BANKING - 2018 FEBRUARY

February 1

SBI inks information utility pact with NeSL
State Bank of India has signed an Information Utility (IU) agreement with National E-Governance Services Ltd (NeSL) to share financial and security information under the Insolvency and Bankruptcy Board of India (IU) regulation 2017.
NeSL is the first IU registered with IBBI. The company has been set up by 17 financial institutions, including State Bank of India, Life Insurance Corporation of India, Bank of Baroda, Canara Bank, and ICICI Bank.
Under IBC, IU will offer services for accepting electronic submission of financial information, recording the same safely and accurately, verifying and authenticating the financial information submitted by a person and providing access to information stored to persons specified by the IBBI Regulations.

Government to merge three general insurance companies
As part of divestment of public sector entities the government will merge three general insurance firms into one and subsequently list the entity on stock exchanges.
Three public sector general insurance companies - National Insurance Co Ltd, United India Assurance Co Ltd and Oriental India Insurance Company - will be merged into a single insurance company and be subsequently listed.
The government has begun strategic disinvestment in 24 public sector units (PSUs), including national carrier Air India. As part of divestment of stake in its general insurance firms, the government diluted stakes in New India Assurance Co Ltd and and General Insurance Corporation of India last year.

February 2

IOB receives ₹173 cr capital infusion from government
Indian Overseas Bank (IOB) has received Rs 173.06 crore capital infusions from the government in the current fiscal.
In a regulatory filing, IOB has received Rs 173.06 crore as contribution of the central government in the preferential allotment of equity shares of the bank as government's investment during the 2017-18 fiscal.

Government introduces Bill to amend the Prevention of Money-laundering Act, 2002 through Finance Act, 2018
The Government of India under the aegis of Ministry of Finance introduced the Bill to amend the Prevention of Money Laundering Act, 2002 (PMLA) through the Finance Act, 2018.
The proposed amendments aim at enhancing the effectiveness and widen the scope of Money Laundering Act.
Key amendments proposed in the Bill are as under:
Amendment of definition of “proceeds of crime”: The definition of “proceeds of crime” has been amended to allow to proceed against property equivalent to proceeds to crime held outside the country also.
Amendment in bail provisions: Proposed amendment would make the applicability of bail conditions uniform to all the offences under PMLA, instead of only those offences under the schedule which are liable to imprisonment of more than 3 years.
Corporate frauds included as Scheduled offence: Section 447 of Companies Act providing for corporate frauds has been included as scheduled offence under PMLA.

February 3

CRISIL, SIDBI Launch India’s First MSE Sentiment Index
The Union Minister for Finance and Corporate Affairs Shri Arun Jaitley launched CriSidEx , India’s first sentiment index for micro and small enterprises ( MSEs) developed jointly by CRISIL & SIDBI.
CriSidEx is a composite index based on a diffusion index of 8 parameters and measures MSE business sentiment on a scale of 0 (extremely negative) to 200 (extremely positive).
CriSidEx will have 2 indices, one for the ‘survey quarter’ and another for the ‘next quarter’ once a trend emerges after few rounds of the survey, providing independent time series data.
The crucial benefit of CriSidEx is that its readings will flag potential headwinds and changes in production cycles and thus help improve market efficiencies. And by capturing the sentiment of exporters and importers, it will also offer actionable indicators on foreign trade.

IWAI inks pact with the World Bank for Jal Marg Proj on Ganga
Inland Waterways Authority of India (IWAI) inked pact with the World Bank for Jal Marg Vikas Project to enhance navigation on National Waterway-1 from Varanasi to Haldia.
IWAI signed a project agreement with the World Bank, even as the latter entered into a USD 375 million loan agreement with the Department of Economic Affairs, Ministry of Finance for Jal Marg Vikas Project (JMVP).
The signing of the pact follows the Cabinet nod for implementation of the USD 800 million JMVP for capacity augmentation of navigation on National Waterway-1 (River Ganga) from Varanasi to Haldia.

February 4

PAN mandatory for entities in transaction over Rs 2.5 lakh
Seeking to widen the tax base, the Budget for 2018-19 provided for making PAN mandatory for any entity entering into a financial transaction of Rs 2.5 lakh or more with effect from April 1.
The 10-digit Permanent Account Number (PAN) would be used as Unique Entity Number for non-individuals.
It is proposed that every person, not being an individual, which enters into a financial transaction of an amount aggregating to Rs 2.50 lakh or more in a financial year shall be required to apply to the Assessing Officer for allotment of PAN.

February 5

Bitcoin trade will be taxed, notices sent to a few lakh investors: CBDT chief
The Income Tax Department has issued a “few lakh” notices to those who have put money in bitcoins and it is working to collect taxes that are due on these investments.
CBDT has come to the notice of the taxman that while many such investors “did not pay advance tax” on the benefits that have accrued to them, some others have not explained the investments in their tax returns in the past.
The department had conducted pan-India surveys at these exchanges in December last year.

Indian Bank revises interest rates
Public sector Indian Bank has revised the interest rates on Foreign Currency Non-Resident (banking) term deposits with immediate effect.
For FCNR (B) deposits, in US Dollar terms, the interest rates have been revised to 3.09 per cent for deposits of one year and above, but less than two years from the existing 2.89 per cent.
For deposits of two years and above but less than three years, the interest rates were revised to 3.31 per cent from 3.08 per cent.
Interest rates were revised to 3.49 per cent on deposits of three years and above, but less than four years from the current 3.22 per cent.

February 6

India contributes $1 million to UN Development Partnership Fund
India has contributed an additional $1 million to the India-UN Development Partnership Fund earmarked for South-South cooperation.
The contribution aims to intensify its partnerships with other developing countries. The fund focuses on the Least Developed Countries and Small Island Developing States.
India has pledged a multi-year contribution of $100 million to the fund established in June 2017, according to the UNOSSC, and has already provided $6 million within the seven months since its launch.

February 7

RBI Monetary Policy Highlights Feb 2018: Keeps repo rate unchanged at 6%, estimates inflation at 5.1% in Q4 FY18
The Monetary Policy Committee chaired by RBI Governor Urijit Patel announced its repo rate decision. The Reserve Bank of India in its sixth bi-monthly policy kept the repo rate unchanged under the liquidity adjustment facility (LAF) at 6%.
Consequently, the reverse repo rate under the LAF remains at 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.25%.
RBI increased its inflation forecast for Q4 to 5.1 per cent, compared to 4.3-4.7 per cent for the second half. Gross Value Added (GVA) growth for 2017-18 is projected at 6.6 per cent and for 2018-19 it is projected at 7.2 per cent.

RBI to set up ombudsman to further regulate NBFCs
The Reserve Bank of India wants to further tighten the regulations around the Non Banking Financial Companies (NBFCs) by setting up an ombudsman for these entities.
The ombudsman scheme will be addressing the customer grievances in the NBFC segment. Till now, for consumer complaints, the RBI had made it mandatory for all the NBFCs to have a grievance redressal officer, whose name and address has to be put up in the offices of the NBFCs.
However, with an ombudsman in place, the customers can directly file a complaint. The scheme will cover all deposit-taking NBFCs and those with customer interface having asset size of one million and above initially.

February 8

YES Bank raises $600 million from international debt markets
YES Bank has raised $600 million through its first US dollar denominated bond offering in the international debt markets.
This bond issuance under $ 1 billion Medium Term Note programme is for a tenor of 5 years and is rated Baa3 by Moody’s Investors Service.
The bonds are being listed on London Stock Exchange’s International Securities Market (ISM); the Singapore Stock Exchange and the India International Exchange IFSC at GIFT City, Gandhinagar.
YES Bank will use the proceeds to fund the bank’s IFSC Banking Unit (IBU) in GIFT City and expand IBU’s growing business opportunities. YES Bank is the first lender based out of GIFT City to launch a Medium Term Note (MTN) programme.

RBI asks banks to link base rate to MCLR by April 1 for quicker transmission of interest rates
Reserve Bank of India announced that, From April 1, banks will have to link the base rate with the MCLR in order to ensure quicker transmission of policy rates to existing loan interest rate to borrowers.
RBI introduced the Marginal Cost of Funds based Lending Rates (MCLR) system with effect from April 1, 2016 to facilitate greater passing on of the benefit of reduction in policy rates to lending rates.
With the introduction of the MCLR system, it was expected that the existing Base Rate linked credit exposures shall also migrate to MCLR system.
The base rate regime (loans taken before April 1, 2016) led to slower pass through. The MCLR for 1-year tenure loan for country's biggest lender State Bank of India (SBI) stands at 7.95 percent for the month of January 2018 while its base rate still stands at 8.65 percent.

HDFC Bank raises MCLR by 10 basis points
Private sector lender HDFC Bank increased the Marginal Cost of Funds based Lending Rates (MCLR) by 10 basis points (bps) for some tenures.
The bank has raised MCLR for six months, one year and two years to 8 percent, 8.20 percent and 8.30 percent, respectively.
The move comes after the Monetary Policy Committee kept key interest rates unchanged but warned of higher inflation going ahead.
Customers expecting loans to get cheaper will be in for a disappointment as the increase in bank’s MCLR indicates that loans are going to get costlier.

February 9

Moody's ups outlook on IOB and Central Bank to positive from stable
Global ratings agency Moody's has revised the outlook on two Indian public sector lenders, the Indian Overseas Bank (IOB) and Central Bank of India (CBI), from "stable" to "positive".
The positive outlook reflects the upward pressure that could develop on the banks' long-term ratings if capital positions continue to improve over the next 12-18 months due to capital infusions from the government.
The agency expects a stabilisation in asset quality, a moderate improvement in profitability metrics, and stable funding and liquidity positions at these two banks.
Based on the announced allocations, CBI will receive Rs 51.6 billion and IOB will receive Rs 46.9 billion in new capital. The capital infusion will increase the common equity tier 1 (CET1 ratio) for CBI by 280 basis points (bps), compared to seven per cent as of September 2017, and for IOB by 320 bps, compared to the reported ratio of 7.1 per cent.

February 10

India Post Payments Bank to be launched across India from April
India Post Payments Bank will start pan-India roll out of its network from April this year. All 1.55 lakh post office branches will operate as access points and 650 payments bank branches will provide them back-end support.
Once the proposed expansion is completed, IPPB will be providing the largest financial inclusion network in the country, covering both urban as well as rural hinterland with ability to provide digital payment services at the doorstep with the help of Postmen and Gramin Dak Sewaks (GDS).
In 2015, RBI had granted 'in-principle' approval to 11 entities, including the Department of Posts, to set up payments banks. Payments banks can accept deposits of up to Rs 1 lakh per account from individuals and small businesses.
Unlike traditional banks, payments banks are not allowed to give loans or credit to customers.

PNB signs pact with National e-Gov Services
Punjab National Bank has signed an agreement for information utility with National e-Governance Services Limited. The objective of the agreement is to augment the information infrastructure in India.
The agreement will enable storing of financial information that will help substantiate defaults and verify claims expeditiously. This will in turn facilitate resolution in the National Company Law Tribunal in a time bound manner.


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