RBI + BANK EXAM 2019

SPECIAL CLASS ON BANKING AND

ECONOMIC AFFAIRS
(16-31 SEP)
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RBI IN NEWS
SEP – 2019

BRAJESH MOHAN, Educator (Unacademy)

Handbook of Statistics on the Indian Economy 2018-19 released by the Reserve Bank of
India (RBI)

According to the Handbook of Statistics on the Indian Economy 2018-19 released by the
Reserve Bank of India (RBI) on September 15, 2019, the aggregate savings deposits in the
Indian private and public sector banks (PSBs) reached Rs 39.72 lakh crore as on March 31,
2019.

The foreign banks had a share of Rs 58,630 Crore.

Savings deposits – The total savings deposits with commercial banks (including foreign banks)
in 2018- 19 stood at Rs 40.31 lakh crore, up from Rs 36.55 lakh crore in 2017-18.

Credit growth – The PSB credit growth for Q1 June 2019-20, increased to 8.7%. The aggregate
deposits growth stood at 6.7%.

The credit growth of foreign banks stood at 5.4% and the aggregate deposits growth was
19.3%.
Bank credit between April and June 2019 grew by 11.7%, against a growth of 11.1% in April
and June 2018. But it was lower than the 13.1% growth in bank credit in the Q4 of 2018-19.

GDP growth – India’s GDP (Gross Domestic Product) growth recorded for the Q1 2019-20 is
5% which is at a six-year low.

Deposits – Aggregate deposits grew 10.1% in the quarter ended June 30, 2019 against 7%
of Q1 2018. This is the highest growth since the quarter ended June 2017 (12.6%).

Growth statistics – Private banks registered a growth of 16.3% in aggregate deposits and of
17.5% in bank credit in the first quarter of the fiscal, against public sector banks that had a
deposit growth of 6.7% and bank credit growth of 8.7% in the same quarter.
RBI allows all recurring bill payments through BBPS

Reserve Bank of India(RBI) has extended the use of the Bharat Bill Payment System(BBPS) for
all recurring(repetitive) payments such as school fees, insurance premiums and municipal
taxes, Equated Monthly Installments (EMI) on a voluntary basis except for prepaid recharges to
extend the scope and coverage of BBPS.

The BBPS was formed after the Committee headed by G. Padmanabhan – RBI’s former
Executive Director was in 2013 to study GIRO based payment’s feasibility and implementation.

GIRO : Payment transfer from one bank account to another bank account and initiated by the
payer, not the payee (person to whom money is paid). General Interbank Recurring Order
(GIRO) is an automated electronic payment.

BBPS was formed in the year 2013 under the aegis of National Payments Corporation of
India(NPCI) which acts as authorized Bharat Bill Payment Central Unit (BBPCU). The BBPS is
currently available only in 5 segments. They are Direct To Home (DTH), electricity, gas, telecom
and water.
UAE tops in non-residents investments in Indian MFs with the share of 16% :RBI

The Reserve Bank of India (RBI) notified that the United Arab Emirates (UAE) emerged as a
top nation in making non-resident investments in Indian mutual funds (MFs). As of March 31,
2019, the foreign liabilities of units in Indian MFs made by UAE stood at Rs 14,979 crore,
registering a share of 16%.

Reserve Bank bars unregulated fintech firms from accessing the consumer credit data

Reserve Bank Of India(RBI) has directed the banks and non-banking finance companies
(NBFCs) to stop sharing the pattern of consumer’s credit information held by credit
information companies (CICs) with analytics firms , IT (Information Technology) companies,
institutional agents and unregulated parties.

The report by RBI highlights that such data sharing actions are against the Credit
Information Companies (Regulation) Act, 2005 (CICRA) and any further default will face strict
actions and penalties.
RBI increased the loan sanction limit for small exporters to Rs 40 Crore per
borrower from Rs 25 Crore

The Reserve Bank of India (RBI) increased the loan sanction limit for small exporters as
priority sector lending (PSL) by banks to Rs 40 Crore per borrower from Rs 25 Crore in order
to boost credit to the export sector.

The existing criteria of ‘units having a turnover of up to Rs 100 Crore’ was removed

Priority sector lending is a mandatory requirement under which lenders are required to
devote a portion of their advances to empower focused groups of the economy. All sectors
put together, this adds up to 42 percent of the total lending for each bank.

The changes have been done "to boost credit to the export sector", the central bank said
in the notification.
RBI &SEBI jointly working on a framework for accurate exchange of borrower data
between banks and CRAs

India’s central Banking Institution, the Reserve Bank of India (RBI) and the regulator for the
securities market in India, SEBI (Securities and Exchange Board of India ) are jointly working
on a framework that will freely enable exchange of borrower information between banks and
credit rating agencies (CRAs) in more accurate manner.

In a meeting on 9 September, a working group of officials from financial sector regulator
found that default rates disclosed by rating agencies differed from what were reported on
RBI’s Central Repository of Information on Large Credits (CRILC).

The RBI-Sebi framework being developed is aimed at bridging this gap.

About CRAs – It is a company that assigns credit ratings, which rate a debtor’s ability to
pay back debt by making timely principal and interest payments and the likelihood of default.
Reserve Bank Comes Out With A New Order Regarding ‘Failed’ Transactions

Under this, the time period has been fixed for the disposal of grievances and auto reversal of the amount on the
failed transaction for the banks, which has been termed as Turn Around Time (TAT).

Banks will have to pay compensation to the customers if there is no settlement or reversal of the transaction
within this time period.

This compensation will be as per Rs 100 per day after completion of the time period. This RBI order will come
into effect on October 15, 2019.

SEBI sets up committee to suggest structure and norms for social stock exchanges

SEBI (Securities and Exchange Board of India) has formed a 15-member committee headed by Ishaat Hussain to
suggest possible measures and regulations in creating the ‘social stock exchanges’.

The work of the committee is to examine and make recommendations for the social stock exchanges within the
securities market domain in order to facilitate the fund raisings by social enterprises and voluntary organizations.
RECOMMENDATIONS BY
RECENT RBI COMMITTEE
SEP – 2019

BRAJESH MOHAN, Educator (Unacademy)

RBI Revises Guidelines On Concurrent Audit System As Per The Recommendations Of An
Expert Committee Headed By Y.H. Malegam

Tenure – As per the new guideline, concurrent auditors will be appointed for a period of not
more than 3 years as against earlier tenure of 5 years & the age limit for retired staff of
concurrent auditors will be capped at 70 years.

Coverage – The detailed purview of work for concurrent auditors, coverage of

business/branches is left to the discretion of the internal audit head of banks, with the prior
approval of the Audit Committee of the Board of Directors (ACB) or (Local Management
Committee (LMC) for the case of foreign banks) of the bank.

Appointment of Auditors – The banks having the option of selecting whether concurrent
audit should be done by the bank’s own staff or external auditors will remains to be left to the
discretion of individual banks.
Accountability – The appointment will be cancelled if any serious acts of omission or
commission are noticed in their (concurrent auditors ) working.

Review of effectiveness – Effectiveness of the Concurrent Audit system and the

performance of the concurrent auditors will be reviewed by the ACB/ LMC of the bank on an
annual basis

Concurrent Audit – It is an audit which is conducted on concurrent basis, means no specific

time period of Audit is defined particularly. In more simpler terms, usually an statutory or
internal audit is conducted for a specified period say 1 year or 3 months.

But, in concurrent audit no such Audit period is defined. It is conducted to check the daily
transactions and ensure whether organization is ensuring operational, regulatory compliance.
BANKS IN NEWS
AUG 2019

BRAJESH MOHAN, Educator (Unacademy)

NPCI reduced merchant discount rate on RuPay Debit Card to 0.60 % on transactions above
Rs 2,000

MDR has been revised to 0.60 percent on transactions above Rs 2,000. There will be a
maximum of Rs 150 per transaction. Currently, MDR of 0.90 percent is charged on transactions
above Rs 2,000. The maximum limit was fixed at Rs 1,000 per transaction.

Bharat QR (Quick Response) i.e. card-based QR transactions also reduce MDR to 0. 50 percent
has been reduced and the maximum MDR will be Rs 150 per MDR.

The lowering the MDR rate and lowering the cap would now encourage businesses to deal
with debit cards.

The new rate will be effective from 20 October 2019.

MDR: It is the is the rate charged to a merchant for payment processing services on debit and
credit card transactions.
Code for Responsible Lending (CRL) for the micro-credit industry launched by MFIN, Sa-
Dhan and FIDC

In order to bring more transparency & address customer-centric issue, the Code for Responsible Lending (CRL)
for the microcredit industry was jointly launched by Microfinance Institutions Network (MFIN), the RBI-
recognized self-regulatory organization and industry association for the microfinance industry, Sa-Dhan along with
FIDC (Finance Industry Development Council) at Sa-Dhan’s 15th Annual National Conference 2019 held in New
Delhi.

ECGC introduces ‘NIRVIK’ scheme to provide 90% insurance cover on the loan amount of
exporters

The Export Credit Guarantee Corporation (ECGC) has released a new Export Credit Insurance Scheme (ECIS)
called NIRVIK (Niryat Rin Vikash Yojana) to ease the lending of loan to exporters so that they can get loans easily
from banks.

Central government will also give support of 8,500 Crore rupees to ECGC in the next five years. The scheme
provides 90% insurance cover on the loan amount of exporters & it covers on both principal and interest.
Till March 31, 2020, Banks to not declare stressed assets of MSMEs as NPAs: Sitharaman

Public Sector Banks will also hold an open meeting with NBFCs (Non-Banking Financial
Companies) and retail borrowers in 200 districts before September 29, 2019 with the intention
of giving loans to farmers, retail loan creditors , loans for housing, vehicles and other purposes.

In the second phase, such meetings named “Shamiana meetings” will be held in 200 other
districts from October 10 – October 15, 2019. That is, there will be meetings of this kind in 400
districts in total. They will focus on ‘RAM’ category – retail, agriculture and MSMEs.

A state-owned bank, Indian Bank has signed a bancassurance agreement with a standalone
health insurance player, Max Bupa to provide Max bupa’s suite of health insurance products to
its customers.

Paisalo Digital (Formerly known as S.E Investments Limited) has signed its second co-
origination of loan agreement with major public sector bank in India, Bank of Maharashtra
(BoM).
About Stressed assets:

Stressed assets = NPAs + Restructured loans + Written off assets.

NPAs: It means a loan or advance for which the principal or interest payment remained
overdue for a period of 90 days.

Restructured loans: The assets of the loan which got an extended repayment period,
reduced interest rate, converting a part of the loan into equity, providing additional financing,
or some combination of these measures.

Written off assets : A write off is the process of removing assets from the accounting records
and financial statements of the bank, which tend to write off assets because the assets are no
longer available or valid.
Bank of Baroda (BoB) has launched an agriculture digital platform called “Baroda Kisan” in
Bardoli, Surat,Gujarat. It is a web-based portal that can also be accessed by farmers through
mobile.
BoB has also launched a system for centralised processing offices of agricultural proposals
in two places, Gandhinagar in Gujarat Hyderabad in Telangana.

India’s IMPS rated as the world’s best real-time payment service in 6th annual Flavours of
Fast report for 2019 by FIS

The Jacksonville, United States (US) based research firm Fidelity National Information
Services (FIS) in its 6th annual Flavours of Fast report for 2019 rated India’s Immediate Payment
Service (IMPS) as the world’s best real-time payment service in comparison to the similar
facilities of 54 countries.

It is rated highest in FIS’s ‘Faster Payments Innovation Index 2019’.

Bharti Airtel has tied up with Bharti AXA Life Insurance, one of the best insurance
companies in India to offer prepaid plan for its users along with insurance protection plan.
Airtel has brought a special prepaid plan of Rs 599, in which customers will get 2GB
(gigabyte) data per day, unlimited calling and 100 SMS (Short Message Service) per day on
any network, as well as a life insurance cover of Rs 4 lakh from Bharti AXA Life Insurance.

Repco Home Finance Ltd (RHFL ),an Indian banking and financial services company has
signed corporate agency agreement with SBI (State Bank of India) Life Insurance,
Through this partnership, SBI Life Insurance will reach more new customers across
geographies to meet their diverse insurance needs.

Pine Labs, an Indian merchant platform company has joined hands with Federal Bank,a
Private Sector, scheduled commercial bank in India to offer EMIs (equated monthly instalments)
for offline debit card transactions.
BUSSINESS & ECONOMY
IN NEWS SEP 2019

BRAJESH MOHAN, Educator (Unacademy)

Government exempts 2% TDS on cash payments of over Rs 1 crore made
through APMCs

Finance Minister of India Smt Nirmala Sitharaman notified that 2% Tax Deducted at Source
(TDS) on cash payments above Rs 1 crore made through Agricultural Produce Market
Committees (APMCs) will be exempted and it is set to be effective from October 1, 2019.

Under the Agricultural Produce Market Committee (APMC) Act, 2003, the Agricultural
Produce Market Committee (APMC) is a statutory body constituted by state government in
order to trade in agricultural or horticultural or livestock products.

Currently there are 585 markets that are linked to the eNAM (Electronic Naitonal Agriculture
Market) network from 16 states and 2 UT's.

Govt plans to link all 7,500 APMCs with e-Nam by 2022

Commerce Ministery launched digital platforms for origin certificate issuance and steel
import monitoring system (SIMS)
The Objective of Steel Import Monitoring System (SIMS) is obtaining steel import information by the govt
and other stakeholders for efficient policy intervention.
This platform will act as a single access point for exporters, Free Trade Agreements(FTA)/ Preferential Trade
Agreements (PTA) and others.
India has 15 FTA/PTA with various partner countries.

Country’s first Central Police University to be built in Greater Noida,Uttar Pradesh

India’s first Central Police University will be established in Greater Noida, Uttar Pradesh near the Yamuna
Expressway with the aim to improve the law and order of the country. In-Principle approval has been given by
the centre for the establishment of the university and 100 acres of land has also been identified for this in
Sector Techzone, Greater Noida.

Wipro Infrastructure and BEML signs MoU to work together in technical sections in
Bengaluru
Two Organization to work in areas such as aerospace components through special economic zone(SEZ) ,
industrial automation processing, 3-D printing, artificial intelligence and hydraulic system engineering
Infosys co-founder Kris Gopalakrishnan to head expert panel to examine non-
personal data regulation

Ministry of Electronics and Information Technology (Meity) has framed an 8-membered high-
level panel headed by Infosys co-founder Kris Gopalakrishnan to study issues related to non-
personal data and suggest the ways to regulate non-personal data.

The draft Data Protection Bill 2019, submitted by the Justice Srikrishna Committee on 18 July
2018, is yet to be tabled in Parliament.

The US becomes the world’s top oil exporter surpassing Saudi Arabia and Russia

The International Energy Agency (IEA) notified that the United States (US) became the top oil
exporter in the world by overtaking Saudi Arabia and Russia. In June 2019, crude exports grew
above 3 million barrels per day (bpd) in the US.
ZestMoney join hands with PayU for cardless EMI payment
Consumer lending platform, ZestMoney has partnered with PayU, a fintech firm that provides payment
technology to online merchants to offer cardless EMI (equated monthly installment) payment option to
consumers.

Visa in partnership with BillDesk to launch interface for recurring payments , “standing
instructions (SI) Hub”
Visa Inc, the world’s leader in digital payments technology and BillDesk, an Indian online payment gateway
company have partnered for the launch of SI (standing instructions )-Hub which is a smooth and secure way
to make recurring payments using cards with a one-time enrollment

India Post launches speed post service for six new countries
The Department of Posts has expanded its speed post service to 6 new overseas destinations in Asia,
Europe and South America. It has introduced International Speed Post (EMS) for Bosnia and Herzegovina,
Brazil, Ecuador, Kazakhstan, Lithuania and North McDonia.

Airtel Payments Bank launched ‘Bharosa’ savings account

Airtel Payments Bank, a public limited company with its headquarters in New Delhi has launched “Bharosa”
savings account services with the aim of deepening the financial inclusion in India.
Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) scheme which is the world’s largest
healthcare scheme signed a Memorandum of Understanding(MoU) with mobility platform Ola whereby the
scheme would provide health insurance to 2 million driver partners of Ola.

OECD lowers India’s economic growth forecast for 2019-20 to 5.9% from 7.2%
As per the intergovernmental economic organisation, OECD (Organisation for Economic Co-operation and
Development ) latest “Interim Economic Outlook” with title “Warning: Low Growth Ahead”, India’s GDP
(gross domestic product) growth expected to grow by 5.9 per cent for 2019 (FY-Fiscal Year 2020) and 6.3 % in
2020 (FY21).
OECD also predicted the global growth to 2.9 percent for 2019 & 3 % growth for the 2020 due to trade war
between the US (United States) and China that affects global growth momentum toward the low point last
seen during the financial crisis.

Asian Development Bank (ADB) in its Asian Development Outlook (ADO) 2019 update cut India’s GDP (Gross
Domestic Product) growth to 6.5% from 7% for FY 2019-20 after the growth slowed down to 5% in the Q1 April–
June FY 2019-20 which is a six-year low in the first quarter.
It predicted that India is expected to rebound to 7.2% growth in the FY 2020-21.
EPFO to credit 8.65% interest in over 6 crore accounts for 2018-19
Minister of State (Independent Charge) of the Ministry of Labour and Employment Santosh Kumar Gangwar
notified that over 6 crore members of the Employees’ Provident Fund Organisation (EPFO) will get 8.65%
interest on deposits, which will be credited to the accounts, for 2018-19 after the approval from the Ministry
of Finance
The Central Board of Trustees (CBT) is the apex decision-making body of the EPFO.
Employees State Insurance Corporation (ESIC) will start a 100-bed hospital Srinagar and a 30-bed hospital in
Leh.
2 offices of EPFO in Srinagar and Jammu will also be established.

Govt Waives 3-Year Lock-In Period On NRI Investments In IDF Bonds

In order to boost foreign investment in the infrastructure sector, waived off the 3-year lock-in period for
investments made by Non-Resident Indians(NRI) in Infrastructure Debt Funds (IDFs), as notified by the
Central Board of Direct Taxes (CBDT).
Recently the govt has planned to invest Rs 100 lakh crore in the infrastructure sector by 2024-2025 with the
task force headed by economic affairs secretary Shri Atanu Chakraborty.

What is IDF: They are investment pools sponsored by commercial banks and Non-Banking Financial Companies
(NBFC) in India where domestic and overseas investors, especially pension and insurance funds can invest through
bonds issued by IDF.
India to achieve $26 billion defence industry target by 2025
The Defence Minister of India Mr Rajnath Singh at the 2nd annual session of the Society of Indian Defence
Manufacturers (SIDM) for 2019 in New Delhi addressed that India will achieve $26 billion defence industry
target by 2025.

It is predicted that there will be an investment of $10 billion and it will create 2.3 million employment
opportunities.
Simplified procedures for defence exports has resulted in exports to Rs 10 thousand 745 Crore in 2018-19
and a target of $5 Billion for exports has been set till 2024.
There are plans to develop 5 Defence Specific Artificial Intelligence products by 2024.

Allotment Agreement signed between Ministry of Coal and WBPDCL regarding world’s
second-largest Deocha Pachami Dewanganj-Harinsingha coal block
Ministry of Coal and West Bengal Power Development Corporation Limited (WBPDCL) signed an allotment
agreement regarding the Deocha Pachami Dewanganj-Harinsingha coal block which is the world’s second-
largest coal block.
The coal block, which can supply coal for the next 100 years, will require investments ranging from Rs
12,000-15,000 crore over a period of time.

It will take nearly 5 years to start commercial production.

NASSCOM’s DSCI, MeitY and Google India launched a nationwide ‘Digital Payment Abhiyan’
The National Association of Software and Services Company’s (NASSCOM) Data Security Council of India
(DSCI), Ministry of Electronics & Information Technology (MeitY) and Google India had collaborated together
to launch a nationwide awareness campaign ‘Digital Payment Abhiyan‘.
Google launched an integrated payments, jobs app and Google Research India- an artificial intelligence (AI)
research lab in Bengaluru, Karnataka.
Google partnered with National Skills Development Corporation (NSDC) and Skill India to introduce the job-
centric Spot codes to offline locations and NSDC centres.
Google and Vodafone-Idea entered into an agreement to introduce Google Assistant to 2G and feature
phone users.

Beneficiaries under PMMVY scheme crossed 1 crore

Pradhan Mantri Matru Vandana Yojana (PMMVY) achieved a mark of reaching 1 crore (1,00,11,200)
beneficiaries in India. The total amount disbursed under the scheme crossed Rs. 4,000 crores.
Top 5 states: Madhya Pradesh, Andhra Pradesh, Himachal Pradesh, Dadra & Nagar Haveli and Rajasthan are
the top 5 states/ union territories (UTs) in the implementation of scheme.
It is a flagship scheme of the Government for Pregnant Women and Lactating Mothers (PW&LM). It is a
direct benefit transfer (DBT) scheme under which PW&LM receive a cash benefit of Rs. 5,000 in three
installments on fulfilling certain conditions.
The eligible beneficiaries also receive cash incentive under Janani Suraksha Yojana (JSY). Thus, on average, a
woman gets Rs. 6,000.
NTPC Ltd to set up 5 GW solar park- biggest in the country, in Gujarat
NTPC ltd has announced to set up a 5GW (gigawatt) solar national park in Gujarat and is also expected to be
the biggest in the country.
The cost of the site set up is expected to be Rs 25,000 crores ($3.5 billion) and is to be operational in 2024.
The Prime Minister Shri Narendra Modi has set a target of producing 175GW of renewable capacity by 2022

CBDT sets up NeAC & appoints Krishna Mohan Prasad as its first Principal Chief Commissioner of Income Tax
of NeAC
Central Board of Direct Tax(CBDT) has newly set up National e-Assessment Centre (NeAC) for electronically
assessing the tax returns which would reduce the human interventions thereby reducing the possibility of
corruption.
CBDT has also appointed 1984 batch Indian Revenue Service (IRS) officer Krishna Mohan Prasad as the first
Principal Chief Commissioner of Income Tax(Pr.CCIT) of NeAC.
Mr. Prasad will be assisted by Ashish Abrol, newly appointed Commissioner of NeAC.

Home Minister Amit Shah announced first ever “digital census” in 2021
He also suggested a single multipurpose identity card i.e., one card facility for all utilities in the future.
The digital census is expected to have the potential in bringing all the cards like Aadhaar, passport, bank
account, driving license etc. under a single platform. Rs. 12, 000 crores will be spent on preparation of National
Population Register (NPR) and census 2021
23rd Session of the UNWTO General Assembly for 2019 held in Saint Petersburg, Russia
The 23rd session of the United Nations World Tourism Organization’s (UNWTO) General Assembly for 2019
was held in Saint Petersburg, Russia from September 9-13, 2019. UNWTO is the leading international
organization in the field of tourism.

India’s ‘Yogi of the Racetrack’, a short promotional film on Yoga produced by the Union Ministry of Tourism,
was conferred ‘Best Video’ award 2019 for the Asia & Pacific Region

32 FMCG companies launched “Karo Sambhav”-packaging waste management venture

aims to mobilise Rs.1000 cr
To address the growing concern of plastic wastes 32 leading Fast-Moving Consumer Goods (FMCG)
companies like Coca-Cola India, PepsiCo India, and Bislerietc are to jointly launch first-of-its-kind packaging
waste management venture named Karo Sambhav in the country that aims to create an ecosystem for post-
consumer packaging collections and optimization of material recycling processes.

Karosambhav developed by Packaging Association for a Clean Environment (PACE), an industrial body, over
the past year, also ensures no recyclable packaging material end up in landfills by 2025 by mobilising and
converging assets and resources of over Rs. 1,000 crores.
15th Indo-US Economic Summit 2019 under the aegis of Indo-American Chamber of
Commerce- North India Council (IACC-NIC) held in New Delhi
He also suggested India Inc to set up food processing units in India in which the element of subsidies go to
an extent of 75 %.
Minister of State in the Ministry of Food Processing Industries, Rameswar Teli stated that the World Bank
has approved to sanction Rs 3,000 crore to grant mini and mega food parks across India, particularly in
Northeast so that processing of grains produced by farmers is done optimally, and help promote farmers’
income.
In a bid to boost the food processing sector, the budget outlay will be increased to Rs 3,000 crore a year
from Rs 1,400 crore.

GSTN makes Aadhaar verification or physical verification mandatory for new dealers from
January 1, 2020
The group of ministers of Good and Service Tax Network (GSTN) headed by Sushil Kumar Modi (Bihar
deputy chief minister) notified that all the new dealers will have to mandatorily make Aadhaar verification or
physical verification from January 1, 2020. This move is aimed to check malpractices in GST.
Those who don’t want Aadhaar authentication, physical verification will be carried out, which will be
completed in three days.