and refinery process improvements

Topic: Miscellaneous 

8. Import restriction on laptops and computers has been deferred to 1 November. 

• The government has now announced that restrictions on imports of laptops, tablets, and personal computers will come into effect from November 1, 2023. 
• Import consignments can be cleared till 31 October without a license for restricted imports. 
• The government has taken this step after chaos among importers due to import restrictions on laptops, tablets, and certain types of computers with immediate effect. 
• From 1 November, the government will allow the import of laptops, tablets and certain types of computers only through valid licences. 
• Import curbs will allow the government to keep a close watch on the locations from where products are coming. 
• This decision will also promote domestic manufacturing at a time when India has identified electronic manufacturing as a key priority area for its future growth. 
• Production Linked Incentive, PLI, Scheme 2.0 for IT Hardware has been notified by the government.
• 44 companies have been already registered under PLI 2.0 IT hardware scheme.

Topic: Corporates/Companies

9. Finance Ministry has upgraded Oil India from a Navratna to Maharatna central public sector enterprise (CPSE).

• It has upgraded ONGC Videsh from a Miniratna CPSE to a Navratna CPSE.
• With the new status, the companies will be allowed to decide on large investments on their own.
• Oil India Ltd (OIL) will be the 13th Maharatna amongst the CPSEs. It is an Oil Ministry CPSE.
• It is under the administrative control of the Ministry of Petroleum and Natural Gas.
• It is the 2nd largest national oil and gas company in India.
• In February 1959, Oil India Private Limited was incorporated to develop the newly discovered oilfields of Naharkatiya and Moran in India’s northeastern region.
• In 1961, it became a joint venture company of the Government of India and Burmah Oil Company Limited, UK.
• In 1981, OIL became a wholly owned Government of India enterprise.
• The Maharatna scheme was started for CPSEs, with effect from May 19, 2010.
• BHEL, ONGC, Indian Oil, BPCL, HPCL and SAIL are some of the important CPSEs.
• In order to be considered for Maharatna status, a CPSE must fulfill the following criteria.
  • Should be holding Navratna status
  • Should be listed on the Indian stock exchange, with a minimum prescribed public shareholding under SEBI regulations
  • Should have an average annual net profit exceeding  Rs 2,500 crore during the last three years
  • Should be having significant global presence or international operations
• ONGC Videsh Ltd (OVL) will be the 14th Navratna amongst the CPSEs. It is an Oil Ministry CPSE.
• A Navratna CPSE is allowed to incur capital expenditure, without any monetary ceiling, on the purchase of new items or for replacement.
• It is allowed to set up financial joint ventures and wholly owned subsidiaries in India or abroad within an investment ceiling of Rs 1,000 crore.

Read Banking Awareness PDF - 4 and 5 August 2023