Banking Awareness of 5 and 6 April 2024

Topic: RBI

1. RBI has imposed penalties on IDFC First Bank and LIC Housing Finance.

• A penalty of ₹1 crore has been imposed on IDFC First Bank for non-compliance with directions on ‘Loans and Advances – Statutory and Other Restrictions’.
• LIC Housing Finance Company has been fined with ₹49.7 lakh for breach of norms.
• It did not comply with provisions of the Fair Practices Code.
• It has also charged pre-payment penalty in housing loans on a floating rate basis and a fixed rate basis.
• LIC Housing Finance Company Limited (LICHFL) is a subsidiary company of LIC.
• IDFC First Bank is an Indian private-sector bank. It was founded in 2015. It is headquartered in Mumbai. V. Vaidyanathan is its MD & CEO.

Topic: Banking/Financial/Govt Schemes

2. RBI Governor announced that mobile application of the Retail Direct portal is under development.

• The mobile application is being developed for improving ease of access by retail investors to the government securities market.
• RBI Governor said the app will be available for use shortly.
• With the mobile application, investors will be able to buy and sell government securities on the go.
• The RBI Retail Direct Scheme was launched in November 2021.
• It provides individual investors access to keep gilt accounts with RBI and make investment in government securities.
• Through this scheme, investors can buy securities in primary auctions. They can buy or sell securities through the NDS-OM (Negotiated Dealing System-Order Matching) platform.

Topic: RBI

3. RBI will modify Liquidity Coverage Ratio (LCR) framework for better management of liquidity risk by banks.

• According to RBI Governor Shaktikanta Das, increased depositor flexibility to swiftly withdraw or transfer funds during stressful times may necessitate a review of the LCR framework.
• Banks covered under LCR framework shall maintain a stock of high quality liquid assets (HQLA) for meeting 30 days net outgo under stressed conditions.
• They shall maintain LCR of 100 per cent with effect from January 1, 2019.
• The LCR of Scheduled Commercial Banks was at 131.4%.
• It was much higher than the minimum prescribed requirement of 100%.
• In order to achieve LCR, all bank-owned SLR-eligible assets may be treated as HQLAs.

Topic: Banking System

4. Total business of the Indian Overseas Bank (IOB) crossed ₹5-lakh crore mark for the first time in FY24.

• It reported business of ₹4.5-lakh crore and a net profit of ₹650 crore in FY23.
• Total business of IOB crossed ₹2.5-lakh crore mark in 2010-11.
• It continued to grow till FY15. In FY15, IOB’s total business was at ₹4.25-lakh crore.
• However, its business declined in the coming years.
• So, RBI placed IOB under the PCA (Prompt Corrective Action) programme in September 2015.
• During FY2018-FY2022, equity capital of ₹24,074 crore has been infused into the bank by the central government.

Topic: Banking System

5. J&K Bank and Paymart has partnered to launch virtual ATM facility.

• Virtual ATM facility has been launched for the bank’s customers in the Jammu and Kashmir region.
• The aim of the partnership is to launch cardless cash withdrawal for the customers of bank through their neighbourhood merchants.
• This facility can be availed by the bank’s customers through its mobile banking app.
• The merchants need bank’s app to initiate cash withdrawal request.
• Virtual ATM facility now has a withdrawal limit of up to Rs 2,000 cash per transaction and a total of Rs 10,000 per month.

Topic: RBI

6. As per latest RBI Monetary Policy, repo rate remains unchanged at 6.5%.

• On 5 April 2024, the Monetary Policy Committee of the RBI decided to keep the repo rate unchanged.
• The Standing Deposit Facility rate remains at 6.25% and the Marginal Standing Facility rate and Bank Rate remain at 6.75%.
• For the last six consecutive MPC meetings, the RBI has kept the repo rate unchanged.
• RBI Governor Shaktikanta Das said that India’s foreign exchange reserves reached an all-time high of $645.6 billion as of March 29, 2024.
• According to him, the headline inflation has eased to 5.1% both in January and February.
• CPI Inflation for FY25 has been projected at 4.5%. In February, CPI inflation was projected at 5.4% for 2023-24.
• The Committee has projected the real GDP growth for FY25 at 7%.
• Trading of Sovereign Green Bonds has been allowed in International Financial Services Centre (IFSC).
• RBI will permit cash deposits in banks through UPI. It allows  ​non-bank payment system operators to offer CBDC (Central Bank Digital Currency) wallets.
• Foreign Portfolio Investors' (FPI) net inflows for 2023–24 were $41.6 billion, which was the second-highest amount of FPI inflows after 2014–15.
• RBI will permit UPI payments from PPI wallets via third-party apps.
• The dates of the next MPC meeting are June 5–7, 2024.
• Monetary Policy Committee (MPC):
  • Monetary Policy Committee was constituted under the Reserve Bank of India Act, 1934.
  • MPC is a six-member committee comprising three members from RBI including Governor Shaktikanta Das and three members appointed by the Central government.

Topic: Reports and Indices

7. Forbes released its 38th annual World Billionaires list.

• Forbes has released its annual list of the world's billionaires for 2024, revealing that the list includes more people than ever before and that they are richer than ever.
• In this, there are 141 more billionaires in the world than last year, whose total number is 2,781.
• Their combined wealth is worth $14.2 trillion, up by more than $2 trillion in 2023.
• The list of 2024 has also broken records set in 2021, adding 26 more billionaires to the list and increasing their combined net worth by $1.1 trillion.
• On the list, the top 20 gained the most, with their combined wealth increasing by $700 billion since 2023.
• The US has a record 813 billionaires, the most of any country.
• There are 473 billionaires in China and 200 in India, which is a record for that country.
• Forbes used stock prices and exchange rates from March 8, 2024, to tally their wealth.
• List of Top 10 Billionaires Ranked by Forbes:

Topic: Miscellaneous

8. Supreme Court declined any interim relief to Kerala to borrow additional funds during current fiscal year.

• SC also refused to stay the operation of two letters issued by the Finance Ministry in 2023 and certain changes made to FRBM Act 2003 in 2018 that impose borrowing restrictions on States.
• Kerala had filed a suit in the Supreme Court under Article 131 of the Constitution which empowers the Supreme Court to settle disputes between a State Government and the Union Government in India.
• Kerala accused the central government of arbitrarily imposing a Net Borrowing Ceiling (NBC) on the State which led to the financial crisis.
• What is Net Borrowing Ceiling (NBC)?
  • It imposes a limitation on the borrowing of a State from various sources including open market borrowings.
  • On the recommendation of the 15th Finance Commission, the NBC for States is fixed at 3% of the Gross State Domestic Product (GSDP) or ₹8,59,988 crore in absolute terms for the Financial Year (FY) 2023-24.
  • The Union government decided to deduct liabilities arising from the public account of the States to reach such a limit.
  • Additionally, borrowings by State-owned enterprises, where the principal and/or interest are paid from the Budget or through assignment of taxes, cess or any other State revenue, are also deducted from the NBC.
  • NBC has been imposed by invoking the powers of Centre under Article 293(3).
• What does the Constitution say about Fiscal autonomy of States?
  • Article 293 permits States to borrow only from within the territory of India on a guarantee from the consolidated fund of the State and within such limits as outlined by the legislatures of each State.
  • The subject “Public Debt of the State” is mentioned in Entry 43 of the State List in the Seventh Schedule which means that the Parliament cannot legislate or administer upon such matters.
  • If a state needs to borrow from the Centre, then such a transaction will be regulated under FRBM Act 2003.
  • Under Article 293(3), the State has to seek consent of the Centre to raise any loan, if any part of the previous loan extended by the Centre is outstanding.
  • Article 266(2) says that the money collected by the Central or State government which does not pertain to the consolidated fund can be brought under the head of ‘public accounts.’ All activities pertaining to such public accounts fall squarely within the domain of the State legislature.

Topic: Miscellaneous

9. Ninety-nine change-makers have been added to the Young Global Leaders Community Class of 2024 by the World Economic Forum (WEF).

• They are all under 40 years old and come from a variety of social backgrounds.
• The World Economic Forum has released its most recent list of "Young Global Leaders," which includes four Indians chosen from the corporate sector.
• Among them is Shashwat Goenka, Vice Chairman of the RP Sanjiv Goenka group.
• The following list provides the other three Indians who were named Young Global Leaders by WEF in 2024. 
  • FSN E-Commerce Ventures CEO and Nykaa brand owner Adwaita Nayar
  • Jubilant Group Director Arjun Bhartia
  • Vedanta Ltd Non-Executive Director Priya Agarwal Hebbar
• Seven Indians in all have received recognition for their contributions to various fields.
• Remaining three Indians are Bhumi Pednekar, Sharad Vivek Sagar and Richa Bajpai.
• The Young Global Leaders initiative of the WEF was introduced in 2005.
• Its goal is to find the next generation of leaders who can help tackle the most important issues facing the world.

Topic: Appointments

10. Rakesh Mohan has been made a member of World Bank economic advisory panel.

• He is presently a president emeritus at Centre for Social and Economic Progress (CSEP).
• He is also serving as part-time member of the Prime Minister’s Economic Advisory Council.
• He is former Reserve Bank of India deputy governor. He earlier served as executive director on the board of the International Monetary Fund.
• He also served as economic affairs secretary and chief economic adviser in the Finance Ministry.
• Lord Nicholas Stern will chair the World Bank panel.
• World Bank Group Chief Economist Indermit Gill will co-chair the panel. Each panel member will serve for two years.

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