Banking, Financial and Economic Awareness

Half Yearly (Jul - Dec 2021)
2021 Book

Banking Awareness

Topic: Banking System

1.  Yes Bank carries out its first Secured Overnight Financing Rate (SOFR) linked transaction.

  • Yes Bank has carried out its first Secured Overnight Financing Rate (SOFR) linked transaction.
  • This is part of the benchmark transition management plan of Yes Bank. This is also the first step to a smooth transition to news Alternative Reference Rates.
  • SOFR will replace USD LIBOR (London Inter-Bank Offered Rate). LIBOR will be phased out (stopped gradually in stages) by the end of 2021.
  • ICICI Bank and SBI have also done SOFR linked transactions earlier.
  • LIBOR serves as a reference rate at which financial instruments can contract upon to establish the terms of agreement and also as a benchmark rate that reflects a relative performance measure for investment returns.
  • SOFR is a secured interbank overnight interest rate and reference rate established as an alternative to LIBOR.
  • Yes Bank:
    • Yes Bank Limited is an Indian private sector bank. It is headquartered in Mumbai.
    • It was founded in 2004 by Rana Kapoor and Ashok Kapoor. Prashant Kumar is its current CEO since Mar 2020.

Topic: Banking System

2. HDFC Bank announces names of winners of fourth edition of its SmartUp Grants 2021.

  • HDFC Bank has announced the names of winners of the fourth edition of its SmartUp Grants 2021.
  • As part of the fourth edition of its SmartUp Grants 2021, 21 startups from the social sector were chosen from 300 applications received from all over India.
  • HDFC Bank said that SmartUp Grants had been offered under the Parivartan programme. It started SmartUp grants in 2017.

Topic: Banking System

3.  PhonePe continued to lead the UPI payments business in March.

  • As per the NPCI data, PhonePe continued to lead the UPI payments business in March 2021.
  • PhonePe and Google Pay are the top apps for Unified Payment Interface (UPI) in March 2021.
  • They continue to be top apps and their market share in terms of the value of transactions is 87%. In terms of volume of transactions, their market share is 79%.
  • In March, transactions processed by PhonePe stood at 43.91% of the market share in terms of volume.
  • Paytm Payments Bank had 14.7% of the market share in terms of volume.
  • In November 2020, NPCI released the standard operating procedure to limit market share cap of third-party application providers. NPCI has placed a 30% limit on volume for all Third-Party App Providers.

Topic: Banking/Financial Schemes

4. U GRO Capital enters into partnership with SBM Bank India to launch GRO Smart Business credit card.

  • U GRO Capital has entered into a partnership with SBM Bank India to launch the GRO Smart Business credit card.
  • U GRO Capital said that credit cards are powered by RuPay, along with EnKash. The credit cards are specially designed for under-banked micro, small and medium enterprises.
  • U GRO Capital borrowers can get these against a fixed deposit (FD) with SBM Bank India.
  • U GRO Capital Limited is a small business-lending platform. In December 2018, SBM became the first foreign Bank in India to operate as a new Indian bank.

Topic: Reports and Indices

5. RBI will publish Financial Inclusion Index in July.

  • The Reserve Bank of India has announced that it will release the Financial Inclusion Index.
  • It will be published annually in July for the previous financial year.
  • It will be used to measure the reach of financial inclusion in the country.  It will be based on various parameters.
  • However, RBI has not released the parameters and other details about the Index.
  • Earlier, RBI had also released the National Strategy for Financial Inclusion for India 2019-2024.
  • Financial Inclusion: It is a method of offering banking and financial services to individuals. It aims to provide basic financial service to everyone.
  • RBI:
    • It was established on April 1, 1935, under the provisions of the Reserve Bank of India Act, 1934.
    • It was set up on the recommendations of the Hilton Young Commission.
    • It is the central bank of India and regulates the banking system in India
    • Shaktikanta Das is the current RBI governor.

Topic: RBI

6. Interim WMAs limit of ₹51,560 crore to State governments extended by RBI until September.

  • Interim ways and means advances (WMAs) limit of ₹51,560 crore to State governments has been extended by RBI until September.
  • RBI has announced an extension to help states during financial stress created by the second wave of COVID-19.
  • Furthermore, the aggregate WMA limit of States and UTs has been enhanced by RBI to ₹47,010 crore per year. Currently, the aggregate WMA limit of States and UTs is ₹32,225 crore.
  • ₹32,225 crore was fixed in February 2016. As per RBI, the basis of normal WMA limits is a three-year average of a State’s actual revenue and capital expenditure.
  • Withdrawals beyond the limit are taken as an overdraft. States are required to pay interest linked to the repo rate on WMA withdrawals.
  • WMAs are temporary loans given by RBI to the states. They help states during any gaps in receipts and payments.
  • WMAs are of two types – normal and special. Special WMAs are secured advances. They are provided against the pledge of Government of India dated securities.

Topic: Taxation System

7.  Net Direct tax collections for financial year 2020-21 increase by almost 5% year-on-year.

  • Net Direct tax collections for the financial year 2020-21 increased by almost 5% year-on-year to ₹9.45 lakh crore.
  • Net Direct tax collections exceeded revised estimates of ₹9.05 lakh crore in the Union Budget.
  • As per experts, Vivad Se Vishwas Scheme helped increase collections. Net Corporation tax collections for the year stood at ₹4.57 lakh crore.
  • As per provisional data released by the Finance Ministry, collection from personal income tax, including the Securities Transaction Tax, was ₹4.88 lakh crore.  Direct tax refunds increased more than 42% in FY21.
  • Advance Tax collections for 2020-21 stand at ₹4.95 lakh crore and this shows the growth of 6.7% over preceding financial year.
  • As per experts, India’s fiscal position may be better than 9.5% of the fiscal deficit projected in revised estimates as indirect tax collections are also rising.
  • Highest indirect tax collection during the financial year (FY21) was seen in March. Indirect tax during the financial year (FY21) collection exceeded actual collection last year (FY20) by 13%. It also exceeded Revised Budget Estimates by about 9%.





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