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

Daily Current Affairs 30 April 2024 | Latest News

 

CURRENT AFFAIRS : BANKING & FINANCE

Reserve Bank of India Issues Guidelines for Voluntary Conversion of Small Finance Banks into Universal Banks

• The Reserve Bank of India (RBI) has issued guidelines for the voluntary transition of Small Finance Banks (SFBs) to Universal Banks effective immediately.
• The “Guidelines for ‘on-tap’ Licensing of SFBs in Private Sector”, dated December 5, 2019, provide a transition path for SFBs to become universal banks.

Key Highlights :

• Minimum Requirements for Transition : The RBI has stated that SFBs should have a minimum net worth of Rs 1,000 crore to become universal banks in accordance with the on-tap licensing norms.
• According to the RBI, SFBs aspiring to become a universal bank need to have scheduled status with a satisfactory track record of performance for a minimum period of 5 years.
• Stock Exchange Listing Requirement : An SFB intending to transition to a universal bank must be listed on a recognized stock exchange.
• Out of the 10 SFBs, only North East Small Finance Bank is not listed.
• Financial Performance and Asset Quality:SFBs must have reported net profit in the last two financial years.

Daily Current Affairs 28 & 29 April 2024 | Latest News

 

CURRENT AFFAIRS : BANKING & FINANCE

SBI Card’s Q4 Profit Surges Unexpectedly Due to Consistent Retail Spending in India     

• India’s SBI Cards and Payment Services reported an unexpected 11% rise in fourth-quarter profit, driven by steady retail spending that offset an increase in bad loans.
• The company’s profit after tax reached 62 billion rupees ($79.4 million) for the January-March period, up from 5.96 billion rupees a year earlier.
• This exceeded analysts’ expectations, which were around 61 billion rupees, as per LSEG data.

Key Highlights :

• Credit Demand and Retail Spending:Credit demand, especially in unsecured categories like credit cards, remained robust, fueled by retail consumer spending.
• This growth in spending contributed to the rise in the company’s profit.
• Cardholder Spending and Interest Income: Total cardholder spending, or the aggregate transacted amount, grew by 11% year-on-year to 796.53 billion rupees during the quarter.
• This led to a 28% increase in interest income, which rose to 21.39 billion rupees.
• Gross Write-offs and Bad Loans:The company’s gross write-offs rose by 60% to 8.64 billion rupees, reflecting a higher level of bad loans and credit losses.
• Gross bad loans as a percentage of gross advances increased to76% at the end of March, compared to 2.64% at the end of December, indicating a deterioration in asset quality.
• Net Interest Margin (NIM): The net interest margin, a key measure of profitability, fell by 60 basis points year-on-year to 10.9%, suggesting increased pressure on margins due to a combination of higher write-offs and bad loans.
• Stock Performance : Shares of the company ended 1% lower ahead of the results.

Edelweiss Mutual Fund Introduces Nifty Alpha Low Volatility 30 Index Fund                           

• Edelweiss Mutual Fund has launched the Nifty Alpha Low Volatility 30 Index Fund, a multi-factor index fund.
• It will consist of 30 stocks selected from a pool of the top 150 listed stocks.
• These stocks have recently outperformed the broader market yet are relatively less volatile.
• The New Fund Offer (NFO) of the scheme will be from April 26 to May 10, 2024.

Key highlights of the fund ;

• Investment Strategy and Benchmark : The scheme will invest 95-100% in equity and equity-related securities representing the Nifty Alpha Low Volatility 30 Index.
• Its scheme will be benchmarked against Nifty Alpha Low Volatility 30-TRI and will be managed by Bhavesh Jain.
• Scheme Variants and Options : The scheme will offer regular and direct plans with growth and Income Distribution cum Capital Withdrawal (IDCW) options.
• Systematic Investment Plan (SIP) Details : The minimum investment amount for daily, weekly, fortnightly, monthly, and quarterly SIP will be Rs 100 and in multiples of Rs 1 thereafter.
• Index Methodology and Rebalancing : The index methodology will be factor-weighted and rebalanced semi-annually in June and December, respectively.
• Additional Allocation : The fund will allocate 0-5% to debt and money market instruments, in a bid to ensure a balanced approach to wealth accumulation.

Who should choose the fund?

• Investors looking for long-term capital appreciation and want passive investment in equity and equity-related securities replicating the composition of the Nifty Alpha Low Volatility 30 Index can go for this fund.
• The principal invested in the scheme will be at “very high” risk according to the riskometer of the scheme.

What Is a New Fund Offer (NFO)?

• NFO refers to a new mutual fund scheme for the public in the financial markets with an aim of first-time subscription.
• In other words, a new mutual fund scheme based on a new investment strategy is offered to investors for a limited period.
• Asset management companies (AMCs) offer NFOs as new mutual fund products which are not previously present as part of the product basket.
• NFOs are offered for both close-ended and open-ended mutual fund schemes.

About Edelweiss Mutual Fund :

• MD & CEO : Radhika Gupta
• Edelweiss Mutual Funds, managed by Edelweiss Asset Management Limited, is one of the country’s youngest and most dynamic mutual fund houses.

Reserve Bank of India Maintains Foreign Portfolio Investors Investment Limit in Government Securities at 6% of Outstanding Stocks for FY25                

• The Reserve Bank of India (RBI) announced that the investment limits for Foreign Portfolio Investors (FPIs) in government securities, state development loans (SDLs), and corporate bonds will remain unchanged for FY25.

Key Highlights :

• Investment Limits for Various Securities:
• The limit for FPI investment in government securities (G-secs) is 6% of the outstanding stocks of securities.
• The limit for state development loans is 2%.
• The limit for corporate bonds is 15%.
• Fully Accessible Route (FAR):As of now, all investments by eligible investors in the ‘specified securities’ will be reckoned under the fully accessible route (FAR).
• Allocation between General and Long-term Sub-categories:The distribution of incremental changes in the G-secs limit, in absolute terms, will remain at 50:50 between the two sub-categories ‘General’ and ‘Long-term’ for 2024-25.
• State Development Loans (SDLs) Allocation:The entire increase in limits for SDLs, in absolute terms, has been allocated to the general sub-category of state development loans.
• Credit Default Swaps (CDS) Limit:The aggregate limit of the notional amount of CDS sold by FPIs will be 5% of the outstanding stock of corporate bonds.
• An additional limit of Rs 2,54,500 crore has been set for CDS in 2024-25, reflecting the increasing scope for FPIs to engage in credit risk management through swaps.

About RBI :

• Established : 1 April 1935
• Headquarters : Mumbai, Maharashtra, India
• Governor : Shaktikanta Das
• Deputy Governors : M.D.Patra; M Rajeshwar Rao; J Swaminathan and T Rabi Sankar

Government Partners with SBI Cards and Telcos to Tackle One-Time Password Frauds   

• India’s Ministry of Home Affairs, SBI Cards and Payment Services Limited (SBI Card), and telecom operators have joined forces to develop an innovative solution to combat OTP (One-Time Password) frauds, cybercrime, and phishing attacks targeting the banking ecosystem.
• The government is testing a solution that allows banks to track the registered address and geolocation of a customer to monitor where an OTP is delivered, providing a way to detect potential fraud.

Key Highlights :

• RBI’s Additional Factor of Authentication: The Reserve Bank of India (RBI) has mandated an additional factor of authentication for digital payment transactions to combat fraud, with the two-factor authentication system being a key security measure.
• Cybercrime’s Impact:According to the Indian Cyber Crime Coordination Centre (i4C), cybercriminals siphoned off Rs 10,319 crore between April 2021 and December 2023.
• Most crimes originated from China, Cambodia, and Myanmar, involving non-state actors.
• Citizen Financial Cyber Fraud Reporting and Management System:Under the i4C framework, the government established the ‘Citizen Financial Cyber Fraud Reporting and Management System,‘ which successfully prevented around Rs 1,200 crore in fraudulent transfers from over 470,000 citizen complaints received by February 2024.
• Statistics on Cyber Fraud in 2023:In the calendar year 2023, the registry received12 million complaints, with fraudulent transfers totaling Rs 7,488 crore, indicating the scale of the issue.

Recent News :

• In April 2024, SBI Card introduced its first travel-centric core credit card, named ‘SBI Card MILES’, offering a range of comprehensive travel benefits.

About Ministry of Home Affairs :

• Union Minister : Amit Shah
• Minister of State : Nityanand Rai, Nisith Pramanik, Ajay Kumar Mishra

About SBI Card :

• Founded : May 1998
• Headquarters : Gurugram, Haryana
• MD and CEO : Abhijit Chakravorty
• SBI Cards & Payment Services Limited, previously known as SBI Cards & Payment Services Private Limited, is a credit card company and payment provider in India.
• SBI Card was launched by the State Bank of India and GE Capital.

Reserve Bank of India Makes Record Net Purchase of $8.5 Billion in the Forex Market in February 2024, the Highest in 32 Months                                                        

• The Reserve Bank of India (RBI) bought $8.5 billion on a net basis in the foreign exchange market in February,2024 marking the highest net purchase by the central bank in 32 months.
• In January, the RBI made a smaller net purchase of $1.9 billion in the spot market.
• This indicates a significant increase in buying activity in February.

Key Highlights :

• No Dollar Sales in February: According to the central bank’s April 2023 Bulletin, the RBI did not sell US dollars in the currency market during February.
• This contributed to the high net purchase figure.
• Comparison with Previous Records: The net purchase of $8.5 billion in February is the highest since June 2021, when the RBI had net bought $18.6 billion in the foreign exchange market.
• All-Time High Foreign Exchange Reserves: The RBI’s headline foreign exchange reserves reached a record high of $648.56 billion as of April 5, demonstrating the central bank’s growing reserve position.
• The RBI’s net outstanding forward purchase stood at $9.69 billion as of end-February, compared with a net purchase of $9.97 billion at the end of the previous month, the data showed.

Securities and Exchange Board of India Approves Groww Mutual Fund’s Launch of Nifty Non-Cyclical Consumer Index Fund via New Fund Offering                                                    

• Groww Mutual Fund has received the Securities and Exchange Board of India’s (SEBI’s) approval to launch the Nifty Non-Cyclical Consumer Index Fund through a new fund offering (NFO).
• The NFO is expected to go live in the first week of May.
• The fund will be India’s first non-cyclical index fund.
• In this instance, the fund is benchmarked against the Nifty Non-Cyclical Consumer Index (Total Return Index).
• This tracks the performance of the top 30 stocks under sectors such as consumer goods and services, telecom and more.
• Aim of the fund : To generate long-term capital growth by investing in securities of the Nifty Non-Cyclical Consumer Index (TRI) in the same proportion to offer returns.
• It is structured to allocate between 95-100% of its assets in equities and equity-related securities of companies directly involved in or anticipated to gain from consumption and consumption-related endeavours.
• Additionally, it may invest 0-5% in debt and money market instruments, as well as units of debt schemes or debt ETFs.

Key Highlights :

• Groww Nifty Non-Cyclical Consumer Index Fund will be an open‐ended scheme tracking Nifty Non-Cyclical Consumer Index – TRI.
• The scheme will be managed by Abhishek Jain.
• The minimum investment amount will be Rs 500 and in multiples of Re 1 for purchases and of Re 0.01 for switches.
• For SIP, the minimum amount is Rs 1,200 (subject to a minimum of 12 SIP instalments of Rs 100 each for monthly instalments and Rs 300 for quarterly instalments).
• The minimum redemption amount for all plans will be Rs 500 and in multiples of Re 1.
• The principal amount invested in the scheme carries a “very high” risk classification according to the scheme’s riskometer.

About Groww MF :

• Established : 2017
• Headquarters : Bangalore, Karnataka
• CEO : Lalit Keshre

KRAs Release Guidelines to Simplify the KYC Process                             

• In a bid to ease the Know Your Customer (KYC) process for investors due to new guidelines that came into effect on April 1, 2024 the 5 KYC registration agencies (KRAs) – CDSL Ventures (CVL), NSDL Database Management (NDML), CAMS, Karvy, and Dotex have come with guidelines to simplify the process.

Key Highlights :

• Scope of KYC Records:The KRAs collectively hold the KYC records of 3 million investors, playing a pivotal role in maintaining these records.
• Status of KYC Records:Out of the total KYC records:
• 73% are in the ‘KYC Validated’ status, indicating no further action is required for transacting in the securities market.
• 15% are in the ‘KYC Registered’ status, allowing existing systematic investment plans (SIPs) with mutual funds to continue.
• 12% are in the ‘KYC On-Hold’ status, requiring additional steps for compliance.
• Implications of ‘KYC Validated’ Status:For investors whose status is ‘KYC Validated’, no action is required and they can transact in the securities market without resubmission of KYC documents.
• Guidance for ‘KYC Registered’ Status : Investors whose status is ‘KYC Registered’ can continue with their existing systematic investment plans (SIPs) already registered with mutual funds.
• If such investors wish to open a new account or a new folio with a new fund house or Sebi-registered intermediary, a fresh set of KYC documents needs to be collected afresh to onboard the investor.
• Requirements for ‘KYC On-Hold’ Status : If the KYC status is ‘On Hold’ then the investor has to compete ‘PAN-Aadhaar Seeding’ in income tax records to make the PAN operational.

What is the KYC Registration Agency (KRA)?

• KRA is an agency registered with SEBI under the Securities and Exchange Board of India [KYC (Know Your Client) Registration Agency] Regulations, 2011.
• The KRA will maintain KYC records of the investors centrally, on behalf of capital market intermediaries registered with SEBI.

AU Small Finance Bank Launches New Rupay Credit Card and ATM Insurance Products                         

• AU Small Finance Bank (AU SFB) has introduced a range of new products, aiming to enhance fee income through innovative credit cards and ATM insurance.

Key Highlights :

• New Credit Cards:Two new credit cards are among the latest offerings: the AU SPONT Rupay Credit Card and the Secured Credit Card – NOMO (No Missing Out).
• The AU SPONT Rupay Credit Card is developed in collaboration with NPCI, while the Secured Credit Card – NOMO is developed with
• Introduction of Secured Credit Cards:The NOMO (No Missing Out) Credit Card is AU SFB’s first secured credit card, which is backed by a Fixed Deposit (FD).
• This marks the bank’s entry into the realm of secured credit cards.
• Enhanced Digital Solutions for Businesses and Customers:AU SFB has launched the AU 0101 Business App, designed to offer customized solutions for proprietorships and Micro, Small, and Medium Enterprises (MSMEs).
• The AU 0101 Version 2.0 is the bank’s upgraded mobile banking app, offering customers an enhanced user experience and additional features.
• ATM Insurance: Industry-First Innovation : First time in the Indian banking industry, AU SFB has launched ATM Insurance, for the convenience of customers to buy insurance through AU SFB’s ATMs with their debit card.
• Insurance journey on ATM is the industry-first innovation, hence, AU SFB have gone ahead and patented this process before launching its first ATM insurance in March 2024.