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Commercial Bank Management:

Assignment-2

Course: Commercial Bank Management, Section-B

Professor Pankaj Baag

December 08, 2020

Submitted By: CBM Section-B

Prashant Saxena (PGP/23/348)
Subham Sharma (PGP/23/482)
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List of 20 Most Important Developments from RBI Website

1. Analysis of RBI Website and Actions:
RBI’s homepage https://www.rbi.org.in/ has a number of important tabs in the main menu
which further leads to different webpages that show important happenings around the country
related to the world of banking. Further, there are sections dedicated to various rates (that are
relevant for banking such as policy rates viz. repo, reverse repo, MSF rate, exchange rates,
lending/deposit rates, reserve ratios and market trends). Moreover, there are links to other
important function wise webpages like Monetary Policy, Financial Markets, Foreign
Exchange Management, etc. Apart from these the landing page is also home to a slew of
other links related to Financial Education and all news and media pertaining to the banking
system and regulation in India. Some of the major happenings in the past few years related to
the banking sector are:

Sr. Important Developments in last Remarks

No. 5 years
1. RBI implemented Mega Bank RBI implemented the Mega Bank
Consolidation Plan Consolidation Plan for the merger of 10 state-
run banks into four lenders came into force
from 1 April, 2020. The move aimed to create
bigger size stronger banks in the public sector.
The amalgamation of 10 PSBs into four Banks
include: (i) Oriental Bank of Commerce (OBC)
and United Bank of India into Punjab National
Bank (PNB) (ii) Syndicate Bank into Canara
Bank (iii) Andhra Bank and Corporation Bank
into Union Bank of India (iv) Allahabad Bank
into Indian Bank
2 RBI selling its entire stake in The stakes were sold in 2 different months to
NHB and NABARD to the the government to end the cross-holding in
Government for 1470 crores institutions
3 RBI’s use of swap transactions, In the wake of the epidemic Covid-19, RBI
LTRO to infuse liquidity used Forex swap and long-term repo
operations (LTROs) to mitigate the effects of
the Covid-19 on the Indian Economy. It aims
to counterbalance the domestic liquidity
effects of the swap and to improve monetary
policy transmission further.
4 RBI directed banks to link all RBI directed banks to link all the new floating-
new floating rate loan rate loan to medium enterprises with external
benchmark with effect from 1st April 2020. The
move by RBI is aimed to further strengthen
the monetary policy transmission. The
benefits of a reduction in key lending rates
can be passed on to medium enterprises.
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5 RBI unveiled a 2019-24 National The RBI's Strategy is aimed at providing access
Strategy for Financial Inclusion to formal financial services in an affordable
manner. It aims to promote financial literacy
among customers. Formed by: The Financial
Inclusion Advisory Committee of the RBI in
consultation with the Government of India,
Securities Exchange Board of India (SEBI),
Insurance Regulatory and Development
Authority of India (IRDAI), and Pension Fund
Regulatory and Development Authority of
India (PFRDA) provided the National Strategy
for Financial Inclusion 2019-24.
6 RBI asking banks to setup For hilly/inaccessible areas, the RBI asked
currency chests banks to setup bank chests which give them
the capacity to withdraw money as and when
necessary.
7 Public Credit Registry Creation of an information repository that
would store the loan details.
8 Recap Bonds for recapitalisation Bonds worth Rs. 88,000 crores were recalled
of Banks by the Central Government after which an
additional 41,000 crore was infused by the
Government.
9 Nirav Modi-PNB Scam The scam involving Nirav Modi and Mehul
Choksi which was allegedly of Rs.14,000 crores
10 Lowering of FPI Debt The holding period of debt securities by
investments maturity foreign investors was reduced from 3 to 1
year.
11 Loan Waivers A loan waiver of 1.72 lakh crore was
announced for farmers of several states.
12 Barring Yes bank’s promoter Rana Kapoor’s tenure was reduced from 3
years to 5 months.
13 IL&FS Issue Defaulted in bet to the score of 91,000 crores
14 Resignation of RBI Governor Urjit Patel resigned from his post due to
personal reasons
15 Fighting over cutting promoter Kotak tried to cut their promoter stakes by
stake in private banks issuing shares that didn’t have any voting
power.
16 Unconventional Policy measures In 2013, the RBI had to resort to fall back to
of RBI some scarcely used methods to recover the
Rupee from the shocks it received.
17 Drivers of growth recovery In 2013, Manufacturing sector had gone down
and due to that agriculture was seen as the
major driver to growth
19 Stress on Asset quality Stress of NPAs resulted in concerns for RBI in
2013
20 Financial and Liquidity stress RBI in 2013 had to hike some of the short-
term interest rates due to the falling price of
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Rupee.