Current Affairs February 2017 - Finance
News 1 - Economic Survey 2016-17 suggested setting up of Public Sector Asset Rehabilitation Agency
To curtail NPAs, Economic survey invited setting up of a centralised Public Sector Asset Rehabilitation Agency (PARA) that could take charge of the largest, most difficult cases, and make politically tough decisions to reduce debt.
Various problems such as failure of Asset Reconstruction Companies, debt repayment problems and bad debts of the state banks have involved creation of Public Sector Asset Rehabilitation Agency. As per the Survey, gross NPAs has climbed to almost 12 percent of gross advances for public sector banks at end-September 2016.
News 2 - Government allows carry forward of Minimum Alternate Tax
The Union Minister for Finance and Corporate Affairs announced in the Union Budget 201718 that the income tax for smaller companies with annual turnover up to Rs. 50 crores will be reduced to 25% to make MSME companies more viable and to encourage firms to migrate to company format.
As per the data of Assessment Year 2015-16, there are 6.94 lakh companies filing returns of which 6.67 lakh companies fall in this category and, therefore, percentage-wise 96% of companies will get this benefit of lower taxation.
News 3 - Provision for NPAs increased from 7.5 % to 8.5% in Union Budget 2017-18
To give a boost to the banking sector, Shri Arun Jaitley proposed to increase allowable provision for Non-Performing Asset from 7.5% to 8.5% in Union budget 2017-18. This will reduce the tax liability of banks.
He also proposed to tax interest receivable on actual receipt instead of accrual basis in respect of NPA accounts of all non-scheduled cooperative banks also at par with scheduled banks.
This will remove hardship of having to pay tax even when interest income is not realised.
News 4 - Fiscal deficit for 2017-18 pegged at 3.2% of GDP
The Union Minister of Finance and Corporate Affairs while presenting the General Budget 2017-18, announced the fiscal deficit roadmap for the next three years. Considering the need for higher public expenditure in the context of sluggish private sector investment and slow global growth, the Finance Minister Shri Jaitley pegged the fiscal deficit for 2017-18 at 3.2% of GDP and further committed to achieve 3% in the following year i.e. 2018-19.
The Government will further improve upon fiscal deficit through focus on expenditure and higher tax realisation from the huge cash deposits in Banks, triggered by demonetization.
News 5 - Union Budget 2017-18 proposed ‘No Cash’ Transaction above Rs. 3 lakhs
In a bid to give a push to Digital Economy and weed-out corruption and black money, the Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley in his Budget Speech announced that Government has decided that no transaction above Rs 3 lakh will be permitted in cash, for which Finance Ministry has proposed an amendment to the Income-tax Act in the Finance Bill.
Government will launch two new Schemes to promote the usage of BHIM App i.e., Referral Bonus Scheme for individuals and a Cashback Scheme for merchants, to promote cashless economy.
News 6 - Lakshmi Vilas Bank develops mobile app in union with Fisdom start up
Bangalore based fin tech start up Fisdom developed a mobile app called as ‘Mission FINFIT’ for Lakshmi Vilas Bank to provide financial planning and wealth management services for its customers. ‘Mission FINFIT’ is made on Robo-advisory Platform. App will offer services like verifying KYC, smart investment of money, account summary details, personal wealth management services, redeem of invested money, etc.
FISDOM is product and service delivery partner of Lakshmi Vilas Bank. App is made to increase cashless economy and make India digital.
News 7 - ICRA rating agency projected Banks’ credit growth at 5-6% for FY17
As per the rating agency ICRA, credit growth is likely to remain muted at 5-6% in 2016-17, due to low demand. Low demand is further letting debt markets to offer more attractive pricing. It has been predicted that deposit growth will drop further to 12% by end-March 2017 from present from 14.7% due to cash availability in the system, low deposit rates and low credit pick up.
Bank deposit growth rate increased due to note ban, from 11.3% on a year-on-year basis on September 30 to 15.2% on December 23.
News 8 - Centre infused Rs. 10,000 crores for PSB recapitalization 2017
Centre allocated budget of amount Rs. 10,000 crore for recapitalization of public sector banks in FY2017-18. This additional allocation will be made whenever required, because as per Indradhanush plan, banks should raise Rs. 1.1 lakh crores more from the markets to meet their capital requirement as per Basel—III norms.
Under the Indradhanush roadmap 2015, the government will infuse Rs. 70,000 crores in state banks over four years, where public sector banks have been given Rs. 25,000 crores in each fiscal, 2015—16 and 2016—17.
News 9 - Government proposed to create a Payments Regulatory Board in RBI
For strengthening the digital economy further, the Finance Minister proposed to create a Payments Regulatory Board in the Reserve Bank of India (RBI) by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems. Finance Ministry has proposed formation of 6-member committee, headed by Urjit Patel.
The Committee on Digital Payments have recommended structural reforms in the payment eco system, including amendments to the Payment and Settlement Systems Act, 2007. The Government will undertake a comprehensive review of this Act and bring about appropriate amendments.
News 10 - Proposal to waive off bank transaction charges by RBI
Reserve Bank of India has decided that till 31.3.2017, banks and prepaid payment instrument issuers shall not levy any charges on customers for transactions up to Rs. 1,000 settled on Immediate Payment Service (IMPS), Unstructured Supplementary Service Data (USSD) and Unified Payments Interface (UPI).
The Reserve Bank of India (RBI) has given banks the freedom to fix bank service charges for transactions. RBI has deregulated interest rates on credit card dues. National Bank for Agriculture and Rural Development (NABARD) has approved a scheme for giving 0.5% incentive on payments made through the Aadhaar Enabled Payment System (AEPS) to merchants.
News 11 - Rs. 10000 crore Special Banking Arrangement made in Budget 2017
To reduce the burden of fertilizer subsidy backlogs, a Special Banking Arrangement of Rs. 10000 crores has been approved in this Budget to clear fertilizer subsidy dues and improve service delivery to farmers. The overall budget allocation for the Department of Fertilizer for the year 2017-18 is Rs. 74,235 crores.
The fertilizers companies used to receive subsidy on receipt of fertilizes at the district, will now get subsidy after the fertilizers are sold to farmers/ beneficiaries by the retailers to point of sale (POS) machines through biometric authentication.
News 12 - Government announced amendment in Pradhan Mantri Garib Kalyan Deposit Scheme
The Government of India has decided to allow declarants to make deposits on one or more occasions in the Pradhan Mantri Garib Kalyan Deposit Scheme, 2016.
The deposit under this Scheme shall be made by any person who declared undisclosed income under Pradhan Mantri Garib Kalyan Yojana, 2016. The deposit sum, which shall not be less than twenty-five per cent of the declared undisclosed income, can be deposited at the authorized banks from December 17, 2016 to March 31, 2017.
News 13 - Government adopted speedy measures for the recovery of NPAs
The Government has taken sector specific measures (Infrastructure, Power, Road, textiles, Steel etc.) where incidence of NPA is high. The Insolvency and Bankruptcy code (IBC) has been enacted and SARFAESI and RDDBFI acts have been amended.
Six new Debt Recovery Tribunals (DRTs) have been established for improving recovery. RBI has provided a number of tools in this regard Corporate Debt Restructuring (CDR), Formation of Joint Lenders’ Forum (JLF), Flexible Structuring for long term project loans to Infrastructure and core industries.
News 14 - Bank of Maharashtra partnered with Cigna TTK
Bank of Maharashtra entered an agreement with Cigna TTK Health to sell its products in their bank's branches. The bank had recently entered into an agreement with Future Generali India Insurance to offer its customers non-life insurance products of the insurer.
The Managing Director & CEO of Bank of Maharashtra is Ravindra Marathe while Sandeep Patel is the CEO & MD of Cigna TTK Health Insurance Company Ltd.
News 15 - Axis Bank tied up with Earthport Plc
Axis Bank has tied up with Earthport Plc to enable faster outbound cross-border payments for its customers. This, it became the first bank in India to connect with Earthport.
Earthport is a regulated Financial Institution. It provides clients with access to a global Payment Network, maintaining local banking partnerships, through which client business is settled directly via local clearing to banked beneficiaries in over 60 countries. It is authorised and regulated by the Financial Conduct Authority (FCA).
News 16 - Ujjivan Small Finance Bank opened five pilot branches in Bengaluru
Ujjivan Financial Services started operations as a small finance bank (SFB) with five pilot branches of in Bengaluru. It plans to open 457 branches over the next few months across 24 states.
It is a Bengaluru-based bank. Samit Ghosh is the Founder of Ujjivan and Managing Director and CEO of the SFB. The other SFBs to get approval from RBI are −
- Equitas Small Finance Bank Ltd
- Utkarsh Small Finance Bank Ltd
- Suryoday Small Finance Bank Ltd
- AU Financiers (India) Ltd
News 17 - RBI released the Monetary Policy Review
The Reserve Bank shifted its monetary policy stance from 'accommodative' to 'neutral. 'Repo rate, or the rate at which the RBI lends to banks, stands unchanged at 6.25%, and the reverse repo rate, or the rate at which the RBI absorbs excess liquidity remained unchanged at 5.75%. The RBI also revised down its GDP growth forecast from 7.4% to 6.9%.
The central bank also decided to form a separate enforcement department for stricter enforcement of its regulatory and supervisory actions. Inflation will be brought down by 4%.
News 18 - India's ForEx increased by USD 1.588 billion to USD 363.146 billion
India's foreign exchange reserves increased by 1.588 billion US Dollars to 363.146 billion US Dollars. Foreign currency assets, a major part of the overall reserves increased by 914.7 million to 340.126 billion US Dollars.
Gold reserves also surged by 664.3 million to 19.248 billion US Dollars. India's special drawing rights with the International Monetary Fund also rose by 3.8 million to 1.448 billion US Dollars, while the country's reserve position also increased by 6 million to 2.324 billion US Dollars.
News 19 - Government to come out with Indradhanush 2.0 for Recapitalization of PSBs
The Government has plans to launch 'Indradhanush 2.0' a comprehensive plan for recapitalisation of public sector banks to ensure that the banks fully comply with the global capital adequacy norms, Basel-III. 'Indradhanush 2.0' will be finalised after completion of the Asset Quality Review (AQR) by RBI by March 2017.
The public-sector banks were given Rs. 25,000 crores in 2015-16, and similar amount has been earmarked for the current fiscal. Besides, Rs. 10,000 crores each would be infused in 2017-18 and 2018-19.
News 20 - Centre Allocates Rs. 500 crores to India Post Payments Bank for FY-18
The Government has allocated Rs. 500 crores to India Post Payments Bank for the financial year 2017-18 to help it increase up to 650 branches across country by September 2017.
Out of the allocated amount, Rs. 125 crores have been allocated as “capital infusion into corporate entity for India Post Payments Bank” and Rs. 375 crores as “grant in aid to India Post Payments Bank (IPPB)”. The total paid up equity of the IPPB is Rs. 800 crores, of which the government has already infused Rs. 275 crores.
News 21 - IFC to conduct training programs for NBFCs
International Finance Corporation (IFC), part of the World Bank Group, has teamed up with Finance Industry Development Council (FIDC) to conduct training programmes on 'movable asset financing' and 'commercial credit reporting' for Non-Banking Finance Companies (NBFCs).
These training programmes would be conducted at various centres across the country and will help enhance the awareness, expertise and professionalism of NBFCs. The Country Head for India of IFC is Jun Zhang and Chairman of FIDC is Raman Aggarwal.
News 22 - Union Cabinet approved the SBI merger with five subsidiary banks
The Union Cabinet approved the merger of State Bank of India with five of its associate banks including State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Travancore.
The merger make SBI among top 50 banks in the world. Post-merger, SBI will have an asset base of Rs. 37 trillion, 22,500 branches, 58,000 ATMs and over 50 crore customers.
News 23 - IMF launched the South Asia Training and Technical Assistance Center in New Delhi
The International Monetary Fund (IMF) launched its first fully integrated capacity development centre, South Asia Training and Technical Assistance Centre (SARTTAC) in New Delhi.
SARTTAC is a collaborative venture between the IMF, the member countries (Bangladesh, Bhutan, India, Maldives, Nepal, and Sri Lanka), and development partners. The centre’s strategic goal is to help its member countries strengthen their institutional and human capacity to design and implement macroeconomic and financial policies that promote growth and reduce poverty.
News 24 - HDFC Life launched ‘Pragati’ Plan for low income group
HDFC Life launched Pragati, a traditional life insurance plan that has been specifically designed to empower low income families. The plan offers the dual benefit of systematic savings (with guaranteed premium returns) and wholesome life protection.
HDFC Standard Life Insurance Company Limited ('HDFC Life' / ‘Company’) is a joint venture between HDFC Ltd., India’s leading housing finance institution and Standard Life, a global investment company.
News 25 - RBI to Reimburse Banks MDR Charges from January 1, 2017
The Reserve Bank of India (RBI) will reimburse banks the merchant discount rate (MDR) on debit cards used for payment of tax and non-tax dues to the Government of India with effective from 1st January, 2017.
MDR is the commission paid by the merchant to the acquiring bank for every digital transaction allowed by the bank. The banks need to forward their claim for reimbursement of MDR along with statutory auditor’s certificate to RBI every quarter.
News 26 - Citibank launched instant chat service for customers
Citibank announced the launch of instant chat services for customers logged in to Citibank Online (CBOL) in India. The real-time chat facility focuses on resolving queries instantly, in a safe environment, across cards, domestic and non-resident accounts, and loans, for clients as they transact online.
India is the first country in Asia Pacific within the Citi network, which spans 12 countries in the region, to launch the generic chat capabilities.
News 27 - RBI permits RRBs to grant Gold Loans up to Rs. 2 lakhs
The Reserve Bank of India (RBI) has allowed the regional rural banks (RRBs) to grant gold loans up to Rs. 2 lakhs with bullet repayment option (loan amount is paid at the end of maturity). The earlier limit was capped at Rs. 1 lakh.
The period of the loan cannot exceed 12 months from the date of sanction. RRBs are required to maintain a Loan to Value (LTV) ratio of 75%. Jewellery of lower purity of gold will be valued proportionately regarding 22 carat gold. Interest will be charged to the account at monthly rests.
News 28 - Cash Credit Limit for MSMEs increased to 30%
The Government has increased the cash credit limit for micro, small and medium enterprises (MSMEs) to 30% of turnover from the existing 20%, subject to the condition that such ventures need to conduct businesses digitally.
The digital transaction would reflect a clean balance sheet. The government also reduced the tax from current 8% to 6% for MSMEs for revenue of up to Rs. 2 crores.
On the cash-GDP ratio, India's cash GDP ratio was at 12 per cent, compared to 4 per cent of developed countries.
News 29 - Canara Bank signed MoU with HRD Ministry
Canara Bank has signed a memorandum of understanding with the Ministry of Human Resource Development (MHRD) to operationalise the Higher Education Financing Agency (HEFA).
HEFA has been jointly promoted by the Ministry of Human Resource Development (MHRD) and Canara Bank with an authorised capital of Rs. 2,000 crores. It would leverage the equity to raise up to Rs. 20,000 crores for funding projects for infrastructure and development of world class Labs in IITs/IIMs/NITs and such other institutions.
News 30 - MasterCard to offer Payments Processing Solution for Airtel Payments Bank
MasterCard will offer payment processing solutions to Airtel Payments Bank. As a part of the agreement, MasterCard will provide a complete outsourced payments processing platform that delivers several payment services including switching, card management, along with support for reconciliation and dispute management processes.
An online debit card has been launched to enable Airtel Payments Bank customers make digital payments at over 1 lakh online merchants.
News 31 - Corporation Bank received National MSME Excellence Award 2017
Corporation Bank has been awarded with the National MSME Excellence Award 2017 at a function in New Delhi. The award is instituted by the Federation of Industry, Trade and Services (FITS).
Corporation Bank has taken several initiatives recognising the constructive role played by MSME Sector in the nation development like online loan facility for MSME borrowers, online facility for revival and rehabilitation of MSME, campaign for growth with various concessions and collateral free loans up to Rs two crore under Credit Guarantee Scheme.
News 32 - RBI allows multilateral FIs to invest in masala bonds
Reserve Bank of India has allowed multilateral and regional financial institutions, where India is a member country, to invest in rupee denominated bonds popularly known as 'masala bonds' issued by Indian entities.
The Masala bonds refer to rupee-denominated bonds through which Indian entities can raise money from foreign markets in rupee, and not in foreign currency. Basically, they are debt instruments that are typically used by corporates to raise money from investors.
News 33 - Oriental Bank launched mobile wallet ‘Batuaa’
Oriental Bank of Commerce launched mobile wallet ‘Oriental Batuaa’ along with several other digital offerings on its 75th Foundation Day.
The bank launched two new variants of debit cards - i) Oriental Premium card which is a RuPay based Platinum international debit card with airport lounge access and 2) Oriental Prepaid Card which is a RuPay card for individuals and corporates. The Bank also launched two MSME schemes - ‘Oriental Sanjeevani’ and ‘Oriental Budget Hotels and Restaurants’.
News 34 - Karnataka Bank entered an agreement with Daimler India
Karnataka Bank Ltd. has entered a memorandum of understanding (MoU) with Daimler India Commercial Vehicles Pvt Ltd (DICV). According to the MoU, the bank would extend finance to its customers for the purchase of commercial vehicles manufactured by Daimler India.
DICV has nominated Karnataka Bank as a preferred financier for the purchase of commercial vehicles manufactured by the company. The Karnataka Bank is a major banking institution based in the coastal city of Mangalore in Karnataka, India.
News 35 - Bharat QR code launched to push less-cash economy
RBI Deputy Governor R Gandhi launched BharatQR code the world’s first interoperable and low-cost acceptance solution as part of efforts to move towards less-cash economy at an "insignificant cost".
It was developed by MasterCard, National Payments Corporation of India (NPCI) and Visa. Bharat QR code is seen as a better alternative to physical Point-of-Sale (PoS) machines which involves capital costs. BharatQR code would require merchants to only display one QR code instead of multiple ones. It will make payments seamless for buyers as they just have to "scan to pay" for transactions instead of swiping their credit/debit cards.
News 36 - BHIM App creates a World Record with 17 Million downloads
As per the Niti Aayog CEO Amitabh Kant, the indigenous digital payments app BHIM has recorded 17 million downloads, which is a world record. It was launched in December 2016 for fast and secure cashless transactions.
The Bharat Interface for Money (BHIM) app was launched on the iOS platform in February 2017. BHIM App has seen one update since launch. 'Pay to Aadhaar’ number as added as a new payment option. it now functions on seven new languages apart from Hindi and English - Odia, Bengali, Kannada, Malayalam, Telugu, Tamil, and Gujarati.
News 37 - Jewellery purchase over Rs. 2 lakh in cash to attract 1% tax from April 1, 2017
Jewellery purchased in cash for an excess of Rs 2 lakh will attract 1% TCS (Tax Collected at Source) from April 1, 2017. The current threshold is Rs 5 lakh.
Once the Finance Bill 2017 is passed, jewellery will be treated on par with general goods which attract 1% TCS on cash purchase of above Rs. 2 lakhs.
The Union Budget 2017-18 has proposed to ban cash dealings of over Rs. 3 lakhs.
News 38 - State Bank of India rebrands its website
The State Bank of India (SBI) will rebrand its website to bank.sbi.Bank.sbi, which is the highest domain protocol, known as generic Top Level Domain (gTLD). gTLD adoption enables an organisation to use its corporate name (.sbi) as their website’s top-level identifier, instead of using a more traditional “.com” or “.co.in” domains.
SBI has become the first banking organisation in India to use a gTLD for its internet presence and providing an exclusive experience of assurance and security to its customers.
News 39 - SIDBI signed MoU with Vijaya Bank to provide concessional loans to micro, small units
Small Industries Development Bank of India (SIDBI) has inked a Memorandum of Understanding (MoU) with Vijaya Bank for providing concessional finance to micro and small enterprises (MSEs).
The MoU also aims for joint financing/cofinancing of MSMEs for meeting capital expenditure under the ‘SIDBI Make in India Soft Loan Fund for Micro, Small & Medium Enterprises’ scheme at concessional rate of 9.60 percent, along with working capital from Vijaya Bank.
News 40 - DishTV partnered with ICICI Bank for digital payments
DishTV, Asia’s largest DTH service provider, has tied up with ICICI Bank with an aim to encourage cashless transactions. The association enables subscribers of DishTV to recharge their connections on any Unified Payment Interface (UPI) enabled app and through *99#, a National Unified USSD Platform (NUUP) in a hassle free and cashless manner.
Customers should dial *99# from their mobile number registered with their respective bank accounts, select the option ‘send money’ and enter the UPI ID (egdishtv.12345678901@icici) as the ‘payment address’ for making the payment.
News 41 - Karnataka Bank bagged top awards presented by ASSOCHAM
Karnataka Bank bagged ‘Best financial inclusion initiatives (small bank)’ award under ‘IBA-Banking Technology’ awards and ‘Best MSME Bank Award (Private sector) 2016’ given by Associated Chambers of Commerce and Industry of India (ASSOCHAM). It also stood as runner up in ‘Best use of digital and channels technology (small bank)’ category.
Karnataka Bank was honoured due to its smart banking technologies in MSME segment and quick business solutions in customer convenience.
News 42 - Dena Bank rolls out RFID-enabled cards to serve valued clients better
Dena Bank has introduced RFID (Radio Frequency Identification)-enabled banking cards. The card would help a branch/relationship manager identify a valued client entering a branch with the card. The branch manager would get the complete customer detail on his/her desktop for such customers.
Once the customer leaves the branch after completion of the transaction, the information will go into an analytics system that allows the bank to evaluate how long a customer waited before being helped and how much time the customer spent in completing the transactions and other details of his transactions.