Banking Awareness of 7, 8 and 9 February 2023

Topic: Indian Economy/Financial Market

1. According to RBI governor, it is expected that Current Account Deficit (CAD) will moderate in H2 FY23 from 3.3% of GDP in April-September (H1 FY23).

• CAD is expected to moderate primarily due to moderation in imports.
• CAD had widened to 3.3% of GDP in H1 FY23 from 0.2% in the H1 of FY22 because of sharp increase in merchandise trade deficit.
• RBI governor said the situation improved in Q3 FY23 as imports moderated as a consequence of lower commodity prices leading to the narrowing of the merchandise trade deficit.
• RBI governor said services exports increased 24.9% year-on-year in Q3 FY23. Rise in services exports was mainly driven by software, business, and travel services.
• Remittance growth for India in April-September 2022-23 was around 26%. The governor said this is likely to remain robust.
• He said India’s external debt ratios are low by international standards.
• India’s external debt/GDP ratio declined from 19.9% in March 2022 to 19.2% in September.
• The debt service ratio fell from 5.2% in 2021-22 to 5% at the end of September 2022.
• Current account deficit means a country is having negative income from trade in goods, trade in services and transfer payments (remittances, grants, and gifts received by a country or its residents).

Topic: Taxation

2. Karnataka High Court said that Gift Vouchers, Cash Back Vouchers, and E-Vouchers will not attract GST.

• Karnataka High Court said that they are not goods and services.
• Earlier, Authority for Advance Rulings had ruled Gift Vouchers, Cash Back Vouchers, and E-Vouchers will be taxable.
• Appellate Authority for Advance Ruling (AAAR) has later affirmed this ruling.
• Karnataka High Court bench now said that these vouchers are mere instruments accepted as consideration for the supply of goods or services.
• These vouchers have no inherent value of their own.
• The bench said the vouchers would fall under the definition of money defined under CGST Act because they are considered as instruments.
• The CGST Act excludes money from the definition of goods and services.
• The vouchers involved in this case are PPIs (prepaid payment instruments) which do not disclose the goods and services at the time of issuance.
• As per the bench, vouchers are semi-closed PPIs in which the products or services that will be redeemed are not specified at the time the voucher is issued.

Topic: Committees/Commissions/Taskforces

3. Inter-ministerial Panel has been set up for drafting Digital Competition Act.

• A 16-member inter-ministerial committee has been set up.
• It will examine the need for a separate law on competition in digital markets.
• The panel will submit its report and a draft Digital Competition Act within three months.
• The passing of the Digital Competition Act was recently recommended by the Standing Committee on Finance, headed by MP Jayant Sinha.
• The inter-ministerial committee will be headed by Manoj Govil, Ministry of Corporate Affairs (MCA) Secretary.
• The committee consists of Sangeeta Verma (Chairperson, Competition Commission of India), Saurabh Srivastava, Aditya Bhattacharya and five personnel from leading law firms.
• The committee will also include nominees from NITI Aayog, Department of Commerce, Department of Economic Affairs, Department of Consumer Affairs, Department for Promotion of Industry and Internal Trade (DPIIT) & Ministry of Electronics and Information Technology.
• The committee will review whether current provisions of the Competition Act 2002 and rules framed thereunder are enough to deal with challenges of digital economy.
• It will also examine the requirement for an ex ante regulatory mechanism for digital market with the help of a separate religion.
• It will study international practices on regulation in the area of digital markets.
• Standing Committee on Finance had recommended that leading market players that can negatively influence competitive conduct in the digital ecosystem should be identified as “systemically important digital intermediaries (SIDI)”.

Topic: Banking System

4.  India’s leading fintech company, MobiKwik, has become the first fintech to support RuPay Credit Cards on UPI.

• Customers of MobiKwik can quickly make payments to merchants by scanning the UPI QR code and using the UPI PIN for payment authentication now that RuPay Credit Cards are directly linked to UPI IDs.
• PhonePe has become first fintech in India to allow UPI payments abroad.
• PhonePe has started a service wherein the users travelling abroad can pay foreign merchants using UPI.
• Users will be allowed to make payments directly in a foreign currency from their Indian bank.
• International merchant outlets in the UAE, Singapore, Mauritius, Nepal and Bhutan that have a local QR code are supported.
• PhonePe has claimed that it is the first Indian fintech app to launch such service.
• PhonePe is a Bangalore-based Indian digital payments and financial services company. It was founded by Sameer Nigam, Rahul Chari and Burzin Engineer in 2015.
• MobiKwik is a Gurgaon-based Indian payment service provider. It was founded in 2009. Its founders are Bipin Preet Singh and Upasana Taku.
• Unified Payments Interface (UPI):
  • It is an instant real-time payment system for transferring money in bank accounts.
  • It was launched in 2016.
  • It was developed by the National Payments Corporation of India (NPCI).

Topic: Indian Economy/Financial Market  

5. Net inflows under non-resident deposits have grown to $3.6 billion during April-November 2022 from $2.6 billion a year ago.

• As per RBI governor, net inflows under non-resident deposits have been boosted by the Reserve Bank’s July 6th measures.
• Under measures to attract NRI deposits, RBI had exempted incremental FCNR (B) deposits and NRE term deposits mobilised by banks (with reference to base date of July 1, 2022) from maintenance of reserves (CRR and SLR).
• The exemptions became effective from the reporting fortnight beginning July 30, 2022. These are valid for deposits raised till November 04, 2022.
• Banks should keep a certain percentage of deposits as cash reserves with RBI. This is known as Cash Reserve Ratio (CRR).
• Statutory Liquidity Ratio (SLR) refers to reserves that the bank should have with them in liquid form in the short term.

Topic: Banking System

6. Government has given approval to increase the number of posts of executive directors in Indian Bank from three to four.

• In August 2019, Department of Financial Services had said that nationalized banks with total business of ₹10 lakh or more as per the last declared results should have four executive directors.
• On 01 April 2020, Indian Bank had assumed control of Allahabad Bank.
• The merger of Allahabad Bank and Indian Bank had created combined entity with a business of over ₹8-lakh crore.
• Indian Bank’s total business increased to ₹10,48,772 crore as of end December 2022.
• Indian Bank was founded in 1907. Its headquarters are in Chennai. Shanti Lal Jain is its MD & CEO.

Topic: Awards and Prizes

7. VP Nandakumar has received Hurun India Award.

• The Hurun India Award was given to VP Nandakumar, managing director and chief executive officer of Manappuram Finance Limited, for his outstanding contributions to business.
• The Hurun Industry Achievement Award 2022 was given to Nandakumar by Hurun Global's founder and chairman, Rupert Hoogwerf.
• On 2 February, V.K. Mathews, the founder and executive chairman of IBS Software, was also honored with the Hurun Industry Achievement Award 2022.
• At a ceremony held in Mumbai, Shishir Baijal, chairman and managing director of Knight Frank India, presented this award to Mathews.
• The previous winners of this award includes Adi Godrej, chairman of the Godrej Group, Cyrus S. Poonawalla, managing director of Serum Institute of India Ltd, Kris Gopalakrishnan, co-founder of Infosys Ltd, and Sanjiv Goenka of the RPG Group.

Topic: Appointments

8. K Satyanarayana Raju appointed as MD & CEO of Canara Bank.

• K Satyanarayana Raju has taken place of LV Prabhakar, who resigned on December 31, 2022.
• K Satyanarayana Raju has taken the charge as the MD and CEO with effect from February 7, 2023.
• He worked as Executive Director of Canara Bank since 10th March 2021.
• Other recent appointments:
  • Raul Rebello has been appointed as Managing Director and Chief Executive Officer-Designate of Mahindra Finance.
  • Shamika Ravi has been appointed as a member of the Economic Advisory Council to the Prime Minister (EAC-PM).

Topic: RBI

9. RBI raised repo rate by 25 basis points to 6.50%.

• The Monetary Policy Committee (MPC) of the Reserve Bank of India has raised the repo rate by 25 basis points to 6.50%.
• RBI has projected GDP growth of 6.4% for the next fiscal year. The MPC had cut down the GDP forecast for fiscal 2023 to 6.8% in December.
• In FY24, retail inflation is expected to be 5.3 %.
• The decision to raise the repo rate has been taken by Monetary Policy Committee with a 4:2 majority.
• The repo rate has been increased for the sixth time since May 2022.
• With the increase in repo rate, lending rates of banks are expected to rise. EMIs on vehicles, home and personal loans will increase. 43.6 % of the total loans are linked with the Repo rate.
• The external benchmark linked lending rate (EBLR) of banks will increase by 25 bps.
• The standing deposit facility rate will be 6.25% and the marginal standing facility rate and the bank rate will be 6.75%.
• Uncertainties from geopolitical tensions, global financial market volatility, rising non-oil commodity prices, etc. are the main concerns of the economy.

Topic: RBI

10. The pilot launch of the QR Code-based Coin Vending Machine has been announced by RBI.

• As per RBI’s announcement, QR Code-based Coin Vending Machine will be launched to improve the distribution of coins.
• RBI announced that the machine will be launched in collaboration with a few leading banks.
• The pilot project will be launched in 19 locations in 12 cities across the country.
• QR Code-based Coin Vending Machine is a cashless coin dispensation machine.
• It will dispense coins against debit to the customer’s bank account using Unified Payments Interface.
• QR Code-based Coin Vending Machines would end the need for the physical tendering of banknotes and their authentication.
• Customers will also have the option to withdraw coins from these machines.
• It is planned that these vending machines will be installed at public places like railway stations, shopping malls, and marketplaces to enhance ease and accessibility.

Read Banking Awareness PDF - 7, 8 and 9 February 2023