BANK EXAM 2019

SPECIAL CLASS ON BANKING AND

ECONOMIC AFFAIRS
(1-15 AUG)
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RBI IN NEWS
AUG – 2019

BRAJESH MOHAN, Educator (Unacademy)

RBI’s Monetary Policy Review

RBI reduced the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) from 5.75
per cent to 5.40 per cent with immediate effect.

Consequently, the reverse repo rate under the LAF stands revised to 5.15 per cent, and the marginal standing
facility (MSF) rate and the Bank Rate to 5.65 per cent.

RBI said in its ‘Statement on Developmental and Regulatory Policies’ to cover all repetitive bill payments under
the Bharat Bill Payment System (BBPS) that includes 5 segments- electricity, telecom, gas, direct-to-home, and
water bills.

RBI has extended the working hour of retail payment system National Electronic Funds Transfer (NEFT), which is
used for fund transfer up to Rs 2 Lakh, from 8 am to 7 pm to 24x7 round-the-clock fund transfers to promote
digital transactions with the exception of 2nd and Fourth Saturday of month.

The MPC lowered its growth forecast (GDP) to 6.9% now from 7% of June policy owning to demand and
investment slowdown.
RBI Changes priority sector lending norms for NBFC

The RBI said on-lending by registered NBFCs (other than MFIs) towards agriculture, MSMEs
and housing sector up to prescribed limits will be treated as priority sector loans.

It is being done in order to boost credit to the needy segment of borrowers.

As per the revised norms, on-lending by NBFCs for 'term lending' component under
agriculture will be allowed up to Rs 10 lakh per borrower.

In case of micro and small enterprises (MSEs) the limit will be Rs 20 lakh per borrower.

In housing sector, the limit has been enhanced from Rs 10 lakh to Rs 20 lakh per borrower
for classification of the loan as priority sector lending.
RBI ‘Fit and Proper’ Criteria for Elected Directors of PSB

All the banks are required to constitute a Nomination and Remuneration Committee
consisting of a minimum of three non-executive directors, of which not less than one-half
shall be independent directors.

The committee should include at least one member from the risk-management committee
of the board to establish ‘fit & proper’ status of applicants.

The Government of India nominee director and the nominee director on behalf of the RBI
shall not be part of the committee.

An elected director shall hold office for three years and shall be eligible for re-election:
Provided that no such director shall hold office for a period exceeding six years, whether
served continuously or intermittently.
The Reserve Bank of India has decided to set up a “Central Payment Fraud
Registry”.

The registry will track frauds in the payment systems. Under this registry, payment system
participants will be provided access to it for near-real time fraud monitoring.
Currently, banks report all banking frauds to the Central Fraud Monitoring Cell of the
Reserve Bank of India.

The Reserve Bank of India (RBI) allowed “Bank of China” to offer regular
banking services in the country.

‘Bank of China Limited’ has been included in the 2nd Schedule to the Reserve
Bank of India Act, 1934.
RBI bans NBFCs from charging loan foreclosure penalties from individual borrowers
The Reserve Bank of India(RBI) has barred the both deposit-taking and non- deposit taking
NBFCs(Non-Banking Finance Companies) from charging pre-payment /foreclosure charges on
any floating rate term loans sanctioned for purposes other than business to individual loan
borrowers.

Foreclosure: The foreclosure of personal loan is the full repayment of the remaining loan
amount in one single payment instead of paying monthly installments.

RBI’s Task Force on Offshore Rupee Markets headed by Usha Thorat recommends extension
of onshore market hours

The Task Force formed by the Reserve Bank of India (RBI) on Offshore Rupee Markets headed
by Usha Thorat has recommended the extension of onshore market hours to 9 am to 9 pm,
from 9 am to 5 pm, to improve access of overseas users and allow Indian banks to freely offer
prices to global clients around the clock.
RBI Releases The Final Regulatory Sandbox Framework For Fintech Companies

The Reserve Bank of India (RBI) issued the final draft ‘enabling framework for regulatory
sandbox (RS)’, for the startups, banks and financial institutions aims at enabling innovations in
the financial technology space.

RBI will launch the sandbox for companies/banks that meet the criteria of the minimum net
worth of Rs.25 lakh and the promoter/director of the entity should meet fit and proper
framework.

Regulatory Sandbox (RS): It refers to live testing of new products/services in a secure

&controlled regulatory environment, where the regulators can allow certain regulatory
relaxations for the limited purpose of the testing.

The concept of Regulatory Sandbox was proposed by a committee headed by Sudarshan Sen,
former executive director of RBI.
HFCs will be treated as one category under NBFCs: RBI

The Reserve Bank of India(RBI) stated that, for regulatory purposes, Housing Finance
Companies (HFCs) will be treated as one of the categories of NBFCs (Non-Banking Financial
Companies) & it will come under RBI’s supervision.

On 5 July 2019 in the maiden Budget 2019-20 speech, Finance Minister Nirmala Sitharaman
had proposed an amendment that National Housing Bank (NHB) will not remain as the
regulator for the HFCs. Since then the amended act (Section 45-IA of RBI Act 1934 in the
Finance Bill,2019) the powers for regulating HFCs given to RBI.

The country’s Central Bank, Reserve Bank of India(RBI) has asked banks not to count failed
transactions at ATMs due to technical reasons (hardware and software issues, non-availability
of cash, and any other reason attributable to the bank), as part of “free ATM transactions” ,
which are permitted every month.
BANKS IN NEWS
AUG 2019

BRAJESH MOHAN, Educator (Unacademy)

Govt issues guidelines for Rs 1 trillion partial guarantee scheme for NBFCs

The partial guarantee scheme will allow state-run banks (PSBs) to purchase assets of non-
banking and housing finance companies (NBFCs and HFCs).

The partial guarantee scheme aims at providing liquidity support to avoid distress sale of
assets in a sector facing a shortage of cash due to asset-liability mismatch.

NBFCs will be able to sell 20% of standard assets, worth up to Rs 5,000 Crore, as on March 31.

The Department of Economic Affairs will provide government guarantee of up to 10% of the
fair value of assets purchased by a bank from a stressed NBFC or HFC.

The scheme is capped at Rs 1,00,000 Crore and will be open for up to 6 months.
The State Bank of India’s (SBI) Shanghai branch is now connected to China’s National
Advance Payment System (CNAPS).

SBI is the only Indian bank to have obtained the license to do business in local currency and
also inducted to the CNAPS by the People’s Bank of China (PBOC).

SBI Shanghai can also offer the real-time transfer of local funds within China by routing them
through the PBOC.

The CNAPS, launched in 2008 by People’s Bank of China (PBOC) provides real-time
settlement services for all payments.

National Payments Corporation of India has announced that Aadhaar enabled Payment
System has crossed the milestone of over 200 million transactions during July 2019.

AePS is a bank led model which allows basic banking transactions at point of sale.

MD & CEO of NPCI: Dilip Asbe

Private sector bank, RBL Bank and digital healthcare platform Practo have partnered to
launch an industry-first co-branded health credit card. This credit card is powered by
MasterCard.

Managing Director & CEO of RBL Bank: Vishwavir Ahuja

A private life insurer Edelweiss Tokio Life Insurance tied up with MobiKwik to offer mobile-
based group insurance solutions for the customers of MobiKwik.

Business-to-business payments startup EnKash has launched the country’s first corporate
credit card called ‘Freedom Card’ for small and medium enterprises (SMEs).

The Freedom Card would give SMEs and startups the freedom to avail credit facility for
immediate needs and to manage their liquidity.
The National Housing Bank (NHB) infused an additional Rs 10,000 crore in Non-Banking Financial Companies
(NBFCs) for Housing Finance Companies (HFCs) as additional liquidity for individual housing loans for affordable
housing. This is done to ease the flow of funds to the housing sector.

Karnataka Bank inks pact with Finwizard Tech to offer MFs via ‘KBL Mobile Plus’ app

Instant Demat account opening facility launched by Federal Bank for the customers. The Demat account can be
opened by the customers in a matter of a minute by logging into FedNet which is the federal bank’s internet
banking portal.

Indian Bank has signed a bancassurance agreement with the leading private life insurer, SBI (State Bank of
India)Life Insurance to provide SBI’s suite of insurance products to its customers.

Max Life Insurance introduces ‘Speed Dial – your partner for life’ initiative to provide better policy servicing
needs to customers

Indian Bank & Aditya Birla Sun Life Insurance inked a pact to offer life insurance products
 SFB IN NEWS
AUG 2019

BRAJESH MOHAN, Educator (Unacademy)

The Postal Department has decided to convert the India Post Payments Bank (IPPB) into
Small finance bank (SFB).

Besides, the department also looks to open one crore accounts for IPPB in 100 days.

The Prime Minister of India, Narendra Modi, at the launch of the India Post Payments Bank, in New Delhi on
September 01, 2018.

CEO : Suresh P. Sethi; HQ : New Delhi, India

Jana Small Finance Bank Ltd, which commenced banking operations in March 2018, has got
the status of a Scheduled Bank.

The government has put the bank on the list of banks included in the second schedule of RBI Act 1934.

Jana Small Finance bank presently operates in 260 bank branches and 338 asset centres, which is serving over
5.5 million customers across the country.

Ajay Kanwal, MD & CEO of Jana Small Finance Bank ; HQ - Benglore

ALL ABOUT SMALL FIANANCE BANK
Small finance banks were recommended by the Nachiket Mor Committee on Financial
Inclusion

Area of operations will be smaller

Can's extend large loans

Individuals/professions with 10 years of experience in finance, Non-Banking Financial

Companies (NBFCs), micro finance companies, local area banks are eligible to set up SFBs.

Cooperative bank can't apply for license of small banks

The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.
The promoter’s minimum initial contribution to the paid-up equity capital of such small
finance bank shall at least be 40 percent and gradually brought down to 26 per cent within 12
years from the date of commencement of business of the bank.

The foreign shareholding in the small finance bank would be as per the Foreign Direct
Investment (FDI) policy for private sector banks as amended from time to time.

The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit
(ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve
Bank.

SFBs have to maintain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) as per RBI
norms.

At least 50 per cent of its loan portfolio should constitute loans and advances of up to Rs. 25
lakh.
What is a scheduled commercial bank?

Scheduled commercial banks are those which are included in the second schedule of the RBI
Act 1934 and which carry out the normal business of banking such as accepting deposits,
giving out loans and other banking services.

The main difference between scheduled commercial banks and scheduled corporative banks
is their holding pattern as co-operatives are registered under the co-operatives society act as
co-operative credit institutions.

The cooperative bank is also regulated by the RBI. They are governed by the banking
regulations act 1949 and banking laws (Co-operative Societies) act, 1965. These banks provide
most services such as savings and current accounts, safety deposit lockers, loan or mortgages
to private and business customers.

Scheduled Banks need to maintain cash reserves with RBI, at the rates prescribed by it. On
the other hand, Non-Scheduled Bank also needs to keep cash reserves, but with themselves
only.
BUSSINESS IN NEWS
AUG 2019

BRAJESH MOHAN, Educator (Unacademy)

Union Ministry of Finance imposed definitive anti-dumping duty on all imports of Purified
Terephthalic Acid (PTA) from South Korea and Thailand.

Govt. Sets up KABIL to supply critical minerals to the Indian market

As a way of ensuring a consistent supply of critical and strategic minerals to the Indian
domestic market, a joint venture company Khanij Bidesh India Ltd (KABIL) is to be set up.

KABIL is a venture between National aluminum Company Ltd (NALCO), Hindustan Copper Ltd
(HCL) and Mineral Exploration Company Limited (MECL) with equity participation ration is
40:30:30 respectively.

Microsoft joins hands with Apollo Hospitals to use AI for Cardiovascular Disease

MasterCard has launched a next-generation, mobile-first authentication solution, called

“Identity Check Express” that will help customers to do uninterrupted secured transactions
while shopping online.
Asian Development Bank (ADB) approved $200 million loans for improving road
infrastructure in 34 districts of Maharashtra to connect rural areas with markets and services.
The total cost of the project is $296 million. The government will provide $96 million.

The National Stock Exchange (NSE) and the Singapore Exchange (SGX) received permission
from the Securities and Exchange Board of India (SEBI) to operate jointly in Gujarat
International Finance Tec (GIFT) City under the proposed programme ‘Connect’.

NSE IFSC-SGX Connect will be operational before December 31, 2020.

After State Bank of India, BoB goes the same way to link home loan product to RBI’s repo rate

The Confederation of All India Traders (CAIT) in partnership with HDFC Bank, Mastercard,
Common Service Centres (CSCs) of Ministry of Electronics and Information Technology (Meity)
and Global Linkers, launched Digi Vyapari- Safal Vyapari– to accelerate usage of digital
payments in the country.
Draft e-Commerce Policy by Department of Consumer Affairs

In order to protect the consumers’ interest, the Department of Consumer Affairs,
Government of India has released draft guidelines called “e-commerce guidelines for consumer
protection 2019” for e-commerce firms.

The name and contact details of the grievance officer(he/she) should be published by every
e-commerce firm on their website along with the mechanism to lodge complaints about the
benefit of users.

The Grievance Officer shall redress the complaints within one month from the date of receipt
of the complaint.

The e-commerce company shouldn’t adopt unfair means by falsely representing themselves
as consumers or post reviews about goods and services in their name.
Saudi’s ARAMCO will buy 20% of RIL’s oil and chemical business for $15 bn

Reliance Jio and Microsoft tied up to accelerate digital transformation in India

OYO Hotels partners with ACKO General Insurance will launch complimentary insurance cover
up to Rs.10 lakh for guests

A high level steering committee on Corporate Social Responsibility (CSR) headed by Injeti
Srinivas, Corporate Affairs Secretary has recommended to make CSR expenditure tax-
deductible and that non-compliance of CSR norms be treated as a civil offence.

Assam’s rare variety tea from Dikom Tea Estate makes records for being sold at Rs.75,000
per kg

A rare tea variety of eastern Assam’s Dikom Tea Estate named “Golden Butterfly tea” created
a record of being sold at Rs.75,000 per kg at the Guwahati Tea Auction Centre (GTAC), Assam.
BILLS RELATED TO BANKING SECTOR
PASSED PARLIAMENT
BRAJESH MOHAN, Educator (Unacademy)
Parliament unanimously passed the Banning of Unregulated Deposit Schemes Bill, 2019

The bill proposes compulsory registration of deposit-taking schemes with a list of specified financial sector
regulators or with the Central or state government.

The legislation provides for severe punishment ranging from 1 year to 10 years and fines ranging from Rs 2 lakh
to Rs 50 crore to act as a deterrent.

The first claim on the recovered money will be of depositors.

Parliament passed Insolvency and Bankruptcy Code (Amendment) Bill, 2019

It provides a 330-day timeline for insolvency resolution process and specifies minimum payouts to operational
creditors in any resolution plan.

The Insolvency and Bankruptcy Board of India was established on 1st October, 2016 under the Insolvency and
Bankruptcy Code, 2016 (IBC Code)

Chairperson - M. S. Sahoo