Current Affairs November 2016 - Finance


News 1 - Banks to report frauds of Rs one crore and above to CVC


Central Vigilance Commission (CVC) has asked the Banks to report to it any suspected fraud cases of one crore rupees and above.

Banks will also now have to report the modus operandi of all the alleged frauds to the CVC which will share these details with other banks to prevent such cases being repeated.

The Commission will also call regular monthly meetings of senior officials of Reserve Bank of India (RBI), CBI and banks to monitor probe in suspected bank frauds of 50 crore rupees and above.

News 2 - RBI directs banks to have 10% of the ATMs in the country dispensing 100 rupee note only

RBI Directs Banks

In order to meet public demand for Rs 100 banknotes, RBI has decided to initiate a pilot under which 10 per cent of ATMs in the country will dispense such notes only.

The central bank conducted a review meet for the steps to be taken by banks for installing such ATMs. RBI in its special instructions, directed banks to complete process within 15 days from the date of the circular and report compliance.

Banks have been given freedom to select the branches with the sample covering relatively large number of centres and meet public demand.

News 3 - RBI appointed M Rajeshwar Rao as new ED

Rajeshwar Rao

The Reserve Bank has appointed M Rajeshwar Rao as Executive Director following G Mahalingam's taking voluntary retirement from the central bank.

Rao will look after Department of Statistics and Information Management, Financial markets Operations Department and International Department.

Prior to taking over as the Executive Director, he was the Chief General Manager, Financial Markets Operations Department. He has previously held charge of the Risk Monitoring Department. He has also worked as the Banking Ombudsman, New Delhi.

News 4 - Hindustan Construction Company becomes first to get RBI nod for debt recast under S4A scheme

S4A Scheme

Reserve Bank of India’s new Scheme for Sustainable Structuring of Stressed Assets (S4A) passed by an ICICI Bank-led joint lender forum in September, has been now approved by the RBI-mandated Overseeing Committee (OC) and can be implemented from now onwards. Thus, Hindustan Construction Company’s Rs. 5,000 crore debt recast is first to get RBI nod.

52% of the debt would be serviced as per the original terms and conditions and rest 48% would be converted into equity for the banks and convertible debentures to be issued to the lenders. This would lead HCC to own 25% stake in the company’s post-scheme equity capital.

News 5 - Government of India and Asian Development Bank (ADB) signed $48 Million Loan to improve Assam’s Power Distribution System

India and ADB

The Asian Development Bank (ADB) and the Government of India signed a $48 million loan to help Assam state continue its drive to improve access to efficient and reliable power.

This is the second tranche loan of the $300 million multi tranche financing facility for the Assam Power Sector Investment Program that was approved by the ADB Board in July 2014.

This loan will help strengthen the state’s distribution system, improve energy efficiency and reduce technical and commercial losses.

News 6 - RBI issued new series of Rs 500 & Rs 2,000 notes with improved features


The Reserve Bank issued new series of notes for 500 rupees and 2,000 rupees denomination with improved features and newer sizes which will be very friendly towards the visuallyimpaired by having features which make it accessible for all sections.

2,000 rupees note, which is a first under the denomination, will be called as the 'Mahatma Gandhi (New) Series' and has a design of the low-cost mission to Mars, the Mangalyaan, on the reverse with the base color of the note as magenta.

News 7 - Clarifications on Hedging for External Commercial Borrowings issued by RBI

External Commercial Borrowings

With a view to provide clarity on ‘External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorized Dealers and Persons other than Authorized Dealers’ and bring uniformity in hedging practices in the market, clarifications were issued by RBI on Coverage, tenor and natural hedge.

Firstly, ECB borrower will be required to cover principal as well as coupon through financial hedges. Secondly, a minimum tenor of one year of financial hedge would be required with periodic rollover. Thirdly, Natural hedge, will be considered only to the extent of offsetting projected cash flows / revenues in matching currency.

News 8 - Reserve bank of India asked banks to configure ATMs to dispense Rs 50 notes

Reserve bank of India

The Reserve Bank of India asked banks to reconfigure ATMs to dispense Rs. 50 notes along with the Rs. 100 with effect from 11th November, 2016. However banks have been asked to wait for further instructions, before dispensing new notes via ATMs.

Since there has been a demand for small denomination notes, RBI has decided to take this action. RBI advised banks to provide all cash withdrawal transactions at their ATMs free of cost to their customers till December 30, 2016.

News 9 - Government agencies to set up Special Cell for receipt of fake currency notes in Banks and Post Office

Fake Currency

RBI has been advised by Ministry of Finance to set up a Special Cell to monitor the receipt of fake currency notes and inform such instances to the Economic Offences Wing of the State Police, Intelligence/Enforcement Agencies of the Central Government and also to the Ministry of Finance.

The Law Enforcement Agencies have also been advised to maintain close vigil over possible movement of fake currencies and take prompt action as and when such cases are detected by them as well as by RBI and Banks.

News 10 - Chhattisgarh first state to adopt resolution on demonetization

Chhattisgarh Demonetization

Chhattisgarh became first state to adopt a resolution welcoming the demonetization of high-value currency notes, the state Assembly adopted a resolution moved by Chief Minister Raman Singh welcoming the Centre's decision. Besides fighting black money, it will also impact various other contentious issues plaguing the system.

Government will take effective steps to encourage people in small business to switch over to the e-payment system and exemption from VAT on the point of sale device for businessmen. All arrangements had been made in the state to make online payments to farmers for their paddy procured under support price system.

News 11 - Insolvency and Bankruptcy Board of India (IBBI) notifies two Regulations


The Insolvency and Bankruptcy Board of India, under section 240 of the Insolvency and Bankruptcy Code, 2016 notified Model ByeLaws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 and Insolvency Professional Agencies Regulations, 2016.

These two regulations inter alia provide for the eligibility norms to be a Professional Member of an Insolvency Professional Agency and also for eligibility norms to be registered with the IBBI as an Insolvency Professional Agency.

News 12 - RBI revised prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances

Income Recognition

RBI revised prudential norms in income recognition, asset classification and provisions with reference to advances. Decision was made due to withdrawal of legal tender 500 and 100 rupee notes.

In order to consider small borrowers’ problems in repaying their loan dues, RBI decided to provide additional 60 days, in case the value of the crop loan is less than INR 1 crore.

Term loans, home loans and agriculture loans, whether business or personal, with sanctioned amount of up to 1 crore rupees by bank or any NBFC, will be eligible for relaxation.

News 13 - Government allowed NABARD to disburse Rs 21,000 crore to farmers


In order to help farmers sow winter crops like wheat ahead of the sowing season, Government has asked NABARD to disburse Rs 21,000 crore to cash-starved farmers. National Bank for Agriculture and Rural Development (NABARD) will disburse the money to farm cooperatives for onward payments to farmers.

Due to restrictions placed on bank withdrawals after demonetization announcement has badly hit the farmers ahead as they are left with very little cash to buy seeds and fertilizers.

News 14 - Gross Non-Performing Assets of PSU banks touch over 6 lakh by Sept

PSU Banks

Gross Non-Performing Assets (NPA) of public sector banks has touched around six lakh thirty thousand crore rupees at the end of September 2016.

The Insolvency and Bankruptcy code (IBC) has been enacted and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) and The Recovery of Debts due to Banks and Financial Institutions (RDDBFI) Act have been amended to improve resolution/recovery of bank loans. Six new Debt Recovery Tribunals (DRTs) have been established for improving recovery.

News 15 - RBI doubles Prepaid Payment Instruments cap to Rs. 20,000

Prepaid Payment Instruments

The Reserve Bank of India has doubled the limit of semi-closed Prepaid Payment Instruments (PPIs) to Rs 20,000 to facilitate digital transactions. The measures will be applicable till December 30, 2016.

While balance in such PPIs cannot exceed Rs 20,000 at any point of time, the merchants can transfer funds from such PPIs to their own linked bank accounts up to Rs 50,000 per month, without any limit per transaction.

News 16 - RBI introduced incremental CRR to manage excess liquidity in banking system


In order to absorb the surge in liquidity in banking system following demonetization of high value notes, the Reserve Bank introduced an incremental Cash Reserve Ratio of 100%.

CRR is the portion of the deposits which banks are required to park with the RBI. Currently it is at 4%. As per the RBI guidelines, on the increase in NDTL, Net Demand and Time Liabilities between September 16 and November 11, scheduled banks shall maintain an incremental CRR of 100%, effective the fortnight beginning November 26, 2016. As per the estimates, this could be 3.5 lakh crore rupees.