banking awareness may 2017 study-iq · pdf filesomething interesting consumer inflationin...

BANKING Awareness MAY 2017

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What is a Payments Bank?Payments Bank is a new type of bank, licenced

by the Reserve Bank of India. As a Payments Bank, Paytm can now accept customer deposits upto Rs. 1 lakh per customer in a wallet, savings

or current account and offer other banking services like Debit Cards, Online Banking and

Mobile Banking.

How is a Payments Bank different from a normal bank?

Payments Banks are not allowed to lend to customers. However, they can partner with other

financial institutions/banks to offer financial products like loans, insurance, mutual funds,

pension funds etc.

PAYTM Payments BankIthaszerochargesonallonlinetransactionsand

nominimumbalancerequirement.

• Itwillbethefirstbanktooffercashbacksondeposits.EverycustomertoopenaPaymentsBankaccountwillgetacashbackofINR250,assoontheybringdepositsofatotalof $387(INR25K).

• Customerswillbegivenzerochargesonallonlinetransactions(suchasIMPS,NEFT,RTGS)andnominimumbalancerequirement.

• Amongpaymentbanklicenceholders,twoentitiesnamelyAirtelPaymentsBankand

IndiaPostPaymentsBank(IPPB)havestartedoperationssofar.

• Airtel- 7.25%interestonsavingsaccount,IPPB5.5%

• PayTm paymentsbank- 4%

InPaytm PaymentsBank

One97Communicationsowns- 49percentstake

VijayShekhar Sharmaowns51percent.HQ– NOIDA

VijayShekhar Sharma,Chairman– PaytmPaymentsBank

Thecentralbankgavein-principleapprovalto11entitiestostartpaymentsbankoperationsin

August2015.Outofthem,TechMahindra,Cholamandalam

InvestmentandFinanceCompanyandaconsortiumofDilip Shanghvi,IDFCBankandTelenorFinancialServiceshavebacktrackedon

theirpaymentsbankplans.

InApril2017

• AdityaBirlaIdeaPaymentsBankgotpermissionfromRBItoopenpaymentsbank

• 51:49jointventure(JV)betweenAdityaBirlaNuvo Ltd(ABNL)andtelecommajorIdeaCellular.

• AdityaBirlaIdeaPaymentsBankLtd- SeventhentitytoreceiveafinallicencefromtheReserveBankofIndia(RBI)tosetupapaymentsbank,(Stockexchangenotification)

• ExceptVodafoneM-Pesa Ltd,allpaymentbanklicenceholdershavereceivedthefinalapproval.

• InMarchlastweek- RBIgrantedafinallicencetoFino PayTechLtdandNationalSecuritiesDepositoryLtdtoopenpaymentsbank

Renu Satti,CEOofPaytm PaymentsBankAim- tobecomethepreferredbankfor50

CROREIndiansby2020Raised$1.4billionfromSoftBank

(MasayoshiSon)

• Airtel1st paymentsbankinthecountrytogolive– 1st inRajasthan

• IndiaPost - 2nd overall– 1st publicsectorPaymentsbank- January2017. Thefirsttwobranches- inRanchiandRaipur

• RelianceIndustries,IdeaCellular,FINOPaytech,andNationalSecuritiesDepository

Limited

• Received PaymentsBankslicenses.

TheInternationalMonetaryFundhaspredictedthattheglobaleconomywouldgrowat3.5%in

2017,upfrom3.1%lastyear,and3.6%in2018.

IMFmanagingdirector– ChristineLagardeHQ– WashingtonDC

IMF - India

• IndialikelytoovertakeGermanytobecomeworld'sfourthlargesteconomyin2022:IMF

Indiatogrowby7.2%in2017-18Indiatogrowat7.7%in2018-19

GrowthinAsiaisforecasttoaccelerateto5.5%in2017from5.3%in2016.Itwas5.3%in2015

IMF’s AdvicetoIndia

• Sortoutpilingstressedassetsinthebankingindustry

• overhaulthetaxsystem• Revivelacklusterproductivity

• Workongeneratingrobustemploymentopportunitiestopeople

• Encourageprivatesectorinvestment• Trytoovercomeasignificantinfrastructure

shortfall

AsianDevelopmentBank• 50thannualmeeting–May4th toMay7th,Yokohama,Japan)

• ADBPresidentTakehiko Nakao,HQ-Manila• 1966• 67Owners, IndiaisADB'sfourthlargestshareholder

• ADBforecast- India’seconomicgrowthrate7.1percent2016-177.4percent2017-187.6percent2018-19

• TheAsianDevelopmentBank(ADB)approveda$275millionloantohelpsupportandimproveurbanservicesdeliveryamongpoorcommunities,particularlyonwatersupplyandsanitation,inMadhyaPradeshincentralIndia.

ADBapproveda$175millionloantoPowerGridCorporationofIndiaLimitedforcleanenergy—particularlysolar— andachieveenergysecurity.(2,500megawatts(MW)ofpowerfromsolarparksinBhadla,Rajasthan,and700MWfrom

Banaskantha,Gujarat)

• ADB financing157.5milliondollarsfortheOrissaIntegratedIrrigatedAgricultureandWaterManagementInvestmentProgram.

• ADBfinancingUSD500millionforRajasthan'sroadproject

• ADBfinancingUSD-390-millionbondtosupport709MWofsolarandwindprojectsacrosssixstatesinIndia.AlsoissuedINR-300crore(aboutUSD47m)offshoreIndianrupee-linkedbondsfortheproject

TheInternetandMobileAssociationofIndia(IAMAI)hasappointedGoogleIndiamanagingdirectorandGoogle’svice-

presidentforSouthEastAsiaandIndiaRajan Anandan asitsnewchairman.

Ex- FreeCharge co-founderandchairmanKunal ShahDeepKalra,chairmanandgroupCEOofMakeMyTrip - newvice-

chairmanIAMAIisthecountry’sleadingassociationofdigitalcompanies.Ithasamembershipofnearly300Indianandoverseascompanies,

andhasofficesinDelhi,Mumbai,BengaluruandKolkata.

MajorrestructuringinthePSUbankingPNBManagingDirectorUshaAnanthasubramanian hasbeenshiftedtoKolkata-

based Allahabad Bank

headof Bank ofIndia(BoI)Melwyn Rego movedto Syndicate Bank

IDBI Bank headKishor PKharat shiftedto Indian Bank.MaheshKumarJainof Indian Bank shiftedto IDBI Bank.

AppointmentsCommitteeoftheCabinet(ACC),headedbyPM

Rajkiran RaiG- MDandCEOofUnion Bank ofIndiaforaperiodofthreeyears.

MajorrestructuringinthePSUbanking

RSubramaniakumar - IndianOverseasBank,MDandCEO.

SunilMehta– toheadthecountry'ssecondlargestpublicsector bank PNBinplaceofAnanthasubramanian whohasbeenshifted.

Dinabandhu Mohapatra - MDandCEOof Bank ofIndia.

RASankara Narayanan- MDandCEOofVijaya Bank.

GrossNPApfPSBsnearlydoubledtoRs 5.02lakhcroreattheendofMarch2016,upfromRs 2.67lakhcroreattheendofMarch2015.

RosebyoverRs 1lakhcroretoRs 6.06lakhcroreduringApril-Decemberof2016-17,thebulkofwhichcamefrompower,steel,roadinfrastructureandtextilesectors.

UNITEDNATIONS

Indiaisprojectedtoachievea7.3 percentgrowthin2017,adownwardrevisionfromthe

7.7percentforecast

Indiawillachieveanimpressive7.9percent GDP growthin2018,revisingupwardsfrom

the7.6percentforecast

• India- fastestgrowinglargedevelopingeconomy,wayaheadofChinawhichisprojectedtogrowat6.5percentin2017and2018.

Worldgrossproductisexpectedtoexpandby2.7percentin2017and2.9percentin2018

(2.3percentin2016)The grossworldproduct (GWP)isthecombinedgross national product ofallthecountriesinthe

worldCopyright@Study-IQeducation,Allrightsreserved

IIP,WPI• Thenew-lookindexofindustrialproduction(IIP)andthewholesalepriceindex(WPI),

• The baseyear fortheindicesinthenewserieshasshiftedto2011-12,againsttheearlier2004-05.

• ChiefStatisticianTCAAnant

IllicitFinancialFlowstoandfromDevelopingCountries:2005-2014

• Ontheotherhand,illicitoutflowsfromIndiawaspeggedat$165billionbetween2005and2014

• Thereportsaidtotalillicitfinancialoutflowwas3%(about$165billion)ofIndia’stotaltradeof

$5500.744billionbetween2005-2014.

• Thereportnotesthatmostofthe illicitinflows andoutflowsinIndiahappeneddueto mis-invoicing of exports and imports.

• Under-voicingbyimportersandover-voicingbyexporters.

• India’scustoms,DirectorateofRevenueIntelligence(DRI)andEnforcementDirectorate(ED)personnel

havebeenunabletomonitorandcurbsuchpracticeswhichleadtomassivelossesintaxrevenuesforIndia.

• Importunder-invoicinginvolvespresentingfakebillswhichunderestimatethevalueof imports which

reducesthedutyburdenontheimporter.Exportersresorttoover-invoicingbypresentinginflatedbillsto

customsofficialswiththesamemotive.

SomethingInteresting

ConsumerInflation inIndiaalmostdoubledbetween2005to2013

In2005, ConsumerInflationinIndia- 4.2%In2010, ConsumerInflation- 11.7%In2013, ConsumerInflation- 9.13%

After2014(MODI)

In2014, ConsumerInflation- 5.86%In2016, ConsumerInflation- 2.23%

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Call 95-8004-8004729-10-594-76

ForeignExchangeReserves

• Foreigncurrencyassets(FCAs)

• Gold

• SpecialDrawingRights(SDRs)(aformofinternationalmoney,createdbytheInternationalMonetaryFund,anddefinedasa

weightedaverageofvariousconvertiblecurrencies.)

• RBI’s ReservepositionwithInternationalMonetaryFund(IMF)

(ForexReservesatLife-TimeHighof$379.310Billion)

AsianInfrastructureInvestmentBank53membersHQBeijing

President- Jin LiqunIndia2nd highestshareholderafterChina(8%)

China-26%,Russia3rd,Germany4th

Russia– 6%Germany– 4.5%

• AIIBapprovedUSD160millionloanforapowerprojectinAndhraPradesh,thefirstcreditfromthe

bankforanIndianproject.(ConcernsoverOBOR)

IndiaBoycott

OperationCleanMoney

Income Tax Department (ITD)initiated OperationCleanMoney

Initialphaseoftheoperationinvolvese-verificationoflargecashdepositsmadeduring9thNovemberto30thDecember2016. Dataanalyticshasbeenusedforcomparingthe demonetisationdata with

informationinITDdatabases

• Theresponseoftaxpayerwillbeassessedagainstavailableinformation.

• Incaseexplanationofsourceofcashisfoundjustified,theverificationwillbeclosedwithoutany

needtovisitIncomeTaxOffice.

• TheverificationwillalsobeclosedifthecashdepositisdeclaredunderPradhanMantri Garib

Kalyan Yojna (PMGKY).

TheReserveBankofIndiaislookingtohireaCFO–chieffinancialofficer- andhasinvitedapplicationsfromqualified

charteredaccountantsforthefirsttimeinitshistory.

RBIinvitesapplicationsforpostofdeputygovernor

TheReserveBankofIndia(RBI)islookingforareplacementfordeputygovernorS.S.Mundra,

whosetermendson31July

VideoconIndustries(Rs 1,757crore)DebtofRs47,000crores

RelianceCommunications(Rs 6,400crores)DebtofRs 42,800crores.

Bhushan Steel(Rs 1,838crores)– DebtofRs46,000crores.

• Theexistingoversightcommittee,hastwomembers,asconstitutedbytheIndianBanks'Association(IBA).

• RBIwillreconstitutethe oversightcommittee (OC)underitsaegistooperationalise thebankingordinanceforresolvingtheissueof badloans thathavesoaredtooverRs 8lakhcrore.

• The RBI willalsoexpandthescopeofcasestobereferredtotheOCbeyondthoseunderS4A(SchemeforSustainableStructuringofStressedAssets)

The RBI wantsratingagenciestoplayavitalroleintheresolutionprocess.

• BankingRegulation(Amendment)Ordinance,2017,

• RBI willannounceframeworktofacilitatean"objectiveandconsistent"decision-makingprocessforcasesthatmaybereferencedforresolutionundertheInsolvencyandBankruptcyCode,2016(IBC).

RBIhasalreadysoughtinformationonthecurrentstatusofthelargestressedassetsfromthebanks.

Theordinanceauthorises theRBItoissuedirectionstoanybankingcompanyorbankingcompaniestoinitiateinsolvency

resolutionprocessinrespectofadefaultundertheprovisionsoftheIBC.

IthasalsoempoweredtheRBItoissuedirectionstobanksforresolutionofstressedassets.

• ImmediatelyafterthepromulgationoftheOrdinancebythegovernment,the RBI hadissuedadirectivebringingchangestotheexistingregulationsondealingwithstressedassets.

• Thestatementsaidacorrectiveactionplancouldincludeflexiblerestructuring,

strategicdebtrestructuringS4A.

• TheconsentrequiredforapprovingaproposalinaJointLenders’Forum(JLF)hasbeenliberalised.Ifanassetistobesubjecttothecorrectiveactionplan,50percentofthecreditorsintheJLFhavetoagreeontheplanandtheymustaccountfor60percent(against75percentearlier)oftheassetbyvalue.ThesechangesweremadetofacilitatedecisionmakingintheJLF.

• UndertheJLFframeworkforrevitalisingdistressedassetsintheeconomy,evenbeforealoanaccountturnsintoanNPA,thenewsystemhelped identifythestressbysegregatingtheaccountsintothreecategories—– SpecialMentionAccounts(SMA)

• SMA-0-->if<30days+signofincipientstress• SMA-1-->loanoverduefor31-60days• SMA-2.-->if>60days

• Fitch,initslatestratingreview,hasaffirmedIndia’ssovereignratingatBBB-,whichisthelowestinvestmentgraderating.

• Accordingtotheratingagency,India’sgeneralgovernmentdebtburdenwas67.9%ofGDP

• AnofficialcommitteeofthegovernmentreviewingtheFiscalResponsibilityandBudgetManagement(FRBM)Acthasrecommendedloweringofthegovernmentdebtto60%ofGDP.

FitchRatingsestimatedearlierthismonththatbankswillneedabout$90billioninnewcapitaltotacklebaddebtandmeetglobalBaselIIIbankingrulestaking

effectinMarch2019.

RBIsaysARCsmusthaveminimumNOFofRs 100croreby2019

• Existingassetreconstructioncompanies(ARCs)notmeetingtheMinimumNOFcriteriashouldhaveacorpusofRs100crorelatestby31March2019

• AspertheamendedSarfaesi Act,noARCcancommenceorcarryonthebusinesswithouthavingNOFofnotlessthanRs 2croreorsuchotherhigheramountastheRBImayspecify.

• BanksallowedbyRBItoinvestinrealestateinvestmenttrusts(REITs)andinfrastructureinvestmenttrusts(InvITs),attractingmoreinstitutionalinvestorstosuchassetsandexpandingtheinvestmentscopeofbanks.

• TheReserveBankofIndia(RBI)onThursdayproposedtoallowbankstoinvestinsuchinvestmenttrustsfollowingarequestfromthemarketsregulator.ThecentralbankwillissuedetailedguidelinesbyendMay.

• Banks,whicharecurrentlyallowedtoinvestasmuchas20%oftheirnet-ownedfundsinequity-linkedmutualfunds,venturecapitalfundsandstocks,mayinvestinthesetrustswithinthislimit.

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banking awareness may 2017 study-iq · pdf filesomething interesting consumer inflationin...

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