Banking, Financial and Economic Awareness of 6 and 7 May 2021

By PendulumEdu | Last Modified: 07 May 2021 19:13 PM IST

Main Headlines:

Topic: RBI

1. On-tap liquidity window of Rs 50,000 crore announced by RBI.

On-tap liquidity window of Rs 50,000 crore has been announced by RBI.
In his address, RBI Governor said that RBI proposes for a Term Liquidity Facility of Rs 50,000 crore to ease access to emergency health services.
On-tap liquidity window of Rs 50,000 crore with tenors of up to three years at the repo rate has been opened till March 31, 2022.
RBI Governor said that CPI Inflation reached up to 5.5% in March 2021 from 5% a month ago.
The Governor said that RBI has also decided to conduct special three-year long-term repo operations of Rs 10,000 crore at repo rate for the small finance banks.
In this repo rate operation of Rs. 10,000 crore for Small Financial Banks, there will be a limit of Rs.10 Lakh per borrower and the facility will be available till October 31, 2021.
Banks can provide fresh lending support to vaccine manufacturers, importers, hospitals/dispensaries, pathology labs, etc. These will be classified under a separate COVID Loan Book.

Topic: Banking System

Strategic disinvestment and transfer of management control in IDBI Bank has been given in-principal approval by Cabinet Committee on Economic Affairs (CCEA).
Central government owns 45.48% equity and LIC owns 49.24% equity in IDBI Bank. Central government and LIC together own over 94% of equity of IDBI Bank.
Currently, LIC is the promoter of IDBI bank with management control. Central government is the co-promoter.
Earlier, LIC’s Board has passed a resolution that LIC may reduce its shareholding in IDBI Bank.

Topic: Indian Economy

Centre has released over Rs. 9,800 crore as revenue deficit grant to 17 states.
Under Article 275 of the Constitution, centre provides Post Devolution Revenue Deficit Grant to states.
Centre releases the grants as per the recommendation of the Finance Commission. The grants are released in monthly instalments to meet gaps in the Revenue Account of states post devolution.
The 15th Finance Commission has recommended Post Devolution Release of Deficit grants to 17 States.
It recommended a total Post Devolution Revenue Deficit Grant of ₹1.18-lakh crore to the 17 States in the financial year 2021-22.
As per Finance Ministry, ₹9,871 crore grant is the second instalment. Total ₹19,742 crore has been released in the first two months of the current financial year.

Topic: RBI

RBI has asked lenders to frame board approved policies within one month to implement viable resolution plans under Resolution Framework 2.0.
Individuals who have taken loans and advances for business purposes would be eligible for resolution.
Small businesses, other than those classified as micro, small and medium enterprises as of March 31, 2021 would also be eligible.
In both cases, the aggregate exposure of the lender should not exceed ₹25 crore as on March 31, 2021.
RBI has kept September 30, 2021 as the last date for invocation of resolution permitted under this window.

Topic: RBI

RBI has announced relaxation in compliance norms for Know Your Customer (KYC).
If customers are not able to update KYC, they will not face punitive actions until December 31, 2021.
RBI has announced that the scope of video KYC will be extended for news categories of customers such as proprietorship firms and authorised signatories.
RBI has also enabled the use of KYC Identifier of Centralised KYC Registry (CKYCR) for video-based customer identification process.
It has announced conversion of limited KYC accounts opened on the basis of Aadhaar e-KYC authentication in non-face-to-face mode to fully KYC-compliant accounts.

Topic: Reports and Indices

Number of people who faced acute food insecurity reached a 5-year high last year as per Food and Agriculture Organisation (FAO).
FAO has said this in its annual report launched by Global Network Against Food Crises-an alliance of UN, EU and non-governmental organisations.
FAO has also said that nearly 155 million people in 55 countries faced acute food insecurity and extreme hunger globally. Of the 155 million, 1.33 lakh were classified as the most severe cases of food insecurity.
India was not on the list of countries in which people face food security. As per the report, the number of those who faced food insecurity increased by about 20 million from 2019.
Conflicts would be the major cause of food crises, while containment measures and weather-related problems will increase food insecurity.
Global Network Against Food Crises was launched by EU, FAO and World Food Programme at the time of 2016 World Humanitarian Summit.
Food and Agriculture Organization (FAO):
- It was founded on 16 October 1945.
- Its headquarters is in Rome, Italy.
- The Director-General of FAO is Qu Dongyu.