BANKING - 2018 DECEMBER

December 1

RBI moves to ease liquidity for non-banking finance firms.
The Reserve Bank of India in a move to make more liquidity available to non-banking finance firms (NBFCs), has issued a circular to relax the securitisation norms by relaxing the Minimum Holding Period (MHP) requirement.
The NBFC sector is facing liquidity shortage after Infrastructure Leasing & Finance Services, a core investment company, started defaulting on loans.
NBFCs are now allowed to securitise loans with maturity of more than five years after holding them for six months on their books, as compared to one year earlier.
In a separate move aimed at boosting MSME sector exports, the RBI said the interest subsidy that exporters get under the ‘Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit’ has been increased to 5% from 3%.

December 2

20-character LEI code mandatory for market participants regulated by the Central Bank: RBI
Reserve Bank of India (RBI) made Legal Entity Identifier (LEI) code mandatory for all market transactions regulated by the central bank.
The LEI is a 20-character unique identity code assigned to entities who are parties to a financial transaction.
However they exclude individuals and transactions undertaken on recognised stock exchanges.
This is a key measure taken by RBI to help improve the quality of risk management by bettering the accuracy of the financial data in the system.

Interest subsidy for MSME sector exports increased to 5 per cent: RBI
Reserve Bank of India increased the interest subsidy, called the Interest Equalisation rate, to 5 per cent from 3 per cent on post and pre-shipment export credit for MSME sector.
The scheme (Earlier Called Interest Subvention Scheme) was announced by the government in November 2018 for all exports of MSME and 416 tariff lines.
The scheme covers mostly labour intensive and employment generating sectors like- processed agriculture/ food items, handicrafts, readymade garments, glass and glassware, medical and scientific instruments, and auto components/parts.

Net stable funding ratio (NSFR) norms for banks to be operational from April, 2020: RBI
RBI announced the date of its implementation of the Net Stable Funding Ratio (NSFR) norms to be from April 1, 2020.
In the backdrop of global crises since 2007, the Basel Committee on Banking Supervision (BCBS) proposed certain reforms to strengthen global capital and liquidity regulations with the objective of promoting a more resilient banking sector.
The NSFR norms were thus issued and from the aforesaid date the NSFR norms would be active in the Indian banking sector.
Net Stable Funding Ratio (NSFR):
The NSFR is defined as the amount of available stable funding relative to the amount of required stable funding.

December 3

Mauritius’ SBM Gets RBI Approval To Merge Operations With Its Indian Subsidiary
The Reserve Bank of India has approved the merger of SBM (Mauritius), India with SBM Bank (India). 
RBI has sanctioned the Scheme of amalgamation of the entire undertaking of SBM Bank (Mauritius) Limited, India with SBM Bank (India) Limited which has been granted licence by the Reserve Bank to carry on the business of banking in India through Wholly Owned Subsidiary (WOS) mode under the Banking Regulation Act.

ECB launch TIPS instant payment system.
European Central Bank (ECB) launched a new pan-European smartphone payment system called TARGET Instant Payment Settlement (TIPS) in Rome.
TARGET Instant Payment Settlement (TIPS) system will let people and companies in Europe transfer euros to each other within seconds and regardless of the opening hours of their local bank.
TIPS system is open only to providers that have an account at a central bank connected to the euro zone’s TARGET 2 network, meaning it is effectively restricted to European Union banks.
The platform was developed by the Banca d’Italia – in cooperation with the central banks of Germany, France and Spain.

December 4

World Bank unveils USD 200 bn in climate action investment for 2021-25.
The World Bank unveiled USD 200 billion in climate action investment for 2021-25, adding this amounts to a doubling of its current five-year funding. The move coincides with a UN climate summit in Katowice (Poland).
The breakdown of 200 billion dollars would comprise approximately 100 billion in direct finance from the World Bank. Around one-third of the remaining funding will come from two World Bank Group agencies with the rest private capital mobilised by the World Bank Group.
In the 2018 fiscal year, running from July 2017 to June 2018, the World Bank had committed USD 20.5 billion to climate action, compared with an annual average of USD 13.5 billion for the 2014-2018 period. .

December 5

RBI released its 5th Bi-monthly monetary policy produced by the Monetary Policy Committee chaired by RBI Governor Dr. Urjit Patel.
The Reserve Bank injected durable liquidity amounting to Rs. 360 billion in October and Rs. 500 billion in November through open market purchase operations, bringing total durable liquidity injection to Rs. 1.36 trillion for 2018-19.
Overall Outlook suggests the following:
Policy Rates
Repo Rate: 6.5%
Reverse Repo Rate: 6.25%
Marginal Standing Facility (MSF) Rate: 6.75%
Bank Rate: 6.75%
Reserve Ratios
CRR: 4%
SLR: 19.5%
GDP Prediction
For 2018-19: 7.4%
For 2018-19 H2: 7.2-7.3%
For 2019-20 H1: 7.5%
CPI Inflation
For 2018-19 H2: 2.7-3.2%
For 2019-20 H1: 3.8-4.2%

December 7

RBI lays down norms on loan system for large borrowers
According to the Reserve Bank of India (RBI), borrowers with working capital limit of Rs. 150 crore and above will need to have at least 40% of it in working capital loans.
In respect of borrowers having aggregate fund based working capital limit of Rs150 crore and above, a minimum level of ‘loan component’ of 40% will be effective from 1 April 2019.
For such borrowers, drawings of up to 40% of the total fund-based working capital limits shall only be allowed from the loan component of their total limit.

RBI Plans Digital Payments Ombudsman To Resolve Complaints
The Reserve Bank of India will introduce an 'ombudsman scheme' to provide cost-free mechanism to redress grievances of customers related to digital transactions.
The scheme will be notified by the end of January 2019.
The central bank has also decided to come out with a framework for limiting customer liability in respect of unauthorised electronic payment transactions involving prepaid payment instruments.

December 8

ADB enters an arrangement with World Bank for co-financed projects
Asian Development Bank (ADB) first Alternative Procurement Arrangement (APA) with the World Bank will allow procedures on co-financed projects to follow a single procurement framework.
The APA is a step further towards reducing procurement timelines in line with Strategy 2030.
Strategy 2030 is ADB's long-term plan to respond effectively to the Asia and Pacific region's changing needs.
Asian Development Bank (ADB):
Head quarter: Mandaluyong, Philippines
President/ General Secretary: Takehiko Nakao

December 10

Nabard signs USD 100 million agreement with Green Climate Fund to boost solar power
The National Bank for Agriculture and Rural Development (NABARD) has signed an agreement with Green Climate Fund (GCF) to infuse $100 million into an ambitious project designed to unlock private sector initiatives for creation of roof top solar power capacity across India.
India hosts the International Solar Alliance, has an ambitious vision of creating 100 gw solar power capacity. NABARD has been financing solar power projects and installations.
NABARD:
Head quarters: Mumbai
Chairman: Harsh Kumar Bhanwala

December 11

The Reserve Bank of India (RBI) may introduce new modes of electronic verification of customers for financial institutions including live video.
RBI officials were keen on rolling out a digital authentication method that would use the XML internet format to extract limited information on customers from the Aadhaar database.
This wouldn’t include the biometrics collected while generating Aadhaar digital identities for residents of India.
RBI:
Governor: Shaktikanta Das

December 12

RBI imposed a fine of Rs 1 crore on Indian Bank for violating cyber security norms
RBI imposed a fine on Indian bank for the contravention of circular on cyber security frame works in banks.
The contravention is with regard to RBI’s directions on Frauds - Classification and Reporting by Commercial Banks.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of the Banking Regulation Act, 1949.
Indian Bank:
Headquarters: Chennai

Jana Small Finance Bank Launched Jana Bankable Debit Card
In association with the Board of Control for Cricket in India (BCCI), Jana Small Finance Bank launched the Jana Bankable Debit Card.
Jana Small Finance Bank is the official sponsor of BCCI for all the cricket matches that are played in India.
This card is designed for cricket fans who like deals and offers on online shopping, gym membership, health & wellness products, food delivery, music and travel.
Jana Small Finance Bank:
MD & CEO: Ajay Kanwal
Headquarters: Bengaluru

December 13

RBI grants 40 branch licenses to Bandhan Bank
Bandhan Bank shares jump over 6 per cent after RBI gives nod to open new branches.
The Reserve Bank of India had earlier imposed restrictions on Bandhan Bank's branch expansion, after it failed to pare promoters stake to 40 per cent from close to 82 per cent.
The total number of branches are 978 after the approval from RBI.
Bandhan bank:
Headquarters: Kolkata
CEO: Chandra Shekhar Ghosh

December 15

Obopay partners with Federal Bank, MasterCard for prepaid cards
The highlights of the card include unique innovations such as the multi-wallet facility that allows dedicated payments and allocation of money for various purposes.
Cardholders will also be able to use the OBOPAY card as a prepaid card, and it will also provide them with a host of additional features such as card to card money transfer, making online payments, withdrawing cash at ATMs.
The card can be availed by all the business entities including corporate, distributor - retailer ecosystem, colleges, factories etc. The account can be operated with zero minimum balance and the users will not be levied any service charge on usage.
Federal Bank:
Headquarters: Aluva, Kerala

Government Forms Panel to Select MD for PSU Insurance Firms Under Banks Board Bureau
The government has constituted a seven-member panel to select managing directors of public sector insurance companies.
Banks Board Bureau (BBB) chairman BP Sharma is the head of this panel.
The other members of the panel are Financial Services Secretary, Department of Public Enterprises Secretary and Chairman of Insurance Regulatory and Development Authority of India.
Banks Board Bureau:
Chair person: Bhanu Pratap Sharma

December 16

India Post launched Internet banking facility for its savings account customers
Under this new facility customers will able to transfer funds from one post office savings bank account to another post office savings bank account.
Customers can make deposits from savings bank account to your own RD account, PPF accounts.
Customers can also open and close an RD account and term deposits (TD) accounts.
India Post:
Headquarters: New Delhi.

December 17

Public Sector Banks (PSBs) do not have any plans to shut down their ATMs
According to the Confederation of ATM Industry (CATMi), ATM service providers may be forced to close down almost half of the 2.38 lakh ATMs by March 2019 due to unviability of operations, thereby impacting the government’s financial inclusion programme.
The industry body has estimated that 1.13 lakh ATMs may have to down shutters across the country by March 2019.
These numbers include approximately one lakh off-site ATMs and a little over 15,000 white-label ATMs.
Ministry of Finance (India)
Minister of state for Finance: Shiv Pratap Shukla

December 18

Aadhaar no Longer Mandatory for Phones, Banking
The Cabinet headed by Prime Minister Narendra Modi approved amendments to the Telegraph Act and the Prevention of Money Laundering Act (PMLA) after the Supreme Court in September 2018 imposed restrictions on the use of Aadhaar by private companies.
These two Acts will be amended to provide for voluntary sharing of the 12-digit number for obtaining new mobile phone connections and for opening of bank accounts.
The apex court in a landmark judgment had held constitutional validity of Aadhaar for the distribution of state-sponsored welfare subsidies but ruled that it cannot be made mandatory for opening bank accounts or providing mobile-phone connections.
UIDAI:
Headquarters: New Delhi

December 19

Capital First merges with IDFC Bank to create IDFC First Bank
IDFC Bank and non-banking financial company (NBFC) Capital First have announced completion of their merger, creating a combined loan asset book of Rs 1.03 lakh crore for the merged entity IDFC First Bank.
The board of IDFC Bank approved the appointment of V. Vaidyanathan, founder and chairman of Capital First Ltd, as Managing Director and Chief Executive Officer of the merged entity.
IDFC First Bank will now offer a wider array of retail and wholesale banking products, services and digital innovations, to a greater number of customer segments.
Capital First:
Head quarters: Mumbai

December 20

Karnataka Bank ties up with Paisabazaar.com for Home Loans
Karnataka Bank as part of digital initiative has announced its strategic partnership with Paisabazaar.com, one of the India’s largest online platforms for financial products to offer the Bank’s home loan product to customers.
Through this partnership, consumers will now be able to choose and apply for a home loan from Karnataka Bank, directly through the Paisabazaar platform.
Karnataka Bank:
Headquarters: Mangalore

The Reserve Bank of India (RBI) announced that it has decided to scale up the amount of liquidity infusion by Rs. 10,000 crore to Rs. 50,000 crore in December 2018.
The central bank had earlier announced to infuse liquidity amounting to Rs 40,000 crore through the purchase of government securities under Open Market Operations (OMOs)
The RBI has already injected Rs 20,000 crore through two OMO purchase auctions.
The Reserve Bank has decided to inject liquidity under OMOs for Rs 50,000 crore in January 2019.
The operations will be conducted through five auctions of Rs 100 billion each.
An open market operation is an activity by a central bank to give liquidity in its currency to a bank or a group of banks.
Reserve Bank of India:
Governor: Shaktikanta Das

December 21

RBI caps outstanding ECBs at 6.5% of GDP
The Reserve Bank of India (RBI) has announced a cap for funds raised via external commercial borrowing (ECB) at 6.5% of the country’s GDP.
The limit in ECBs was announced based on the gross domestic product (GDP) figures.
ECBs refer to commercial loans in the form of bank loans, securitized instruments buyers’ credit, suppliers’ credit availed of from non-resident lenders with a minimum average maturity of three years.
Reserve Bank of India:
Headquarters: Mumbai

Three - way amalgamation of BoB, Dena Bank, Vijaya Bank takes wings
The proposed amalgamation of Bank of Baroda (BoB), Vijaya Bank and Dena Bank has moved a step forward with the Alternative Mechanism (AM) headed by Finance Minister, Arun Jaitley, giving its in-principal approval for the structure of the amalgamation.
As per the in-principle approval, Bank of Baroda (BoB), will be the ‘transferee bank’ and Vijaya Bank and Dena Bank will both be ‘transferor banks’.
BoB will retain its brand identity while the other two Vijaya Bank and Dena Bank will cease to be separate legal entities.
Bank of Baroda:
Headquarters: Alkapuri, Vadodara

December 23

RBI shortlists TCS, Wipro, IBM to set up Public Credit Registry
The PCR (Public Credit Registry) will be the single point of mandatory reporting for all material events for each loan.
The Reserve Bank of India has shortlisted six major IT companies, including TCS, Wipro and IBM India, to set up a wide-based digital Public Credit Registry (PCR) to capture details of all borrowers and willful defaulters.
The other three shortlisted vendors are: Capgemini Technology Services India, Dun & Bradstreet Information Services India, and Mindtree Ltd.
Reserve Bank of India:
Governor: Shaktikanta Das

December 25

Punjab National Bank (PNB) has launched a special card for Kumbh Mela 2019.
Punjab National Bank (PNB) in collaboration with Uttar Pradesh government launched a special card called PNB Rupay card, for Kumbh Mela 2019.
It is aimed to create a model for digitization at this edition of Kumbh Mela for convenient and hassle-free transactions for the participating 12 crore devotees.
PNB Rupay card works even in absence of internet.

December 26

RBI contemplated cooling-off period for its retired top officials to 1 year for Directorial position and 3 years for CEO and Chairmanship
The central bank of India, Reserve Bank of India (RBI) issued norms providing guidelines of cooling-period before a retired RBI top official starts to hold top ranking position in other entities.
Any retired official intending to take over the position of CEO or Chairman of any other entity would have to wait for 3 years.
However, if the official is to join as a director of the company’s board, he/ she would have to wait for a period of 1 year.
Reserve Bank of India:
Founded: 1 April 1935, Kolkata
Headquarters: Mumbai

December 27

RBI launches survey to capture retail payment habits in 6 cities
The Reserve Bank of India (RBI) will capture payment habits of individuals in six cities, including four metropolitan towns.
For the purpose, the central bank has launched a ‘Survey on Retail Payment Habits of Individuals (SRPHi)’.
According to RBI , the survey will cover a sample of 6,000 individuals from various socio-economic backgrounds across six cities including Mumbai, Delhi, Kolkata, Chennai, Bengaluru and Guwahati.
Reserve Bank of India:
Founded: 1 April 1935, Kolkata

December 28

Former RBI Chief, Bimal Jalan to head RBI expert panel for reviewing economic capital framework: Rakesh Mohan to be vice-chairman
The Reserve Bank of India, in consultation with the government of India has set up a 6-member committee headed by Former RBI Chief Bimal Jalan to review the economic capital framework of the central bank.
The committee will suggest how the central bank should handle its reserves and whether it can transfer its surplus to the government.
The six-member panel has former deputy RBI governor Rakesh Mohan as its vice chairman and comprises economic affairs secretary Subhash Chandra Garg, RBI central board members Bharat Doshi and Sudhir Mankad and deputy governor NS Viswanathan.
Reserve Bank of India:
Founded: 1 April 1935, Kolkata
Headquarters: Mumbai

December 29

Former RBI allows Sidbi to use an existing Rs. 1000 crore corpus for lending to MFIs
India’s institutional framework to support microfinance would get a boost with Reserve Bank of India clearing a proposal to dig in an existing Rs 1000-crore corpus for funding micro lenders.
The development bank will now use the money to offer soft loans to Micro Financial Institutions (MFIs) on a condition that end borrowers should get loans at 15-17% rate, which is significantly lower than the prevailing 20-22% market rate.
Sidbi has so far tied up with not for profit entities such as Uttar Pradesh-based Cashpor Micro Credit and Karnataka-based Shri Kshetra Dharmasthala Rural Development Project (SKDRDP) for channeling micro loans at a lower-than-market rate.
SIDBI (Small Industries Development Bank of India):
Headquarters: Lucknow

ICICI Bank has topped the list of banks with maximum number of employees on whom action has been taken in the last three years for involvement in frauds.
According to data furnished by the Reserve Bank of India, between 2015 and 2017, private lender ICICI Bank penalized the highest number of employees for defrauding bank assets in the last three year out of 60 scheduled commercial banks operating in India.
It is followed by State Bank of India and Punjab National Bank.
In all, banks took action against a staggering 13,949 officials, of which 16%, or 2,236, belonged to ICICI.
ICICI Bank:
Headquarters: Mumbai

United Bank of India to get Rs. 2159 crores fund infusion
State-owned United Bank of India announced that the government has decided to infuse Rs 2,159 crore in the bank as part of Rs 28,615 crore capital infusion to be done in about half a dozen banks.
The government has decided to pump Rs 28,615 crore into seven public sector banks (PSBs) through recapitalization bonds soon.
Out of these seven PSBs, Bank of India is likely to get the highest amount of Rs 10,086 crore.
United Bank of India:
Headquarters: Kolkata

RBI raises withdrawal limit for depositors to Rs. 5,000 from Rs. 1,000
The Reserve Bank of India (RBI) has relaxed restrictions placed on the Mumbai-based the City Co-operative Bank by allowing the depositors to withdraw Rs. 5,000.
Earlier, the RBI had imposed several restrictions on the cooperative bank, including limiting the withdrawal by depositors to Rs. 1,000 amid weakening of the financial position of the bank.
The RBI had relaxed the previously mentioned norm with the condition that- wherever any depositor is having liability to the bank in any manner, i.e. either as a borrower or surety, including loans against the bank deposits, the amount may be adjusted first to the relevant borrowal accounts.
Reserve Bank of India (RBI):
Governor: Shaktikanta Das

December 30

With RBI nod, ESAF is now ‘scheduled bank’
ESAF Small Finance Bank Ltd has received the RBI’s approval for inclusion in the second schedule of the RBI Act, 1934, within two years of its commencement of operations.
This makes ESAF Small Finance Bank the fifth scheduled bank from Kerala.
ESAF MFI was among the 10 applicants to receive approval from the RBI to start banking operations in 2016.
ESAF Small Finance Bank:
Managing Director & Chief Executive: K Paul Thomas

RBI extends liquidity sops for banks to March 31 2019
The Reserve Bank of India has extended the relaxation offered to banks for offering liquidity support to NBFCs up to March 31, 2019.
It had allowed banks to use government securities equal to their outstanding credit to non-bank lenders- NBFCs and HFCs.
LCR are highly liquid assets that banks and financial institutions hold to meet their short term obligations.
Reserve Bank of India (RBI):
Governor: Shaktikanta Das

Gross NPAs jump to 11.2% or Rs. 10.39 tln in FY18: RBI Report
Reserve Bank of India (RBI) released the ‘Trends & Progress of Banking in 2017-18’ report which stated that, system-wide Gross Non-Performing Assets (GNPA) of banks rose to 11.2% or at Rs. 10.39 trillion in FY18.
The share of public sector banks stood at Rs. 8.95 trillion or at 14.6% due to restructured advances slipping into NPAs and better NPA recognition whereas Private sector banks’ GNPA ratio stood at a much lower level of 4.7%.
The report stated that the resolute efforts on the part of private sector banks to clean up their balance sheets through higher write-offs and better recoveries also contributed to their lower GNPA ratios.
Reserve Bank of India (RBI):
Headquarters: Mumbai

December 31

Banks recover Rs. 40,400 crore from defaulters: RBI report
According to the Reserve Bank of India (RBI), Banks have seen a significant improvement in recovery of stressed assets helped by the Insolvency and Bankruptcy Code (IBC) and amendments in the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, during FY18.
In the fiscal ended March 2018, banks recovered Rs. 40,400 crore worth of bad loans as against Rs. 38,500 crore recovered in FY17.
The various channels through which lenders recovered their bad loans include the Insolvency and Bankruptcy Code (IBC), SARFAESI Act, debt recovery tribunals (DRTs) and Lok Adalats.
Reserve Bank of India:
RBI Governor: Shaktikanta Das

Government to infuse Rs. 10,086 crore in Bank of India
According to the state-owned Bank of India, the government has decided to infuse Rs. 10,086 crore in the bank as part of Rs. 28,615 crore capital infusion to be done in about half a dozen public sector lenders.
The capital infusion in the Bank of India’s equity will be done by way of preferential allotment of shares.
The government has decided to pump Rs. 28,615 crore into seven public sector banks (PSBs) through recapitalisation bonds in order to enhance the lending capacity of PSBs and help them come out of the Reserve Bank of India’s Prompt Corrective Action (PCA) framework.
Bank of India:
Headquarters: Mumbai

RBI eyes phone-based solution to help blind identify currency
The Reserve Bank of India (RBI) is looking at a mobile phone-based solution to help the visually impaired easily identify Indian currency notes.
Currently, intaglio printing-based identification marks are present in banknotes of Rs. 100 and above for helping the visually challenged identify them.
In June 2018, the RBI announced that it will explore the feasibility of developing a suitable device or mechanism for aiding the visually impaired in the identification of Indian banknotes.
Reserve Bank of India:
RBI Governor: Shaktikanta Das

Provision coverage ratio of PSU banks on the rise, crosses 66%
According to the financial Services Secretary, Rajiv Kumar Provision Coverage Ratio (PCR) of Public sector bank has gone up from 46.04% as of March 2015 to 66.85% as of September 2018, reflecting improvement in their financial health.
The provision coverage ratio (PCR) gives an indication of the provision made against bad loans from the profit generated.
Higher the PCR, lower is the unexposed part of the bad debts.
Ministry of Finance:
Minister: Arun Jaitley


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