Teaching Material – Monthly Updations

CONTEMPORARY

CORPORATE TRAINING & DEVELOPMENT INSTITUTE (CTDI)

VOLUME - 21 No. 07 JULY 2021

The Finance Minister Nirmala Sitharaman announced a series of measures

aimed towards reviving the Indian economy. Among her announcements were
providing further funds for the government's emergency credit guarantee
scheme, increased allocation towards public health, and a new loan guarantee
scheme to help small borrowers.
KEY HIGHLIGHTS:
 Loan guarantees worth Rs. 1.1 lakh cr to be provided for Covid-hit sectors.
 Size of emergency credit guarantee scheme to be increased to Rs. 4.5 lakh
crore from Rs. 3 lakh crore.
 Government to offer guarantees to banks for lending to microfinance sector.
 Loan guarantees to be given for tourism sector under the emergency credit
guarantee scheme.
 ECONOMIC RELIEF PACKAGE 1  Free visa for first 5 lakh tourists once borders reopen.
G-SAP 3  Atmanirbhar Bharat Rozgar Yojana extended till March 31, 2022.
 PREPACK INSOLVENCY RESOLUTION 5
 An additional Rs. 23,220 crore has been earmarked for public health in
PROCESS (PPIRP)
FY22.
 BITCOINS 6
 BharatNet plan expanded with an additional Rs. 19,041 crore.
 Tenure of performance-linked incentive scheme for electronic manufacturing
 POLICY GUIDELINES 9
extended by a year.
 SNIPPETS & BANKING NEWS 12 LOAN GUARANTEE SCHEME FOR COVID AFFECTED SECTOR
 CERTIFICATE OF DEPOSITS 16 (Rs. 1.1 LAKH CR)
HEALTH SECTOR:
 BRAINSTORMING 17
Rs. 50,000 crore aimed at up scaling medical infrastructure targeting
 RECOLLECTED Q’s 19 underserved areas.
 CURRENT GENERAL KNOWLEDGE 20
 Guarantee cover for expansion and new projects related to health/medical
infrastructure in cities other than 8 metropolitan cities.
 Guarantee coverage: 50% for expansion and 75% for new projects.
 For Aspirational Districts, guarantee cover of 75% for both new projects and
TM expansion.

CTDI
GURUKUL FOR BANKERS
st
SCO 91, (1 Floor), Sector 47-D,
Chandigarh-160047,
Mob: 9041086057, 9317723230
Website: www.corporatetraininginstitute.com
Email : training@corporatetraininginstitute.com
HYDERABAD BRANCH:
Kachiguda Pride, Ground Floor, 3-1-328,
Nimboli Adda, 332 Kachiguda Station Rd,
Hyderabad - 500027, Mobile:- 9395140742
SUGGESTION / FEEDBACK
WILL BE APPRECIATED
Please e-mail us on:
drbhallahelpdesk@yahoo.com
 Maximum loan: Rs. 100 crore;
 Guarantee duration: Up to 3 years; Interest rate capped at 7.95%
 Guarantee by National Credit Guarantee Trustee Company Limited.
OTHER SECTORS: Rs. 60,000 crore
 Interest rate capped at 8.25% p.a.
 Normal interest without guarantee cover is 10-11%
EMERGENCY CREDIT LINE GUARANTEE SCHEME
(ADDITIONAL Rs. 1.5 LAKH CRORE)
 Launched as part of Atma Nirbhar Bharat Package in May, 2020.
 ECLGS-1.0, 2.0 and 3.0 have resulted in credit disbursal of 2.69 lakh crore to
1.1 crore units by 12 Public Sector Banks, 25 Private Sector Banks, and 31
Nonbanking Financial Companies.
 Contact intensive sectors already covered and shall be continued. Rs. 4,000
crore given to these sectors through this window so far.
 Limit of admissible guarantee and loan amount proposed to be increased
above existing level of 20% of outstanding on each loan.
 Overall cap of admissible guarantee to be raised from Rs. 3 lakh crore to Rs.
4.5 lakh crore.
A tree that wants to touch the sky must extend its roots into the earth.
The more it wants to rise upwards, the more it has to grow downwards,
So to rise in life, we must be down to earth, humble and grateful

Registration No. CHD / 0030 / 2009 -11, RNI NO. CHAENG /1997/4961
 (Cont’d from Page 1)
CREDIT GUARANTEE SCHEME TO FACILITATE LOANS TO 25 LAKH
PERSONS THROUGH MFIs
 Guarantee will be provided to Scheduled Commercial Banks for loans to new or
existing NBFC-Micro Finance Institutions (MFIs) or MFIs for on lending upto Rs.
1.25 lakh to approximately 25 lakh small borrowers.
 Interest Rate on Loans from banks to be capped at MCLR plus 2%.
 Maximum loan tenure 3 years, 80% of assistance to be used by MFI for
VOLUME 21 NO. 07 JULY 2021
incremental lending, interest at least 2% below maximum rate prescribed by RBI.
 Focus on new lending, not repayment of old loans.
EDITORIAL BOARD  Loans to borrowers to be in line with extant RBI guidelines such as number of
lenders, borrower to be member of JLG, ceiling on household income & debt.
DIRECTOR:  All borrowers (including defaulters upto 89 days) eligible.
 Guarantee cover for funding provided by MLIs to MFIs/NBFC-MFIs till 31-3- 2022
Dr. G.S. Bhalla
or till guarantees for an amount of Rs.7,500 cr are issued, whichever is earlier.
ASSOCIATES:  Guarantee upto 75% of default amount for upto 3 years through NCGTC.
 No guarantee fee to be charged by NCGTC.
Harvinder Singh Bedi
Harsimran Singh Bhalla FINANCIAL SUPPORT TO MORE THAN 11,000 REGISTERED TOURIST GUIDES/TRAVEL
AND TOURISM STAKEHOLDERS
Shweta Tiwari Under new Loan Guarantee Scheme for COVID Affected Sectors, working
Designed By: capital/personal loans will be provided to people in tourism sector to discharge
liabilities and restart businesses impacted due to COVID-19.
The scheme will cover:
 10,700 Regional Level Tourist Guides recognised by Ministry of Tourism and
TM Tourist Guides recognised by the State Governments.

CTDI
 904 Travel and Tourism Stakeholders (TTS) recognized by Ministry of Tourism.
 Loans will be provided with 100% guarantee up to the following limits:
 Rs. 10,00,000 for TTS ( per agency).
SCO 91, (1st & 2nd Floor), Sector  Rs. 1,00,000 for tourist guides licenced at Regional or State level.
47-D, Near PNB, Chandigarh  No processing charges, waiver of foreclosure/prepayment charges. No additional
collateral requirement.
Pin - 160047.  Scheme to be administered by the Ministry of Tourism through NCGTC.
MOB: 9041086057, 9317723230 FREE TOURIST VISA TO 5 LAKH TOURISTS
 10.93 million foreign tourists visited India in 2019, spent US $ 30.098 billion on
leisure and business.
RATES FOR HARD COPY  Average daily stay for a foreign tourist in India is 21 days.
Magazine Rate Regd. Total  Average daily spending of a tourist in India is around $34 (Rs. 2400).
Per Copy Amount  Once Visa issuance is restarted, the first 5 lakh Tourists Visas will be issued free
Per copy 50 50 100/- of charge.
One year 600 600 1200/-  Benefit will be available only once per tourist.
 The scheme will be applicable till 31st March, 2022 or till 5,00,000 visas are
FOR ONLINE MAGAZINE issued, whichever is earlier.
 Total financial implications- Rs. 100 Crore.
EXTENSION OF ATMANIRBHAR BHARAT ROZGAR YOJANA
Per Copy ………………. Rs 40.00
For One Year …………. Rs 400.00  Launched on 1st Oct, 2020 it incentivizes employers for creation of new
For Two Years………… Rs 750.00 employment, restoration of loss of employment through EPFO.
For Three Years……… Rs 1000.00  Approved outlay Rs. 22,810 crore for 58.50 lakh estimated beneficiaries. Last
date for registration is 30.06.2021.
 Subsidy provided for two years from registration for new employees drawing
FOR ONLINE PAYMENT: monthly wages less than Rs. 15000 for:
a) Beneficiary CTDI  Both Employer’s and Employee’s share of contribution (total 24% of wages) for
of Account. establishment strength upto 1000 employees.
b) CA A/c 7718002100000011  Only Employee’s share (12% of wages) in case of establishment strength of
No. more than 1000.
c) IFSC PUNB0771800  Benefit of Rs. 902 Cr given to 21.42 lakh beneficiaries of 79,577 establishments
Code till 18.06.2021.
d) Bank PNB, Sector 47-D,  Scheme extended from 30.6.2021 to 31.03.2022.
Chandigarh (160047) ADDITIONAL SUBSIDY FOR FERTILIZERS (ANNOUNCED EARLIER)
Please Note: After depositing the
 Record procurement of 432.48 Lakh MT of wheat in Rabi Marketing Season
amount, please send us complete
(RMS) 2021-22 (against 389.92 Lakh MT in RMS 2020-21).
mailing address with Pin code and
 Rs. 85,413 Crore paid to farmers.
Mobile number through E-mail to our E-
 Existing NBS subsidy was Rs.27,500 cr in FY 2020-21 which has been increased
mail ID:
to Rs. 42,275 cr in FY 2021-22.
training@corporatetraininginstitute.com  Additional amount of Rs.14,775 cr to be provided. This includes Rs.9,125 cr
training@corporatetraininginstitute.com additional subsidy for DAP and Rs.5,650 cr additional subsidy for NPK based
complex fertilizer. (Cont’d on Page No 4)

(CONTD ON PG 4) 2
JULY 2021 CTDI, GURUKUL FOR BANKERS
SCO 91, (1ST & 2ND FL) SEC. 47-D,
CHANDIGARH-160047, M - 9317723230
 KNOWLEDGE+

+
G-SEC ACQUISITION PROGRAMME (G-SAP) (FROM OUR PARTICIPANTS)
 As a part of liquidity management operations, RBI announced to conduct open market purchase 1) BRAJESH NANDAN (7208633235))
of government securities of Rs.1 lakh crore under the Government Securities Acquisition Program Good evening Sir,
(G-SAP 1.0) in Q1 2021-22. The initiative is a counterpart of Open Market Operations (OMOs). I would like to inform you that I have
Under OMOs, RBI undertakes the purchase and sale of government securities (G-Secs) by the RBI been elevated to AGM and got 5th
on behalf of the government, to reduce the volatility in the bond market. position in all India rankings due to
 The RBI acts as a debt manager to the government, which manages the borrowing your guidance in written, GD and
programmes and ensures the debt is available at the lowest interest rate. Interview. Thank you for your
 In case RBI’s objective is to inject liquidity in the economy, RBI under OMOs, prints money and constant support and motivation.
purchases securities in the secondary market from those interested in selling them. The biggest Sir, Those who have taken your
drawback of OMOs is that investors do not know the timing of these purchases. However, under G- interview classes from Union
SAP, with an upfront commitment there will be clear communication about the OMO purchase Bank, 3 became GMs, 6 became
calendar. This will reduce the uncertainty and allow investors to bid better in the scheduled auction DGMs & more than 10 became
with a pre-decided calendar set by the RBI. Under the programme, the RBI will commit upfront to a AGMs.
specific amount of open market purchases of government securities with a view to enabling a Union Bank of India
stable and orderly evolution of the yield curve amidst comfortable liquidity conditions. 2) RAJEEV KUMAR BANSAL (PSB)
 BACKGROUND: With your kind blessing and
 The RBI’s Governor in his Statement on 7th April, 2021 observed that despite the supporting materials provided by you
recommencement of 14-day variable rate reverse repo (VRRR) auctions since January 15, 2021, I have been elevated as DGM OF
liquidity absorbed through the fixed rate reverse repo has steadily increased. (VRRR with a maturity OUR BANK PUNJAB & SIND BANK
of 14 days was announced by RBI in Jan 2021, with a view to rein in inflation and absorb surplus Rajeev Kumar Bansal,
liquidity in the system). ZONAL MANAGER,
 In view of the success of VRRR and given the rising level of surplus liquidity, RBI has decided ZONE FARIDKOT
to conduct VRRR auctions of longer maturity. The amount and tenor of these auctions will be 9872231663
decided based on the evolving liquidity and financial conditions. By paying a higher rate of interest 3) BALASUBRAMANIAM (UCO BANK)
on liquidity absorptions through the VRRR auctions, the RBI is indirectly expanding liquidity. Good morning sir,
 During the financial year 2020-21, the government borrowed around Rs.12.8 lakh cr and plans I am happy to share with your
to borrow another Rs.12.05 lakh cr in FY 2021-22. Due to this excessive borrowing, the bond kindself that I have been elevated to
market will demand a higher return from govt. securities thus pushing up the yield on the G-Sec. TEGS-VI w.e.f. 1-4-2021 in the
 The average return (popularly known as yield-to-maturity; YTM) on the benchmark 10-year recent promotion process initiated by
bond yield traded at around 5.93% from April 2020 to June 2020, which rose to a high of 6.25% on my bank. I wholeheartedly express
March 10, 2021, before falling. The YTM is the annual return the investor can expect when a my gratitude to you for your valuable
security is bought at a particular price at a specific time and held on until maturity. support, guidance by way of relevant
 When the returns on the existing securities go up, the RBI has to offer a higher rate of returns inputs which added values to me as
for the fresh securities it will be issuing in 2021-22, which will eventually push up the interest cost of a banker.
the govt. Once the G-Sec interest rates go up, all the different lending rates will surge. In any I have been transferred to Pune as
healthy economic system, the interest rates pricing should be market driven and not artificially Zonal Head of Pune Zone;
suppressed by RBI. This might lead to distortions and have other consequences. UCO Bank (Scale 5 to 6)
 Hence, through G-SAP, the RBI is indirectly financing the government’s borrowing as it will print M - 9003037737
money and buy bonds. In this way, it will be able to put enough money in the financial system, 4) GARIMA (UCO - 8679474005)
which will ensure that the returns on G-Sec do not go up, and the RBI will borrow money for the I am from UCO. I have attended your
government at a lower rate of interest.

classroom programme and interview
G-SAP HIGHLIGHTS: module for Scale 3 to4. I have been
promoted to scale 4 in very first
 With the second wave intensifying this financial year, the focus of the RBI is increasingly turning attempt.
from systemic liquidity to its equitable distribution. RBI deployed unconventional monetary
It’s truly because of your guidance.
policy measures that distribute liquidity among all stakeholders.
Thank you so much sir.
 The RBI officially notified and has conducted the first phase of G-SAP 1.0 operations on April
5) SHAIFALI (9599551471)
15, 2021.
With your blessings and guidance I
 The first phase of G-SAP purchase will happen using the multiple price method under which the
am promoted as Scale 3 in SBI. I am
bidders pay at the respective rate they had bid. This is to ensure that the liquidity conditions
excited about my promotion! Your
evolve in consonance with the stance of monetary policy. input during online classes has been
 The RBI has notified four securities for the G-Sec purchase in different maturities. This would valuable in helping with my career
be under the LAF, longer-term repo/reverse repo auctions, forex operations and open market progression. Thank you for investing
operations including special OMOs. in me and trusting me with the new
 The timing of the second auction was aimed towards replenishing the drainage of liquidity due opportunity.
to the restoration of the cash reserve ratio (CRR) to its pre-pandemic level of 4 per cent of net Thank you so much again for being
demand and time liabilities. In addition, the redemption of govt. securities worth around Rs. with me. I am big admirer of you and
52,000 crore during the last week of May fully neutralised the CRR restoration. your guidance.
 Taking the above developments into account, RBI decided that another operation under G-SAP Shaifali Roonwal
1.0 for purchase of G-Secs of Rs. 40,000 cr will be conducted on June 17, 2021. Of this, Rs. SBI Nainital
10,000 cr would constitute purchase of state development loans. For more details, Please visit our
 RBI has also decided to undertake G-SAP 2.0 in Q2:2021-22 and conduct secondary market website.
purchase operations of Rs. 1.20 lakh cr to support the market. Soon after the announcement to WEBSITE
purchase G-Sec worth Rs.1 lakh crore through G-SAP, the 10-Year G-Sec bond yield dropped www.corporatetraininginstitute.com
from 6.08 per cent to 6.03%.

JULY 2021
YY
CTDI, GURUKUL FOR BANKERS 3
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(CONT’D FROM PAGE 2 )
EXTENSION OF PMGKAY (ANNOUNCED EARLIER)
 Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) was
launched on 26th March 2020 to ameliorate the hardships faced
by the poor due to economic disruption caused by COVID 19
Pandemic. Keeping in view the need for continuous support to
the poor and the needy, the scheme was extended till
November 2020
 The total cost of the scheme in 2020-21 was Rs. 133,972 crore.
In the wake of the second wave of COVID-19, the scheme was  Export Credit Guarantee Corporation (ECGC) promotes exports
relaunched in May 2021 to ensure food security of poor /
vulnerable. 5 kg of food grains will be provided free of cost to
NFSA beneficiaries from May to November 2021.  Proposed to infuse equity in ECGC over 5 years to boost export
 Estimated financial implications are Rs. 93,869 cr, bringing the
total cost of PMGKAY to Rs. 2,27,841Crore.
HEALTH
(ADDITIONAL RS. 23,220 CR FOR PUBLIC HEALTH)
 Rs. 15,000 Cr Emergency Health Systems Project (2020-21) led
to 25 fold increase in COVID dedicated hospitals, setting up of
7,929 COVID health centres, 9,954 COVID care centres, 7.5
times increase in oxygen supported beds, 42 fold increase in
isolation beds, 45 fold increase in ICU beds.
 New scheme focused on short term emergency preparedness
with emphasis on children and paediatric care/paediatric beds.
 Rs. 23,220 crore earmarked for one year.
 Funding for short-term HR augmentation through medical
students (interns, residents, final year) and nursing students.
 Increase availability of ICU beds, oxygen supply at central,
district and sub-district level.
 Ensure adequate availability of equipment, medicines; access to
teleconsultation; ambulance services.
 Enhance testing capacity and supportive diagnostics,
strengthen capacity for surveillance and genome sequencing.
IMPETUS FOR GROWTH & EMPLOYMENT
FIGHTING MALNUTRITION AND IMPROVING FARMERS’ INCOME:
RELEASE OF CLIMATE RESILIENT SPECIAL TRAITS VARIETIES
 Earlier focus of research was on developing higher yield crop
varieties. Attention towards nutrition, climate resilience and
other traits was missing.
 Concentration of important nutrients far below required level,
susceptible to biotic and abiotic stresses.
 ICAR has developed bio-fortified crop varieties having high
nutrients like protein, iron, zinc, vitamin-A.
 Varieties tolerant to diseases, insects pests, drought, salinity,
and flooding, early maturing and amenable to mechanical
harvesting also developed.
 21 such varieties of rice, peas, millet, maize, soyabean, quinoa,
buckwheat, winged bean, pigeon pea & sorghum will be
dedicated to the nation.
REVIVAL OF NORTH EASTERN REGIONAL AGRICULTURAL
MARKETING CORPORATION (NERAMAC)
 Established in 1982 to support farmers of North East in getting
remunerative prices of agri-horticulture produces with the aim to
enhance agricultural, procurement, processing and marketing
infrastructure in North East.
 75 Farmer Producer Organisations / Farmer Producer PROCESS FOR PPP PROJECTS AND ASSET MONETISATION
Companies registered with NERAMAC. 13 GI crops of North  Current process for approval of Public Private Partnership
East registered.
 Prepared business plan to give 10-15% higher price to farmers  New policy will be formulated for appraisal and approval of PPP
by-passing middlemen/agents.
 Proposes to set up North-Eastern Centre for Organic
Cultivation, facilitating equity finance to entrepreneurs.
 Revival package of Rs. 77.45 crore proposed for financial
restructuring and infusion of funds to NERAMAC.
JULY 2021
ECONOMIC RELIEF
BOOST FOR PROJECT EXPORTS THROUGH NEIA
 National Export Insurance Account (NEIA) Trust promotes
medium and long term project exports by extending risk covers.
 Provides covers to buyer’s credit, given by EXIM Bank, to less
creditworthy borrowers and supporting project exporters.
 NEIA Trust has supported 211 projects of Rs. 52,860 cr in 52
countries by 63 different Indian Project Exporters till 31-3- 2021.
 Proposed to provide additional corpus to NEIA over 5 years to
allow it to underwrite additional Rs. 33,000 cr of project exports.
BOOST TO EXPORT INSURANCE COVER
by providing credit insurance services. Its products support
around 30% of India’s merchandise exports.
insurance cover by Rs. 88,000 cr
DIGITAL INDIA
BROAD BAND TO EACH VILLAGE THRU BHARATNET PPP MODEL
 On August 15, 2020, PM announced broadband connectivity to
all inhabited villages in 1000 days.
 Out of 2,50,000 Gram Panchayats, 1,56,223 Gram Panchayats
have been made service ready by 31st May, 2021.
 Implementation of BharatNet in PPP model in 16 States
(bundled into 9 packages) on viability gap funding basis.
 Additional Rs. 19,041 Cr being provided for BharatNet
 Expansion and upgradation of BharatNet to cover all Gram
Panchayats and inhabited villages.
EXTENSION OF TENURE OF PLI SCHEME
 Product Linked Incentive (PLI) scheme provides incentive of 6%
to 4% on incremental sales of goods under target segments that
are manufactured in India, for a period of five years.
 Incentives applicable from 1-8-2020. Base year 2019-20.
 Companies have been unable to achieve incremental sales
condition due to disruption in production activities due to
pandemic related lockdowns; restrictions on movement of
personnel; delay in installation of relocated plant and machinery;
disruption in supply chain of components.
 Tenure of the scheme launched in 2020-21 is proposed to be
extended by one year i.e. till 2025-26.
 Participating companies will get option of choosing any five
years for meeting their production targets under the scheme.
RESULT LINKED POWER DISTRIBUTION SCHEME
 Revamped reforms-based, result-linked power distribution
scheme of financial assistance to DISCOMS for infrastructure
creation, up-gradation of system, capacity building and process
improvement.
 State specific intervention in place of “one size fits all”.
 Participation contingent to pre-qualification criteria like
publication of audited financial reports, upfront liquidation of
State Government’s dues/subsidy to DISCOMS and non –
creation of additional regulatory assets. • 25 crore smart meters,
10,000 feeders, 4 lakh km of LT overhead lines planned.
 Total allocation- Rs.3,03,058 Cr, Central share- Rs.97,631 cr.
 States have already been allowed additional borrowing for four
years upto 0.5% of Gross State Domestic Product annually (Rs.
1,05,864 Cr for 2021-22) subject to carrying out specified power
sector reforms.
(PPP) projects is long and involves multiple levels of approval
proposals and monetization of core infrastructure assets,
including through InvITs. The aim is to ensure speedy clearance
of projects to facilitate private sector’s efficiencies in financing
construction and management of infrastructure.
CTDI, GURUKUL FOR BANKERS 4
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 PPIRP
b) In CIRP, the resolution professional takes control of the
debtor as a representative of financial creditors while in pre-
(PRE-PACK INSOLVENCY RESOLUTION PROCESS) packs the existing management retains the control. Experts are
 On 4 April 2021, President of India promulgated the IBC of the view that with the introduction of pre-packs, minimal
Amendment Ordinance 2021, allowing the use of pre-pack disruption to business and employment will take place.
insolvency resolution process for Micro, Small and Medium c) At the end of 2020, more than 86% of the 1717 insolvency
Enterprises (MSMEs) with defaults of Rs.10 lakh and above and resolution proceedings crossed 270 days threshold period.
up to Rs. 1 crore under the Insolvency and Bankruptcy Code. ELIGIBILITY:
 The move comes soon after the revocation of the suspension  Pre-pack insolvency is only restricted to the Companies and
on fresh proceedings under the Insolvency and Bankruptcy Limited Liability Partnerships (LLPs). The sole proprietorship,
Code, 2016 (IBC). Creditors can leverage on the instrumentality partnerships and Hindu Undivided Family (HUF) forms of
of IBC for resolution of stressed assets. MSMEs are out of the ambit of the aforementioned process.
 PPIRP provides a hybrid mechanism (a blend of formal and  Most MSMEs will not be eligible for the pre-pack insolvency
informal mechanisms) and is intended to facilitate resolution for process introduced by the Central Government under the IBC.
MSMEs in an expeditious and cost effective manner with This is because a corporate debtor must be registered as a
minimum disruption in business continuity. micro, small or medium enterprise under Sub-section (1) of
 In this scheme the resolution of a company’s business is Section 7 of the MSME Development Act 2006 to be eligible for
explored first with the debtor-in-possession even before the the pre-pack process.
formal initiation of the process. The main aim behind the  As per the NSS 73rd Round Survey (2015-16) on MSMEs,
introduction of the pre-pack is to provide an efficient alternative 6.3 crore MSMEs exist in India. The MSME registration portal,
insolvency resolution framework for corporate persons classified Udyam Registration mentions that only 26.42 lakh MSMEs have
as MSMEs for timely, efficient and cost-effective resolution of been registered to date. Taking these figures into consideration,
distress thereby ensuring positive signal to the debt market, the unregistered MSMEs exceeds the registered MSMEs and
employment preservation, ease of doing business and couldn't benefit under the pre-pack insolvency process.
preservation of enterprise capital insolvency resolution process SWISS CHALLENGE MODEL:
to the bankrupt MSMEs.  The pre-pack mechanism introduced by the Central
 PPIRP aims to provide MSMEs with the opportunity to Government allows for a Swiss challenge for a given resolution
restructure their liabilities and start afresh. While safeguarding plan that mentions less than full recovery of dues for creditors.
the rights of the stakeholders, it provides enough protection to Also, if the creditors are not satisfied with the resolution plans put
prevent any potential misuse by the firms to avoid making forth by the promoter, they can seek resolution plans from a third
payments to the creditors. It will also assist corporate debtors party.
with going into consensual rebuilding with lenders and address  Under this mechanism, any third party would be able to
the entire risk side of the organization. submit a resolution plan for a distressed company and the
 This system of insolvency proceedings has become an original applicant can either go forward with the improved
increasingly popular mechanism for insolvency resolution in the resolution plan or forego the investment.
UK and Europe over the past decade. Under the pre-pack ASSESSMENT OF CIRP
system, financial creditors will agree to terms with a potential
 As per the Financial Stability Report, at the end of Q4:2020-21, the
investor and seek approval of the resolution plan from the
National Company Law Tribunal (NCLT). number of CIRPs commenced under the Insolvency and Bankruptcy
 As per the Chairman of Insolvency and Bankruptcy Board of Code stood at 4376, with the manufacturing sector accounting for the
India (IBBI) M.S. Sahoo, "It is informal up to a point and formal largest share. About 61% of these had been closed, with 13%
thereafter. It blends debtor-in-possession with creditor-in-control. culminating in resolution plans and 48% yielding orders for liquidation.
It is neither a fully private nor a fully public process - it allows the  Overall, realisation by financial creditors (FCs) in the resolved
company, if eligible under Section 29A (which disqualifies wilful cases was 39.3% of their claims and 179.9% of liquidation value.
defaulters), to submit the base resolution plan which is exposed  The CIRPs which yielded resolution plans by the end of March
to Swiss challenge for value maximisation." 2021 took 406 days on an average (after excluding the time excluded
HIGHLIGHTS OF PPIRP: by the Adjudicating Authority) for conclusion of the process.
 A pre-pack is the resolution of the debt of a distressed OUTCOME OF CIRPS (AS ON MARCH 31, 2021)
company through an agreement between secured creditors and CIRPs initiated by
investors instead of a public bidding process. It is a settlement of Outcome Description Financial Operational Corporate
Total
Creditor Creditor Debtor
the debt of a distressed company with the help of an agreement Status of Closure by Appeal / Review /
inked between the creditors and the investors. The creditors and 164 447 6 617
CIRPs Settled
the investors will first mutually agree on an agreement and then Closure by Withdrawal u/s 12A 120 284 7 411
seek the approval of the National Company Law Tribunal (NCLT) Closure by Approval of
191 116 41 348
Resolution Plan
on the resolution plan. Closure by Commencement of
 Before submitting a resolution plan to the NCLT, it must be 548 573 156 1277
Liquidation
approved by at least 66% of the creditors who are unrelated to Ongoing 852 805 66 1723
the corporate debtor. Furthermore, it is up to the NCLT to reject TOTAL 1875 2225 276 4376
or accept any application for a pre-pack insolvency proceeding CIRPs Realisation by FCs as % of
190.4 114 141 179.9
yielding Liquidation Value
before considering a petition for a CIRP. Resolution Realisation by FCs as % of their
ADVANTAGES PRE-PACKS OVER CIRP: Plans Claims
44.7 16.6 26 39.3
a) Over the years, the Corporate Insolvency Resolution Average time taken for Closure
463 458 439 459
Process (CIRP) has been criticised due to its 270-day threshold of CIRP
CIRPs Liquidation Value as % of
period. In comparison with the CIRP, the pre-pack is limited to a 6.3 8.9 9.9 7
yielding Claims
maximum of 120 days and 90 days will be provided to the Liquidations Average time taken for Closure
366 344 324 351
stakeholders to bring in the resolution plan to the NCLT. of CIRP

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BITCOINS
 Bitcoins is a digital currency that is created and held
electronically on a computer. Bitcoins are not paper money like
dollars, euros, or yen controlled by central banks or monetary
authorities. Bitcoins are also referred to with terms like: digital
currency, virtual currency, electronic currency or cryptocurrency.
 Bitcoin is a digital representation of value that is neither
issued by a Reserve Bank or a public authority but is accepted
by natural or legal persons as a means of payment. Bitcoins can
be transferred electronically from one user to another.
 Bitcoin is not a medium of exchange at all. It is merely a new
method for transacting. Bitcoins are digital and non-physical store
of value that can be exchanged for goods and services at places
that accept them. For instance, one may be able to use Bitcoins
as payment at online stores and even some physical goods and
services.
 Bitcoins uses peer-to-peer technology to facilitate instant
payments. It is created, distributed and stored with use of a
decentralized ledger system.
 Bitcoins has the characteristics of money (durability,
portability, fungibility, scarcity, divisibility, and recognizability)
based on the properties of mathematics rather than relying on
physical properties (for instance gold and silver) or trust in
central authorities such as fiat currencies. Bitcoins is based on a
decentralized, peer-to-peer network, i.e., it does not have a
central clearing house.
ADVANTAGES OF BITCOIN:
TRANSPARENCY:
Every transaction made with Bitcoin is monitored and recorded in
a public ledger that is known as the blockchain. A transaction
cannot be changed once it is confirmed. Moreover, every
cryptocurrency transaction is verified and it cannot be
manipulated by any hackers or scammers.
ACCESSIBLE 24/7: Bitcoin could become a global form of
currency as it is the easiest and fastest means of exchange that
can be used across the globe.
COMPLETE CONTROL:
Bitcoin and cryptocurrency users have complete control over
their funds and transactions, keeping everything safe and
anonymous. Every transaction that is executed will be
independent of the individuals' or parties' identities. No private
information is made public and this prevents fraud and identity
theft from happening.
SIGNIFICANT POTENTIAL FOR APPRECIATION:
Bitcoin has a huge potential for growth and appreciation.
BITCOIN IS PERMISSION LESS:
Traditional currencies and forms of money require permission to
use from governments/regulator. Bitcoins requires no such
permission from anyone and is free and open to use globally.
There are no borders or limits with Bitcoins.
DISADVANTAGES OF BITCOIN:
NO INVESTORS/BUYER PROTECTION:
 Since Bitcoins are not regulated by regulatory body of any
country the risk element for investor is very high. Further, when
goods are bought using Bitcoins, and the seller does not send
the promised goods, nothing can be done to reverse the
transaction.
 Since there is no central authority governing Bitcoins, no one
can guarantee its minimum valuation and may not be retrievable.
If a large group of merchants decide to ‘dump’ Bitcoins and leave
the system, its valuation will decrease greatly which will
immensely hurt the investors.
 Similar to any speculative investment, the price of Bitcoin
could drop precipitously and a single online hacking or crashed
hard drive incident can wipe out the investment with no recourse.
JULY 2021
BITCOINS
DIFFICULT TO UNDERSTAND:
The entire concept of a decentralized financial system that is
stored with the help of blockchain technology is not easy to be
understood by most people. Further, Bitcoins are still only
accepted by a very small group of online merchants. This makes
it unfeasible to completely rely on Bitcoins as a currency.
NO PHYSICAL FORM:
Since Bitcoins do not have a physical form, it cannot be used in
physical stores. It would always have to be converted to other
currencies. Most investors who own and use Bitcoin have not
acquired their tokens through mining operations. Rather, they
buy and sell Bitcoin and other digital currencies on any of a
number of Bitcoin exchanges. These exchanges are entirely
digital and, as with any virtual system, are at risk from hackers,
malware, and operational glitches.
MARKET FLUCTUATIONS:
Bitcoins are subject to changing market prices. Its value is
constantly fluctuating according to demand. Crypto market is
volatile and huge market fluctuations causes huge profits and
losses in bitcoin investment.
MAJOR REASONS BEHIND BITCOIN CRASH:
 Crypto market crash is a common phenomenon and the
crypto markets are highly volatile. Price corrections like these
happen every few months.
 Many crypto coins have multiplied in value tens of times.
Coins like Dogecoin, Shiba Inu coin have made early investors
millionaires. Ethereum has shown significant growth. Bitcoin
reached peak price in April, 2021 reaching $64,000 in price.
However, the crypto currency market saw a big correction with
prices of major currencies including Bitcoin, Ethereum and
others crashing as much as 30% within 24 hrs. Bitcoin’s tumbled
amid a broad crypto crackdown from China has pushed it below
$30,000 eroding its entire 2021 gain.
 The fall of the crypto market started when Elon Musk made a
tweet declaring that Tesla has stopped accepting Bitcoin
payments, citing the environmental concerns of Bitcoin.
Overnight, the price of Bitcoin fell down sharply which caused
panic selling among crypto investors as they sell their Altcoins.
This negative reviews led to crash of Bitcoin.
 Further, China has barred financial institutions and payment
companies from providing any services related to cryptocurrency
transactions. This means that banks and online payments
channels must not offer clients any service involving
cryptocurrency, such as registration, trading, clearing and
settlement. China had issued such a ban in 2017 as well, but
compared with the previous ban, the new rules have expanded
the scope of prohibited services, and summarise that ‘virtual
currencies are not supported by any real value’.
LEGAL STATUS OF CRYPTOCURRENCY IN INDIA:
 Cryptocurrencies are not illegal in India but at the same time
they are not regulated by any regulatory authority. Further, there
are no regulations on cryptocurrency in the country yet.
 The RBI in its circular on April 6, 2018, had prohibited banks
from dealing in cryptocurrency for offering any service to
customers on them.
 This ban was finally struck down by the Supreme Court in a
landmark judgment (Internet and Mobile Association of India
Vs RBI) of March 2020, on the grounds that it killed the business
opportunities of cryptocurrency exchanges, taking away their
rights under the Article 19(1)(g) of the Constitution.
 The Reserve Bank of India has clarified that as per a 2020
Supreme Court order, its old circular banning payments related
to cryptocurrencies is no longer valid. The RBI issued a
clarification around Bitcoin and cryptocurrency trading, informing
banks that they cannot warn customers against trading, using an
old order.
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 The RBI Governor Shaktikanta Das said: “There is no change
in RBI’s position. We have major concerns around
cryptocurrencies, which we have conveyed to the government.
And, about investors, it is for each investor to do his/her due
diligence and take a very careful and prudent call.”
 The clarification comes as a relief for the crypto market which
has been dealing with a lot of confusion and uncertainty in India.
According to Internet and Mobile Association of India (IAMAI), 15
million users and upwards of Rs.10,000 crores are held by small
investors in cryptos.
 Earlier this year, there were signs that the Indian government
is planning to ban cryptocurrencies. A bill was also proposed in
this regard ahead of Union Budget 2021, however, it was put on
hold after requests from the crypto industry. The government had
subsequently formed a committee to give recommendations.
This was followed by reports that RBI may come up with its own
digital rupee.
 While the RBI has given a relief to crypto investors, it has
suggested that both banks and crypto platforms need to make
sure that these transactions are not used for fraudulent activities
and tax evasion. It has asked the banks to carry out necessary
customer due diligence process in line with regulations
governing standards for Know Your Customer (KYC), Anti-
Money Laundering (AML), Combating of Financing of Terrorism
(CFT) and obligations of regulated entities under Prevention of
Money Laundering Act, (PMLA), 2002.
 The banks have also been asked to ensure compliance with
relevant provisions under Foreign Exchange Management Act
(FEMA) for overseas remittances.
NSDL FREEZING MAURITIUS-BASED FUNDS
HOLDING ADANI GROUP SHARES
 The Adani Group of companies shares fell sharply after the
National Securities Depository Ltd (NSDL) froze the trading
accounts of three Mauritius-based funds (Albula Investment
Fund, Cresta Fund, and AMPS Investment Fund ) that hold
stakes worth close Rs. 43,500 cr of some of the group Co’s.
 At their lowest level, the six stocks of the Adani group fell in
value by around one trillion rupees (equivalent to US$13.66
billion at current exchange rates) in just under an hour of
trading. Four of the Group’s six stocks hit ‘circuit breakers’ with
trading suspended after they fell by the maximum amount
permitted by stock-exchange rules.
 SEBI had earlier said that FPIs have to comply with the
beneficial ownership criterion under PMLA provisions, and
should be made applicable for the purpose of know-your-
customer (KYC).
 While no official reason for the action taken by NSDL was
stated, there is apprehension that NSDL acted due to
insufficient disclosures to India’s regulatory authorities by these
investment funds operating out of Mauritius about their ‘true
beneficial owners’ following the imposition of new ‘ know your
customer’ (KYC) norms.
 According to the Mauritius financial regulator, the three
foreign funds - Albula Investment Fund, Cresta Fund and APMS
Investment Fund - are all registered at the same address. The
funds cumulatively control 2.7% of all shares in the Adani Group
companies.
 Two other Mauritius-based funds that are also investors in
Adani companies - LTS Investment Fund and Asia Investment
Corp - are also registered at the same address. The five funds
deployed 94.4%-97.9% of their total capital in Adani companies'
shares.
 Four of the six Adani stocks have a public shareholding of
about 25% - the minimum level mandated by regulators for
companies listed on Indian exchanges.
JULY 2021
BITCOINS
 On May 31, 2021, the board of PNB Housing Finance
(PNBHFL) approved a preferential allotment of shares and
warrants to entities including the Carlyle Group, General
Atlantic, Salisbury Investments Private Ltd. and Alpha
Investments to raise Rs. 4,000 crore (Rs. 3,200 crore worth
of shares and Rs. 800 crore worth of warrants). Salisbury
Investments is former HDFC Bank CEO Aditya Puri’s family
investment vehicle.
 The allotment was proposed at a price of Rs.390 per
share/warrant compared with the then prevailing market price
of about Rs. 525 per share.
 PNB holds a 33 per cent stake in PNB Housing. Carlyle,
along with persons acting in concert (PAC), hold 32 per cent.
Post the capital infusion, PNB’s holding will drop to 20 per
cent, while Carlyle and PACs will increase to 50 per cent.
 Stakeholders Empowerment Services (SES) a proxy
advisor, governance watchdog stated that the proposal
by Carlye Group to infuse Rs. 4,000 crore in PNB Housing
Finance is against the interest of public shareholders of the
mortgage lender, parent company Punjab National Bank and
the government. It would be all the more detrimental for
shareholders of PNB who would have willingly surrendered
control without extracting fair compensation.
 SES has observed that the move by PNBHFL is in
contradiction to the board’s Press release dated January 23,
2020 in which a categorical statement was made that PNB
will not dilute its stake in the company below 26 per cent.
However, without any warning or explanation, PNBHFL is
doing just the opposite. If the board subsequently agreed to
reduce its stake to below 20 percent, then such price-
sensitive information should have been officially
disseminated to shareholders. Governance experts view this
as a failure to comply with listing and disclosure norms.
 SES has maintained that the proposed preferential issue
is ultra vires the Articles of Association (AoA) as the company
has decided on the issue price without obtaining a legally
tenable valuation report. The so called valuation report
obtained by PNBHFL is not legally tenable as it does not
seem to have come from a registered valuer, but from an
independent CA firm.
 SES firmly believes that PNBHFL cannot undertake any
issue other than a rights issue, unless the issue price is
supported by a valuation report from a registered valuer.
 The Securities and Exchange Board of India barred PNB
Housing from going ahead with the preferential allotment.
The regulator said the proposed resolution is ultra-vires of the
articles of association and should not be acted upon until an
independent registered valuer determines the allotment price.
 The company filed an appeal with the Securities Appellate
Tribunal, which allowed the company to go ahead with
shareholder voting on the resolution on June 22, but barred it
from declaring the result until the final order on the matter is
issued.
 As per the latest development, Punjab National Bank has
advised its housing finance arm to restructure its fund raising
deal with investors, led by the Carlyle Group, in accordance
with the recent directive by the Securities and Exchange
Board of India. However, PNB Housing Finance has decided
to wait for the Securities Appellate Tribunal’s (SAT) order.
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( 23rd ISSUE – JULY 2021)
 The Reserve Bank of India released the 23rd issue of its bi-
annually Financial Stability Report (FSR) which is headed by
the Governor of RBI.
 The FSR focuses on risks to financial stability and the
resilience of the financial system. It also discusses issues
relating to development and regulation of the financial sector.
 “On the domestic front, the ferocity of the second wave of
Covid-19 has dented economic activity, but monetary,
regulatory and fiscal policy measures have helped curtail the
solvency risk of financial entities, stabilise markets, and
maintain financial stability," the report said.
HIGHLIGHTS:
Impact of Covid-19 Second-Wave:
 The impact of the Covid – 19 second Wave on the balance
sheets of Indian banks has been less than what was
projected before and capital buffers are reasonably
resilient to withstand future shocks.
 A capital buffer is required reserves held by financial
institutions put in place by regulators. These are designed to
provide banking organizations with the means to support the
economy in adverse situations.
 While the recovery is underway, new risks have emerged
which are nascent and mending state of the upturn - Revival
of the Economy.
Corporate Insolvency Resolution Process (CIRP):
 At the end of Q4:2020-21, the number of CIRPs
commenced under the Insolvency and Bankruptcy Code (IBC)
stood at 4376, with the manufacturing sector accounting for the
largest share. About 61 per cent of these had been closed, with
13 per cent culminating in resolution plans and 48 per cent
yielding orders for liquidation.
 Overall, realisation by financial creditors (FCs) in the
resolved cases was 39.3 per cent of their claims and 179.9 per
cent of liquidation value.
 The CIRPs which yielded resolution plans by the end of
March 2021 took 406 days on an average (after excluding the
time excluded by the Adjudicating Authority) for conclusion of
the process.
Stress in MSMEs & Retail Segments:
 While banks’ exposures to better rated large borrowers are
declining, there are incipient signs of stress in the Micro, Small
and Medium Enterprises (MSMEs) and retail segments.
 At the end of March 2021, 15.9% of loans of less than Rs.
25 crore to the MSMEs Sector had turned bad.
 The demand for consumer credit across banks and
NBFCs has decreased, with some deterioration in the risk
profile of retail borrowers becoming evident.
Share of Large Borrowers:
 The share of large borrowers in the aggregate loan portfolio
of SCBs stood at 52.7% in March 2021, but they accounted for
a share of 77.9% of the total GNPAs (73.5% in Sept. 2020).
 Bank credit growth has remained tepid, impacted by
lockdowns and associated restrictions. On the other hand,
deposit growth maintained its upward trajectory, with current
account and savings account (CASA) deposits leading the
way, reflecting continued preference for precautionary savings.
 SCBs’ return on assets (RoA) and return on equity (RoE)
maintained a positive uptrend through 2020- 21 and their
capital to risk-weighted assets ratio (CRAR) improved by 130
bps year-on-year to reach 16 per cent in March 2021.
Restructuring of Loans:
 During 2020-21 the RBI had introduced a one-time
restructuring scheme to aid borrowers affected by the Covid-19
JULY 2021
FINANCIAL STABILITY REPORT
pandemic. The scheme was to be invoked by December 2020
and implemented within 90 days for retail borrowers and 180
days for corporate borrowers.
 By March 2021, 0.9% of total bank advances (loans) were
under restructuring. MSMEs had the highest restructure ratio at
1.7%. Corporate borrowers had a restructured ratio of 0.9% of
total advances.
Gross Non-Performing Asset Ratio:
 As per the financial stability report the bad debt ratio
of banks would likely deteriorate substantially by the end of this
financial year due to coronavirus, even as the banks have
enough capital to take care of the stress.
 The gross non-performing assets (GNPA) and net NPA
(NNPA) ratios remained stable during the second half of 2020-
21, amounting to 7.5 per cent and 2.4 per cent respectively in
March 2021. NBFCs recorded credit growth at 8.8 per cent
during the year while their GNPA ratio declined marginally to
6.4 per cent.
CRAR & PCR:
 Banks have managed to capitalise themselves well during
2020-21 aiding them in maintaining adequate capital adequacy
even under stress situations.
 The Capital to Risk-Weighted Assets Ratio (CRAR) of
SCBs increased to 16.03%. The overall provisioning coverage
ratio (PCR) increased from 66.2 per cent in March-2020 to 68.9
per cent in March 2021.
Macro-stress Tests for Credit Risk:
 Macro-stress tests for credit risk show that SCBs’ GNPA
ratio may increase from 7.48% in March 2021 to 9.80 per cent
by March 2022 under the baseline scenario and to 11.22 per
cent under a severe stress scenario.
 Stress tests also indicate that SCBs have sufficient capital,
both at the aggregate and individual level, even in the severe
stress scenario.
Systemic Risk Survey (SRS):
 In the latest systemic risk survey (SRS), all broad
categories of risks to the financial system - global,
macroeconomic, financial market, institutional and general -
were perceived as ‘medium’ by the respondents. Within the
above categories, commodity price risk, domestic growth and
inflation, fiscal deficit, corporate vulnerabilities, equity price
volatility, banks’ asset quality and capital requirement, credit
growth and cyber risk were rated as ‘high’
Risks to the Financial Sector:
 The FSR does highlight some of the risks to the financial
sector, including those that are a product of the expansion of
government market borrowing. It has pointed out that banks’
holdings of government paper are at the highest since March
2010, and that for public sector banks “held-to-maturity
holdings of G-Secs have not risen commensurate to their
acquisition” - meaning they are particularly exposed to yield
movements. Partly this increase in holdings is accounted for by
pandemic-related liquidity meeting a refusal to lend by banks.
 The FSR points out that for almost 800 private
manufacturing companies analysed, the reinvestment of
retained earnings has become the major source of funds.
 The banking sector’s exposure to Co’s shifted away from
the private sector in particular, with public sector banks
showing “subdued” lending to non-PSUs, while PSUs have
gathered an increased share of lending from all categories of
banks.
 The FSR also pointed out that between September 2020
and April 2021, the asset quality of exposure to non-PSU non-
financial companies showed “considerable deterioration, with
migration to impaired status across all SMA (special mention
account) categories”.
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DECLARATION OF DIVIDENDS BY NBFCs
In order to infuse greater transparency and uniformity in practice,
the Reserve Bank on June 24, 2021 prescribed guidelines on
distribution of dividend by NBFCs.
The guidelines are as below:
 The guidelines shall be applicable to all NBFCs regulated by
the RBI.
 The guidelines shall be effective for declaration of dividend
from the profits of the financial year ending 31-3-2022 and
onwards.
 The Board of Directors shall, while considering the proposals
for dividend, take into account the following aspects:
a) Supervisory findings of the Reserve Bank (National Housing
Bank (NHB) for HFCs) on divergence in classification and
provisioning for Non-Performing Assets (NPAs).
b) Qualifications in the Auditors’ Report to the financial
statements; and
c) Long term growth plans of the NBFC.
d) The Board shall ensure that the total dividend proposed for
the financial year does not exceed the ceilings specified in
these guidelines.
ELIGIBILITY CRITERIA: NBFCs shall comply with the
following minimum prudential requirements to be eligible to
declare dividend:
MINIMUM PRUDENTIAL REQUIREMENTS
Sl.
Parameter Requirement
No.
1. Capital (a) NBFCs (other than Standalone Primary
Adequacy Dealers) shall have met the applicable
regulatory capital requirement for each of the
last three financial years including the financial
year for which the dividend is proposed.
(b) Standalone Primary Dealers (SPDs) should
have maintained a minimum CRAR of 20 per
cent for the financial year (all the four quarters)
for which dividend is proposed.
2. Net NPA The net NPA ratio shall be less than 6 per cent
in each of the last three years, including as at
the close of the financial year for which
dividend is proposed to be declared.
3. Other criteria (a) NBFCs shall comply with the provisions of
Section 45 IC of the RBI Act, 1934. HFCs shall
comply with the provisions of Sec 29 C of The
National Housing Bank Act, 1987.
(b) NBFCs shall be compliant with the
prevailing regulations/ guidelines issued by the
Reserve Bank. The RBI or the NHB (for HFCs)
shall not have placed any explicit restrictions
on declaration of dividend.
QUANTUM OF DIVIDEND PAYABLE:
NBFCs eligible to declare dividend may pay dividend,
subject to the following:
a) The Dividend Payout Ratio is the ratio between the amount of
the dividend payable in a year and the net profit as per the
audited financial statements for the financial year for which the
dividend is proposed.
b) Proposed dividend shall include both dividend on equity
shares and compulsorily convertible preference shares eligible
for inclusion in Tier 1 Capital.
c) In case the net profit for the relevant period includes any
exceptional and/or extra-ordinary profits / income or the financial
statements are qualified (including ’emphasis of matter’) by the
statutory auditor that indicates an overstatement of net profit, the
same shall be reduced from net profits while determining the
Dividend Payout Ratio.
JULY 2021
POLICY GUIDELINES
d) The ceilings on dividend payout ratios for NBFCs eligible
to declare dividend are as under:
CEILINGS ON DIVIDEND PAYOUT RATIO
Max Dividend Payout
TYPE OF NBFC Ratio (%age)
NBFCs that do not accept public
1. funds and do not have any No ceiling specified
customer interface.
2. Core Investment Company 60
3. Standalone Primary Dealers 60
4. Other NBFCs 50
e) The Reserve Bank shall not entertain any request for ad-hoc
dispensation on declaration of dividend.
f) NBFC (other than SPD) which does not meet the applicable
prudential requirement prescribed above for each of the last
three financial years, may be eligible to declare dividend, subject
to a cap of 10 percent on the dividend payout ratio, provided the
NBFC complies with the following conditions:
 Meets the applicable capital adequacy requirement in the
financial year for which it proposes to pay dividend; and
 Has net NPA of less than 4 per cent as at the close of the
financial year.
 In case of SPDs which have a CRAR at or above the
regulatory minimum of 15% during each of the quarters of the
previous year, but lower than 20% in any of those quarters,
the dividend payout ratio shall not exceed 33.3%.
REPORTING SYSTEM:
 NBFC-D, NBFC-ND-SI, HFC & CIC declaring dividend shall
report details of dividend declared during the financial year as
per the format prescribed. The report shall be furnished within a
fortnight after declaration of dividend to the RO Office of the
Department of Supervision of the RBI / Deptt of Supervision of
NHB, under whose jurisdiction it is registered.
 The Board of Directors shall, while considering the proposals
for dividend, take into account the supervisory findings of the RBI
(National Housing Bank for HFCs) on divergence in classification
and provisioning for non-performing assets (NPAs), qualifications
in the auditors’ report to the financial statements; and long term
growth plans of the NBFC.
GOLD (METAL) LOANS
 The Reserve Bank of India on June 23, 2021 notified all
scheduled commercial banks that as per the extant instructions,
nominated banks authorized to import gold and designated
banks participating in Gold Monetization Scheme (GMS)
2015 can extend Gold (Metal) Loans (GML) to jewellery
exporters or domestic manufacturers of gold jewellery.
 On a review, the Reserve Bank has decided as under:
i) Banks shall provide an option to the borrower to repay a part of
the GML in physical gold in lots of one kg or more, provided;
a) The GML has been extended out of locally sourced / GMS-
linked gold;
b) Repayment is made using locally sourced IGDS (India Good
Delivery Standard)/ LGDS (LBMA’s Good Delivery Standards)
gold;
c) Gold is delivered on behalf of the borrower to the bank directly
by the refiner or a central agency, acceptable to the bank,
without the borrower’s involvement;
d) The loan agreement contains details of the option to be
exercised by the borrower, acceptable standards and manner
of delivery of gold for repayment;
e) The borrower is apprised upfront, in a transparent manner, of
the implications of exercising the option;
ii) Banks shall suitably incorporate the above aspects into the
board-approved policy governing GML along with concomitant
risk management measures. Banks shall continue to monitor the
end-use of funds lent under GML.
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APPOINTMENT OF CHIEF RISK OFFICER
 The Reserve Bank of India has decided that all primary
(Urban) co-operative banks (UCBs) having asset size of
Rs.5,000 cr or above, shall appoint a Chief Risk Officer (CRO).
 UCBs have been advised to strictly adhere to the
following instructions in this regard:
 The CRO shall be a senior official in the bank’s hierarchy and
shall have adequate professional qualification / experience in
the area of risk management.
 The CRO shall be appointed for a fixed tenure with the
approval of the Board.
 The Board shall put in place adequate policies to safeguard
the independence of the CRO.
 The CRO shall not have any reporting relationship with the
business verticals and shall not be given any business targets.
 In UCBs that follow committee approach in credit sanction
process for high value proposals.
 If the CRO is one of the decision makers in the credit sanction
process, he shall have voting power and all members who are
part of the credit sanction process, shall individually and
severally be liable for all the aspects, including risk perspective
related to the credit proposal.
 UCBs which do not follow committee approach for sanction of
high value credits, the CRO can only be an adviser in the
sanction process and shall not have any sanctioning power.
 All credit products shall be vetted by the CRO from the angle
of inherent and control risks.
PAYMENT OF MARGINS BY FPIs
 The Reserve Bank of India has allowed authorised dealer
banks to provide margin money facility to Foreign Portfolio
Investors (FPI) for their transactions in Government Securities
(G-Sec). The move is aimed at encouraging investments by FPIs
in the Indian debt market.
 Announcing the measure, RBI Governor Shaktikanta Das
said that the provision would ease operational constraints faced
by FPIs and promote ease of doing business.
 As per RBI's decision, authorised dealer banks will now be
able to place margins on behalf of their FPI clients for their
transactions in Government Securities, including State
Development Loans and Treasury Bills.
 This will be permitted within the credit risk management
framework of banks for the purpose of placing margins with The
Clearing Corporation of India Ltd. (CCIL) in respect of settlement
of transactions involving government securities by the FPIs.
ATMs/CASH RECYCLER MACHINES
 The Reserve Bank of India had constituted a Committee
under the Chairmanship of the Chief Executive, Indian Banks’
Association to review the entire gamut of Automated Teller
Machine (ATM) charges and fees with particular focus on
interchange structure for ATM transactions.
 The recommendations of the Committee have been
comprehensively examined. RBI also observed that the last
change in interchange fee structure for ATM transactions was in
August 2012, while the charges payable by customers were last
revised in August 2014. A substantial time has thus elapsed
since these fees were last changed.
 Accordingly, given the increasing cost of ATM deployment
and expenses towards ATM maintenance incurred by banks /
white label ATM operators, as also considering the need to
balance expectations of stakeholder entities and customer
convenience, RBI has decided as under:
a) Allow increase in interchange fee per transaction from Rs.15
to Rs.17 for financial transactions and from Rs.5 to Rs.6 for
non-financial transactions in all centres.
JULY 2021
POLICY GUIDELINES
b) Customers are eligible for five free transactions (inclusive of
financial and non-financial transactions) every month from
their own bank ATMs. They are also eligible for free
transactions (inclusive of financial and non-financial
transactions) from other bank ATMs viz., three transactions in
metro centres and five transactions in non-metro centres.
c) Applicable taxes, if any, shall be additionally payable.
d) These instructions shall also apply, to transactions done at
Cash Recycler Machines (other than for cash deposit
transactions).
BBPS - ADDITION OF BILLER CATEGORY
 Bharat Bill Payment System (BBPS) is as an interoperable
platform for repetitive bill payments. It was conceptualised to
offer interoperable and accessible bill payment services to
customers through a network of agents with multiple payment
modes and instant confirmation of payment.
 Pilot phase of BBPS was launched on August 31, 2016. The
system offers ‘anytime anywhere’ bill payment service to
customers using online payments as well as through a network
of physical agent locations.
 The system provided standardised bill payment experience,
centralised customer grievance redressal mechanism,
prescribed customer convenience fee and ensured availability of
a bouquet of anytime, anywhere digital payment options.
 The Reserve Bank on June 14, 2021 permitted ‘mobile
prepaid recharges’ as a biller category in Bharat Bill Payment
System (BBPS), on a voluntary basis. BBPS earlier covered bills
of five categories, such as Direct to Home (DTH), electricity, gas,
telecom and water. The scope and coverage of BBPS was
expanded to include all categories of billers which raise recurring
bills (except mobile prepaid recharges) as eligible participants,
on a voluntary basis.
 As per NPCI data, the volume of BBPS transactions almost
doubled in FY21 to Rs.154.482 crore from Rs.77.809 cr in FY20.
DOCUMENT ON REGULATION OF MICRO FINANCE
 The Reserve Bank of India had announced that a
consultative document will be issued for harmonising the
regulatory frameworks for various regulated lenders in the
microfinance space.
 The Reserve Bank has now released the Consultative
Document on Regulation of Microfinance for feedback from all
stakeholders. The suggested framework in the Consultative
Document is intended to be made applicable to the microfinance
loans provided by all entities regulated by the RBI and is aimed
at protecting the microfinance borrowers from over-indebtedness
as well as enabling competitive forces to bring down the interest
rates by empowering the borrowers to make an informed
decision.
KEY PROPOSALS OF THE CONSULTATIVE DOCUMENT:
 A common definition of microfinance loans for all regulated
entities;
 Capping the outflow on account of repayment of loan
obligations of a household to a percentage of the household
income;
 A Board approved policy for household income assessment;
 No pre-payment penalty; no requirement of collateral; and
greater flexibility of repayment frequency for all microfinance
loans;
 Alignment of pricing guidelines for NBFC-MFIs with guidelines
for NBFCs;
 Introduction of a standard simplified fact sheet on pricing of
microfinance loans for better transparency;
 Display of minimum, maximum and average interest rates
charged on microfinance loans on the websites of regulated
entities.
CTDI,
GURUKUL FOR BANKERS
SCO 91, (1ST& 2ND FL) SEC. 47-D,
10
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11

 INDIA TIES WITH RUSSIA AS 4TH LARGEST FOREX
RESERVES HOLDER: As per Reserve Bank of India’s data,
the foreign exchange reserves of India has crossed $600
billion marks for the first time. The Forex reserve of India
increased by USD 6.842 billion to $605.008 billion in the week
ended June 04, 2021. This is the lifetime high of India’s foreign
asset. With this, India has tied with Russia as the fourth largest
reserve holder in the world. The forex reserve of Russia is
calculated to be $605.2 billion.
 ‘ICICI STACK FOR CORPORATES’: ICICI Bank has
announced the launch of ‘ICICI STACK - wide range of 360-
degree solutions for corporates to enable them to seamlessly
meet all banking requirements of their ecosystem in an
expeditious and frictionless manner. The four main pillars of
the ‘ICICI STACK for Corporates’ are Digital banking solutions
for companies, Digital banking services for channel partners,
dealers and vendors, Digital banking services for employees,
Curated services for promoters, directors and signatories.
 “INDUSEASY CREDIT”: IndusInd Bank announced the launch
of ‘IndusEasy Credit’, a comprehensive digital lending platform
that enables customers to meet their financial requirements
from the comfort of their homes. ‘IndusEasyCredit’ offers a fully
digital end to end process that leverages the power of India’s
public digital infrastructure – ‘Indiastack’ to offer loans & credit
cards in a paperless, presence less and cashless manner.
 NO TAX ON CASH DEPOSITS MADE BY HOUSEWIVES:
The Income Tax Appellate Tribunal (ITAT), Agra bench has
ruled that cash deposit made by the housewives during the
demonetization scheme 2016, cannot be subject to addition if
such deposits are below Rs. 2.5 lakh and such amount shall
not be treated as income of the assessee.
 PEAK MATRIX: Tata Consultancy Services has been
recognized as a Leader in Everest Group's PEAK Matrix for
Intelligent Process Automation. The report highlights TCS
Business 4.0 framework that combines digital technologies
such as automation, analytics, cloud, and AI to fulfill the growth
and transformation agenda of enterprises.
 'INDUSTRY LEADER': Wipro has been named by Zinnov as
the 'Industry Leader' for its Engineering and Research &
Development (ER&D), and Internet of Things (IoT) Services for
the eleventh consecutive year. In addition, for the first time,
Wipro has also secured leadership positions across 24
industries measured by Zinnov Zones Assessment on ER&D
and IoT Services 2020.
 “DIGITAL SKILL CHAMPIONS PROGRAM”: The National
Skill Development Corporation and WhatsApp announced an
alliance to launch the Digital Skill Champions Program that
aims to train India’s youth on digital skills. The partnership
identifies two broad areas of collaboration viz., WhatsApp
Digital Skills Academy and Pradhan Mantri Kaushal Kendra
(PMKK) and WhatsApp Business App Training sessions.
Through this program, school and university students would be
coached to imbibe digital and online skills that would lead to
awarding of ‘Digital Skill Champions’ certification.
 TITLE PARTNER OF THE LONDON: Tata Consultancy
Services (TCS) has announced that it will become the title
partner of the London Marathon from 2022. Building on its
success as the technology partner since 2016, TCS said it will
continue to partner with the London Marathon in the innovative
use of technology to further enhance the marathon experience
and promote a healthy lifestyle.
JULY 2021
SNIPPETS
 INDIA'S GDP FORECAST SLASHED: The World Bank has
slashed India's GDP forecast to 8.3% for FY22, the fiscal year
starting April 2021, as against its earlier estimate of 10.1%. It
has further projected India's growth to be 7.5% in 2022, even
as its recovery is being hampered by an unprecedented
second wave of the Covid-19.
 INDIA’S FIRST CNG MOBILE REFUELLING UNIT (MRU):
India’s first CNG Mobile Refueling Unit has been inaugurated.
The MRU has been developed by Indraprastha Gas (IGL) and
Mahanagar Gas. The benefits of mobile fuel retailing includes
lower cost, ability to reach consumers at shopping malls,
offices and other places.
 M&M TO BUY STAKE IN MERU: Tractor-to-technology major
Mahindra & Mahindra (M&M) has bought the remaining 56.8
percent share in Meru Cabs to take its holding to 100 percent -
strategic intent to grow its presence in the shared mobility
space.
 NACH TO BE AVAILABLE ON ALL DAYS FROM AUGUST 1:
RBI: As per RBI, National Automated Clearing House (NACH)
will be available on all days of the week, effective August 1,
2021. NACH, a bulk payment system operated by the National
Payments Corporation of India facilitates one-to-many credit
transfers such as payment of dividend, interest, salary and
pension. It also facilitates collection of payments pertaining to
electricity, gas, telephone, water, periodic instalments towards
loans, investments in mutual funds and insurance premium.
 TWO STATE-RUN BANKS TO BE PRIVATISED: The Centre
could privatise Central Bank of India and Indian Overseas
Bank after the names of the two state-run banks were
shortlisted by the government think-tank NITI Aayog. Bank of
India could be a potential candidate for privatisation too.
 “MISSION INNOVATION CLEANTECH EXCHANGE”: The
Governments of 23 nations, including India, have collectively
launched a bold new plan called Mission Innovation 2.0, to
catalyze action and spearhead a decade of innovation for
global investment in clean energy research, development and
demonstrations. Mission Innovation 2.0 is the second phase of
the global Mission Innovation initiative, launched alongside the
Paris Agreement at the 2015 COP21 conference. The new
initiative was launched at the Innovating to Net Zero Summit,
hosted by Chile.
 PROGRAM TO HELP BOOST INDIA’S MSME SECTOR: The
World Bank’s Board of Executive Directors has approved a
USD 500 million programs to support India’s nationwide
initiative to revitalise the MSME sector, which has been heavily
impacted by the COVID-19 crisis. The USD 500 million Raising
and Accelerating Micro, Small and Medium Enterprise (MSME)
Performance (RAMP) Program is the World Bank’s second
intervention in this sector, the first being the USD 750 million
MSME Emergency Response Program, approved in July 2020
to address the immediate liquidity and credit needs of millions
of viable MSMEs.
 SBI CARD PARTNERS WITH FABINDIA: SBI Card, and
Fabindia, a retail platform for a wide range of handcrafted
products by the artisans, have joined hands to launch an co-
branded contactless credit card named “Fabindia SBI Card”.
 ‘E-PGS’: Life Insurance Corporation has launched a
centralized web-based workflow-based IT platform called “e-
PGS” designed to provide a centralized collection and payment
accounting with a high level of bank integration. On this portal,
corporate customers will be able to view their data, initiate
actionable processes and lodge and track claims.
CTDI, GURUKUL FOR BANKERS 12
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THE CAIRN TAX ARBITRATION CASE
 Cairn Energy has sued India’s flagship carrier Air India to
enforce a $1.2 billion arbitration award that it won in a tax dispute
against India, according to a U.S. District Court filing reviewed by
Reuters.
 The move raises up pressure on India’s government to pay
the sum of S1.2 billion plus interest and costs that the British firm
Cairn was awarded by an arbitration tribunal in December 2020.
The body ruled India breached an investment treaty with Britain
and said that India was liable to pay.
 Cairn filed the lawsuit in the U.S. District Court for the
Southern District of New York, seeking to make Air India liable
for the judgment that was awarded to Cairn. The lawsuit argued
that the carrier as a state-owned company, is ‘legally indistinct
from the state itself’.
 "The nominal distinction between India and Air India is
illusory and serves only to aid India in improperly shielding its
assets from creditors like (Cairn)," the filing said.
 The Cairn Energy-India government dispute has its origins in
the vexed issue of retrospective taxation. In January 2013, the
Supreme Court ruled in favour of Vodafone Plc in a case where
the Indian government had raised a $2 billion (over Rs. 14,600
crore now) tax claim with the British telecom company related to
its acquisition of Hutchison's assets in India in 2007 through a
web of intermediate companies.
 The apex court said that a transfer of assets between two
entities outside the geographical territory of India cannot be
taxed in India, even if the asset was located in India. However,
the then finance minister Pranab Mukherjee introduced the
retrospective taxation policy by amending the Income Tax 1961
that would be applicable from April 1, 1962, so that several deals
struck earlier would come under the tax net. This led to a long
drawn legal battle between Cairn Energy and the Indian
government as the government demanded $1.2 billion from
Cairn as taxes related to a 2006 restructuring of assets it held in
India. It was then that Cairn approached the permanent court of
arbitration at Hague arguing that the new tax laws amounted to a
gross violation of fair and equitable treatment promised under
the India-UK Bilateral Investment Treaty. India, on its part,
argued that tax disputes are not protected by bilateral investment
treaties.
 Cairn’s action by is the latest attempt to force India to pay
$1.7bn awarded by an international tribunal over a tax dispute.
Its asset freeze application in Paris is the first to succeed. The
company said it would effectively transfer the ownership of 20
properties valued at more than €20m.
INDIA MAINTAINS 43RD RANK ON IMD'S WORLD
COMPETITIVENESS INDEX:
 India maintained 43rd rank on an annual World
Competitiveness Index compiled by the Institute for Management
Development (IMD) that examined the impact of COVID-19 on
economies around the world this year.
 The 64-nation list was led by Switzerland, while Sweden has
moved up to the second position (from sixth last year), Denmark
has lost one place to rank third, the Netherlands has retained its
fourth place and Singapore has slipped to the fifth place (from
first in 2020).
 The top-performing Asian economies are, in order, Singapore
(fifth), Hong Kong (seventh), Taiwan (eighth) and China (16th).
 The IMD World Competitiveness Ranking ranks 64
economies and assesses the extent to which a country promotes
the prosperity of its people by measuring economic well-being
through hard data and survey responses from executives.
JULY 2021
BANKING & FINANCIAL NEWS
DEMONETISATION PERIOD CCTV FOOTAGE AT
BRANCHES AND CURRENCY CHESTS:
 The RBI has advised all banks to preserve the CCTV
recordings of operations at their branches and currency chests
during the demonetisation period (from November 08, 2016 to
December 30, 2016) in a proper way, till further orders. This is in
view the investigations pending with law enforcement agencies
and proceedings pending at various courts.
 The Government had issued a notification on Nov. 8, 2016,
withdrawing the legal tender status of Rs.500 and Rs.1,000
denominations of banknotes of the Mahatma Gandhi Series
issued by the Reserve Bank of India. The Government then said
demonetisation of the aforementioned notes was done to tackle
counterfeiting Indian banknotes, to effectively nullify black money
hoarded in cash and curb funding of terrorism with fake notes.
IN-PRINCIPLE APPROVAL TO CENTRUM TO OWN PMC
BANK VIA SFB ROUTE:
 The RBI has given ave ‘in-principle’ approval to Centrum
Financial Services Ltd (CFSL) to set up a Small Finance Bank
(SFB), which earlier in February showed the expression of
interest to own the PMC (Punjab and Maharashtra Cooperative)
Bank.
 Jaspal Bindra-led Centrum Capital, the holding entity for
CFSL, and its partner BharatPe, a payments system company,
will infuse Rs 1,800 crore into the SFB. It will get 120 days to
commence operations.
 The minimum paid-up net worth requirement for starting an
SFB is Rs.200 crore. Once CFSL takes over PMC Bank, it would
get a ready-made branch network of about 100 branches in
Mumbai and in a few States.
 The RBI would consider granting a licence for
commencement of banking business on being satisfied that the
applicant has complied with the requisite conditions laid down by
RBI as part of “in principle” approval.
 There were four bidders for the failed PMC Bank that ran into
trouble leaving thousands of depositors hanging aggregating Rs.
10,727 crore. The other bidders include UK's Liberty Group and
two independent business houses from Hyderabad and Mumbai.
KALROCK-JALAN PLAN TO REVIVE JET AIRWAYS:
 The National Company Law Tribunal (NCLT) has cleared the
Kalrock-Jalan plan to revive Jet Airways, while rejecting the
consortium’s demand for historicity of airport slots. The tribunal
order comes exactly two years after the start of the insolvency
proceedings.
 Jet is the first airline to see resolution under the Insolvency
and Bankruptcy Code (IBC). Even as the order paves the way for
the grounded airline’s revival, the resumption of operations
hinges on negotiations between the consortium and the
government on the issue of airport slots. The consortium will
have 90 days to seek all regulatory permissions and complete
formalities for restarting the airline and can seek a further
extension if required.
 Jet Airways collapsed under a burden of huge debt. The
Kalrock-Jalan consortium was selected by a committee of
creditors with over 99% vote to restart the airline. Jalan is a
Dubai-based NRI businessman and Kalrock Capital is a financial
advisory and asset management Co.
 While Jet has admitted claims of over Rs. 15,000 crore, the
consortium proposed to pay nearly Rs 1,200 crore to creditors
over the next five years and re-establish Jet Airways as a full
service airline with 25 aircraft fleet.
 According to the resolution plan, banks will get a 9.5% stake
in the airline while public shareholding will reduce to 0.21%. The
consortium would hold 89.79% in the airline. Employees will also
get 0.5% stake in the airline.
CTDI, GURUKUL FOR BANKERS
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BBB INVITES APPLICATIONS FOR PNB MD & CEO POST:
 The process of selection of the next Managing Director and
CEO of Punjab National Bank has begun with the Banks Board
Bureau (BBB) inviting applications for this post. The incumbent
MD & CEO S.S. Mallikarjuna Rao’s term at the helm of PNB is
due to end on September 18 this year.
 The BBB has now stipulated that any applicant who wants to
be considered for this top post at PNB should be in the age
group of 45 to 57 years as on September 19, 2021.
AFTER FIVE YEARS OF LOSSES, PSBs REPORTED NET
PROFITS IN FY21:
 According to ICRA, Public sector banks (PSBs) reported net
profits in FY21 after five consecutive years of losses, supported
by windfall treasury gains. However, gains are likely to be much
lower in FY22, given limited headroom for further decline in bond
yields. The credit rating agency estimated that the 12 PSBs
booked profits of Rs.31,600 crore from this source, compared to
the overall Profit Before Tax (PBT) of Rs.45,900 crore in FY21.
Notably, the trading gains for PSBs in FY21 exceeded the capital
infusion of Rs.200 billion received from the Govt.
 Notwithstanding the profits reported by the public banks in
FY21, the PBT of other PSBs (excluding State Bank of India/SBI)
at Rs.18,400 crore were lower than their trading gains
(Rs.25,500 crore), reflecting the challenges posed by Covid-19
on the asset quality and profitability of the banks.
DIRECT TAX COLLECTION HAS NEARLY DOUBLED
THIS FISCAL YEAR:
 Direct tax collection has nearly doubled this fiscal year so far
over the equivalent period in 2020-21 in spite of economic
disruption due to the second pandemic wave.
 Strong growth is visible as part of the first instalment
of advance tax flows in. Also, the trend is in contrast to the
moderation in GST collection seen last month.
 Direct tax collection, net of refunds, stood at Rs. 1.62 trillion
up to June 11 this year against Rs. 87,000 crore in the same
period last year, posting 85 per cent growth.
 Collection is also 33 per cent higher than seen in 2019-20, a
normal year, during this period. Collection this year is rather
closer to the realisation seen after the first advance
tax instalment (June 15) last year, which stood at Rs 1.68 trillion.
 Gross collection at Rs. 1.93 trillion is 54 per cent higher than
last year. However, refunds are 17 per cent lower at Rs. 31,000
crore against Rs. 37,300 crore.
 Collection in Mumbai grew nearly 80 per cent to Rs. 48,000
crore from Rs. 27,000 crore last year during this period. Delhi
has seen a 67 per cent jump to Rs. 20,000 crore from Rs. 12,000
crore last year. Chennai and Pune have posted an expansion of
120 per cent and 150 per cent, respectively, to Rs. 11,000 crore
and Rs 10,000 crore, respectively.
 The Budget has estimated revenues from direct taxes at Rs.
11.08 trillion, which will need a growth rate of 17 per cent over
the 2020-21 actuals. Last year, the direct tax mop-up at Rs. 9.47
trillion was 9.7 per cent lower than the previous year, but
exceeded the revised estimates, which stood at Rs 9.05 trillion.
OVERSEAS INVESTMENT LIMIT FOR MUTUAL
FUNDS REVISED:
 The Securities and Exchange Board of India (Sebi) has
revised the overseas investment limit for mutual funds (MFs).
The market regulator stated in a circular that MFs can make
overseas investments up to $1 billion each, within the overall
industry limit of $7 billion.
 MFs had made representations to the regulator to increase
the investment limit. Last November, SEBI had enhanced the
overseas investment limit from $300 million per mutual fund to
$600 million.
JULY 2021
BANKING & FINANCIAL NEWS
 Investing in global markets allows investors to capture
disruptive growth through various themes, many of which are not
available on the listed markets in India. Global investing,
therefore, diversifies the investment portfolio and has the
potential to improve their risk adjusted returns.
POTENTIAL RISK CLASS MATRIX:
 The Securities and Exchange Board of India has
directed mutual funds (MFs) to introduce another label called as
potential risk class matrix to help investors assess risk better. At
present, MFs have to follow the only the risk-o-meter labelling
system.
 The potential risk class matrix will consist of parameters
based on maximum interest rate risk (measured by Macaulay
Duration, or MD of the scheme) and maximum credit risk
(measured by Credit Risk Value (CRV) of the scheme). This
decision was taken based on the recommendation of the Mutual
Fund Advisory Committee and discussions held with the mutual
fund industry.
 SEBI in its circular stated that the thresholds across the
matrix would determine the maximum interest rate risk and the
maximum credit risk which the scheme would be permitted to
take but the scheme would have the flexibility to move
downwards on the risk scale.
 NEW MODEL OF PUBLIC FINANCE:
 Prime Minister Narendra Modi has said that the new model of
public finance, where states were allowed to exceed their annual
borrowing limits in 2020-21 only if they undertook certain pre-
specified reforms, is a classic example of the new model of
‘reforms by conviction and incentives.’
 In a blog posted on LinkedIn, the Prime Minister said, India
has seen a model of “reforms by stealth and compulsion.” This is
a new model of “reforms by conviction and incentives.” This was
a nudge, incentivising states to adopt progressive policies to
avail additional funds. The results of this exercise are not only
encouraging but also run contrary to the notion that there are
limited takers for sound economic policies.
 Citing the example of four reforms, which state governments
had to undertake to become eligible for the additional 1 per cent
borrowing, Modi said each of the reforms was linked to improving
Ease of Living for the public, mainly the poor, the vulnerable and
the middle class. It also promoted fiscal sustainability.
 Raising enough resources for public welfare while ensuring
sustainability is proving to be one of the biggest challenges, the
Prime Minister said. He added states were able to raise an extra
Rs. 1.06 trillion in 2020-21 by an approach of Centre-State
‘Bhagidari’.
 Elaborating on the first report, which is One Nation One
Ration card, Modi said that the main benefit of this is that
migrant workers can draw their food ration from anywhere in the
country. Seventeen states completed this reform and were
granted additional borrowings amounting to Rs. 37,600 crore.
 On the second reform linked to additional borrowings, which
is aimed at improving Ease of Doing Business, Modi said this
reform (covering 19 laws) is of particular help to micro, small and
medium enterprises (MSMEs). This is because these enterprises
suffer the most from the burden of ‘inspector raj'. It also
promotes an improved investment climate, greater investment
and faster growth. Twenty states completed this reform and were
allowed additional borrowings of Rs 39,521 crore.
 The third reform required states to notify floor rates of
property tax and of water and sewerage charges. This was in
consonance with stamp duty guideline values for property
transactions and current costs in urban areas. Eleven states
completed these reforms and were granted additional borrowings
of Rs 15,957 crore in 2020-21.
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 The fourth reform was the introduction of direct benefit
transfer (DBT) in lieu of free electricity supply to farmers.
Additional borrowing of 0.15 per cent of the gross state domestic
product (GSDP) was linked to this. A component was also
provided for reduction in technical and commercial losses and
another for reducing the gap between revenues and costs (0.05
per cent of GSDP for each). Thirteen states implemented at least
one component while six states implemented the DBT
component. As a result, Rs. 13,201 crore of additional
borrowings was permitted.
 Overall, 23 states availed of additional borrowings of Rs. 1.06
trillion out of a potential of Rs 2.14 trillion. As a result, the
aggregate borrowing permission granted to states for 2020-21
(conditional and unconditional) was 4.5 per cent of the initially
estimated GSDP.
EASIER DILUTION NORMS FOR MEGA INITIAL
PUBLIC OFFERINGS (IPOs):
 Easier dilution norms for mega initial public offerings (IPOs)
have come into effect. Companies with post-listing market
capitalisation (m-cap) of more than Rs. 1 trillion will not be
required to dilute a minimum of 10 per cent. The move to relax
dilution norms is seen as a precursor to Life Insurance
Corporation’s IPO.
 The Govt. has said Co’s with an m-cap exceeding Rs 1 trillion
will have to dilute Rs. 5,000 cr and at least 5% of their m-cap.
 Experts said the earlier framework discouraged large
companies from listing since they were forced to offload a large
volume of shares during the time of their IPO.
 Moreover, companies relisting after insolvency proceedings
will need to have 5 per cent minimum public shareholding. This
will have to be increased to 10% within a year and 25% in three
years, said the latest notification by the finance ministry.
 While there was no minimum threshold of public holding at
the time of acquisition earlier, it had to be increased to 10 per
cent within 18 months. The amendments to the Securities
Contracts (Regulation) Rules notified by the Department of
Economic Affairs will ensure fair price discovery.
GOVT MAY REVIEW IBC PROVISIONS AS LENDERS
SETTLE FOR HAIRCUTS AS HIGH AS 94%:
 A 2018 amendment in the IBC allows the committee of
creditors (CoC) to withdraw the insolvency application with the
approval of a 90% majority. NCLT had observed that creditors of
Videocon Industries will be taking nearly 96% haircut on their
loans and the bidder is ‘paying almost nothing’.
 The Centre may look into reviewing legal provisions that
permit the withdrawal of legal proceedings in the Insolvency and
Bankruptcy Code (IBC) for a nominal one-time settlement.
 Siva Industries Holding Limited where IDBI Bank led lenders
accepted a one-time settlement by its former promoter C
Sivasankaran offering just 6.5 percent of the total debt of Rs.
4,863 crore following which a withdrawal application was filed
before the National Company Law Tribunal (NCLT).
 NCLT has asked the creditors to explain the rationale behind
taking a 93.5 per cent haircut and just Rs 5 crore in upfront cash.
A similar approach was followed by the lenders of debt-ridden
firm Videocon Industries that approved the Rs. 2,962.02 cr bid of
Anil Agarwal's Twin Star Technologies. NCLT observed that
creditors of Videocon Industries will be taking nearly 96 percent
haircut on their loans and the bidder is "paying almost nothing".
 RPG Enterprises Chairperson Harsh Goenka also rebuked
the NCLT saying that it should be the next institution to be
cleansed by the government to prevent ‘hard-earned public
money being stolen’ as companies' promoters stash away
money on the side and get 80-90 percent haircut from bankers
during the insolvency resolution process.
JULY 2021
BANKING & FINANCIAL NEWS
 A 2018 amendment in the IBC allows the committee of
creditors (CoC) to withdraw the insolvency application with the
approval of a 90 percent majority. It seems that this exit route is
being misused in some cases. The matter is under examination
and based on facts appropriate decisions will be taken.
NEW AUDITORS: RBI CLARIFIES ON TENURE,
ELIGIBILITY NORMS :
 Amidst both support to as well as calls for a review of its new
norms for appointing auditors by financial institutions, the RBI
has stuck to its stance but has clarified certain doubts in the
industry on the tenure and eligibility criteria among others.
 The RBI on April 27, 2021, had issued a circular on
'Guidelines for appointment of statutory central auditors
(SCAs)/statutory auditors (SAs) of commercial banks (excluding
RRBs), UCBs and NBFCs (including HFCs)'.
 While the circular has been lapped by domestic audit firms,
including their apex regulatory body ICAI, industry lobbies have
called for a review saying it will increase cost and also doubting
the ability of domestic audit firms to handle large accounts.
 Significantly, the big four--KPMG, Deloitte, EY and PwC
which are foreign entities have been conspicuously silent so far,
in spite of the fact that the new norms will hit their business hard.
NITI AAYOG'S SDG INDIA INDEX 2020-21:
 The third edition of the Sustainable Development Goals
(SDG) India Index and Dashboard 2020–21 was released by
NITI Aayog. Since its inaugural launch in 2018, the index has
been comprehensively documenting and ranking the progress
made by States and UTs towards achieving the SDGs.
 The index has become the primary tool for monitoring
progress on the SDGs in the country and has simultaneously
fostered competition among the States and Union Territories.
 Kerala has retained the top rank in the NITI Aayog's SDG
India Index 2020-21, while Bihar has been adjudged the worst
performer.
 The Index for SDGs evaluates progress of states and Union
Territories on social, economic and environmental
parameters. Kerala retained its rank as the top state with a score
of 75. Both Himachal Pradesh and Tamil Nadu took the second
spot with a score of 74. However, in the 16 SDGs, different
states topped on different parameters.
RBI SLAMS FOREIGN BANKS ON DATA RULE:
 The Reserve Bank of India has pulled up several
multinational banks operating in the country for not providing a
board-approved system audit report certifying compliance with its
data-localisation norms.
 In a communication, the RBI said that a majority of banks are
yet to submit system audit reports certifying compliance to data
storage norms even after three years since the issuance of the
circular. It also said that many foreign banks have said that the
audit norms did not apply to them and this was not acceptable.
 The RBI has imposed restrictions on Mastercard Asia /
Pacific Pte. Ltd. (Mastercard) from on-boarding new domestic
customers (debit, credit or prepaid) onto its card network from
July 22, 2021. Notwithstanding lapse of considerable time and
adequate opportunities being given, the entity has been found to
be non-compliant with the directions on Storage of Payment
System Data.
 The supervisory action has been taken in exercise of powers
vested in RBI under Sec. 17 of the Payment and Settlement
Systems Act, 2007 (PSS Act). Last month, RBI barred American
Express Bank and Diners Club from on-boarding new customers
citing violation of data storage norms.
 Compiled from RBI circulars, PIB – Govt. of India,
Business Standard, Business Line, Financial Express,
Livemint etc.
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(REVISED GUIDELINES)
DEFINITION:
 Certificate of Deposit (CD) is a negotiable, unsecured money
market instrument issued by a bank as a Usuance Promissory
note against funds deposited at the bank for a maturity period
upto one year.
 The primary difference between a CD and a Fixed Deposit
(FD) is CDs are negotiable instruments whereas Fixed Deposits
are not negotiable. Further, there is difference in the value of the
principal amount that can be invested. The former are issued for
large sums of money – Rs. 5 lakh and multiple of Rs. 5 lakh. The
maturity period of CDs ranges from 7 days to 1 year if issued by
banks. However, for FDs the maturity period is from 7 days to 10
years.
 CDs offer a relatively higher interest rate because the
depositor agrees to leave the lump-sum deposit untouched for a
predetermined period of time.
ELIGIBLE ISSUERS:
Certificate of Deposits (CDs) may be issued by:
 Scheduled Commercial Banks;
 Regional Rural Banks; and
 Small Finance Banks.
 All India Financial Institutions.(Separate guidelines issued by
RBI for CDs issued by All India FIIs.)
ELIGIBLE INVESTORS:
CDs may be issued to all persons resident in India.
GENERAL GUIDELINES
(a) Primary issuance:
 CDs shall be issued only in dematerialised form and held with
a depository registered with SEBI.
 Denomination: CDs shall be issued in minimum
denomination of Rs.5 lakh and in multiples of Rs.5 lakh
thereafter.
 Tenor: The tenor of a CD at issuance shall not be less than
seven days and shall not exceed one year.
 CDs shall be issued on a T+1 basis where T represents the
date of closure of the offer period for issuance of the CDs.
(b) Discount/Coupon rate:
 CDs may be issued at a discount to the face value.
 CDs may also be issued on a fixed / floating rate basis
provided the interest rate on the floating rate CD is reset at
periodic rests agreed to at the time of issue and is linked to a
benchmark published by a Financial Benchmark
Administrator or approved by the Fixed Income Money
Market and Derivatives Association of India (FIMMDA) for
this purpose.
 FIMMDA shall ensure that any floating rate approved by them
for this purpose is determined transparently, objectively and
in arm’s length transactions.
(c) Secondary market - Trading Venues and Settlement:
 CDs shall be traded either in Over-the-Counter (OTC)
markets, including on Electronic Trading Platforms, or on
recognised stock exchanges with the approval of the RBI.
 The settlement cycle for OTC trades in CDs shall be T+0 or
T+1.
 All secondary market transactions in CDs shall be settled on
a DvP basis through the clearing corporation of any
recognized stock exchange or any other mechanism
approved by the RBI.
(d) Loans against CDs: Banks are not allowed to grant loans
against CDs, unless specifically permitted by the Reserve Bank.
(e) Buyback of CDs: Issuing banks are permitted to buyback
CDs before maturity.
Buyback of CDs shall be subject to the following conditions:
JULY 2021
CERTIFICATE OF DEPOSITS
 Buyback of CDs can be made only 7 days after the date of
issue of the CD;
 The buyback offer shall be made to all investors in a particular
CD issue on identical terms and conditions. The investors shall
have the option to accept or reject the buyback offer;
 Buyback of CDs shall be at the prevailing market price; and
 CDs bought back, partially or in full, shall be extinguished.
(f) Market Timings: Primary issuance and secondary market
trading hours shall be between 9:00 AM and 5:00 PM on a
business day or as specified by the RBI from time to time.
(g) Repayment of CD:
There will be no grace period for repayment of CDs.
(h) Market Practices and Documentation:
Eligible participants and agencies in the CD market shall follow
the standardised procedures and documentation which may be
prescribed by FIMMDA, in consultation with the RBI for
operational flexibility and smooth functioning of the markets.
(i) Reserve Requirements:
Reserve requirements in respect of the CDs issued by banks
shall be governed by relevant regulations of the RBI.
(j) Accounting of CD Transactions:
Accounting for CD transactions shall be as per the applicable
accounting standards prescribed by the Institute of Chartered
Accountants of India or other standard setting organisations or
as specified by the relevant regulations of the RBI.
REPORTING REQUIREMENTS:
(a) Primary Issuance:
Details of primary issuance of a CD shall be reported by the
issuer to the Trade Repository (TR), i.e., Financial Market Trade
Reporting and Confirmation Platform (“F-TRAC”) of the Clearing
Corporation of India Ltd. (CCIL) by 5.30 PM on the day of
issuance or as decided by the RBI from time to time.
(b) Secondary Market Transactions:
All secondary market transactions executed in OTC market
and/or on the recognised stock exchanges in CDs shall be
reported, with time stamp, within 15 minutes of execution (the
time when price is agreed) on the F-TRAC platform by each
counterparty to the transaction.
(c) Buyback Transactions:
Details of the buyback of a CD shall be reported by the issuer on
the F-TRAC platform by 5.30 PM on the day of buyback.
(d) Reporting by Depositories:
The depositories shall report to the RBI, the details of the CDs
held with them in the dematerialised form, in the prescribed
format at fortnightly intervals (on the 15th day and on the last day
of the month) and as and when called upon to do so by the
Reserve Bank.
Dissemination of Data: The RBI or any other person
authorised by the RBI, may publish any anonymised data related
to transactions in primary and secondary markets in CDs.
Violation of Directions: In the event of any person or agency
violating any provision of these Directions or the provisions of
any other applicable law, the RBI, in addition to taking any penal
or regulatory action in accordance with law, disallow that person
or agency from dealing in the CD market for a period not
exceeding one month at a time, after providing reasonable
opportunity to the person or agency to defend its actions, and
such action will be made public by the RBI.
Applicability of other laws, directions, regulations or
guidelines:
Participants in CD market shall abide by the provisions of any
directions, regulations or guidelines issued by any regulator or
any other authority that may be applicable, in respect of issue of
or investment in CDs provided that such directions, regulations
or guidelines do not conflict with these Directions. In case of any
conflicts, the provisions of these Directions shall prevail.
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1) On 4 April 2021, President of India promulgated the IBC
Amendment Ordinance 2021, allowing the use of Pre-Pack
Insolvency Resolution Process (PPIRP) for Micro, Small and
Medium Enterprises (MSMEs) with defaults of Rs. ____ lakh
and above and up to Rs. ____ lakh under the Insolvency
and Bankruptcy Code.
a) 10;50 b) 10;100 c) 25;100 d) 50;250
2) Under Pre-Pack Insolvency Resolution Process (PPIRP)
for Micro, Small and Medium Enterprises (MSMEs), before
submitting a resolution plan to the NCLT, it must be
approved by at least _____% of the creditors who are
unrelated to the corporate debtor. Furthermore, it is up to
the NCLT to reject or accept any application for a pre-pack
insolvency proceeding before considering a petition.
a) 40 b) 50 c) 66 d) 75
3) Under Pre-Pack Insolvency Resolution Process (PPIRP)
for Micro, Small and Medium Enterprises (MSMEs), the pre-
pack is limited to a maximum of _____ days and ____ days
will be provided to the stakeholders to bring in the
resolution plan to the NCLT.
a) 90 ; 120 b) 120 ; 90 c) 90 ; 180 d) 120;180
4) Under Pre-Pack Insolvency Resolution Process (PPIRP)
____ forms of MSMEs are eligible to be covered:
a) Companies and Limited Liability Partnerships (LLPs).
c) Sole Proprietorship d) Partnerships
e) Hindu Undivided Family (HUF) f) All of the above.
5) To further support small business units, micro and small
industries, and other unorganised sector entities affected
during the current wave of the pandemic, RBI has decided
to conduct special three-year long-term repo operations of
Rs.10,000 cr at repo rate for the SFBs, to be deployed for
fresh lending of up to Rs.____ lakh per borrower. This
facility will be available till Oct. 31, 2021.
a) 10 b) 12 c) 15 d) 18
6) As per the extant guidelines, lending by Small Finance
Banks to Micro-Finance Institutions (MFIs) for on-lending is
not reckoned for priority sector lending (PSL) classification.
However, in view of the fresh challenges brought on by the
pandemic and to address the emergent liquidity position of
smaller MFIs, SFBs are now being permitted to reckon fresh
lending to smaller MFIs with asset size of up to Rs.____ cr
for on-lending to individual borrowers as priority sector
lending. This facility will be available up to March 31, 2022.
a) 250 b) 300 c) 500 d) 800
7) As announced by GoI, foreign portfolio investors (FPIs)
will continue to enjoy ____% withholding tax on interest
income earned in debt securities.
a) 20 b) 15 c) 10 d) 5
8) With a view to incentivise credit flow to the micro, small,
and medium enterprise borrowers, in Feb. 2021 Scheduled
Commercial Banks were allowed to deduct credit disbursed
to new MSME borrowers from their net demand and time
liabilities (NDTL) for calculation of the cash reserve ratio
(CRR). In order to further incentivise unbanked inclusion of
MSMEs into the banking system, this exemption currently
available for exposures up to Rs.____ lakh for credit
disbursed upto the fortnight ending Oct. 1, 2021 is being
extended till 31-12-21.
a) 20 b) 25 c) 30 d) 35
9) The overall limit for overseas investment by Alternative
Investment Funds (AIFs) and Venture Capital Funds (VCFs)
have been enhanced to:
a) USD 2,000 million b) USD 1,500 million
c) USD 1,000 million d) USD 750 million
JULY 2021
BRAIN STORMING
10) For enhancing customer convenience, RBI, has decided
to rationalise certain components of the extant KYC norms.
Which of the following is incorrect w.r.t the guidelines:
a) Extending the scope of video KYC known as V-CIP (video-
based customer identification process) for new categories of
customers such as proprietorship firms, authorised signatories
and beneficial owners of Legal Entities and for periodic
updation of KYC;
b) Conversion of limited KYC accounts opened on the basis of
Aadhaar e-KYC authentication in non-face-to-face mode to
fully KYC-compliant accounts;
c) Enabling the use of KYC Identifier of Centralised KYC Registry
(CKYCR) for V-CIP and submission of electronic documents
(including identity documents issued through DigiLocker) as
identify proof;
d) Introduction of more customer-friendly options, including the
use of digital channels for the purpose of periodic updation of
KYC details of customers.
e) For the customer accounts where periodic KYC updating is
due/pending, no punitive restriction on operations of customer
accounts shall be imposed till Dec. 31, 2021 unless warranted
due to any other reason or under instructions of any
regulator/enforcement agency/court of law, etc.
f) None of the above
11) To boost provision of immediate liquidity for ramping up
COVID related healthcare infrastructure and services in the
country, an on-tap liquidity window of Rs. 50,000 crore with
tenors of up to three years at the repo rate has been opened
till March 31, 2022. Which of the following is correct w.r.t the
said on-tap liquidity window scheme:
a) Banks can provide fresh lending support to a wide range of
entities including vaccine manufactures; importers / suppliers
of vaccines and priority medical devices; hospitals /
dispensaries; pathology labs; manufactures and suppliers of
oxygen and ventilators; importers of vaccines and COVID
related drugs; logistics firms and also patients for treatment.
b) Banks are incentivised for quick delivery of credit under the
scheme through extension of priority sector classification to
such lending up to March 31, 2022. These loans will continue
to be classified under priority sector till repayment or maturity,
whichever is earlier.
c) Banks may deliver these loans to borrowers directly or
through intermediary financial entities regulated by the RBI.
Banks are expected to create a COVID loan book under the
scheme.
d) By way of an additional incentive, such banks will be eligible
to park their surplus liquidity up to the size of the COVID loan
book with the RBI under the reverse repo window at a rate
which is 25 bps lower than the repo rate or, termed in a
different way, 40 bps higher than the reverse repo rate.
e) All of the above
12) As per latest RBI guidelines, all UCBs having asset size
of ______, shall appoint a Chief Risk Officer (CRO).
a) Rs.1000 crore or above b) Rs.2,000 crore or above
c) Rs.5,000 crore or above d) Rs.10,000 crore or above
13) RBI has expanded the coverage and has permitted
________ as a biller category in Bharat Bill Payment System
(BBPS), on a voluntary basis. This is in addition to the five
categories covered earlier. These are Direct to Home (DTH),
electricity, gas, telecom and water.
a) Mobile prepaid recharges b) School fees.
c) Diesel & Petrol d) Online shopping
14) Accounts opened using OTP based e-KYC shall not be
allowed for operation for a period more than _____ unless
face to face identification or V.CIP is carried out.
a) 6 months b) 1 year c)18 months d) 2 years
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15) In view of the increasing cost of ATM deployment and c) Small businesses, including those engaged in retail and
expenses towards ATM maintenance incurred by banks / wholesale trade, other than those classified as micro, small and
white label ATM operators, RBI has decided to allow medium enterprises as on March 31, 2021, and to whom the
increase in interchange fee per transaction from Rs.15 to lending institutions have aggregate exposure of not more than
Rs.____ for financial transactions and from Rs.5 to Rs.____ Rs.25 crore as on March 31, 2021.
for non-financial transactions in all centres. d) The last date for invocation of resolution permitted under this
a) 17; 6 b) 18;7 c) 19;8 d) 20;10 window is September 30, 2021.
16) As per RBI guidelines, customers are eligible for ____ e) The moratorium period, if granted, may be for a maximum of
free transactions (inclusive of financial and non-financial two years, and shall come into force immediately upon
transactions) every month from their own bank ATMs. They implementation of the resolution plan.
are also eligible for free transactions (inclusive of financial f) All of the above.
and non-financial transactions) from other bank ATMs viz. 23) In view of the uncertainties created by the resurgence of
____ transactions in metro centres and ______ transactions the COVID-19 pandemic, the RBI on May 5, 2021 extended
in non-metro centres. the facility for restructuring existing loans to micro, small or
a) 5;3;5 b) 3;3;5 c) 3;5;3 d) 5;5;3 medium enterprise (MSME) without a downgrade in the
17) As per RBI guidelines for Banks and Non-Bank Prepaid asset classification. Which of the following are part of RBI
Payment Instrument Issuers, System Providers and System guidelines:
Participants, the maximum amount outstanding in respect a) The borrower should be classified as a micro, small or medium
of full-KYC PPIs (KYC-compliant PPIs) has been increased enterprise as on March 31, 2021 as per Govt. guidelines.
from Rs.1 lakh to Rs. ____ lakh. b) The borrowing entity is GST-registered on the date of
a) 2 b) 3 c) 4 d) 5 implementation of the restructuring. However, this condition
18) As per RBI guidelines for Banks and Non-Bank Prepaid will not apply to MSMEs that are exempt from GST-
Payment Instrument Issuers, System Providers and System registration.
Participants, the feature of cash withdrawal shall be c) The aggregate exposure, including non-fund based facilities,
permitted in respect of full-KYC PPIs issued by non-bank of all lending institutions to the borrower does not exceed
PPI issuers as well subject to a maximum limit of Rs. _____ Rs.25 crore as on March 31, 2021.
per transaction with an overall limit of Rs._____ per month d) The borrower’s account was a ‘standard asset’ as on March
per PPI. Further, all cash withdrawal transactions performed 31, 2021 and the borrower’s account was not restructured in
using a card / wallet, shall be authenticated by an Additional terms of MSME restructuring guidelines.
Factor of Authentication (AFA) / PIN. e) The restructuring of the borrower account is invoked by Sept.
a) 2,000 ; 5000 b) 3,000 ; 5,000 30, 2021 and the restructuring of the borrower account is
c) 2,000 ;10,000 d) 5,000 ; 10,000 implemented within 90 days from the date of invocation.
19) As per RBI guidelines for Banks and Non-Bank Prepaid f) If the borrower is not registered in the Udyam Registration
Payment Instrument Issuers, System Providers and System portal, such registration shall be required to be completed
Participants, the cash withdrawal limit from Points of Sale before the date of implementation of the restructuring plan for
(PoS) terminals using debit cards and open system prepaid the plan to be treated as implemented.
cards has been rationalised to Rs._____ per transaction g) Upon implementation of the restructuring plan, the lending
within an overall monthly limit of Rs._____ across all institutions shall keep provision of 10 per cent of the residual
locations (Tier 1 to 6 centres). debt of the borrower.
a) 2,000 ; 5000 b) 3,000 ; 5,000 h) All of the above
c) 2,000 ;10,000 d) 5,000 ; 10,000 24) As per the Economic Relief Package announced on 28 th
20) To compensate the banks for the higher interchange fee June, 2021 loan guarantees worth ______ to be provided by
and escalation in costs, they are allowed to increase the the Govt. for Covid-hit sectors
customer charges to Rs.___ per transaction beyond the 5 a) Rs. 1.1 lakh crore b) Rs. 1.2 lakh crore
free ATM transactions. c) Rs. 1.3 lakh crore d) None of these
a) Rs.25 b) Rs.21 c) Rs.18 d) Rs. 15 25) As per the Economic Relief Package announced on 28 th
21)RBI has advised that Commercial Banks may pay June, 2021 size of Emergency Credit Guarantee Scheme to
dividend on equity shares from the profits for the financial be increased to _____ from Rs. 3 lakh crore.
year ended March 31, 2021, subject to the quantum of a) Rs. 4.0 lakh crore b) Rs. 4.5 lakh crore
dividend being not more than____ percent of the amount c) Rs. 5.0 lakh crore d) None of these
determined as per the dividend pay-out ratio which 26) As per the Economic Relief Package announced on 28 th
stipulates the dividend pay-out ratio shall not exceed _____. June, 2021 loan guarantees to be given for ____ sector
a) 50% and 30% b) 50% and 40% under the emergency credit guarantee scheme.
c) 40% and 30% d) 60% and 40% a) Tourism b) Retail c) Agriculture d) None of these
22) With the objective of alleviating the potential stress to 27) As per the Economic Relief Package announced on 28 th
Individual borrowers and Small businesses due to the June, 2021 free visa for first ____ lakh tourists will be given
resurgence of COVID-19 pandemic, the RBI on May 05, 2021 once borders reopen.
announced the guidelines for Resolution of Advances to a) 3 b) 5 c) 7 d) 10
Individuals and Small Businesses. Which of the following
are part of RBI guidelines: ANSWERS
a) Individuals who have availed of personal loans, excluding the 1 b 2 c 3 b 4 a 5 a 6 c 7 d
credit facilities provided by lending institutions to their own
8 b 9 b 10 f 11 e 12 c 13 a 14 b
personnel/staff.
b) Individuals who have availed of loans and advances for 15 a 16 a 17 a 18 c 19 c 20 b 21 b
business purposes and to whom the lending institutions have 22 f 23 h 24 a 25 b 26 a 27 b
aggregate exposure of not more than Rs.25 cr as on 31-3- 2021.

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 Contactless payment through card can be made by placing
the card at close proximity to the device using Radio
frequency identification (RFID) and Near field
communication (NFC) within a maximum distance of
_______: 4.00 cm.
 R-42 is meant for: RTGS transactions for Bank to Bank.
 Which is India’s first international exchange: India
International Exchange (IFSC) Limited (India INX) is India’s
first international exchange in International Financial
Services Centre (IFSC) located at the Gujarat International
Finance-Tec City (GIFT City). India INX is a subsidiary of
BSE Limited.
 Who is the Chariman of FSDC: Union Finance Minister –
Smt. Nirmala Sitharaman is the chairman of Financial
Stability and Development Council (FSDC)
 Bankers’ right to sell the pledged gold ornaments is under
which Act: Indian Contract Act, 1872.
 Bankers’ Book Evidence Act is enacted in which year? 1891
 RTI act was enacted in the year ______: 2005
 Tax Exemption for deposits comes under Section _____ of
IT Act: 80C
 If in a PPF account, a customer deposits more than
Rs.1,50,000 what is the rate of interest paid for the excess
amount? No interest payable
 Joint and several liability is applicable for which type of
customer? Partners in Partnership firm
 Which pass is in Arunachal Pradesh? Bom Di La Pass
 New Name for PMAY. Abhilasha Home loan scheme
 Notices 13 (2) and 13 (4) relate to _____ and _____ under
Sarfaesi Act: Demand [Sec 13(2)] and Possession [Sec 13
(4)].
 Who issues Sovereign Gold Bond: RBI
 Which Is not a Browser: Google Pixle
 Name of Educational Loan portal. ” Vidyalakshmi
 Gold Bonds Issued for: Rs. 50 Per Gram
 What is the expiry of RBI Floating rate interest Bond: RBI
floating rate bonds interest rate @7.15% to remain fixed
till 30th June 2021. The bonds have a fixed tenure of
seven years and minimum investment of Rs. 1000/-
 What is the amount allocated for education sector in Union
budget 2020-21: Rs.99,300 crores and Rs, 3000 crore for
Skill Development.
 What was India’s GDP Growth for 2019-20? 4.2%
 What is Govt. Contribution under NPS? 14% for Central
Govt. Employees and 10% for other Govt. Employees
 Use of Hindi in Banks is governed by which Act? Use of
Hindi in Public Sector Banks is governed by the Official
Languages Act, 1963 (as amended in 1967) and the Official
Language Rules, 1976 (framed under the Act by the Ministry
of Home Affairs, Department of Official language,
Government of India.
 What is the lower limit to proceed under SARFAESI? The
provisions of this Actare applicable only for NPA loans with
outstanding above Rs. 1.00 lac. NPA loan accounts where
the amount is less than 20% of the principal and interest are
not eligible to be dealt with under this Act.
 What is the full form RAROC: Risk Adjusted Return on
Capital It measures return on investment with the
assumption that riskier projects should be accompanied by
higher expected returns
 What is the full form of CARE: Credit Analysis and
Research is a credit rating agency in India.
JULY 2021
RECOLLECTED QUESTIONS
 What is the full form of PCGS: Partial Credit Guarantee
Scheme 2.0 was launched to provide portfolio guarantee for
purchase of bonds or commercial paper with a rating of AA
and below by Public Sector Banks issued by NBFCs/ HFCs /
MFIs as a part of Aatmanirbhar Bharat Abhiyan
 What is the full form of LGD? Loss Given Default
 Basel I, Basel II and Basel III is related to which field?
Minimum Captial requirement for Banks
 APY exit at what age for getting pension: As per Atal
Pension Yojana (APY) guidelines, subscriber can exit from
APY upon completion of 60 years and avail the pension.
 NWC is 12, Current Liability is 48, then what is current
ratio? Current Ratio = 1.25:1
 What is the guarantee fee to be charged under CEGCL
Scheme by NCGTC: NCGTC will not charge any guarantee
fee under the Scheme
 Full form of FEDAI: Foreign Exchange Dealers Association
of India announces exchange rates for Indian Inter Bank
Foreign Exchange Business
 Exposure limits for Urban Co-operative Banks to a
single borrower and group of borrowers ____ of Tier-1
capital: The prudential exposure limits for UCBs for a single
borrower/party and a group of connected borrowers/parties
shall be 15 per cent and 25 per cent, respectively, of their
tier-I capital.
 Financial Markets operations dept. controlled by:
Reserve Bank of India
 MSP of agri commodities recommeded by :Commission
for Agricultural Costs and Prices (CACP)
 IPO maximum loan amount to individual: In case of Initial
Public Offer (IPOs)/ Follow-on Public Offer (FPOs) maximum
amount of finance to an Individual for IPOIFPO is Rs 10.00
lakh.
 UFCE expansion: Unhedged Foreign Currency Exposure
 NCLT appeal time: As per Section 61(2) of the IBC Code,
the time limit for filing an appeal against the decision of
NCLT is thirty days from the date of the order of NCLT.
 Loan to bank directors and relatives - getting
confirmation from the board: Unless sanctioned by the
Board of Directors, banks should not also grant loans and
advances aggregating Rs.25 lakh and above to bank
directors and relatives
 Reporting of Frauds to CBI: Cases to be referred to CBI -
Rs. 3.00 Crore and above but uptoRs. 25.00 Crore
 Federal Bank head quarters: Aluva Kerala
 Full form of RXIL: Receivable Exchange of India Ltd.
 Which of the following does not guarantee credit: DI&CGC,
CGTMSE, NCGTC. Ans is DI&CGC
 OECD - Organisation for Economic Co-operation and
Development: HQ - PARIS.
 Head Quarters of Bank of International Settlement: Basel,
Switzerland.
 For setting up new Currency Chests in areas other than hilly
/ inaccessible places, the minimum area of strong room
should be ___ and the minimum Processing capacity of
____ pieces of banknotes per day:1500 sq ft and 6,60,000.
 Full form of TReDS: Trade Receivables Discounting
System.
 ______% of the beneficiaries under NRLM should be
minorities is: 15%.
 Loans under Prime Ministers Mudra Yojana are covered
under : CGFMU
 Power of attorney becomes invalid after death of the
______: Donor or Principal..
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 ______ names CEO Satya Nadella as new chairman :
MICROSOFT
 Govt appoints ____ as director at India’s WTO mission:
AASHISH CHANDORKAR
 ______ named member of World Bank-IMF High Advisory 
Group: MONTEK AHLUWALIA
 The RBI has approved the re-appointment of ______ as the 
part-time Chairman of ICICI Bank for a period of three years :
GIRISH CHANDRA CHATURVEDI
 The Appointments Committee of the Cabinet on approved the  _____________ has become the first country in the world to
re-appointment of_____________ Deputy Governor, RBI, for
two years: MAHESH KUMAR JAIN
 ________ has been to re-appointed Chandra Shekhar Ghosh
as its MD and CEO for three years: BANDHAN BANK
 WhatsApp has appointed former ____ as a director to lead the
growth of its payments business in India : AMAZON
EXECUTIVE MANESH MAHATME
 ______ has been appointed as the World Bank Education
advisor, starting from June 2021 to June 2024 : RANJITSINH
DISALE
 PM Modi Launches three E-100 Ethanol Dispensing Stations in
______ : PUNE
 Group Health Insurance Start-Up led by Tiger Global - PLUM  _____ has become the first village in the country, where the
raises ______ : $15.6 MILLION
 SBI’s Ecowrap revises FY22 GDP Projection to ______ from
10.4% : 7.9%
 Union Bank of India has nominated ______ as its chief
compliance officer: A K VINOD
 ICICI Bank announced that it has tied up with ______ to offer a
facility that helps overseas partner banks to send instant
remittances on behalf of their customers to the beneficiary in
India : SWIFT
 Digital payments network PhonePe has said it crossed _____
lifetime registered users: 300 MILLION
 ______ launched a tie-up with Apple and Alphabet Inc's
Google to allow users to add cards from their accounts to the
payment apps run by the two tech giants: COINBASE
GLOBAL INC
 Boxop, a Kerala-based start-up has tied up with ___________
to provide low-cost insurance protection for the Covid-19
treatment : MAHINDRA INSURANCE BROKERS LTD (MIBL)
 HDFC Bank plans to become Carbon Neutral by __ : 2031-32
 IDBI Bank has secured a ______ judgment in the commercial
division of the High Court of London against a Cypriot
subsidiary of India-based Essar Shipping Group, among one of
the largest debt judgments obtained by an Indian bank in the
English courts : USD 239 MILLION
 India is likely to adopt Singapore's Variable Capital Company
model for investment funds at the ____ in Gujarat's GIFT City -
-- with a separate legislation that is not part of the Co’sAct,
2013: INTERNATIONAL FINANCIAL SERVICES CENTRE.
 SBI has sanctioned a loan of _____ for the development of
Noida International Airport (NIA) which is being developed by
Yamuna International Airport (YIAPL): Rs.3725 CRORE
 IndusInd Bank will reduce carbon emissions to 50% in next
four years and raise climate financing to _________ in two
years : 3.5 %
JULY 2021
GENERAL KNOWLEDEG
 The RBI has approved the appointment of ______ as the
Managing Director and CEO of RBL Bank for a one-year
period with effect from June 30, 2021 : VISHWAVIR AHUJA
 SBI explores opportunities to enter into partnerships with
______ to handle high volume and low-ticket loans in the
Agribusiness optimally through a digital strategy : AGRITECHS
______ has announced the acquisition of rival Medlife, thereby
creating India’s largest online pharmacy: PHARMEASY
The ____ airport achieved net energy neutral status in the
Financial Year 2020-21 as part of its sustainability goals:
KEMPEGOWDA INTERNATIONAL AIRPORT
grant legal tender status to Bitcoin: EL SALVADOR
 ______ becomes ICC’s official partner till 2023: BHARATPE
 State Bank of India has launched a collateral-free
_____________ to enable its customers to meet medical
expenses of self and family members for Covid treatment :
“KAVACH PERSONAL LOAN”
 ______ became the world’s first mask-free country in the
Corona period : ISRAEL
 _____ has announced the launch of ‘Ghar Ghar Ration’
Program, an employee-funded program for its low-income
customers whose livelihoods are affected by COVID-19 : IDFC
FIRST BANK
entire population above 18 years has been vaccinated:
WEYAN, A VILLAGE IN DISTRICT BANDIPORA (J&K)
 ______ leaders declared that China poses a constant security
challenge and is working to undermine global order : NATO
 The government of India has launched _____ to step up
production of medical oxygen to meet the potential increase in
demand due to further waves of the pandemic: ‘PROJECT O2
FOR INDIA’
 LIC Cards Services has launched a contactless prepaid gift
card, ______ , in collaboration with IDBI Bank on the RuPay
platform : ‘SHAGUN’
 Flying Officer ______ has become the first woman from
Jammu and Kashmir to be inducted as a fighter pilot in the
Indian Air Force (IAF) : MAWYA SUDAN
 India’s official Olympic theme song ‘Lakshya Tera Samne Hai’
composed by __________ : MOHIT CHAUHAN
 The world’s first genetically modified (GM) rubber plant has
been planted by Rubber Board, at the board’s farm in _____ :
SARUTARI (ASSAM)
 ____ has announced the launch of ‘Pay Your Contact’ that
enables its customers to send money or make payments
simply by the beneficiary’s mobile number: KOTAK
MAHINDRA BANK
 _____ launched the Aarogyam healthcare business loan to
the healthcare sector amid the pandemic : SBI

BANK RATE 4.25% MCLR Overnight 6.55% -7.05%
CRR 4.00% FOREX RESERVES- Rs. (in crore) 4519253
SLR ( w.e.f 4th
18.00% FOREX RESERVES US ($ Million) 608999
Jan, 2020)
REPO RATE 4.00% SCB Total Deposits - (Crores) 15298539
REVERSE REPO 3.35% SCB Total Credit - (Crores) 10841866
MSF 4.25% CREDIT- DEPOSIT RATIO (in mn) 68.93
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