Banking, Financial and Economic Awareness

Half Yearly (Jan - June 2021)
2021 Book

Banking Awareness

Topic: RBI

1. RBI deputy governor BP Kanungo retires.

  • RBI deputy governor BP Kanungo has retired on 2nd April.
  • His term as deputy governor started in April 2017 for a three year term ending April 2, 2020. Then, his term was extended by one year.
  • After the retirement of BP Kanungo, RBI is left with three deputy governors. Their names are Mahesh Kumar Jain, Michael Patra and Rajeshwar Rao.
  • Shaktikanta Das is the current governor of RBI. He took charge in December 2018 for three year term after the resignation of Urjit Patel.
  • RBI can have a maximum of four deputy governors. Out of the four deputy governors, two are usually chosen from executive directors of RBI. One is nominated from among te chairpersons of PSBs. One is an economist.

Topic: Reports and Indices

2. IMF projects India’s growth at 12.5% in FY 2022 (April 2021 to March 2022).

  • In its latest World Economic Outlook (WEO), International Monetary Fund (IMF) has projected India’s growth at 12.5% in FY 2022 (April 2021 to March 2022).
  • The latest World Economic Outlook is titled as ‘Managing Divergent Recoveries’. In FY 2023, the growth will decline to 6.9%.
  • In its January World Economic Outlook, IMF has projected India will grow at 11.5% in the same period.
  • Base effect due to record contraction will cause this double-digit growth. As per IMF, India’s growth contracted 8% in FY 2021. Base effect refers to the impact of a highly low inflation rate in the corresponding period of last year on growth in this year.
  • IMF has projected the world economy to grow at 4.4% in 2022 (calendar year). Last week, World Bank revised its estimates from 4.7% points to 10.1%.
  • Economic Survey has also projected double digit growth rate (11%). IMF World Economic Outlook is published twice a year.

Topic: RBI

3. RBI keeps policy rate unchanged and continues with its accommodative stance.   

  • RBI has kept the policy repo rate unchanged at 4% and continued with its accommodative stance.
  • It has kept the reverse repo rate unchanged at 3.5%. Marginal Standing Facility rate and bank rate have also been kept unchanged at 4.25%.
  • RBI has kept the real GDP Growth Rate projection for 2021-22 unchanged at 10.5%. It consists of 26.2% in Q1, 8.3% in Q2, 5.4% in Q3 and 6.2% in Q4.
  • RBI has revised CPI Inflation projection to 5% in Q4 of 2020-21.

Quarters of 2021-22

RBI’s CPI inflation projection

Q1

5.2%

Q2

5.2%

Q3

4.4%

Q4

5.1%

  • RBI has decided to introduce a secondary market G-sec acquisition programme or G-SAP 1.0.  It announced a G-SAP of Rs 1 lakh crore for Q1 of 2021-22.

Topic: RBI

4. RBI increases deposit limit of payments banks from Rs 1 lakh to Rs 2 lakh.

  • RBI has increased the deposit limit of payments banks from Rs 1 lakh to Rs 2 lakh.
  • RBI Governor Shaktikanta Das said that the current limit on the maximum end of day balance of ₹1 lakh per individual customer is being increased to ₹2 lakh.
  • As per Guidelines for Licensing of Payments Banks, payments banks were allowed to hold a maximum balance of ₹1 lakh per individual customer. These guidelines were issued on November 27, 2014.
  • Payments Bank:
    • The payments banks can accept deposits up to a maximum of Rs. 1 lakh from a customer.
    • It is authorised to open both savings and current accounts of their customers.
    • It can only issue ATM or debit cards to their customers.
    • It cannot provide loans or lending services to customers.

Topic: RBI

5. All India Financial Institutions (AIFIs) to be provided Rs 50,000 crore by RBI.

  • All India Financial Institutions (AIFIs) will be provided Rs 50,000 crore by RBI.
  • NABARD, National Housing Bank (NHB), SIDBI will be provided ₹25,000 cr, ₹10,000 cr, ₹15,000 cr, respectively.
  • All India Financial Institutions (AIFI) is a group of development finance institutions and investment institutions. These institutions assist in the proper allocation of resources and ensure the continued circulation of money in the economy.
  • National Housing Bank was founded in July 1988. It is headquartered in New Delhi. It is the apex financial institution for housing.

Topic: Regulatory Bodies/Financial Institutions

6. SEBI Chairman Ajay Tyagi says that ideal solution to issues such as ensuring independence of independent directors is yet to be found.

  • SEBI Chairman Ajay Tyagi said that ideal solution to issues such as ensuring independence of independent directors is yet to be found.
  • He was speaking at a corporate governance summit organized by the Confederation of Indian Industry.
  • He also said that ideal solutions are yet to be found for issues such as selecting the best-suited persons as independent directors and making their role more effective and meaningful.
  • SEBI’s listing obligations and disclosure regulations (LODR) require India’s listed companies to follow basic corporate governance standards.
  • Securities and Exchange Board of India (SEBI):
    • SEBI was set up in 1988 and given statutory status in 1992. Its headquarters is located in Mumbai.
    • In addition to a chairman, SEBI currently has four whole-time members and three part-time members.
    • It is a regulator of the securities market in India and aims to protect the interests of investors in securities. Ajay Tyagi is the current chairman of SEBI.

 

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