Banking, Financial and Economic Awareness of 6 and 7 August 2020

1. RBI tightens norms for current account opening

• RBI has tightened norms for current account opening to prevent borrowers from using multiple operating accounts.
• RBI has said that banks cannot open a current account if customer is already using or gaining benefits of credit facilities from the banking system.
• This will prevent customers from opening current accounts and using credit facilities through cash credit (CC)/overdraft (OD) accounts across multiple banks.
• RBI has also restricted debits from cash credit (CC)/overdraft (OD) accounts if the exposure of a bank to borrower is less than 10%.
• Cash Credit (CC) accounts are meant for business purpose. Overdraft account is a credit facility that can be availed in case of low or zero balance.  

2. Panel for one-time restructuring of loans set up

• Panel for one-time restructuring of loans has been set up by RBI and Kundapur Vaman Kamath (KV Kamath) will be head of this panel.
• RBI has also provided opportunity for restructuring of loans without downgrading of assets as per its Prudential Framework on Resolution of Stressed Assets.
• The expert committee headed by KV Kamath will recommend financial parameters, sector-specific benchmark ranges to be included into resolution plans.  
• RBI has come out with Prudential Framework on Resolution of Stressed Assets on June 7, 2019. It involves downgrading of a borrower account as NPA.

3. IEX opposes market coupling concept proposed by CERC

• Indian Energy Exchange (IEX) has opposed market coupling concept proposed by CERC in its Power Market Reforms 2020’ notification.
• Power Market Reforms 2020 notification was brought by Central Electricity Regulatory Commission (CERC) on July 18.
• Market coupling means matching of all buy and sell bids in all power exchanges by a central market coupling operator. This is done to find a uniform market clearing price.
• IEX is one of two power exchanges of India. Its share in power trading market is 95%. Another exchange is PXIL. A third exchange has been approved. It will be set up by Pranurja Solutions.
• Central Electricity Regulatory Commission (CERC) was formed in 1998. It is headquartered in New Delhi. Mr. P. K. Pujari is its chairperson.

4. Aquaconnect Hubs launched in Andhra Pradesh

• Three Aquaconnect Hubs has been launched in Andhra Pradesh by Aquaconnect, which is an aquaculture technology start-up.
• The hubs have been set up at Bapatla, Ongole and Avanigadda. They will demonstrate technology and sell inputs to farmers.
• The startup also plans to set up 20 more hubs in next two years. They will be set up in different states.
• In Tamil Nadu, two similar hubs are operational. The company is also in process of partnering with three banks to help shrimp farmers. Currently, shrimp farmers face competition from Vietnam and Indonesia.
• India’s estimated fish production stands at 8 million tonnes and shrimp production stands at 7 lakh tones.
• India exports 95% of shrimp produced and US is largest importer of shrimps from India. India is also largest exporter of frozen shrimp.

5. Innovation hub to be set up by RBI

• An innovation hub will be set up by RBI in India.
• It will be set up to persuade startups to give ideas to address issues linked with financial inclusion and efficient banking services.
• As per RBI, the innovation hub will encourage innovation across the financial sector.
• Earlier, a regulatory sandbox framework was introduced by RBI on 27 August 2019. It was introduced to invite solutions related with digital payments.

6. RBI’s measure to increase digital payments

• To increase digital payments, RBI has announced scheme for offline digital payments.
• RBI has also announced a Positive Pay Mechanism. Positive Pay mechanism is aimed at preventing frauds with all cheques of values of ₹50,000 and above.
• Positive Pay mechanism involves processing of cheques by drawee bank as per the information provided by its customer while issuing of cheque.
• RBI has also announced a pilot scheme for offline digital payments till March 31, 2021.
• RBI has also said that Payment System Operators (PSOs) will gradually introduce Online Dispute Resolution (ODR) Systems.
• RBI has also released Statement on Developmental and Regulatory Policies on 6 August, 2020.

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