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MORNING BANKING & FINANCIAL NEWS UPDATES

ISSUE: 245 2023 07 June 2023

RBI KEY RATES FOREX (RBI REF. ) EQUITY /COMM. MARKET

Repo Rate: 6.50% INR / 1 USD : 82.6396 Sensex: 62792.88 (+5.41)
SDF: 6.25% INR / 1 GBP : 102.8279 NIFTY: 18599.00 (+5.20)
MSF /Bank Rate: 6.75% INR / 1 EUR : 88.6696 Bnk NIFTY: 44164.60 (+62.90)
CRR: 4.50% INR /100 JPY: 59.2800 Gold: 59,911.00 (+63.00)
SLR: 18.00% Silver: 71,917.00 (+45.00)

Govt-appointed panel will explore how NPS can be

improved for its employees: PFRDA Chairman: The
National Pension System (NPS) is a good investment product but has
been caught in political crosshairs in recent times. In the last one
year, some state governments have decided to revert to the old
pension scheme (OPS) for government employees. On the other
hand, NPS schemes have performed consistently well since
inception, and witnessed growth in subscriber bases across the
government schemes, corporate and individual models (all citizens’
scheme) as well as Atal Pension Yojana (APY). In an exclusive
interview with Moneycontrol PFRDA chairman Deepak Mohanty, who
assumed charge in March 2023, shared his vision for the NPS
ecosystem, plans for a minimum assured returns scheme and the
need to start investing early towards retirement to ensure a
substantive corpus. The Pension Fund Regulatory and Development
Authority (PFRDA) has commenced work on designing a minimum
assured returns scheme (MARS) under the National Pension System
(NPS) architecture, and it will be rolled out in “near future,” PFRDA
chairman Deepak Mohanty has said. “The minimum assured returns
scheme has been in the works for some time. It is very much on our
agenda. Our statute also requires that we ought to offer this
guarantee,” Mohanty told Moneycontrol in an exclusive interview.
(Moneycontrol)
SAT quashes SEBI order cancelling Brickwork Ratings'
licence: India's markets appeals tribunal on Tuesday set aside a
ruling by the markets regulator cancelling the licence of Brickwork
Ratings India, according to an order published on the tribunal's
website. SEBI had cancelled the licence of the rating agency in
October in a case of alleged violation of laws applicable for rating
agencies. The Securities Appellate Tribunal (SAT), which hears
appeals against orders passed by SEBI, said violations by Brickwork
Ratings "were not deliberate or fraught with maladies or fraud and
therefore cannot result in the cancellation of the licence". The
tribunal, however, partly affirmed the regulator's findings of alleged
violations and referred the matter back to SEBI for imposing
appropriate penalties.
(Moneycontrol)
World Bank offers dim outlook for the global economy
in face of higher interest rates: The global economy is likely
slowing sharply this year, hobbled by high interest rates, the
repercussions of Russia’s invasion of Ukraine and the lingering
effects of the coronavirus pandemic.That’s the latest outlook of the
World Bank, a 189-country anti-poverty agency, which estimates that
the international economy will expand just 2.1% in 2023 after growing
3.1% in 2022.
(Moneycontrol)
Public sector banks, ICAI to set up common platform for
balance confirmations: Statutory auditors may have cause for
cheer as a new mechanism in the form of a common balance
confirmation portal is now being put in place to provide “external
confirmation of balances” for aiding the audit of financial statements.
Over the years, auditors have been using “external confirmations” to
obtain balance confirmations in respect of accounts receivables,
accounts payables, bank balances, loans, investments or inventories
held by third parties, etc. from various parties, including banks. Put
simply, external confirmations means audit evidence obtained as a
direct written response to the auditor from a third party (the confirming
party), in paper form, or by electronic or other medium. To prevent
such scandals and also to streamline the process, the proposed
common platform for balance confirmation will be jointly owned by the
Indian Banks’ Association (IBA) and the Institute of Chartered
Accountants of India (ICAI). It will initially cover only public sector
banks but be later extended so as to cover private sector banks and
financial institutions as well, sources said.
(Business Line)
Work underway on non-IBC resolution formats: The much
celebrated June 7 circular of 2019 titled “Prudential framework for
resolution of stressed assets” is likely to get a facelift. The intention
of RBI, according to highly placed sources, is to determine whether
some tweaks can be made to the circular so that stressed assets can
be resolved outside the scope of the Insolvency and Bankruptcy
Code, or IBC. The circular in its current form allows for a little window
to resolve a bad loan without taking it to the IBC in its initial days. But
resolution through this circular hasn’t been a great success. “One of
the high-profile resolutions invoking the June 7 circular was DHFL.
But even there, since the lenders failed to come on the same page,
IBC had to be evoked eventually,” said a banker aware of the matter.
“Now the attempt is to see whether consensus can be achieved
between banks in an easier manner so that there could be some way
out to resolve the stress without getting into the litigation process”.
The intent of the circular was to resolve the stress in the banking
system in a timely and urgent manner.
(Business Line)
Axis Bank introduces Kiwi credit card on UPI app: Axis
Bank has partnered with Kiwi, a credit card platform, to launch the
Credit on UPI app. The app aims to offer a one-stop solution for
RuPay credit card users. With the Kiwi app, the company aims to craft
a direct-to-customer model in the credit card market wherein
customers can pay either using a bank account directly or a credit
card via phones in a secure manner. Furthermore, users of the Kiwi
Credit Card will be given a digital RuPay credit card instantly through
which users will be able to link the UPI and Rupay Card in the app.
(Business Line)
NSE shifts Bank Nifty settlement from Thursday to
Friday: The National Stock Exchange (NSE) has shifted the
settlement of derivative contracts on Bank Nifty from Thursday to
Friday. In a release, the exchange said the change will be effective
from July 14and accordingly, all existing contracts with Thursday
expiry will be revised to Friday on July 6. “The first Friday expiry will
be on July 14, 2023,” the NSE circular added. Recently, the BSE
tweaked the lot size and expiry day of monthly, weekly, and long-
dated futures and options contracts on Sensex and Bankex indices
that took effect from May 15. It has changed the expiration day of its
monthly, weekly, and long-dated futures and options contracts to
Fridays, from Thursdays. Accordingly, the lot size for futures and
options contracts of Sensex has been reduced to 10 from 15 earlier
and that of Bankex index has been changed to 15 from 20.
(Business Line)
World Bank trims India growth forecast but lifts global
outlook: The World Bank on Tuesday raised its 2023 global growth
forecast saying that the U.S. and other major economies have proven
more resilient than forecast. But it lowered India's growth outlook to
6.3% in FY2023/24 (April-March), a 0.3 percentage point downward
revision from January. The World Bank said in its latest Global
Economic Prospects report that global growth is likely to slow to 2.1%
in 2023, with prospects clouded by financial risks but that's up from a
1.7% forecast issued in January.
(Economic Times)
RBI says banks can offer NDF contracts to resident
Indians for hedging: Reserve Bank of India has issued rules
allowing banks to offer non-deliverable forward contracts involving
the rupee to resident Indians. These contracts can be issued to non-
retail residents for hedging purposes and settled in Indian rupees. For
contracts with a person resident outside India, the settlement can be
in Indian rupees or any foreign currency. Banks can issue these
contracts via IFSC banking units.
(Economic Times)
Govt removes cap on MSP purchases of 3 pulses: The
government has removed the procurement ceiling of 40% of total
marketable surplus for tur, urad and masur under the Price Support
Scheme (PSS). Curiously, the move comes when elevated prices of
three varieties forced the government to impose stock limits for urad
and tur last week.Actual MSP purchases of these three pulses by
Nafed, the official procurement agency, has been minimal in the last
couple of years.“The assured procurement of these pulses by the
government at remunerative prices will help motivate the farmers to
enhance sowing area in the upcoming kharif and rabi sowing
seasons,” according to an official statement on Tuesday.Sources
said that because of robust demand and domestic shortfall, Nafed
has unable to procure substantial quantity of these pulses varieties
from the farmers under PSS. The government has been importing
these varieties of pulses to meet domestic demand.
(Financial Express)
PhonePe launches account aggregator service: Fintech
major PhonePe has launched its account aggregator services,
allowing app users to share their financial data with regulated
financial institutions to gain easier access to their products. The
company launched it through its wholly-owned subsidiary PhonePe
Technology Services. PhonePe had received the Reserve Bank of
India’s (RBI) approval to operate as an account aggregator in 2021.
The account aggregator services will allow Indian consumers to
consent to and share all their financial data such as bank statements,
insurance policies and tax filings with regulated financial institutions.
(Financial Express)
SBI to factor in climate finance risk: SBI will focus on
factoring in environment-induced financial risk in its overall risk
management strategy during the current fiscal year (2023-24),
according to its Chairman Dinesh Kumar Khara. Khara, in a
communiqué to shareholders in the annual report for 2022-23 (FY23),
said it was widely expected that the Reserve Bank of India (RBI)
would make tangible progress in this direction during this fiscal year.
(Business Standard)
 TODAY’S FINANCIAL TERMINOLOGY/CONCEPTS
Self Reliant India (SRI) Fund
❖ The government had announced the Rs 50,000 crore Fund of Funds called
Self Reliant India (SRI) Fund in May 2020 (post Covid) to support its aim to
enable credit access for MSMEs. Registered with SEBI as a category-II
Alternative Investment Fund (AIF), the fund operates through a mother-fund
and daughter-fund structure for equity or quasi-equity investments in MSMEs
by venture capital and private equity firms.
❖ Employing a fund-of-funds strategy, the SRI fund invests in SEBI-registered
Category I and Category II AIFs called daughter funds which in turn invest in
MSMEs. The government is the sole anchor investor in the fund with the initial
support of Rs 10,006 crore as the mother fund. The corpus is expected to be
enhanced to Rs 50,000 crore with Rs 40,000 crore from daughter funds
during the 15-year tenure of the fund while the investment or commitment
period is 13 years.
❖ The daughter funds have to invest at least five times the amount of capital
contribution received from SRI Fund in MSMEs. The daughter fund must
ensure that the MSMEs it is investing in are registered with the Udyam portal
of the MSME ministry. The target return for daughter fund is a gross IRR
(internal rate of return) of 12 per cent per annum. Gross IRR is referred to the
return on investment without taking into account any management fees and
costs.
❖ According to NSIC Venture Capital Fund (NVCFL) – the implementing body
of SRI fund, there are 44 daughter funds as of now. As of March 31, 2023,
the SRI fund had made a capital commitment of Rs 5,120 crore to 42 of the
empanelled daughter funds.

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