Daily Current Affairs November 20th 2024

 

CURRENT AFFAIRS : BANKING & FINANCE

Reserve Bank of India to Launch Cloud Services in 2025, Aiming to Challenge Global Firms’ Dominance     

• The Reserve Bank of India (RBI) plans to launch a pilot programme for cloud services in 2025 to offer local cloud data storage for financial firms at affordable rates.

Key Highlights :

• Competitors:The initiative will challenge global cloud giants like Amazon Web Services, Microsoft Azure, Google Cloud, and IBM Cloud in India’s growing cloud services market.
• Market Insights:India’s cloud services market was valued at $8.3 billion in 2023 and is projected to grow to 24$.2 billion by 2028.
• Currently, the market is dominated by foreign firms.
• Target Audience:The service aims to cater to smaller banking and financial services firms unable to afford existing cloud solutions.
• Development and Funding:The project is spearheaded by the RBI’s research wing, Indian Financial Technology and Allied Services (IFTAS).
• EY has been appointed as an advisor to the project.
• Initial funding of ₹229.74 billion will come from the RBI’s Asset Development Fund.
• Financial firms may hold equity in the cloud service at later stages.
• Implementation Timeline:A small-scale implementation will begin in the coming months, with expansion in phases over the next few years.
• Focus on Localisation:The project aligns with the RBI’s push for localisation of financial data and payments infrastructure.
• Technology Collaboration:RBI will collaborate with local Indian IT firms experienced in building cloud solutions.
• Only Indian-incorporated companies or consortia are eligible to bid for the project.
• Data Centre Locations:Data centres for the project will be established in Mumbai and Hyderabad.
• Procurement:A procurement document was published on the IFTAS website in October 2024, inviting bids for the project.
• Background Announcement:RBI Governor Shaktikanta Das announced plans for a public cloud platform for the financial services industry in December 2023.

State Bank of India Raises ₹10,000 Crore Through Seventh Infrastructure Bond Issuance at 7.23% Coupon Rate for 15-Year Tenure   

• State Bank of India (SBI) has raised ₹10,000 crore at a coupon rate of 7.23 per cent through its seventh infrastructure bond issuance, payable annually for a tenor of 15 years.
• The instrument is rated AAA with stable outlook.

Key Highlights :

• Advantages of Infrastructure Bonds:Funds raised through infrastructure bonds are exempt from regulatory reserve requirements like the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR).
• Unlike deposits, where banks must maintain 5% CRR and invest approximately 18% in securities for SLR compliance, the proceeds from infrastructure bonds can be fully deployed for lending activities, providing greater flexibility.
• SBI’s $500 Million Bond Issuance:SBI has issued $500 million in Senior Unsecured Fixed Rate Notes.
• The bonds have a maturity of 5 years and a coupon rate of 5.125%, payable semi-annually.
• These bonds will be issued through SBI’s London branch on November 25 and listed on the Singapore Stock Exchange and India International Exchange, GIFT City.
• Significance of Infrastructure Bonds:Infrastructure bonds are an essential funding source for banks, particularly for large-scale infrastructure projects, offering the advantage of exempting from CRR and SLR obligations.
• Use of Proceeds:The funds raised from the infrastructure bond issuance will be used for lending purposes, supporting the bank’s lending activities without the constraints of statutory reserve requirements.

About SBI :

• Founded : 1 July 1955
• Headquarters : Mumbai, Maharashtra, India
• Chairman : Challa Sreenivasulu Setty

State Bank of India to open 300-400 branches annually in the medium term    

• The State Bank of India (SBI) plans to open 300-400 branches annually in the medium term.
• The bank aims to increase financial service penetration in India by setting up branches in residential colonies and underserved areas.
• SBI conducted an extensive micro-market survey to identify areas lacking financial services, leading to the target of 500 new branches.
• SBI may relocate branches that are not performing well to more strategic locations, ensuring access to financial services, particularly in rural and semi-urban areas.
• As of September 2024, SBI has 22,640 branches, an increase from 15,870 branches in March 2014.

SBI’s Global Market Position:

• SBI is ranked 17th in the world in terms of market capitalization.
• The bank aims to be among the top 10 global banks in market capitalization within three years.
• SBI’s market capitalization stands at ₹7.26 trillion ($86 billion), while HDFC Bank’s market capitalization is ₹13.06 trillion ($154 billion).
• SBI aims for an annual net profit of ₹1 trillion and is targeting ₹1 trillion in operating profit for the current year.
• SBI recently concluded the centennial celebration of its main branch in Mumbai.

Daily Current Affairs November 10th & 11th 2024

 

CURRENT AFFAIRS: BANKING & FINANCE

Cashfree Payments Pilots Cross Border Payments

• Months after receiving the Payment Aggregator Cross Border (PA-CB) licence, Cashfree Payments has launched a pilot program enabling overseas customers to transact with key Indian merchants using UPI and RuPay options, typically restricted to domestic use.

Key Partnerships with Major Indian Brands

Cashfree has partnered with several well-known Indian brands, including:

• Swiggy (foodtech)
• Zepto (quick commerce)
• Nature’s Basket (premium grocery)
• Nykaa (beauty and fashion)
• Bookmyshow (online ticketing)
• Redbus (travel reservations)
• Vedantu (edtech)

These partnerships aim to expand the availability of cross-border payments for UPI and RuPay users.

CEO’s Perspective on Cross-Border Transactions

• Akash Sinha, CEO of Cashfree, highlighted the convenience offered to SaaS customers handling payments of $10,000–$20,000 and above, where credit card fees may not be cost-effective.
• With Cashfree’s solution, merchants receive an account that simplifies the process, allowing money to be seamlessly collected from overseas customers.

Company Background and Recent Achievements

• Founded in 2015 by Akash Sinha and Reeju Datta, Cashfree Payments provides a full-stack digital payments solution and recently received the Prepaid Payment Instrument (PPI) licence from the Reserve Bank of India (RBI).
• This license supports purchases and fund transfers with a preloaded value.

Financial Overview (FY24)

In the financial year 2023-24 (FY24):

• Net Loss: Increased by 2.17% to INR 136 Cr from INR 133.1 Cr in FY23.
• Operating Revenue: Grew by 4.19% to INR 639.3 Cr from INR 613.6 Cr in FY23.

IRDAI Chairman Calls For 100% FDI In Insurance

• Debasish Panda, Chairman of the Insurance Regulatory and Development Authority of India (IRDAI), recently proposed allowing 100% foreign direct investment (FDI) in the insurance sector to accelerate the goal of achieving ‘insurance for all’ by 2027.

Key Highlights from Panda’s Address

• Need for Capital:
  • Panda emphasized that insurance is a capital-intensive industry, which requires substantial financial input to grow.
  • Achieving broader insurance penetration will necessitate more players and significant capital influx.
• Current FDI Cap:
  • Presently, the FDI limit stands at 74% for general, life, and health insurance sectors.
  • Panda highlighted that opening up 100% FDI would allow foreign companies to invest directly without requiring an Indian partner, which could boost competition and innovation.
• Potential Benefits of Full FDI:
  • Opening up to 100% FDI could increase the number of market players, drive competition, and ultimately enhance insurance accessibility across the country.
  • This move could also supplement domestic investments, preventing the crowding out of local capital.

Supporting India’s Long-term Vision

• Panda linked the expansion of the insurance sector to India’s larger vision of a ‘Viksit Bharat’ by 2047 (a fully developed India), indicating that universal insurance will play a pivotal role in social and economic growth.

Role of Bima Sugam Digital Platform

• The Bima Sugam digital platform, an initiative by IRDAI, aims to be a comprehensive public infrastructure to simplify policy access and management for policyholders.
• Panda noted that Bima Sugam would be instrumental in transforming the insurance sector, making policies more accessible, user-friendly, and transparent for all citizens.

RBI imposes penalty on South Indian Bank

• The Reserve Bank of India (RBI) has imposed a penalty of Rs 59.20 lakh on South Indian Bank due to non-compliance with directives on interest rate on deposits and customer service standards.

Reasons for the Penalty

• Non-Compliance in Customer Notification:
  • South Indian Bank failed to notify certain customers via SMS, e-mail, or letter regarding penal charges levied for non-maintenance of minimum/average minimum balance.
• Improper Lien Marking:
  • The bank placed liens against specific Non-Resident External (NRE) savings accounts, which was found to be against RBI’s regulatory norms.

Supervisory Inspection and Findings

• A statutory inspection was conducted by the RBI, based on the bank’s financial status as of March 31, 2023.
• Following the inspection, RBI issued a notice based on supervisory findings indicating non-compliance.
• After considering South Indian Bank’s responses and oral submissions, the RBI concluded that the bank had indeed violated regulatory directives, justifying the monetary penalty.

Daily Current Affairs November 08th 2024

 CURRENT AFFAIRS : BANKING & FINANCE

Reserve Bank of India Updates Know Your Customer Norms to Comply with Anti-Money Laundering Regulations   

• The Reserve Bank of India (RBI) has announced amendments to the Master Directions on Know Your Customer (KYC) on November 6, 2024 and the amended provisions in the Master Direction shall come into force with immediate effect.
• According to the Amendment to the Master Direction – KYC Direction, 2016, regulated entities (REs) will have to apply the customer due diligence (CDD) procedure at the unique customer identification code (UCIC) level.

Daily Current Affairs November 01st & 02nd 2024

 

CURRENT AFFAIRS : BANKING & FINANCE

Reserve Bank of India’s Diwali Initiative: Covertly Transporting 102 Tonnes of Gold from England to India

• On Dhanteras (October 29, 2024), the Reserve Bank of India (RBI) transported an additional 102 tonnes of gold from the Bank of England to secure storage facilities within India.

Key Highlights :

• RBI’s Gold Holdings:As per the RBI’s 43rd Half Yearly Report on Management of Foreign Exchange Reserves (April – September 2024), the RBI holds a total of 854.73 metric tonnes of gold.
• 46 metric tonnes of this gold is stored domestically, while 324.01 metric tonnes are held overseas with the Bank of England and the Bank for International Settlements (BIS).
• An additional 26 metric tonnes are held in the form of gold deposits.
• Gold Repatriation:Since September 2022, approximately 214 tonnes of gold have been brought back to India due to increased focus on asset security amid global geopolitical tensions.
• In May 2024, around 100 tonnes of gold were repatriated from the Bank of England.
• Gold’s Role in Forex Reserves:The share of gold in India’s total foreign exchange reserves increased from 15% in March 2024 to 9.32% in September 2024.
• Reason for Storing Gold Overseas:India and other nations store gold with the Bank of England primarily due to immediate access to the London bullion market, which facilitates liquidity.
• The Bank of England is the second-largest custodian of gold globally, after the New York Federal Reserve.

About RBI :

• Established : 1 April 1935
• Headquarters : Mumbai, Maharashtra, India
• Governor : Shaktikanta Das

Daily Current Affairs October 25th 2024 | Latest News

 

CURRENT AFFAIRS : BANKING & FINANCE

Reserve Bank of India Study Shows Private Banks at the Forefront of Artificial Intelligence Adoption    

• Artificial Intelligence (AI) adoption in India is gaining momentum, particularly among private banks, with asset size and CRAR (Capital to Risk Weighted Assets Ratio) being key factors influencing the rate of adoption.
• The size and financial health of a bank, measured by CRAR, positively influence the bank’s focus on AI. Larger banks benefit from economies of scale and have more investment capacity for AI technologies.

Key Highlights :

• Text Mining Study (2015-16 to 2022-23): A text mining analysis of Indian banks’ annual reports from 2015-16 to 2022-23 shows a significant increase in AI emphasis across both private and public sector banks.
• However, the rate of AI adoption is faster for private banks.
• AI Adoption Challenges for Smaller Banks: Smaller banks face difficulties in adopting AI due to higher fixed costs and lack of economies of scale, making AI adoption relatively more challenging.
• Capital Adequacy and AI Adoption: Banks with higher CRAR are better positioned to invest in AI, as they have adequate capital buffers and confidence to pursue AI solutions.
• Increase in AI-Related Keywords: The usage of AI-related keywords in private banks’ annual reports increased by six-fold in 2022-23 compared to 2015-16.
• For public sector banks (PSBs), the emphasis on AI increased more than three-fold during the same period.
• Technologies Employed by Banks: Major technologies being employed include cloud computing, big data, automation, and data analytics, with increasing focus on newer AI technologies like Robotic Process Automation (RPA), Internet of Things (IoT), and Natural Language Processing (NLP).

Department of Financial Services Revamps Middle Management Structure in Nationalised Banks    

• The Department of Financial Services (DFS) in the Finance Ministry announced a major revamp of the middle level management structure in nationalised banks.
• This restructuring aims to significantly increase promotion opportunities for employees at the Chief Manager (Scale IV) and above levels.
• Through the latest revamp of the middle management structure, the Finance Ministry has sought to level the playing field among public sector banks (PSBs) and sort out the employee level promotion discrepancies that had crept in, post the mega consolidation exercise leading to 11 PSBs in the country.

Key Highlights :

• New Framework: The new framework introduces a substantial increase in the number of Chief General Managers (CGMs), General Managers (GMs), Deputy General Managers (DGMs), and Assistant General Managers (AGMs) across the 12 nationalized banks.
• Executive Posts Based on Business Mix: The number of executive posts (CGM/GM/DGM/AGM) will be determined based on the banks’ business mix as of March 31, 2023.
• CGM Post Availability: Under the revamped guidelines, the post of CGM (scale VIII) would henceforth be available in all the nationalised banks, below Board level, irrespective of the business mix.
• Categories Based on Business Mix: Nationalized banks are categorized based on their business mix:
• Category A: Business Mix of less than ₹10 lakh crore.
• Category B: Business Mix of ₹10 lakh crore and above.
• CGM Distribution:
• Up to ₹4 lakh crore: 4 CGMs
• ₹4 lakh crore to ₹10 lakh crore: 8 CGMs
• Over ₹10 lakh crore: Minimum 10 CGMs, plus 1 additional CGM for each ₹1 lakh crore increase in business mix.
• Corporate Office Placement: At least 50% of CGMs must be placed at corporate offices for Category A banks.
• Ratios of Executives:CGM ratio is set at 1:4 for all categories of nationalized banks.
• GM:DGM ratio is 1:3:9.
• Review Timeline: The methodology for computing CGM positions may be reviewed by DFS in FY27-28, based on the banks’ business mix as of March 31, 2027.
• Concerns About Saturation: A former chairman of a public sector bank expressed that despite the increase in middle management posts, the “saturation issue” may still persist.

Daily Current Affairs 31 May 2024 | Latest News

 

CURRENT AFFAIRS : BANKING & FINANCE

Reserve Bank of India Imposes Business Restrictions on Edelweiss Asset Reconstruction Company and ECL Finance     

• The Reserve Bank of India (RBI) imposed business restrictions on Edelweiss Asset Reconstruction Company (EARCL) and ECL Finance due to material concerns observed during supervisory examinations.
• EARCL is barred from acquiring financial assets, and ECL Finance is prohibited from undertaking structured transactions for its wholesale exposures.
• The action is based on material concerns observed during supervisory examinations, primarily arising from the group entities’ conduct.
• EARCL and ECL Finance were found to be “acting in concert” by entering into a series of structured transactions for “evergreening stressed exposure of ECL, using the platform of EARCL and connected alternative investment funds (AIFs), thereby circumventing applicable regulations.
• The structures against the Edelweiss Group companies follow similar measures taken by the RBI against JM Financial Products and IIFL Finance.

Key Highlights :

• The RBI also observed that security receipts (SRs) in the case of both ECL and EARCL had been incorrectly valued.
• Moreover, it found that ECL had indulged in a slew of wrong practices.
• These included the submission of incorrect details of its eligible book debts, to its lenders, for computing drawing power.
• Moreover, loan-to-value norms for lending against shares had not been complied with.
• The RBI also encountered incorrect reporting to the Central Repository for Information on Large Credits (CRILC) system.
• Besides, the entities had not adhered to the Know Your Customer (KYC) guidelines by ECL, the RBI observed.
• In April 2024, Kotak Mahindra Bankwas barred from taking on new customers through its online and mobile banking channels and issuing fresh credit cards due to deficiencies in its IT systems.
• Restrictions were also imposed on Bank of Baroda and Paytm Payments Bank.

What is a Security Receipt?

• Security receipts are instruments issued by asset reconstruction companies (ARCs) as consideration for their purchase of distressed assets from banks/Non-Banking Financial Companies (NBFCs).

About Edelweiss Asset Reconstruction Company (EARC) :

• EARC is sponsored by Edelweiss, a leading diversified financial services conglomerate in India, and CDPQ Private Equity Asia Pte Limited (CDPQ).
• EARC specializes in acquiring Non-Performing Assets (NPAs) from banks and financial institutions.
• The company resolves NPAs through strategies outlined in the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002 (SARFAESI).
• EARC operates two distinct business divisions: Wholesale Assets and Retail Assets.

HDFC Bank to Discontinue SMS Alerts for Unified Payments Interface Transactions Below ₹100      

• HDFC Bank has informed the customers it will stop sending SMS alerts for any UPI (Unified Payments Interface) payment spent below Rs 100 or receipt of money less than Rs 500.
• As per the bank, this step will be effective from June 25, 2024.
• From this date, SMS notifications will be pushed only for transactions above Rs 100 (for money sent/paid) and above Rs 500 (for money received).
• Reason for Change: The decision is due to the high cost of sending bulk messages, which costs banks a few crores of rupees daily due to the large volume of UPI transactions, averaging around ₹40 crore per day.

What is UPI?

• UPI, or Unified Payments Interface, has become the backbone of digital transactions in India.
• The UPI was introduced in India on April 11, 2016, by Dr Raghuram G Rajan, Governor, RBI at Mumbai, Maharashtra and developed by the National Payments Corporation of India (NPCI).
• It allows you to instantly transfer money between any two parties’ bank accounts.
• UPI transactions require the authorisation of a Personal Identification Number (PIN), a 4-6 digit pass code set by the customers as a security measure to ensure safe and approved transactions.
• For normal UPI the transaction limit is up to Rs 1 Lakh per transaction.
• 3 prominent UPI applications are the Walmart-owned PhonePe, Google Pay and Paytm.
• In 2023, UPI transactions in India reached a record high with 117.6 billion transactions and a value of ₹183 trillion.
• Besides India, the popular digital payment method has spread to seven countries.
• These include Bhutan, France (for e-commerce), Mauritius, Nepal, Singapore, Sri Lanka, and UAE.
• The share of UPI in digital payments in India has reached close to 80% in 2023.
• India accounts for nearly 46% of the world’s digital transactions (as per 2022 data).

About HDFC Bank :

• Founded : 1st July 2023 (via the merger between HDFC-HDFC bank)
• Headquarters : Mumbai, Maharashtra, India
• MD & CEO : Sashidhar Jagdishan
• Tagline : We Understand Your World

Reserve Bank of India Fines HSBC Rs 36.38 Lakh for Foreign Exchange Management Act Regulation Violations      

• The Reserve Bank of India (RBI) imposed a fine of Rs 36.38 lakh on foreign lender HSBC for Foreign Exchange Management Act (FEMA) violations.
• The violations pertain to the reporting requirements under the Liberalised Remittance Scheme of FEMA, 1999, which HSBC did not follow.
• RBI issued a show cause notice to HSBC.
• The bank responded with a written reply and made oral submissions.
• After reviewing the facts and HSBC’s responses, the RBI concluded that the violations were substantiated, leading to the imposition of the penalty.

What is the Foreign Exchange Management Act (FEMA)?

• The Foreign Exchange Management Act, 1999 (FEMA), is an Act of the Parliament of India “to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India”
• This new Act is in consonance with the frameworks of the World Trade Organisation (WTO).
• It also paved the way for the Prevention of Money Laundering Act, 2002 which came into effect on July 1, 2005.

Recent News :

• In May 2024, The Reserve Bank of India (RBI) imposed a penalty of ₹1 crore on ICICI Bank and fined Yes Bank ₹91 lakh for non-compliance with regulatory directions.

About HSBC :

• Headquarters : London, England, UK
• Group Chairman : Mark Tucker
• Group Chief Executive :Noel Quinn

Asian Development Bank Pledges $2.6 Billion in Sovereign Loans to India        

• The Asian Development Bank (ADB) committed $2.6 billion in sovereign lending to India in 2023 for projects that aim to strengthen urban development, support industrial corridor development, promote power sector reforms, build India’s climate resilience, support horticulture, and enhance connectivity.
• The loans aim to foster India’s structural transformation, job creation, infrastructure enhancement, green growth, and socioeconomic inclusiveness, and integrate smart technologies and innovations.
• ADB also extended $23.53 million in technical assistance and $4.1 million in grants under the sovereign portfolio.
• In addition, ADB committed over $1 billion for private sector projects during the year.

Key Highlights :

• India’s Relationship with ADB: India is a founding member and one of the largest shareholders of ADB, headquartered in the Philippines.
• ADB focuses on development in the Asia-Pacific regions.
• ADB-Funded Projects in India : Projects funded by ADB in India include the Visakhapatnam–Chennai Industrial Corridor Development project, road connectivity projects in Bihar and Madhya Pradesh, the expansion of the Delhi–Meerut rapid rail transit corridor, horticulture development projects in Himachal Pradesh.
• ADB’s Portfolio in India: As of 31 December 2023, ADB had committed 623 public sector loans, grants, and technical assistance totalling $55.3 billion to India, with its current sovereign portfolio in India including 67 loans worth $14.15 billion.

What is Sovereign Debt?

• Sovereign debt is the government debt of a country, a sovereign nation.
• It is also referred to as government debt, national debt, public debt, or country debt.
• The sovereign debt of a country consists of all its debt liabilities to both domestic and foreign creditors.

About ADB : 

• Established : 1966
• Headquarters : Manila, Philippines
• President : Masatsugu Asakawa
• Membership : 68 members, including 49 regional members (countries in Asia and the Pacific) and 19 non-regional members (countries outside the region)

Axis Bank Collaborates with Mastercard to Introduce NFC Soundbox      

• Axis Bank, in partnership with Mastercard, has introduced the NFC Soundbox, a new payment solution.
• The NFC Soundbox serves as an all-in-one payment solution, enabling users to accept Bharat QR, UPI, Tap & Pay, and Tap + Pin payments.
• Axis Bank claims to be the first bank in India to offer a Soundbox capable of accepting Tap + Pin payments, facilitating transactions exceeding Rs 5000 via card instruments.

Key Highlights :

• Dual Confirmation Feature: The device features a dual confirmation mechanism, providing audio cues through its speaker and visual feedback on the screen in over 7 languages.
• This ensures a smooth and secure transaction experience for both merchants and consumers.
• Connectivity and Network: The NFC Soundbox is equipped with 4G + WiFi capability and is compatible with leading payment networks such as Visa, RuPay, and American Express.
• Enhanced Security and Convenience: The launch of the NFC Soundbox underscores a commitment to providing consumers with quick and highly secure card transactions while offering small merchants a cost-effective and comprehensive payment solution.

About Axis Bank :

• Established : 3 December 1993
• Headquarters: Mumbai, Maharashtra, India
• MD & CEO: Amitabh Chaudhry
• Tagline : Badhti Ka Naam Zindagi

About Mastercard :

• Founded : 1966
• Headquarters : New York, U.S
• CEO : Michael Miebach