Financial Snippets


SNIPPETS- 20/03/2019

1. BANKS BOARD BUREAU IDENTIFIES 75 SENIOR OFFICERS FOR LEADERSHIP ROLES IN PSBs: The Banks Board Bureau (BBB), the apex body for selection of whole-time Directors of Public Sector banks has identified 75 senior officers from the Senior Management Level to take over leadership role in the future. The current list of 75 officers have been selected from a pool of 450 such eligible officers to take on the current and emerging challenges as well as help create a leadership pipeline. Shortly a globally ranked Indian Institution will be identified where every year the identified personnel would undergo intensive leadership development training.

2. ICICI BANK LAUCNHES INSTANT LOAN SCHEME: ICICI bank has launched an Instant Loan for its salaried customers wanting to buy cars and two wheelers. Pre-approved ICICI Bank customers can get a sanction letter for a car or two wheeler loan instantly which can be used to get a vehicle loan for the full on road price within 15 days. ICICI Bank is already offering instant personal loans, home loans and credit cards and now it has added vehicle loans in this list.

3. IDBI BANK BRINGS PAPERLESS ACCOUNT FACILITY FOR NRIs: IDBI Bank has launched “NRI-Insta- Online” account opening for Non Resident Indians (NRIs). This online account opening process is available to NRIs residing in Financial Action Task Force (FATF) member countries. Hence NRIs living in nearly 40 countries will now be able to open account in IDBI Bank without submitting paper documents as they will not be required to furnish any physical documents such as KYC proofs. This user friendly initiative will help NRIs to open the account without any need to visit the branch or submit any physical documents and they can choose the branch in which the account needs to be opened.

4. EASIER FINANCING FOR LOW-COST HOMES LIKELY: The government is planning to ease funding and construction norms for its “Housing for All” programme to speed up construction of affordable house. Some of the changes under consideration are allowing greater access to institutional finance to the poor, relaxation in eligibility criteria for bank loans and switching to a life cycle cost approach to construction of such houses to bring down costs and ensure quality of construction. Besides this, fiscal support is being considered for companies that use recycled products made from waste.

5. CHANGES IN INCOME TAX RETURN FORM FOR AY-19-20: The Central Board of Direct Taxes (CBDT) has introduced new Income Tax Return (ITR) forms for the assessment year 2019-20. The new ITR form comes with a set of changes. The tax payer will be required to feed more detailed disclosure. The idea is to check evasion and eliminate many loopholes. With the last date for filing the returns being 31 ST July, the tax payer needs to start the process in advance to fill in the required details.

6. CBDT AMENDS FORM-16 AND FORM-24Q FOR DETAILED REPORTING ON TDS: The Central Board for Direct Taxes (CBDT) has affected amendments in Form-16 (Certificate for Tax Deducted at Source- TDS) and Form-24Q, a quarterly TDS statement for salaries. As per the new form it is required to provide more details related to bifurcation of exemptions under Section 10 of the Income Tax Act, disclosure of standard deduction amount and other income.

7. BRITAIN ORDERS FOR SEPERATION OF AUDIT AND CONSULTANCY BUSINESS FOR THE “BIG FOUR” AUDIT FIRMS: Britain’s “Big-Four” accounting firms have to now separate their consultancy business and audit business as per the country’s competition watchdog. This means the auditors should focus exclusively on producing the most challenging and objective audits rather than being influenced by their much larger consultancy businesses.

8. BUILDERS FACING TOUGH CHOICE IN GST RATES FOR ONGOING PROJECTS: Builders and home buyers are finding it difficult to understand the best deal for them under the new GST rates for on- going projects. Real Estate Developers have time till May 10 th to decide on whether to stick to the old rate with input tax credit or to opt for new GST rate (5%) with no input tax credit.

SNIPPETS- 13/03/2019

1. SBI CARD PLANNING FOR A CARD-LESS BUSINESS MODULE : SBI Card, the credit card arm of State Bank of India (SBI), is changing its business model. It is planning and is preparing for a card-less world. In the last 18 months it has set up its own infrastructure and brought back its core platform to India without losing sight of growth. Now they are using Chatbot, Artificial Intelligence and robots to do their respective jobs. The card company is backed by private equity fund Carlyle and is also diversifying its funding from banks beyond SBI to tap local bond market as it seeks diversification after the exit of GE Capital a year ago.

2. BANKS CLOSE THE FY19 WITH ROBUST CREDIT GROWTH: According to RBI data released this week, bank credit rose by 13.24% while deposit grew by 10.03% in Financial Year 2018-19. This is the second consecutive double-digits credit growth after the same had declined to 4.5% in Financial Year 2016-17. On a Year-on-Year basis, non-food credit increased by 13.2%, Loans to Services sector by 23.7%, Credit to Industry by 5.6%, credit to Personal loan segment by 16.7% and advances to Agriculture & Allied Activities increased by 7.5%.

3. BANK BOARD BUREAU TALKS OF AUTONOMY TO PSU BANKS TO DECIDE ORGANISATIONAL STRUCTURE : The Banks Board Bureau (BBB), the apex body for selection of whole-time Directors of State-owned Banks, has made a case for giving a complete autonomy to banks to decide organisational structure for better efficiency. The board has suggested revamping credit governance architecture in these banks to reinforce efforts to minimise credit costs and enhance efficiency of credit allocation. It has also recommended incentivisation scheme linked to performance.

4. I-T DEPARTMENT TO GO AFTER 65,000 NON-FILERS FOR 2016-17 : The Income Tax Department will initiate recovery of tax along with penalty from approximately 65,000 assessees who had deposited Rs 10 lakh and more in their bank account during demonetisation period but did not file returns for the assessment year 2017-18.

5. RESERVE BANK OF INDIA ISSUES NEW NORMS FOR BANKS TO SET UP CURRENCY CHESTS: The Reserve Bank of India (RBI) has come out with new set of guidelines for setting up of new Currency Chests by banks. As per the new guideline the strong room/vault size must be of minimum 1,500 sq ft. For those situated in hilly area the area should be 600 sq ft. Besides this, the new currency chests should have the capacity to process 6.6 lakh pieces of bank notes per day.

6. LIC GETS 12 YEARS TO CUT ITS STAKE IN IDBI BANK: The Reserve Bank of India has given Life Insurance Corporation of India (LIC) 12 years to reduce its stake by 10% in IDBI Bank. Presently LIC has 51% controlling stake in IDBI bank making it the bank’s majority shareholder. This has to be brought down to 40% in the next 12 years.

7. CERTAIN NBFCs TO GET LICENCE FOR FOREX DEALERSHIP: Reserve Bank of India has announced that certain Non-Banking Financial Companies (NBFCs) will be able to get licence as authorised foreign exchange dealer. This move will make it easy to purchase foreign exchange for overseas travel. Accordingly Non-deposit taking systematically important NBFCs (NBFCs-NDSI) will be made eligible to apply for grant of Authorised Dealer Category-II licence.

8. BANK OF INDIA TO SELL 25.05% STAKE OF ITS INSURANCE JV : Bank of India has announced that it will sell 25.05% stake in its insurance Joint Venture (JV) Star-Union Dai-ichi Life Insurance Co. The proposed sale of over 6.48 crore equity shares will fetch the bank at least Rs 1,106 crore. The floor price for the stake sale has been fixed at Rs 170.50 per share.

SNIPPETS- 09/03/2019

1. SBI TO JOIN SWIFT’S GLOBAL PAYMENT SYSTEM: State Bank of India (SBI) will soon join the Society for Worldwide Interbank Financial Transactions (SWIFT). Eleven Indian Banks have already subscribed to SWIFT’s new payment interface- Global Payment Interface (GPI) which is set to make cross-border transactions much more secure and transparent. The GPI enabled banks can also opt for an additional feature called Payment Control Service (PCS) where if any irregularities are found in the payment transaction such as higher than usual fund size or uncommon transaction timeframe, the channel can block the transaction and notify the bank.

2. PRIVATE BANKS CONTINUE TO TAKE AWAY PSB MARKET SHARE: As per a report by Kotak Institutional Equities based on RBI data, private banks have continued to wrest away both deposit and credit market share from Public Sector Banks. Private Sector Banks have increased their Deposit market share by 24% year-on year. Their growth rate is more in urban areas as compared to semi urban and rural areas. In credit also they have continued to grow at a rate of 40% in rural areas and 20% in urban areas year-on-year.

3. NBFCs WITH Rs 1,000 CRORE ASSETS WANT PUBLIC DEPOSIT ACCESS: Non-Banking Finance Companies (NBFCs) with assets exceeding Rs. 1,000 crore want the RBI to allow them to accept deposits from the public. For large NBFCs the industry wants a separate classification. The sector leaders want “Systemically Large” NBFCs to be treated differently than the other 10,000 NBFCs that are there in the sector.

4. RBI FINES 19 BANKS FOR NON-COMPIANCE ON SWIFT SYSTEM USE: The Reserve Bank of India (RBI) has fined as many as 19 banks, including ICICI Bank and State Bank of India for failing to comply with its guidelines on the use of global payments network SWIFT. Most notable among those guidelines was requirement for banks to connect the SWIFT interbank messaging system with their core banking software. The penalties totalled to more than Rs. 40 crore and ranged from Rs 1 crore to Rs 4 crore for each bank. The series of fines imposed is a stern warning from RBI to banks to strengthen their internal systems and minimise frauds after the PNB fraud case last year.

5. PAN NUMBER TO BE LINKED TO BANK ACCOUNT FOR GETTING INCOME TAX REFUNDS: From March 1, 2019 the Income Tax Department has started issuing refunds via e-mode in to the bank accounts of the tax payers. For this, linking PAN number to the bank account is mandatory to get the tax refund directly to the bank account.

6. BANKS SEEK EXTENSION FOR THE ROLL-OUT OF INDIAN ACCOUNTING STANDARDS: Banks are seeking extension for the roll-out of the Indian Accounting Standards (IndAS) which will come in to effect from April 1st 2019. Banks are citing higher capital for bad-loans provisioning, pending legislative amendments and delay in finalising rules as some of the reasons for deferring the implementation of IndAS. Banks are in great pressure to improve their financials but implementation of IndAS will further add to banks’ compliance burden.

7. BANKS RECOVER ALMOST HALF OF 1.43 LAKH DEFAULTING ADVANCES THROUGH IBC: Banks have so far recovered almost half of 1.44 lakh crore defaulting advances stuck in 82 cases that have been resolved in the past two years through Insolvency & Bankruptcy Code (IBC). IBC has become increasingly effective in recovering bad loans as it has injected an element of fear in to the minds of defaulting promoters. IBC is yielding definite results but there is still vast scope for further evolving and improvement.

8. GOVERNMENT TO ROLL OUT Rs.20 COIN FOR THE FIRST TIME: The Finance Ministry has announced in a gazette notification about the roll-out of Rs. 20 coin for the first time in the country. The new Rs 20 coin will be shaped like a “dodecagon” (12 edged polygon) just to differentiate it from the Rs 10 coin which is in circulation.

SNIPPETS- 02/03/2019

1. RBI EXTENDS KYC DEADLINE FOR e-WALLETS BY 6 MONTHS: Reserve Bank of India has extended the deadline of Know Your Customer (KYC) compliance for e-Wallet companies by 6 months. Earlier the deadline was supposed to end on 28TH February. The extension comes after intense follow-up and requests by mobile wallet companies and domestic internet groups over the past few months. This comes as a big relief to consumers as well as mobile wallet companies.

2. PSU BANKS STEP UP TAKEOVER OF MORTGAGE LOANS FROM NBFCs: Public sector banks are launching new schemes to takeover housing loans from Non-Banking Finance Companies (NBFCs) and home finance companies that are facing liquidity crunch. State Bank of India and Bank of Baroda have already initiated these special schemes to attract takeover of loans. Bank of Baroda has initiated a special scheme “ Switch Karo, Save Karo” which allows customers to switch their home loans without any income proof provided a minimum of 12 monthly instalments have been paid regularly and their credit score is at or above 725. The rate of interest offered by Bank of Baroda for such takeover loans is 9% which is much lower than the rates offered by NBFCs and Home Finance Companies. In our opinion more PSU banks should come out with such schemes to garner more business.

3. CANARA BANK TO GIVE LOAN TO BANK OF INDIA AND UNION BANK EMPLOYEES: Bank of India and Union Bank of India have made arrangements with Canara Bank to provide Collateral-free loans to their respective employees to fund purchase of shares of their respective banks under Employee Stock Purchase Scheme ( ESPS). Canara Bank loan is priced at 8.7% and the size of the loan will be 10 months gross salary of respective employee subject to a maximum of Rs 5 lakh. Regulations do not allow banks to offer loans to their own employees for purchasing shares under ESPS. Bank of India is looking to raise up to Rs 800 crore while Union Bank looks to raise Rs. 600 crore.

4. BANK LOCKER PROTECTION POLICY LAUNCHED: IFFCO Tokio General Insurance Company has announced the launch of Bank Locker Protection policy to protect the contents of a Bank locker. The policy offers a cover against various risks including fire, earthquake, burglary, holdup, infidelity by bank staff or act of terrorism. Apart from jewellery and valuables one can insure important documents as an add-on cover. The bank locker hire agreement does not cover compensation in case of such untoward incidents.

5. LOANS TO NBFCs BECOME COSTLIER AS RBI TIGHTENS NORMS: Reserve Bank of India has stepped in to slow down the flow of credit to Non-Banking Finance Companies (NBFCs) by making it more expensive for banks to lend to these NBFCs. A loan to an NBFC which owes banks Rs 200 crore or more and is un-rated, will now attract a risk weight of 150%. Any NBFC to which banks have an exposure of 100 crore and more which was rated earlier but subsequently un-rated then it will attract 150% risk weight.

6. MERGER OF REGIONAL RURAL BANKS WITHIN THE SAME STATE LIKELY: The government is looking at the possibility of merging Regional Rural Banks (RRBs) operating within the same state and has urged the Public Sector Banks to explore such options, as it wants further consolidation among RRBs. At present the central government holds 50% stake in RRBs while the Sponsor Bank holds 35% and rest 15% is held by respective state governments. The government eventually wants to bring them down to a more manageable number of 10 to 15 RRBs. Presently there are 56 RRBs functioning in the country.

7. GOVERNMENT TO CREATE GLOBALLY COMPETITIVE LARGE BANKS VIA MERGERS: Finance Minister Mr Arun Jaitley has said that the situation of bad loan scenario in Public Sector Banks has improved in the last three quarters and now the government will amalgamate banks to create healthy large lenders that are globally competitive. In order to make the banks sound and globally competitive, the government is gradually following the policy of amalgamation. Mr Jaitley further said that the government has lived up to its promise by funding the troubled banks in terms of capital.

8. SBI HAS FOUND FRAUD WORTH Rs 7,951 CRORE DURING APRIL-DECEMBER 2018 PERIOD: In an RTI reply, State Bank of India has revealed that there were frauds amounting to Rs 7,951 crore during the first nine months of the current fiscal. The first quarter reported 669 cases of fraudulent activities amounting to Rs 723.06 crore, the second quarter saw 660 cases involving an amount of Rs 4,832.42 crore and the third quarter reported 556 cases amounting to Rs 2,395.81 crore.

SNIPPETS- 23/02/2019

1. SBI TO WAIVE LOANS TAKEN BY MARTYRED CRPF PERSONNEL, ALSO TO RELEASE INSURANCE PAYMENTS: State Bank of India has said that it would waive all outstanding loans availed by the 23 CRPF personnel who were killed in the Pulwama terror attack. All the 44 CRPF personnel were customers of State Bank of India under Defence Salary Package where the bank provides insurance of Rs. 30 lakh to each of the defence personnel. Bank is taking steps to expedite release of insurance amount to the next of kin of the martyred soldiers.

2. RBI SEEKS INFORMATION FROM NBFCs ON MORATORIUM GIVEN TO BORROWERS: Amid the recent controversy on loans against shares, Reserve Bank of India has asked Non-Banking Finance Companies (NBFCs) to disclose the moratorium (grace period for repayment) given to borrowers. Besides Mutual Funds, NBFCs are large lenders against pledge of shares. If the borrowers pledging the shares to raise money fail to bring in additional collateral when the stocks fall, lenders should sell the stock to protect their exposure. And if the shares are not sold then the credit rating agencies should downgrade the instruments issued by the borrower to raise funds. RBI may look in to the rules on loans against shares for NBFCs and banks and this would include raising the risk weightage on loans against stocks.

3. GOVERNMENT TO INFUSE Rs. 48,239 CRORE IN 12 PSU BANKS: The Finance Ministry on Wednesday announced that it would pump in Rs. 48,239 Crore in 12 Public Sector banks (PSBs) in this fiscal to help them maintain regulatory capital requirements and finance growth plans. The biggest gainers in this are Corporation Bank (Rs. 9,086 crore) and Allahabad Bank (Rs. 6,896 Crore). With this funding, the total amount of capital infusion to all the PSBs would increase to Rs. 1,00,958 crore out of the planned recapitalisation of Rs. 1.06 lakh crore in the current fiscal.

4. ONLY 6 BANKS CROSS DESIRABLE LEVEL OF 70% PROVISION COVERAGE RATIO: Provision Coverage Ratio (PCR) is the ratio of provisioning to gross Non-Performing Asset which indicates the extent of funds a bank has earmarked or kept aside to cover loan losses. The Public Sector Banks (PSBs) have substantially increased their Loan-loss provision and have strengthened their respective balance sheets in the first 9 months of the current fiscal but only 6 out of 21 PSBs have crossed the desirable level of 70% of PCR.

5. SBI TAKES WORK-LIFE BALANCE TO A NEW HEIGHT: State Bank of India has taken a new initiative to ensure Work-Life balance of its massive employee workforce. The programme called “Nayi Disha”, focuses on work-life balance and also involves the staffs’ immediate family members, also gives them the ability to inform the bank if an employee is not able to leave work on time. The programme is evolved in such a way that its 2.6 lakh strong work force does not work mechanically and is sufficiently motivated to take on newer challenges that the future will throw up. The programme will also boost the morale of its staff which will have a positive impact on customer service. The bank has hired external hand to design the programme.

6. SOON BANKS WILL TAKE BACK HEFTY PAYOUTS FROM ERRANTS CEOs: The Reserve bank of India is tightening the CEO compensation norms in the wake of instances of large Non-Performing Assets and sharp practices adopted by the top executives to dodge the regulators. RBI is working on a set of rules that would link remuneration of banks CEOs to parameters like balance sheet size of the bank, loan delinquencies, profit and governance. The proposed framework is expected to provide a broad template to the Board of Directors while approving increase in salary, performance bonus and stock options.

7. GOVERNMENT PASSES UNREGULATED DEPOSIT SCHEME ORDINANCE: The President Mr Ram Nath Kovind promulgated the Banning of Unregulated Deposit Scheme Ordinance. This will help to put a check on illicit deposit-taking activities that dupe the poor and financially illiterate of their hard-earned savings. The Ordinance makes it mandatory for everyone to register before taking a deposit. This ordinance will also help create a central repository of all the registered entities that can take deposits.

SNIPPETS- 16/02/2019

1. FINANCE MINISTRY ASKS 6 PSU BANKS TO PERFORM BETTER TO COME OUT OF PCA: The Finance Ministry has asked six banks who are under Prompt Corrective Action (PCA) to improve on seven parameters to get the government’s support for coming out of PCA framework. These six banks have been told to improve upon Net Interest Margins (NIMs), CASA (Current & Savings Accounts) Risk Weighted Assets (RWAs), NPA Recognition, Divergence (disparity in loan recognition), Operating Profit and Non-Core asset selling to be able to come out of PCA framework.

2. FINNACE MINISTRY IS WITHIN REACH OF ACHIEVING NPA RECOVERY TARGET: The Finance Ministry is on course to meet the NPA recovery target of Rs 1.80 Lakh crore by March 31, 2019 with the recoveries already touching Rs. 1.08 lakh crore. The bigger ticket loan recoveries are due and will be recovered by March end from Essar Steel and Bhushan Power Steel which together may fetch Rs. 60,000/- crore.

3. INDIVIDUAL INSOLVENCY CODE MAY SOON COME IN TO FORCE: The Chairman of The Insolvency & Bankruptcy Board of India Mr. M S Sahoo has said that individual insolvency code will be introduced soon. Three sets of individuals will fall under the Individual Insolvency Code. They would include personal guarantor to corporate debtors, proprietary firms and individual borrowers. The government is in the process of putting in place a broad framework on individual insolvency code and once this is introduced, failure to repay home loans might drag future defaulters to dedicated bankruptcy courts in future.

4. GOVERNMENT RAISES LIMIT FOR DISCLOSURE OF STOCK/MUTUAL FUND INVESTMENTS FOR EMPLOYEES: Group A and B government officers were to disclose such details if the total investments in shares and mutual funds etc exceeded Rs. 50,000/- during a calendar year. This limit has been increased to six months of their basic pay. This is in accordance with an order issued by Personnel Ministry.

5. REAL ESTATE SECTOR IS LIKELY TO GET MUCH AWAITED GST RELIEF: A group of State Finance Ministers have decided to recommend a GST rate cut for under-construction projects to 5% from the current 12% and slashing of GST rate to 3% from the present 8% for affordable Housing Projects. However the proposed change in GST rates structure would be accompanied by denial of Input Tax Credit (ITC) to the builders.

6. IICA LAUNCHES GRADUATE PROGRAMME FOR INSOLVENCY PROFESSIONALS: The Indian Institute of Corporate Affairs (IICA) has launched the Graduate Insolvency Programme (GIP) for individuals aspiring to join the insolvency profession in India and abroad. This is among the first of its courses in the world for professionals dealing with insolvent companies and helping them achieve debt resolution. This programme is approved by the Insolvency Bankruptcy Board of India. It is a two year programme comprising of one year of residential classroom and another year of internship. An individual is eligible to do the programme if he has 10 years of post-membership experience as a Chartered Accountant, Company Secretary, Cost Accountant, Advocate or 15 years of management experience after completion of his graduation.

7. PUNJAB NATIONAL BANK TO e-AUCTION 4,000 PROPERTIES TO RECOVER BAD LOANS: Punjab National Bank said that it has decided to place more than 4,000 properties all over India on e-auction as part of its loan recovery effort. According to the bank, the e-auction under the Securitisation and Reconstruction of Financial Assets & Enforcement of Securities Interest Act (SARFAESI) will help achieving the recovery of Rs 26,000 crore during the current Financial Year.

SNIPPETS- 09/02/2019

1. CRITERIA FOR BULK DEPOSIT FOR BANKS RAISED TO 2 CRORE: The Reserve Bank of India in its latest monetary policy has decided to raise the criteria of bulk deposits for banks from the existing Rs. 1 crore to Rs. 2 crore. This is done to provide more operational freedom to lenders to raise funds. Banks have been given discretion to offer differential rate of interest on the bulk deposits as per their requirements and Asset Liability Management (ALM) projections. Interest rates on bulk deposits are marginally higher than the smaller amount of deposits for similar maturity period.

2. RBI RAISES THE LIMIT FOR COLLATERAL-FREE FARM LOANS: The Reserve Bank of India has raised the loan limit for collateral-free farm loans to Rs. 1,60,000/- from the existing limit of Rs. 1,00,000/- in view of the overall inflation and also considering the rise in agricultural input costs. RBI also said that it would set up an internal working group to examine issues pertaining to agricultural loans.

3. SEBI COMES OUT WITH RULES TO REVIEW PERFORMANCE OF PUBLIC INTEREST DIRECTORS: Securities and Exchange Board of India (SEBI) has come out with a strict framework for Public Interest Directors (PIDs) serving at Stock exchanges, Clearing Corporations and Depositories. Now the PIDs will be nominated for a period of three years to be extendable by another term of three years. This will be subject to a performance review.

4. BANKS NEED Rs 20 LAKH CRORE DEPOSITS FOR HEALTHY CREDIT GROWTH: As per a report by credit rating agency CRISIL, banks need to raise an amount of nearly 20 lakh crore in deposits by March 2020 for a healthy credit growth. The report further says that the healthier private sector banks will account for about 60% of the incremental deposit mobilisation. In the last few years the deposit growth rate has dropped due to lower rate of interest offered by the banks as compared to other financial avenues. This additional deposit mobilisation drive will put pressure on the interest rates and as a result the interest rates may go up.

5. RBI PLANS “UMBRELLA ORGANISATION” FOR URBAN COOPERATIVE BANKS: The Reserve Bank of India plans to set up an “Umbrella Organisation” for Urban Cooperative Banks (UCBs) to improve their operational and financial health as per best global practices. Reserve Bank of India further said that to make UCB sector financially stronger and to enhance depositors’ confidence, it is decided to set up the Umbrella Organisation as prevalent in many countries. The Umbrella Organisation thus formed will extend liquidity and capital support besides setting up an information and technology infrastructure to enable these UCBs to widen their services at a relatively lower cost.

6. RBI TO REGULATE PAYMENT GATEWAY PROVIDERS: Reserve Bank of India proposes to regulate payment gateway service providers and payment aggregators. This is another move to make digital payments safer. This would mean that payment gateways such as Paytm, Mobikwik etc would have to adhere to RBI guidelines just as any other financial entities. Consequently these gateways will become more transparent, accountable in their workings, thereby benefitting the common man using these digital payments.

7. RBI TO ASSIGN RISK WEIGHTS FOR BANK EXPOSURES TO NBFCs: The Reserve Bank of India will now assign risk weighted rating exposures of banks to all Non-Banking Finance Companies. RBI said that the guidelines for this would be issued by the end of February. With a view to facilitate flow of credit to well-rated NBFCs, it has now been decided that rated exposures of banks to all NBFCs would be risk weighted. This will be as per the rating assigned by the accredited rating agencies, in a manner similar to that for Corporates which is being followed now by all banks.

8. PUBLIC SECTOR BANKS TO BE RANKED ON THE BASIS OF PERFORMANCE: The government will start surveying Public Sector banks annually to rank them on their performance parameters ranging from profitability to customer satisfaction. The parameters include customer responsiveness, financial inclusion, digital platforms and security. Further financial performance will be assessed on the basis of recoveries made, return on asset and differentiated banking strategy.



** 99.54% of Income tax Returns thus filed have been accepted as having been filed without any scrutiny.
** Standard Deduction limit raised to Rs. 50,000/- from the existing Rs. 40,000/- {Section 16(IA)}
** Tax on deemed rent from 2ND house abolished. This means that the benefit of self-occupied property has been increased from one house property to two house properties. The income tax on notional rental income will not be taxed on the second house property {section 23(4)}.
** The limit for tax rebate under section 87A increased from Rs. 3,50,000/- to Rs. 5,00,000/- , thereby the tax savings would be Rs 12,500/- instead of earlier Rs. 2,500/-. This means that for a taxable income up to Rs. 5,00,000/- there would be “ZERO” tax. Around 3 crore Tax Payers would be benefitted by this ** TDS on bank deposits/Post office Savings deposit increased to Rs 40,000/- from Rs. 10,000/- {Section 194A}.
** TDS limit for rent from properties has been increased to Rs. 2,40,000/- from Rs. 1,80,000/- {Section 194I}.
** Within next 2 years almost all verification/assessments of the tax returns selected for scrutiny will be done electronically manned by tax experts/officials without any manual intervention and without any interface between tax payers and tax officials
** It is proposed that within next 2 years income tax returns will be processed in 24 hours and refund will be issued simultaneously.
** Exemption under Section 54 will be available on the purchase of two house properties provided the capital gain is up to Rs 2.00 crore. The benefit can be availed only once in a lifetime.


** Farmers owning land up to 2 hectares to get Rs. 6,000/- per anum under Pradhan Mantri Kissan Yojna 12 crore Farmers to be benefitted under the scheme.
** Farmers affected by natural calamities to get 2% interest subvention and additional 3% interest subvention for timely repayment of loan
** Farmers pursuing the activities of animal husbandry and fisheries, who avail loan through Kisan Credit Card to get 2% interest subvention and further 3% interest subvention in case of timely repayment.


**Proposed Pension scheme under Pradhan Mantri Shram-Yogi Maandhan. Pradhan Mantri Shram-Yogi Maandhan that offers a pension of Rs. 3000/- per month after the age of 60 to unorganised sector workers with monthly income of up to Rs. 15000/-. Under the scheme, an unorganised sector worker joining pension Yojana at the age of 29 years will contribute Rs 100/- per month till the age of 60 while a worker joining at the age of 18 will have to contribute Rs. 55/- per month. This would be matched by an equal contribution by the government to the pension account. This is being termed as the World’s biggest pension scheme. Around 42 Crore unorganised sector workers would be benefitted by this.
**Time limit for attachment of property under Prevention of Money Laundering Act 2002, to be hiked from 90 days to 365 days.
**To promote “ Make in India” concept , the Customs duty to be abolished on 36 capital goods.


**GST registered SME enterprises will get 2% rebate on interest charged to them on their loans up to Rs. 1 crore.
**SME with a turnover of up to Rs. 5 crore to file GST returns on quarterly basis as against the monthly returns as of now.


** Defence Budget to cross Rs. 3,00,000 lakh crore for the first time ever.
In our opinion this interim budget is populist and election oriented budget for the benefit of lower and lower middle class. These provisions will put a stress on the fiscal deficit of the country.

SNIPPETS- 02/02/2019

1. DIRECT TAX COLLECTION EXCEEDS THE TARGET IN FINANCIAL YEAR 2019: The government had originally budgeted the Direct Tax collections at Rs 11.50 Lakh crore in current financial year 2018-19 which includes Corporate Tax and Personal Income Tax. The government has estimated to collect Rs 12.00 lakh crore this fiscal which is Rs. 50,000 crore more than the estimated target. Out of this, Rs. 6.71 Lakh crore is from corporate tax and Rs. 5.29 Lakh crore is from Personal Income Tax. For the Financial year 2019-20 the budget estimated target is Rs 13.80 lakh crore.

2. GOVERNMENT ANNOUNCES PENSION SCHEME IN BUDGET 2019: Interim Finance Minister Mr. Piyush Goyal has announced Pradhan Mantri Shram-Yogi Maandhan that offers a pension of Rs. 3000/- per month after the age of 60 to unorganised sector workers with monthly income of up to Rs. 15000/-. Under the scheme, an unorganised sector worker joining pension Yojana at the age of 29 years will contribute Rs 100/- per month till the age of 60 while a worker joining at the age of 18 will have to contribute Rs. 55/- per month. This would be matched by an equal contribution by the government to the pension account. This is being termed as the World’s biggest pension scheme.

3. GST COLLECTIONS TO MISS THE BUDGETED TARGET FOR FINANCIAL YEAR 2018-19: GST collections by the Centre will miss the budgeted target set for current financial year by Rs 1 lakh crore. The government had estimated to collect over Rs. 7.43 lakh crore from GST in the current financial year but however the collections would be Rs 6.43 lakh crore. The total indirect tax collection for financial year 2019-20 has been estimated at Rs 7.61 lakh crore.

4. THREE PSU BANKS COME OUT OF PCA: As per Reserve Bank of India statement, Bank of India, Bank of Maharashtra and Oriental Bank of Commerce are out of the Prompt Corrective Action (PCA). Reserve Bank of India has eased operational curbs on these three banks on account of the marked improvements in the capital positions and asset quality. Now these banks would be allowed to open branches and extend loans freely.

5. IRDAI ASKS INSURERS TO MAKE PROVISIONS FOR IL&FS EXPOSURE: Industry Regulator IRDAI has instructed Insurance Companies to make provisions for their exposure to the crippled infra lender IL&FS. The IL&FS group with a debt of over Rs. 94,000 crore has been defaulting on its financial obligations since August 2018 and has also borrowed from insurance companies but the exact amount of exposure to the industry is not yet immediately known. These exposures cannot be written off and these insurance companies will have to make provisions for the said exposures.

6. SENIOR MANAGEMENT AT ICICI BANK TO HAVE NO TITLES: ICICI Bank has decided to scrap designations at senior management level to inspire more efficient teamwork by making processes less hierarchical. Designations at the bank will now be indicative of the function or the job that a person is expected to perform. Executives at the senior management level will now have the job title of “Head” followed by their function or department as it will be a role based designation aligned with appropriate decision-making powers so that the bank can respond to market opportunities in a faster manner.

7. ICICI BANK ASKS CHANDA KOCHHAR TO RETURN BACK ALL PERFORMANCE BONUSES: ICICI Bank’s internal inquiry has found that former Chief Executive Chanda Kochhar violated disclosure norms on conflict of interest and her exit from the bank will not be treated as normal resignation but as dismissal. Now the bank has asked her to return back all the bonuses awarded to her during her tenure and she stands to lose all dues along with all the stock options that would have accrued to her.

SNIPPETS- 26/01/2019

1. COMPANIES TOLD TO DISCLOSE DUES TO MSME SECTOR: In its latest attempt to improve the liquidity crunch faced by Micro, Small & Medium Enterprises (MSMEs) and to bring in more transparency, the government is mandating all companies to disclose arrears (payables) of more than 45 days to MSMEs. Corporate Affairs Ministry is expected to notify the rules within a few days. In future every company will have to make half yearly disclosures regarding the unpaid bills to MSMEs. The government has clarified that the rules are in line with what is prescribed in the law governing MSME sector and the same is being implemented now.

2. YES BANK PARTNERS WITH MAHARASHTRA GOVERNMENT FOR ELECTRONIC PDS: Yes Bank has partnered with Maharashtra Government for the state government’s e-PDS State Programme to enrol Fair Price Shops as Business Correspondent Agents. Yes bank will enrol around 40% Fair Price Shops across the state and this will cover more than 20,000 ration shops and over 70 lakh citizen. This facility will enable Fair Price Shops to provide banking services such as small value deposits and withdrawals from any bank account via Aadhaar-enabled payment system. These shops will also be able to collect digital payments through Aadhaar enabled payment for ration and also will provide value added services like bill payments and mobile recharge.

3. NON-ITR FILERS TO SUBMIT INCOME TAX RETURN OR REPLY TO TAX QUERY WITHIN 21 DAYS: The Finance Ministry has identified several individuals as potential non-filers who have carried out high value transactions in the Financial Year 2017-18 (Assessment Year 2018-19) but have still not filed their Income Tax Returns (ITRs)for FY 2017-18. These Non-Filers have been asked to assess their tax liability for F Y 2017-18 and file their tax returns or submit online response within 21 days.

4. GOVERNMENT TO SEEK SPECIAL DISPENSATION FROM RBI FOR IL&FS CRISIS: Following the crisis at IL&FS late last year, some of the companies of the diversified IL&FS group, which has a debt of over Rs. 91,000 crore, have failed to repay loans. This has raised concerns over liquidity in the system and hence the Corporate Affairs Ministry has superseded its board by deciding to approach the RBI for seeking a special dispensation for deferment of provisioning requirements for bank loans extended to IL&FS since the group is expected to come out of the trouble as it is planning to monetise some of its assets.

5. NO e-WAY BILLS FOR NON-FILERS OF GST RETURNS: Non-filers of GST returns for consecutive six months will be barred from generating e-way bills for movement of goods. The Service Tax Network is developing a new IT system wherein such businesses that have not filed GST Returns for consecutive six months will not be able to generate e-way bills. The new rules will be notified and will bring in to force once the new IT system is ready.

6. RBI ANNOUNCES Rs. 10,000 CRORE BOND BUYBACK TO IMPROVE LIQUIDITY POSITION: The Reserve Bank of India has announced a Rs. 10,000 crore bond buyback under its Open Market Operations (OMO). RBI has committed to purchase an aggregate amount of Rs. 50,000 crore government securities under OMO and so far has purchased Rs. 30,000. The latest purchase of Rs. 10,000 crore is based on the assessment of prevailing liquidity conditions and it is a continuing effort by RBI to provide adequate liquidity.

7. CANARA BANK PROPOSES TO SELL ITS STAKE IN SIDBI AND NSDL: Canara Bank proposes to sell one crore shares in Small Industries Development Bank of India (SIDBI). It has invited bids at a floor price of Rs. 225/- per share. The bank also proposes to sell 4 lakh shares in NSDL at a floor price of Rs.850/- per share.

8. GOVERNMENT SACKS TWO PUNJAB NATIONAL BANK EXECUTIVES: The government has removed Mr. K Veera Brahmaji and Mr. Sanjeev Saran, two senior executives of Punjab National Bank from the office of Executive Director with immediate effect for failing to prevent the $2 billion Nirav Modi fraud.

SNIPPETS- 19/01/2019

1. DEPOSITORS READY TO TAKE HAIRCUT TO SAVE KAPOL BANK: For the first of its kind in the history of Indian Banking, the Depositors of the troubled Kapol Co-operative Bank Ltd have drawn up a plan to revive the stressed bank. Around 2.5 lakh depositors, under the banner of Kapol Trustee (Public Interest Efforts), have submitted an 5 point plan to RBI which offers to convert 35% of their deposits in to Bank’s share capital, conversion of 25% of their deposits in to 3 year FDs, conversion of 37% of their deposits to reducing balance accounts and straight forfeiture of 3% of all savings. However this seems to be a long drawn process as the administrator appointed by RBI must approve the plan. This will be followed by the RBI physically scrutinizing whether the consent given by each depositor is valid or not.

2. EDELWEISS PRIVATE CREDIT FUND RAISES Rs. 9,200 CRORE FOR INVESTMENT IN STRESSED ASSETS: Edelweiss Alternative Asset Advisors Ltd, a unit of Edelweiss Financial Services Ltd has raised Rs. 9,200 crore ( $ 1.3 billion) for investments in stressed assets through its India fund. The private credit fund is looking at making investments in stressed assets with an aim to turn around the Non-Performing Asset. These investments could be a combination of last- minute financing, financial restructuring and operational turnaround assistance.

3. GOVERNMENT TO INFUSE Rs. 6,000 CRORE IN EXIM BANK: The government is infusing a sum of Rs. 6,000 crore in Exim Bank thereby doubling its share capital to Rs. 20,000 crore. The equity will be infused in two instalments. Rs. 4,500 crore in 2018-19 and Rs. 1,500 crore in 2019-20. The Cabinet has already approved the infusion of the said funds. The said infusion would help the bank to expand its business.

4. GET INCOME TAX REFUND WITHIN A DAY FROM 2020: From the year 2020, the e-filing tax payers will get their refund orders within a day through a pre-filled tax return form. Currently the average time taken for tax return processing and giving a refund is 63 days and this will be reduced to just one day. The Cabinet has cleared this ambitious project of Rs. 4,242 crore for e-filing and centralised processing of income tax returns.

5. NEW e-COMMERCE RULES MAY BOOST PROFITS OF SMALL RETAIL STORES: Tighter norms for e-Commerce players may be a boon for small retail businesses as their profits are bound to grow by around Rs. 10,000-12,000 crores in 2020. This is as per a report by CRISIL. In December 2018 the government has introduced new regulations for e-Commerce players that would bar on-line marketplaces with foreign investments from selling products of companies where they have a stake and ban exclusive marketing arrangements.

6. GOVERNMENT PLANS TO PREVENT COMPOSITION DEALERS FROM CHARGING GST FROM ITS BUYERS: The Revenue Department is planning to introduce a mandatory rule for Composition Dealers and Service Providers to declare their GST Registration Status in invoices to ensure that they do not charge GST from the buyers. The measure when implemented would check the practice of Composition Dealers of collecting GST from the buyers and not depositing the same with the government.

7. PSU BANKS WITHDRAW AID TO GRAFT ACCUSED’S LEGAL BATTLE: In a setback to hundreds of bankers facing corruption related charges, the government has advised PSU Banks to withdraw any legal or financial support to fight cases, especially when the bank itself is a complainant. At present a committee within the bank decides the cases in which financial and legal support is provided. Now the Finance Ministry has said there is no question of providing support to bankers in cases that are filed by the lender itself. In the second category, where the case is filed by the investigating agency, the government has left it to lenders to take decisions based on the merits of the case.

SNIPPETS- 12/01/2019

1. RBI’S KYC DEADLINE MAY HAMPER WALLET COMPANIES PLANS: Prepaid Payment Instruments (PPIs) or Mobile Wallets were mandated by Reserve Bank of India in October 2017 to capture all information of its users as required under Know-Your-customer (KYC) guidelines. So far Wallet Companies have been able to verify only a fraction of their total user base, and are yet to complete the biometric or physical verification of majority of users. This means more than 95% of mobile wallets in the country could stop operating by March 2019 if they do not comply with the RBI mandate.

2. AROUND 16% OF ASSESSEES DO NOT FILE MONTHLY GST RETURNS: The latest government data reveals that on an average 16% of GST return assessees are not filing their monthly GST returns. And under Composition scheme the percentage of non-filers as on November 2018 was 28.7%. As per the GST law every GST registered person will have to file GST returns in one form or the other. A registered person will have to file monthly returns (if he is a normal supplier) or on quarterly basis (supplier opting for composition scheme).

3. CREDIT GROWTH OF PRIVATE AND COMMERCIAL BANKS SURGES: Credit growth of Scheduled Commercial banks (SCBs) improved across all bank groups between March and September 2018. According to the Reserve Bank of India’s latest Financial Stability Report the credit extended by all SCBs increased by 13.1% as on September 2018 and that of private sector banks grew by 22.5% during the same period.

4. NO e-WAY BILL IF GST RETURNS NOT FILED FOR TWO MONTHS: The GST council has formulated a new rule according to which the Finance Ministry has barred e-way bill generation for transporting consignment if the supplier or the recipient of the cargo has not furnished returns for two consecutive tax periods under GST. The e-way bill is required to be generated from a common portal by a business unit for movement of consignment worth Rs. 50,000/-

5. RBI LIKELY TO PAY INTERIM DIVIDEND OF Rs. 40,000 TO THE GOVDERNMENT: The Reserve Bank of India is likely to transfer an interim dividend of up to Rs. 30,000 crore to Rs. 40,000 crore to the government by March 2019. The said amount could help the government to bridge the widening gap in the budget deficit following a drop in tax collections.

6. NBFCs AND HFCs RAISE FUNDS THROUGH SECURITISATION OF SME AND RETAIL LOANS: The cash starved Non-Banking Finance Companies (NBFCs) and Housing Finance Companies (HFCs) have sold their retail and SME portfolios worth Rs. 73,000 crore during October-December 2018 to banks through securitisation mode. These NBFCs and HFCs are facing lot of liquidity crunch in the aftermath of defaults by IL&FS and its group companies in the second quarter of this fiscal and have forced them to liquidate part of their loan portfolio to generate funds to meet redemption requirements and also to maintain their credit flow.

7. NO LIABILTY IF e-WALLET USERS REPORT FRAUD WITHIN 3 DAYS: Prepaid instruments comprise of Mobile wallets, Prepaid Payment Cards and paper vouchers like Sodexo. Now the Reserve bank of India has absolved customers using these prepaid instruments, of liabilities arising out of a fraud if the same is reported within 3 days. This is now on par with the rules that are prevailing for banks.

8. GST RELIEF TO MSMEs: The Micro Small and Medium Enterprises (MSMEs) who are registered under GST have now got the option of moving out of the GST ambit as the GST council has raised the aggregate turnover threshold for GST exemption to Rs. 40 lakh from the present Rs. 20 Lakh. Under the Composition Scheme the limit is increased to Rs.1.5 crore from present Rs.1 crore. The composition tax payer will pay tax quarterly but file the returns annually. Composition scheme is also newly started for services with a turnover up to Rs.50 lakhs and that will attract 6 % tax. These measures will come in to effect from 1st April 2019.

SNIPPETS- 05/01/2019

1. NEARLY 9% OF EDUCATION LOANS GIVEN BY PUBLIC SECTOR BANKS TURN BAD IN 2018: Nearly 9% of Education Loans given by Public Sector Banks (PSBs) have been categorised as Non-Performing Assets (NPAs) in the last fiscal year. This is as per the government report. As per the information provided by Indian Banks’ Association, NPAs of PSBs in education loan touched a figure of 8.9% as on March 31, 2018. Among the NPAs in education loan category the highest 21.28% originated from nursing courses.

2. NO JOB LOSSES DUE TO MERGER OF PUBLIC SECTOR BANKS: Finance Minister Mr. Arun Jaitley has said that there would be no loss of jobs due to merger of Public Sector Banks. He further said that the mergers could lead to creation of larger and bigger entities like SBI and there by the cost of lending could become cheaper.

3. PAYMENT BANKS SEE SECOND STRAIGHT YEAR OF LOSSES: Payment Banks, launched with an intension to make India more financially inclusive, are in fact proving to be a cause of concern to the regulators and investors as these banks have incurred losses even in their second year with little signs of turning over soon. The consolidated balance sheets for the operational payment banks showed net losses of Rs 516.50 crore for the fiscal year 2018 which is almost double that of fiscal year 2017 when they had incurred a loss of Rs 242.20 crore. These losses are attributed to high operating expenses as large capital expenditure had to be incurred while setting up initial infrastructure. In our opinion it may take some time for these banks to break even.

4. RBI SCALES DOWN PRINTING OF Rs. 2,000 CURRENCY NOTES: The printing of Rs.2,000 currency notes, introduced post-demonetization in November 2016 has been reduced to the minimum by Reserve Bank of India. When Rs. 2,000 were introduced, it was decided that printing of these notes would be scaled down over a period of time since this high value currency note was meant for meeting the re-monetization need. Of the total currency in circulation amounting to Rs. 18,033 billion as on March 2018, Rs 2,000 notes accounted for 37.3%, down from 50.2% as at the end of March 2017.

5. RBI ALLOWS ONE TIME RESTRUCTURING OF MSME LOANS: In a breather to Micro, Small & Medium Enterprises (MSMEs) sector, the Reserve Bank of India has decided to permit one-time restructuring of existing loans to those enterprises that are in default but “standard”( Not NPA) as on January 01, 2019, without an asset classification downgrade. Restructuring without an asset classification downgrade will save the banks from higher provisioning burden. This will encourage banks and NBFCs to take up restructuring of MSMEs.

6. DIRECT TAX COLLECTION FOR FINANCIAL YEAR 2018-19 RISES BY 14%: The Direct Tax collection till December 20, 2018 amounted to Rs 7.36 Lakh Crore, a growth of 14% over the same period last year. This is 64% of the Budgeted target for the direct tax collection in the current fiscal. The number of income tax e-returns filed till December 6, 2018 stood at 6.09 crore which is 47% higher than last year.

7. PUBLIC SECTOR BANKS LOSSES ABSORBED 70% OF CAPITAL INFUSED BY GOVERNMENT IN LAST 3 YEARS: The government has infused capital in Public Sector banks intermittently in the last three years from 2015 to 2018. But more than 70% of the infused capital was absorbed into the losses incurred by these Public Sector Banks. This is as per the RBI report.

8. INDIAN BANKS RECORD LOWEST RETURN ON ASSETS SINCE 2008: Indian banks suffered badly from the weak asset quality and have recorded their lowest Return on Assets (RoAs) since 2008 in Financial Year 2018.While banks in Russia, India & China suffered decline in RoAs, countries like Brazil, Mexico & Indonesia posted robust RoAs.

SNIPPETS- 29/12/2018

1. RBI TO SET UP COMPLIANCE PORTAL TO TRACK CYBDER FRAUDS: The Reserve Bank of India would set up a Compliance Tracking System Portal to tackle cyber frauds and establish a better redressal mechanism for consumers. With the digital transactions gaining momentum, this step is seen as a bid to promote and improve customer confidence in the digital channel. As per a RBI report on the data for reported frauds, 22.7% were cyber frauds in 2013-14 while the percentage was 34.1% in 2017-18, indicating a hike in cyber-related crimes.

2. RBI BACKS HIGHER CAPITAL NORMS, NEED FOR PROMPT CORRECTIVE ACTION: The Reserve Bank of India has backed its policy of asking banks to maintain capital ratios that exceed global norms. It also upheld the Prompt Corrective Action (PCA) framework for weak banks, which were point of contention between the RBI and the government.

3. ANGEL TAX RECOVERY PUT ON HOLD, RELIEF FOR START-UPS: Earlier the tax department had issued notices to Start-up companies for payment of Angel Tax. Now the Central Board of Direct Taxes (CBDT) has directed its officials from taking any coercive action or recovery measures for these start-up firms till a policy decision is taken. The Department of Industrial Policy & Promotion (DIPP) would soon constitute a committee to consider tax exemptions to Start-ups.

4. SINGLE GST RATE MAY BE IMPLEMENTED IN FUTURE: Finance Minister Mr. Arun Jaitley has hinted that India could go ahead with a single standard GST rate in future. Such a scenario could materialize only when the revenue from GST rises significantly. He said the country should eventually have one standard GST rate. The government is also looking to simplify GST, reduce number of items in highest GST bracket.

5. INDIA POST LAUNCHES E-COMMERCE PORTAL: India post has launched an E-commerce portal with an aim to provide an online market place to small artisans, self-help groups, women entrepreneurs in the rural areas as it operates a network of more than 1.5 lakh post offices in the country. The products sold will be shipped through its e-commerce portal, via its speed post service.

6. NCLT HELPS RECOVER Rs. 80,000 CRORE IN 2018 FROM IBC CASES: The National Company Law Tribunal (NCLT) has helped to resolve insolvency and bankruptcy proceedings of more than Rs. 80,000 crore this fiscal. The amount is expected to touch 1 trillion in 2019 with several big–ticket corporate cases pending. Plans are being crafted out to strengthen NCLT by increasing the number of judges and benches and provide adequate infrastructure to fast-track the process for speedy resolution.

7. SEVEN PUBLIC SECTOR BANKS MAY GET Rs. 286 MILLION THROUGH RECAPITALISATION BONDS SOON: 7 Public Sector Banks (PSBs) will receive a capital infusion of Rs. 286 billion through the next tranche of recapitalisation bonds. All the banks, except Syndicate Bank, which are expected to receive capital infusion are under RBI’s Prompt Corrective Action (PCA) framework.

8. NBFCs FEEL THAT OVER REGULATION IS AFFECTING THEIR LIQUIDITY: Some key Non-Banking Finance Companies (NBFCs) have told Prime Minister Mr. Narendra Modi that over regulation is affecting their liquidity and hurting the sector. Some of the NBFCs backed by Assocham met the Prime Minister and requested for easier regulatory norms. They also told that fund raising activity remains highly restricted which creates a fund crunch.

SNIPPETS- 22/12/2018

1. FARM LOAN WAIVER PROMISE CAUSES 24% RISE IN MP FARM LOAN NPAs: As per the latest data available, the Non-Performing Assets (NPAs) in farm loans has doubled to 10.6% of the total advances in Madhya Pradesh. In a little over one year period ending June 2018, the NPAs in the state rose to 24%. A similar trend is seen in Rajasthan also. Farm waivers are bad news for Banks and Farmers. Anticipating relief, farmers start skipping repayments which impacts bank finances. Banks in turn slow down their fresh lending until governments reimburse the amount thus written off, which often happens over several years.

2. NOW EXECUTIVE DIRECTORS OF NATIONALISED BANKS ELEGIBLE TO BECOME MD OF SBI: Earlier as a tradition only Deputy Managing Directors (DMDs) of State Bank of India (SBI) were made Managing Directors of SBI and other nationalised Banks, where as other nationalised banks Executive Directors were made MDs of other Nationalised Banks but not of SBI. Now moving away from the tradition, the government has made a policy decision to select EDs of other Nationalised Banks to become MD of SBI. There are four MDs in SBI and the Chairman heads the Bank.

3. SBI MAY BUY OUT CANARA BANK’S LOAN OF Rs 400 CRORE: State Bank of India is looking to buy out Canara Bank’s Loans of about 400 crore in Ratnagiri Gas& Power Pvt Ltd (Erstwhile Dhabol Power Co). This is expected to be the first resolution under the Inter-Creditor Agreement (ICA), which is part of government’s Project Sashakt aimed at resolving bad loans. This step by SBI follows Canara Bank moving the National Company law Tribunal (NCLT) in September 2018 against Ratnagiri Gas.

4. GOVERNMENT STRIKES OFF NAMES OF 1 LAKH COMPANIES THIS YEAR: The government has struck off the names of one lakh companies from the official records in the current financial year as these companies have not been carrying out any business activities for long. Under the Act, the government can remove the names of such companies who have not been carrying out any business for two immediate preceding financial years and have also not sought dormant status. The names of 2,26,166 and 1,00,150 companies have been struck off during financial years 2016-17 and 2017-18 respectively by the Registrar of Companies after following prescribed procedures under Companies Act, 2013.

5. NON-CTS COMPLIANT CHEQUES WILL NOT BE CLEARED FROM JANUARY 1, 2019: Non-CTS ( Cheque truncation System) complied cheques will not be accepted in clearing from January 1st 2019 and the same will be returned in clearing. Cheque Truncation System of cheques was started in the year 2010 by RBI for faster clearance of cheques. Cheque Truncation means stopping of the flow of physical cheques issued by a drawer to the drawee branch.

6. TO PREVENT BAD LOANS, BANKS TO CROSS CHECK ADDITIONAL INFORMATION ON BORROWERS: Bankers will soon seek authorisation from their borrowers and guarantors so that they can approach authorities such as Income Tax Department and GST departments to cross check the authenticity of the information submitted by the borrowers for getting loans. The proposed move is aimed at strengthening the loan sanction mechanism. This move has been planned in the backdrop of the recent pile-up of bad loans in the entire banking system. The authorisation from borrowers and guarantors is like a consent given to the bankers so that they can approach these authorities to seek the information.

7. BANK OF BARODA TO LAUNCH NEW DIGITAL INTERFACE: Bank of Baroda is building a new digital interface for faster and more efficient disbursement of retail loans and the digital format will be launched by the bank next year. The bank has been improving its impetus on deploying technical solutions for business enhancement and increasing their digital footprint.

SNIPPETS- 15/12/2018

1. PSBs PETITION NEW RBI CHIEF TO RELAX NPA RESOLUTION NORMS: The newly appointed Reserve Bank of India Governor Mr. Shaktikanta Das met Mumbai-based Public Sector Bank (PSBs) Chiefs in his first meeting with bankers this week and discussed a host of issues. During the meeting the PSB Chiefs have urged the RBI Governor to relax NPA resolution norms. They told that the 180 days deadline within which the account has to be resolved in case of a default is rather too severe and they wanted the deadline to be extended.

2. LIQUIDITY CONSTRAINTS FACED BY NBFCs TO TIGHTEN CREDIT SUPPLY AND DAMPEN GROWTH: Liquidity constraints faced by some Non-Banking Finance Institutions will tighten the credit supply and this will affect economic growth. This is as per Moody’s Investors Service Report. The report says this will slow down economic growth to some extent for the current fiscal. Besides, any further distress in the NBFC sector will pose significant downside.

3. GOVERNMENT PLANS ADDITIONAL 30,000 CRORE CAPITAL INFUSION IN PSU BANKS: The government is considering an additional capital infusion of up to Rs. 30,000 crore in Public Sector Banks as they have been unable to raise the required funds from open markets. The government initially had envisaged that the PSU Banks would raise Rs. 58,000 from stock markets by 2019 to meet Basel III norms. But due to the subdued market conditions, banks have been unable to raise enough funds from markets so far. Also the Non-Performing Assets of almost all the banks have seen a spurt which has hurt their bottomlines.

4. SBI PLANS TO DISBURSE AGRICULTURE LOANS DIGITALLY: State Bank of India is planning and is running a pilot project to disburse agriculture loans digitally. It expects to roll out the services to the rural public very soon. SBI has said that there are lot many fin-tech players in the market who are ready with the software and many of the Indian states have the land records of the farmers in digital format so this will help in providing digital loans to farmers using the technology.

5. 4 OF THE 11 INDIAN BANKS FACING PROMPT CORRECTIVE ACTION (PCA) MAY COME OUT OF PCA: Reserve Bank of India has estimated that 4 out of 11 banks facing Prompt Corrective Action (PCA) framework may come out of it based on their performance in Quarter 4 of the current fiscal and with some capital infusion by the government. Presently the 11 banks which are facing PCA are, IDBI (Net Loss Rs.3602 crore and Net NPA- 17.30%, United Bank (Net Loss Rs. 883 crore and Net NPA 14.36%, IOB (Net Loss Rs. 487 crore and Net NPA 14.34%, UCO Bank (Net Loss Rs. 1136 crore, and Net NPA 11.9%), Dena Bank (Net Loss Rs.417 crores and Net NPA 11.70%), Corporation Bank ( Net Profit Rs.103 crore and Net NPA 11.65%), Bank of Maharashtra (Net Profit Rs 27 crore and Net NPA 10.61%), Central Bank (Net Loss Rs. 924 crore and Net NPA 10.36%), Oriental Bank ( Net Profit Rs.102 crore and Net NPA 10.07%), Allahabad Bank (Net loss Rs.1083 crore and Net NPA 7.96% and Bank of India (Net loss Rs. 1156 crore and Net NPA 7.64%).

6. DIRECT TAX COLLECTIONS RISE BY 15.5% FOR APRIL-NOVEMBER 2018 PERIOD: The Direct Tax collections are up by 15.7% for the April-November 2018 period as compared to the corresponding period last year. The government has collected Rs 6.75 lakh crore during this period while the refunds amount to Rs 1.23 lakh crore. After adjusting the refunds the net collections are Rs. 5.51 lakh crore which shows a jump of 15.5% over the last year.

7. RESERVE BANK OF INDIA REDUCES SLR IN A GRADUAL MANNER: The Reserve Bank of India has initiated a step towards a gradual reduction in Statutory Liquidity Ratio (SLR) from the existing 19.5% to 18% in the next six quarters from January next year.

SNIPPETS- 08/12/2018

1. RBI TO LINK INTEREST RATES TO EXTERNAL BENCHMARKS RATES : Reserve Bank of India (RBI) has proposed that banks will now have to link the interest rates charged by them on loans to the external benchmarks instead of the present internal benchmarks for better transmission of policy rates. According to the proposal the loans can be benchmarked to any one of the following: 1. RBI Policy Repo Rate, 2. Government of India 91 days treasury bill yield as fixed by Financial Benchmarks India Pvt Ltd (FBIL), 3. Government of India 182 days Treasury bill yield as fixed by FBIL, or 4. Any other benchmark market rate fixed by FBIL. However, the spread over and above the benchmark rate is to be wholly decided by the bank at its discretion and it should remain unchanged during the tenor of the loan, unless the borrower’s credit assessment undergoes a substantial changes.

2. PERMISSION FOR NEW BRANCHES FOR URBAN CO-OP BANKS RESTRICTED BY RBI: In a move to ensure better professionalism and governance in co-operative sector, RBI has put a condition that Urban Cooperative Banks(UCBs) will be allowed to open new branches only if they amend laws to set up a Board of Management (BoM). A Board of Management be constituted in every UCB in addition to Board of directors with a view to strengthening the governance.

3. RBI LAYS DOWN NORMS ON LOAN SYSTEM FOR LARGE BORROWERS: The Reserve Bank of India has said that borrowers with an aggregate Fund Based working capital limit of Rs 150 crore and above will need to have at least 40% in loan component from April 1, 2019. And this would go up to 60% by July 2019. The India Rating report said that the impact can be significant for working capital intensive sectors.

4. RBI EASES NORMS FOR NBFCs TO SECURITISE LOAN BOOKS: A move likely to ease the stress in the NBFC sector facing a crisis of confidence and funds crunch, RBI has relaxed norms for NBFCs to securitise their loan books. As per a notification of the RBI, NBFCs have been permitted to securitise loans of above Five-year maturity after holding them for a minimum period of six months.

5. INCOME TAX APPELLATE TRIBUNAL SAYS CONVERTING A COMPANY TO LLP IS A TRANSFER HENCE TAXABLE: Earlier Companies and professional were allowed to convert to Limited Liability Partnerships (LLPs) as this was facilitated by the government to attract foreign investors. Under a LLP it was allowed to freely distribute profits to partners as dividend without deducting dividend distribution tax. But the recent ruling by Income-Tax Appellate Tribunal says that since transfer of companies and professionals into LLP is a transfer, hence the dividend thus transferred to partners is taxable.

6. THREE NEW PAN CARD RULES COME INTO EFFECT: The Department of Revenue has put into effect new rules with respect to Permanent Account Number (PAN) to check tax evasion and allow more options to tax payers. These 3 new rules are : 1. A resident person other than an individual ( like an HUF, Firm, Charitable trust et cetra) who enters into a financial transaction of Rs 2.50 lakhs or more in a financial year and who has not been allotted PAN, shall apply for one by May 31 of the next financial year. 2. A person who is Managing Director, Director, partner, trustee, Karta of such entities mentioned in Point no 1 and who has not been allotted a PAN no shall apply for one. 3. Mentioning Father’s name in a PAN card will not be mandatory.

SNIPPETS- 01/12/2018

1. NEW NOTES ISSUED AFTER DEMONETIZATION BECOME UNUSABLE AFTER 2 YEARS: New notes of Rs. 500 and Rs. 2000 were issued after the demonetization phase. These notes which were introduced with higher security features are becoming unusable within just two years of circulation. As per a report published by a Hindi Newspaper “Amar Ujala”, this is happening because the paper quality of the new notes is not good compared to the earlier notes. If the currency becomes unusable, it cannot be loaded in ATMs as the sensors inside the ATMs cannot detect poor quality notes. But government has denied any compromise with the quality of notes and said the new notes have higher security features to stop counterfeiting.

2. SBI TO BLOCK INTERNET BANKING FACILITY OF ITS CUSTOMERS WHOSE MOBILE NUMBER IS NOT LINKED TO THE ACCOUNT: State Bank of India has issued a notice stating that net-banking facility will be blocked for those of its customers who have not linked their mobile numbers to their respective accounts. As per RBI advisory, it is mandatory to register your mobile number to avail internet banking services. Banks must register mobile numbers of their customers for SMS alerts for electronic banking transactions like internet and mobile banking services.

3. GST ON BANKS’ FREE SERVICES: Over the last few months the tax department has issued preliminary notices to banks seeking to levy Goods & Service Tax (GST) on free services such as issue of cheque books, ATM usage and refund of fuel charges etc. The GST notice are separate from those served in April 2018 to recover about Rs. 40,000 crore in service tax and penalties from all banks. Most of the banks are now considering passing on the GST cost to the customer.

4. MEGA FOOD PARKS (MFPs) TO BECOME OPERTAIONAL THIS YEAR: The government’s dream project—Mega Food parks (MFPs) is all set to be operational as 14 MFPs will become operational this year. The estimated investment is around 3,500 crore and it will create around 70,000 new jobs. Creation of MFPs aims to bring together farmers, processors and retailers and link them with the market so as to ensure maximum benefit to the farmers.

5. THREE LAKH CRORE STRESSED ASSETS WERE ADDRESSED IN INSOLVENCY LAW IN LAST 2 YEARS: Since its inception in December 2016, the Insolvency Law has helped in addressing stressed assets worth 3 lakh crore in the last two years. More than 9,000 cases have come for redressal under the Insolvency & Bankruptcy Code (IBC).

6. CENTRE TO INFUSE Rs. 42,000 CRORE IN PSU BANKS BY MARCH 2019: The government will infuse Rs. 42,000 crore in the state-owned banks by March 2019. The next instalment will be released by next month. The government earlier this year had pumped Rs. 11,336 crore in 5 PSBs – Punjab National Bank, Allahabad bank, Indian overseas Bank, Andhra bank and Corporation Bank.

7. LARGE INDIAN COMPANIES MUST BORROW 25% IN BONDS FROM APRIL 1st 2019: The Securities Exchange Board of India (SEBI) has said that Indian Companies with long term outstanding loans of Rs.100 crore and above will have to raise at least 25% of their fresh borrowings in bonds from April 1ST 2019. This is an effort to strengthen the Indian Corporate Bond market which is relatively low compared to international markets.

8. NOW NO NEED FOR NRIs TO REVEAL DETAILS OF FOREIGN BANK ACCOUNTS: As per the latest ruling by Income-Tax Appellate Tribunal (ITAT) now Non Resident Indians (NRIs) need not reveal details of their Foreign Bank accounts and assets to Indian authorities. The Tribunal has also ruled that the onus of proving that the assessee has parked undeclared income arising from India in Foreign Bank accounts lies with Income Tax Department.

SNIPPETS- 24/11/2018

1. BANK CREDIT GROWS BY 14.88% AND DEPOSITS BY 9.13%: The total Bank credit went up by 14.88% to touch Rs. 91.11 Lakh Crore and Deposits by 9.13% to Rs 118.25 Lakh Crore as on November 9, 2018. A year ago during the same time the Bank credit was Rs 79.31 lakh Crore and Deposits stood at Rs 108.35 Lakh Crore. Bank credit to Service sector expanded by 24% as compared to with 7% in September 2017. Advances to agriculture and allied activities grew by 5.8%.

2. HALF OF INDIA’S ATMs MAY CLOSE DOWN BY MARCH 2019: The Confederation of ATM Industry (CATMi) has warned that half of India’s ATMs may face closure due to the changes in regulatory landscape. The Industry body has said that the recent regulatory changes, including those on hardware and software upgrades, coupled with mandates on cash management standards and the cassette swap method of loading cash will make the ATM operations unviable, resulting in the closure. A majority of ATMs that will shut down will be in the non-urban areas which can hamper the financial inclusion efforts put in by the government and the banks.

3. SBI’S “YONO” SUSPENDS PAPERLESS ACCOUNT OPENING VIA AADHAAR: Sate Bank of India has temporarily suspended its Aadhaar based online account opening through its one-stop solution platform- YONO (You Only Need One) since the Supreme Court in its ruling has said that it is not mandatory to link the 12 digit Unique Identification Number Aadhaar for opening of accounts. As of now the e-KYC is not being permitted and hence the same has been suspended and now they have sought clarification from RBI.

4. J & K BANK BROUGHT UNDER RTI, CVC AND STATE LEGISLATURE: The Jammu & Kashmir bank has been brought under the purview of Right to Information (RTI) Act, The Chief Vigilance Commissioner (CVC) guidelines and the State Legislature as per an official release. The State Administrative Council (SAC) has approved that the provisions of Jammu & Kashmir Rights to Information Act 2009, shall be applicable to the bank like any other PSUs. Besides the bank shall follow CVC guidelines. Established in 1938 the J&K Bank Ltd is the only state government promoted bank in the country with the J&K Government holding 59.3% share in the bank. The purpose of SAC’s decision is a step towards strengthening better corporate governance.

5. DELHI JUMPS CLOSURE TO MUMBAI’S INCOME TAX COLLECTIONS: Mumbai, India’s Business hub and business capital still contributes 29% of total Income Tax revenues which is the largest chunk. But its share has been falling. Delhi which is the second largest contributor of the tax revenue saw its collections rising by 45% from April to November 2018 this year. Collections in Mumbai rose by a meagre 5%. Slower growth in Mumbai is attributed to hefty refunds and the changing economic landscape of our country.

6. RBI TAKES MEASURES TO INCREASE CREDIT FLOWS AS MOST PCA LADEN BANKS MET MANDATORY PRIORITY LENDING TARGETS: The government feels that putting as many as half of banks in Prompt Corrective Action (PCA) is preventing the credit flow to MSME sector which is highly labour intensive. But an analysis of RBI data on such loans shows that a large majority of banks including those facing PCA have achieved the mandatory priority sector target for Micro Enterprises. The MSME lending has been exempted from most of the restrictions and several steps have been taken by RBI to ease credit flow to this sector.

7. PUBLIC SECTOR BANKS’ LOSSES RISE 3.5 TIMES HIGHER IN SECOND QUARTER OF FY’19: The cumulative losses of Public Sector banks has widened nearly 3,5 times to Rs 14, 716 crore in July-September quarter of current fiscal. Higher provisioning towards bad loans has impacted the balance sheets of majority of these banks. Out of this, the loss reported by Punjab National bank was the highest with the bank posting a net loss of Rs 4,532 crore during the said period.

SNIPPETS- 17/11/2018

1. BANKERS’ PANEL INCORPORATES “SASHAKT INDIA AMC: Mr. Sunil Mehta, the Chairman of Bankers’ Panel said that an Asset Management Company (AMC) has been formulated for large stressed assets and will be called as “Sashakt India Asset Management” The Bankers’ Panel is working on faster resolution of stressed assets in banks. He further stated that now the panel is working towards identifying potential investors for an Alternative Investment Fund (AIF) which will fund the AMC. In July this year the government had proposed a Five Pronged Strategy under Project Sashakt to tackle large stressed assets and formed a Panel led by Mr Sunil Mehta.

2. RBI REFUSES TO GIVE INFORMATION ON NPAs, LOAN DEFAULTERS TO SEBI: Security Exchange Board of India (SEBI) had sought information regarding Non-Performing Assets (NPAs) and Loan Defaulters List from RBI. The Reserve Bank of India has declined to pass on the said information. The denial of RBI to divulge the information is because it fears further data leakage as it becomes known to wider range of people which in turn will hurt the business prospects of the companies involved. The Central Information Commission (CIC) has sent a show-cause notice to the RBI Governor for not providing the information.

3. RBI IMPOSES FINE OF Rs. 3.00 CRORE EACH ON DEUTSCHE BANK AND J&K BANK: The Reserve Bank of India has imposed a penalty of over Rs. 3.00 crore each on Deutsche Bank and J&K Bank for non-compliance of various norms, including Asset Classification and KYC. The penalties on these two banks have been imposed taking into account the failure of these banks to adhere to the directions issued by RBI.

4. SEBI MAY TIGHTEN LIQUID MUTUAL FUNDS: The Securities Exchange Board of India (SEBI) is considering tightening the rules of Liquid Mutual Funds holding assets worth Rs. 8 lakh crore or more. This is to curb the volatility in flows following the challenges faced by the Finance companies in the wake of recent debt default by IL&FS.

5. SEBI TIGHTENS DISCLOSURE, REVIEW NORMS FOR RATING AGENCIES: The Securities Exchange Board of India (SEBI) has tightened the disclosure and review norms for Credit Rating Agencies (CRAs). SEBI has ordered CRAs to analyse deterioration in the liquidity conditions of an issuer while monitoring its repayment schedules and also analyse any asset-liability mismatches. SEBI has also instructed CRAs to disclose parameters like liquid investments or cash balances, access to any un-utilised credit lines and adequacy of cash flows in a specific section on liquidity.

6. OVER 2 LAKH ASSESSEES WHO MIGRATED FROM VAT TO GST OPTED OUT OF GST NET: Over 2 lakh Goods & Services Tax (GST) assessees have opted out of the GST net as their annual business turnover is below the threshold limit of Rs 20 Lakh. These are assessees who had migrated from the Value added Tax (VAT) regime to GST regime. This will benefit both the GST network and the tax assessees, as the GST network will now have less load and the concerned assessees will not be required to file the GST returns.

7. DIRECT TAX COLLECTIONS TO EXCEED TARGET THIS YEAR: Direct Tax collection as on October 2018 has already crossed Rs. 5 lakh crore which is 44% of the net Direct Tax collection target. At this rate this will cross the budgeted target of Rs. 11.5 Lakh crore for the current fiscal. The Income Tax Department has already issued refund orders amounting to Rs. 1.15 lakh crore and hence from now onwards the net collections will increase.

8. HOW DOES RBI BUILDS ITS RESERVES ? : The Reserve Bank of India builds its reserves from several factors. Mainly it is built from three sources. First, by interest on government bonds held for conducting open market operations, fees from governments market borrowing programme and income from investment in foreign currency assets. Second, is earnings retained after giving dividends to government. Third source is revaluation of foreign assets and gold.

SNIPPETS- 10/11/2018

1. FOUR PUBLIC SECTOR BANKS MAY COME OUT OF PCA SHACKLES: Four Public Sector Banks (PSBs) are expected to come out of the RBI’s Prompt Corrective Action (PCA) framework based on their improved financial performance. The turnaround should happen by the end of the third quarter. This shows that PSBs are diligently and sincerely following the action plan shared with the government. The banks expected to come out of PCA include Bank of India, Corporation Bank and Bank of Maharashtra. The government will site this example to persuade RBI to relax the PCA norms which is one of the issues over which the government and RBI are in conflict.

2. GOVERNMENT TO INFUSE Rs. 3,054 CRORE IN ALLAHABAD BANK: The government is releasing Rs. 3,054 crore to Allahabad Bank during the current fiscal. The bank has been informed by the government about the fresh capital infusion of Rs. 3,054 crore towards contribution of the Central Government in the preferential allotment of equity shares. Allahabad Bank’s Capital Adequacy Ratio as per Basel-III stood at 6.88% by the end of first quarter of the current fiscal and the government owned 71.81% stake in the Bank.

3. RBI SLAPS Rs. 1 CRORE FINE ON FINO PAYMENTS BANK: The Reserve Bank of India has slapped a monetary penalty of Rs. 1 crore on Fino Payments Bank Ltd for contravention of the direction to stop opening of new accounts until further instructions. Fino Payments Bank was asked by RBI to stop all new account opening activities after the RBI found out that there were few accounts with the bank with deposits in excess of Rs 1 lakh, which goes against the licensing criteria of a Payments bank.

4. NBFC FUND CRUNCH BEGINS TO HIT REAL ESTATE SECTOR: With The Non-Banking Finance Companies (NBFCs) facing liquidity crunch, Real Estate Developers and home buyers are being hit badly as in several cases sanctioned home loans are not being released and funds committed earlier under construction linked home loan schemes are also not being released. The cash crunch has also pushed the home loan interest rates by 50 to 100 basis points and for developers the increase can be as much as 300 basis points (which is 3% more). With funds drying up, several smaller NBFCs are trying to liquidate their loan portfolios to raise funds.

5. SBI REDUCES DAILY ATM WITHDRAWAL LOMIT TO Rs. 20,000: In an attempt to address the growing incidence of ATM frauds and boost digital transactions, State Bank of India has reduced its daily ATM cash withdrawal limit to Rs. 20,000/- from Rs, 40,000/- earlier on its Classic Debit Cards. This will surely impact many SBI customers since these cards constitute a sizeable chunk of the bank’s card portfolio.

6. 75 LAKH NEW TAX FILERS ADDED TO INCOME TAX NET THIS FISCAL YEAR: About 75 lakh new tax filers have been added to the income tax payers list so far in this fiscal year .The number of policy and enforcement measures undertaken to check tax evasion are among the reasons for achieving these numbers. The target is to add 1.25 crore fresh tax filers by the end of this fiscal.

7. PROFITS OF PRIVATE SECTOR BANKS TAKE A DENT DUE TO HIGH PROVISIONING: Net Profit of 17 private sector banks fell by 1.6% in September Quarter on account of higher levels of provisioning and contingencies. On account of the new guidelines issued by RBI on Non-Performing Assets in February 2018, many top private sector banks had to raise their provisioning levels compared to last year.

8. BANK’S CONSUMER DURABLE LOAN PORTFOLIO FALLS BY 82%: Most of the banks are shying away from disbursing consumer durable loans probably due to the fear of delinquencies. Outstanding loans in this segment dropped to Rs. 3,225 crore in September 2018, a sharp 82% decline compared to last year. This space is taken over by NBFCs as their exposure to consumer durable loans has increased by 41.5%.

SNIPPETS- 03/11/2018

1. INCOME TAX DEPARTMENT MAY SEEK FIRST RIGHT ON RECOVERY OF DUES UNDER IBC: At present the recovery of tax dues is possible only after payment to financial creditors under the Insolvency and Bankruptcy Code (IBC). The Income Tax Department is likely to request the Ministry of Corporate Affairs under which the IBC falls, to intervene so that the tax dues get a higher priority over the dues of the Financial Creditors.

2. E-FILING OF INCOME TAX RETURNS RISES BY 65%: As per the data released by Central Board of Direct Taxes (CBDT), there is a robust growth in taxpayers filing e-returns as it has grown by 65% between April-September as compared to the e-returns filed during the same period last year. The e-returns are being filed even after the deadline for filing income tax returns ended on August 31ST. Moreover, the average tax paid by an individual filer has touched a little over Rs.35,000/-.

3. RBI ALLOWS BANKS FOR FIRE AUDIT OF CURRENCY CHESTS BY APPROVED AGENCIES: Reserve bank of India has relaxed the norms for Fire Audit of Currency Chests by allowing banks to get the fire audit done from approved agencies in case of shortage of staff at District Fire Offices. Banks maintaining currency chests are required to get fire audit done once in every two years. Since RBI has been receiving various references from banks about non-availability of staff in State/District Fire Departments for getting the periodical fire audit done, RBI in its recent notification, has allowed banks to get the fire audit done by agencies approved by the respective State/District Fire departments.

4. GOVERNMENT EXPECTS NPA RECOVERIES TO CROSS 1.80 TRILLION IN FINANCIAL YEAR 2019: Due to the positive impact of the newly introduced Insolvency and Bankruptcy Code (IBC), the government expects the recoveries of Non-Performing Asset (NPAs) or the bad loans to exceed Rs 1.80 trillion target set for the current financial year 2019. Some big accounts are in the process of getting resolved while some more are lined up for resolution under IBC.

5. RBI GIVES LICENCE TO KIRLOSKAR CAPITAL: At a time when the whole of Non-Banking Financial sector is going through lot of liquidity crunch and crisis of confidence, Reserve bank of India has given license to Kirloskar capital for its lending business. Kirloskar Oil Engines Ltd Executive Chairman Mr. Atul Kirloskar has said that they are venturing in to this lending activity as they are seeing a lot of opportunities in financial services and are willing to commit Rs. 1,000 crores of capital over the next three years. The initial focus will be on lending to small and Medium sized enterprises. Kirloskar Group has more than 30,000 retailers and about 1,000 dealers who will be leveraged especially for SME loans.

6. IDFC BANK SELLS Rs. 2,400 CRORE NPAs TO EDELWEISS ASSET RECONSTRUCTION COMPANY: IDFC Bank has sold more than Rs. 2,400 crores of Non-Performing Assets to Edelweiss Asset Reconstruction Company for Rs. 622.6 crore, a loss of 75% on the exposure. IDFC Bank has done this as it intends to clean up its books ahead of the pending merger with Non-Banking Finance Company—Capital First.

7. RBI AUTONOMY ESSENTIAL, NURTURED BY GOVERNMENT SAYS FINANCE MINISTRY: Amid reports of mounting tension between RBI and the government, the Finance Ministry has said the government respects and nurtures the autonomy of Reserve Bank of India and has been holding extensive consultations with it on many issues and the autonomy of RBI within the framework of RBI Act is essential in their functioning and have to be guided in the interest of the Public and Indian Economy. The statement by the government however did not mention of the reason of the government citing never-before-used power of issuing directions to RBI Governor to seek a resolution regarding the differences with the Central Bank. The government has sent at least 3 letters on different issues under Section 7(1) of RBI Act that gives the government powers to issue any direction to the Central bank Governor on matters of public interest.

SNIPPETS- 27/10/2018

1.IDFC BANK TO BE RENAMED AS “IDFC FIRST BANK”: IDFC Bank has proposed to change its name to “IDFC First Bank Ltd” as it is in the process of amalgamating Non-Banking Finance Company- Capital First with itself. The amalgamation process is in the advanced stage as it has received approvals from Competition Commission of India, Stock Exchanges, RBI, shareholders and creditors. The Bank would further require approvals for this change of name from RBI, Registrar of Companies and all other statutory regulatory authorities including shareholders and creditors.

2.FAKE BANK APPS MAY HAVE STOLEN DATA OF THOUSANDS OF CUSTOMERS: Fake Apps of SBI, ICICI Bank, Axis Bank and other leading banks are available on Google Play, and the deceptive malware in these Apps may have stolen thousands of customers’ account and other credit card details. This is as per a report published by IT Security firm Sophos Labs. These “fake Apps” have logo of respective banks which makes it very difficult for customers to differentiate between fake and original Apps. However many banks have told that they have not come across any such fake apps.

3.APP BASED LENDING PLATFORM “EARLYSALARY” CLAIMS TO BE THE LARGEST LENDING APPLICATION: App based lending platform “EarlySalary” has claimed that it has crossed Rs. 550 crore online loan disbursals, making it the country’s largest consumer lending application. The company has so far provided loans to over 1,35,000 customers and cumulatively has disbursed 3,50,000 loans to young working Indians. On an average it is disbursing Rs. 80 crore loans, processes over 60,000 applications and disburses 35,000 loans every month. The company currently services customers across 17 cities in India.

4.THE MERGED ENTITY OF BANK OF BARODA-VIJAYA-DENA TO GET GROWTH CAPITAL FROM GOVERNMENT: The government will provide an additional cushion by way of “Growth-Capital” to the proposed merged bank to be formed by amalgamation of Bank of Baroda, Vijay Bank and Dena Bank to start the new bank on a stronger note. The actual capital infusion in money terms will be clear only after the financials of July-September quarter of all the three banks are available.

5.SYNDICATE BANK GETS Rs. 728 CRORE CAPITAL INFUSION FROM GOVERNMENT: Syndicate bank has received Rs. 728 crore capital infusion from the government. The Finance Ministry has conveyed to the bank regarding the release of capital infusion to the tune of Rs. 728 crore through preferential allotment of equity shares during 2018-19 as government’s investment. The bank will be taking the necessary approvals for allotment of requisite equity shares to the government in due course of time.

6.RBI MAY AMEND PROMPT CORRECTIVE ACTION FRAMEWORK TO HELP BANKING SYSTEM: The Reserve Bank of India may make certain changes in the Prompt Corrective action (PCA) framework that put restrictions on financially weak banks. The changes could be made in the next couple of weeks after taking into account the various aspects and in the larger interest of the banking system. As many as 11 out of 21 banks are under RBI’s PCA watch list, of these Dena Bank and Allahabad bank are facing restrictions on expansion of business.

7.INCOME TAX DEPARTMENT LAUNCHES MAJOR DRIVE AGAINST INDIANS WITH ILLEGAL FOREIGN ASSETS: The Income tax Department has launched massive operation to investigate cases of illegal funds and properties held outside India by Indians and is looking to invoke the new anti- black money law for strict criminal action in many such cases. The Department, in coordination with its foreign counterparts, is investigating offshore bank deposits and purchase of assets by Indians and the number may go into thousands of cases.

8.GOVERNMENT DENIES ANY LIQUIDITY CRISIS: Defaults by IL&FS and its subsidiaries had led to concerns of grave repercussions on the credit market, leading to a liquidity crisis. But the government has assured that there is no such liquidity crisis in the market as there is surplus liquidity in the system. Banks are buying NBFC portfolios and there is no shortage of liquidity. But looking at the present market conditions, it is apparent that there is a liquidity crunch prevailing in the system.

SNIPPETS- 20/10/2018

1. RBI COMES TO THE RESCUE OF NBFCs, ALLOWS BANKS TO LEND MORE: Reserve Bank of India relaxed liquidity norms to ease liquidity crunch prevailing in the financial market and allowed banks to lend more to Non-Banking Finance Companies (NBFCs), which are facing Asset-Liability mismatches. RBI said now banks are permitted to raise their exposure to a single NBFC borrower (Only to those NBFCs which do not finance infrastructure) to 15% of its capital. Earlier it was 10%. This move could free as much as Rs. 50,000 crore for lending to NBFC sector. The Asset-Liability mismatch refers to the imbalance between short-term borrowings and long-term investments (lending).

2. NBFCs LIQUIDITY CRUNCH TO HIT HOME LOAN SALES: As per a report by Japanese brokerage firm- Nomura, the on-going liquidity crunch faced by Non-Banking Finance Companies (NBFCs) will slow down home loan disbursements by these NBFCs. Banks can utilise this opportunity to increase their market share in housing loans. The real estate developers, which are already reeling under the pressure due to the lack lustre market, will also face further troubles owing NBFCs inability to lend.

3. FOREIGN INVESTORS LEAVING INDIAN MARKETS: After 2 years of good Foreign Portfolio Investments (FPI) inflows, the Indian Markets are now witnessing a reversal in the trend as this year the net foreign outflow is $13.7 billion so far as against a net foreign inflow of $ 15.3 billion a year ago. There are several factors that led to FPI outflows—from rising crude oil price to widening of current account deficit.

4. MUTUAL FUND COLLECTION VIA SIP INCRESED BY 40%: As per a report by Association of Mutual Fund in India (AMFI), Systematic Investment Plan (SIP) continues to be the preferred route of retail investors to invest in Mutual Fund as it helps them to reduce market risks. Mutual Fund Industry has collected Rs. 7,727 Crore through SIPs in September 2018, as the SIP contribution for the first half of the current fiscal rose to Rs. 44,487 Crore compared to Rs 29,266 Crore in the corresponding period last year, which is a 40% increase.

5. DEBIT CARD POS TRANSACTIONS OF AIRTEL, PAYTM AND FINO PAYMENTS BANKS BEAT THOSE OF MID SIZED BANKS: The Point-of-Sale (POS) based transactions reported by the three Payment banks – Airtel, Paytm and Fino has touched a whopping 2.1 million debit card transactions which is higher than those made by debit card holders of some of the mid-sized Public Sector banks. This is as per a data from Reserve bank of India.

6. RBI ISSUES e-WALLET INTEROPERABILITY ADVICES: The Reserve Bank of India has issued guidelines for enabling all phases to prepare E-wallets for better interoperability. RBI has clarified that all types of wallet interoperability will happen through Unified Payments Interface (UPI) and cards through interoperable card network. But for security reasons RBI has mandated PPI issuers to adhere to all security guidelines laid down by National Payments Corporation of India (NPCI) for UPI and card networks. However, interoperability will be made available to fully KYC wallets only.

7. PUNJAB NATIONAL BANK PLANS TO SELL NON-CORE ASSETS WORTH Rs. 8,600 CRORE: Punjab National Bank, the country’s second largest Public Sector bank has identified various non-bank core assets amounting to Rs. 8,600 crore which it plans to sell during this year. This includes its housing finance arm—PNB Housing Finance Co. The bank has already sold some assets worth Rs 400 crore.

8. MAHARASHTRA STATE CO-OPERATIVE BANK TO ENTER FRETAIL BANKING: The Maharashtra State Co-operative Bank, the apex lender in the state’s three tier cooperative banking sector, plans to enter retail banking sector and compete with private sector banking. It has already submitted a proposal to merge Urban Co-operative Banks. The proposal is yet to be cleared by RBI.

SNIPPETS- 13/10/2018

1. RBI COULD CANCEL LICENCES OF 1,500 NBFCs : Infrastructure Financing & Leasing Services Ltd (IL&FS), a major infrastructure and financing and construction company sent shock waves through the Non-Banking Finance Company (NBFC) sector when it defaulted on some of its debt obligations in recent weeks. Because of this, many Industry experts have opined that the RBI may cancel licences of as many as 1,500 NBFCs because they do not have adequate capital, and also the RBI may make it more difficult for new entrants to get approval. The way things are moving, there is certainly cause for concern and according to a statement made by former Deputy Governor Mr. Harun Rashid Khan, this sector also could see consolidation.

2. CASH MANAGEMENT COMPANIES TO FORM SELF REGULATORY ORGANISATION TO ADDRESS INDUSTRY RISKS: Cash Management Companies, providing cash transport and logistics support at ATMs as well as bank branches, have come together to form Self-Regulatory Organisation (SRO). In April this year, the Reserve Bank of India had come out with certain regulations by setting standards for engaging service providers in cash management activities. Among other things, the RBI had directed banks that the staff associated with cash handling should be adequately trained and duly certified through an accreditation method. By forming this SRO, all the above concerns will be taken care of, which will mitigate the risks to the banking industry and ultimately facilitate the regulation of this sector.

3. SBI TO PURCHASE LOAN ASSETS WORTH Rs. 45,000 CRORE FROM NBFCs: State Bank of India will increase its portfolio purchase of loans from Non-Banking Finance Companies (NBFCs) Initially SBI had planned for a growth of Rs. 15,000 crore through portfolio purchase this year, which is being enhanced to around Rs. 45,000 crore. This will provide the much needed liquidity to the funds starved NBFC sector, and simultaneously fulfil SBI’s priority sector lending obligations. As per RBI rules, banks must lend 40% of their deposits to small businesses, agriculture and home loans which come under priority sector and SBI plans to buy these kind of loans from NBFCs.

4. CHALLENGES GROW FOR NBFCs AS BANKS STOP LENDING TO THEM: Banks have stopped fresh lending to Non-Banking Finance Companies due to which NBFCs are facing greater challenges at a time when everyone is trying to preserve liquidity and avoid loan defaults. There are wide scale complaints from many NBFCs that some banks are even refusing to release funds against their sanctioned limits.

5. SBI REPORTS 1,329 FRAUD CASES WORTH Rs.5,555 CRORE: In response to a query of RTI, State Bank of India has revealed as many as 1,329 cases of fraud, involving an amount of Rs. 5,555 crore in the first 6 months of the current fiscal year. In the first quarter (April to June), 669 cases worth Rs. 723. 06 crore were reported, whereas in the second quarter (July to September), 660 cases involving an amount of Rs 4,832 crores have been reported.

6. CBDT EXTENDS DEADLINE FOR FILING ITRs WITH AUDIT REPORTS TO OCTOBER 31 st : The Central Board for Direct Taxes (CBDT) has now extended the deadline till October 31 st for filing Income Tax Return and Audit Report for financial year 2107-18. The deadline was earlier extended from September 30 th to October 15 th for tax payers whose accounts have to be audited.

7. RBI TO INFUSE Rs.120 BILLION INTO THE SYSTEM TO MANAGE LIQUIDITY: Reserve Bank of India has decided to inject Rs. 12,000 crore into the system through purchase of government bonds to arrest the liquidity crunch and meet the festival season demand for funds. The government will purchase bonds with maturity ranging between 2020 to 2030. The auction to purchase government bond is a part of the Open Market Operations (OPO) to manage liquidity in the economy.

SNIPPETS- 06/10/2018

1. RBI GIVES NOD TO SET UP KERALA BANK: The Reserve bank of India has accorded an in principle sanction to Kerala State Government to set up “Kerala Bank”. This bank would be formed by merging District Co-operative Banks with State Co-operative Banks. RBI has given instructions to the Kerala State government to complete the entire process of merger by March 2019.The Kerala government announced that the much awaited project “Kerala Bank” is expected to become a reality by August 2019.

2. NORTH KOREAN HACKERS LINKED TO RECENT COSMOS BANK HEIST: California based cyber security company FireEye has indicated that the recent Cosmos Bank cyber heist in August 2018 may have been planned and executed by a financial crime syndicate backed by North Korea. Cosmos Bank had lost Rs. 80.50 crore in one of the largest banking heists in the country through 14,849 fraudulent ATM withdrawals in a two and half hour period in August 2018.

3. RBI ADVISES NBFCs TO RELY ON EQUITY FUND FOR LONG TERM FINANCING: After a series of defaults by IL&FS which led to a near seizure of short-term money markets, Non-banking Finance Companies (NBFCs) received lessons on Asset-Liability Management from RBI. Reserve Bank of India has advised NBFCs to raise more equity and long-term debt instead of relying on short-term funds. Mr. Viral Acharya, RBI Deputy Governor has advised NBFCs to place greater reliance on equity and other long-term modes of finance for funding their long-term assets.

4. FEDERAL BANK FINED Rs 5 CRORE FOR NON-COMPLIANCE OF RBI NORMS: Federal Bank has been penalised Rs. 5 crore for non-compliance on reporting of large borrower exposures and non-payment of customer compensations. The bank was found to have not complied with RBI directions on reporting of data on Central Repository of Information on Large Credits (CRILC) and reporting to RBI for assessment under risk-based supervision.

5. BANK OF MAHARASHTRA SHUTS DOWN 51 BFRANCHES: Bank of Maharashtra has shut down 51 non-viable branches across India. These branches were incurring huge losses and declared as non- viable. These identified branches after closing have been merged with the nearest neighbouring Branches. This is first such instance by any Public Sector Bank in Maharashtra. Bank of Maharashtra has around 1,900 branches all over India.

6. GROSS DIRECT TAX COLLECTION GROWS BY 16.7%: Gross Direct Tax collection in the first 6 months of the financial year grew by 16.7% to Rs 5.47 lakh crore. Refunds amounting to Rs. 1.03 lakh crore have been issued between April 2018 to September 2018, which is 30% higher than refunds issued during the same period in last financial year.

7. GOVERNMENT NOTIFIES 10% LONG TERM CAPITAL GAIN TAX ON IPO/FPO GAINS: The Income Tax Department has notified norms for 10% Long-Term Capital Gain (LTCG) tax for gains from investments made in Initial Public Offer (IPO) and Follow-on Public Offer (FPO). The new norms will come into effect from 1 ST April 2019 and will apply in relation to assessment year 2019-20 and then for subsequent assessment years.

8. COMPANIES PAY UP THEIR DUES FOR FEAR OF INSOLVENCY ACTION: Banks are seen to be the biggest beneficiaries of Insolvency & Bankruptcy Code (IBC), enacted to bring rogue borrowers to book. The fear of insolvency action has helped the bankers to recover Rs. 1.1 lakh crore from loan defaulters who were earlier reluctant to clear their dues. So far 977 cases have been admitted by National Company Law Tribunal (NCLT). The number of cases filed is actually high but many are withdrawn before they are admitted as the borrower agrees to settle the dues.

SNIPPETS- 29/09/2018

1. BAD NEWS FOR RENEWABLE ENERGY COMPANIES: The government has ruled out the possibility of giving priority status for renewable energy sector for limit less borrowing. At a time when Banks are reluctant to grant loans to renewable projects, it has been a long standing demand of this sector to give it priority status to trigger easy cash flow. Banks have been reluctant to fund renewable energy projects due to low tariffs, power evacuation issues and NPAs in the thermal sector.

2. NO MORE COMMISSION FOR PSB STAFF FOR CROSS SELLING PRODUCTS: The government has asked the Public Sector Banks (PSBs) not to pay any commission to its employees for cross-selling of products. This could discourage PSB employees from cross-selling products like retail loans, insurance and mutual funds as now banks will stop paying cash incentives, rewards and recognition. On the other hand this would mean Public Sector banks like SBI and Bank of Baroda who were till now giving commission to its staff, are at a disadvantage over Private banks who have such schemes of rewarding its staff for cross selling.

3. GOVERNMENT BEGINS CONSOLIDATION OF REGIONAL RURAL BANKS: The government has initiated the process of consolidation of Regional Rural Banks (RRBs) along with the Public Sector Banks and intends to bring down their numbers to 36 from the present 56. In this regard, the Centre has begun consultations with States as respective States are one of the sponsors of RRBs. The Sponsor banks have also been informed to formulate a road map for the amalgamation of RRBs within a State. The proposed amalgamation of RRBs will bring in better efficiency, higher productivity, improved Financial Inclusion and greater flow of credit to rural areas.

4. RBI SETS THE RULE FOR JOINT PRIORITY SECTOR LENDING: The Reserve Bank of India has directed Public Sector banks to jointly lend to priority sector along with Non-Banking Finance Companies (NBFCs). RBI has now allowed this joint lending along with NBFCs to push priority sector loans and to reap the benefit of the strengths of two sets of lenders. The Priority sector will have the benefit of low cost funds from the banks and lower cost of operations of NBFCs which would be passed on to the ultimate beneficiary through blended rate and weighted average rate. A single blended fixed rate of interest will be offered to the ultimate borrower based on respective interest rates and proportion of risk sharing.

5. GOVERNMENT TO TAKE ALL MEASURES TO ENSURE LIQUIDITY IN NBFCs: In the backdrop of the default on a series of its coupon payments by one of the biggest names in the Non-Banking Finance Companies (NBFCs)- Infrastructure Leasing & Financial Services (IL&FS) due to which there was panic selling in the equity market which pulled the markets down, the Finance Minister Mr. Arun Jaitley said that the government is ready to ensure credit is available to Non-Banking Financial Companies and adequate liquidity is maintained/provided to the NBFCs.

6. CURRENCY CIRCULATION SLOWS DOWN: Currency In Circulation (CIC), which increased substantially since the note ban in November 2016 has seen some slow down since May 2018. The Currency In Circulation increased from Rs. 9 trillion in January 2017 to Rs 19.5 trillion in May 2018. And the same is being maintained till September 2018. This may be because of a possible reason that people have cut down on their spending with the recent hike in petrol and Diesel prices particularly in rural areas.

7. THREE STATES- MAHARASHTRA, KARNATAKA & TAMILNADU ACCOUNT FOR 40% OF TOTAL RETAIL LOANS: Maharashtra, Karnataka and Tamil Nadu together account for 40% of the total retail loans in the country as on June 30, 2018. This is despite having only 20% of the total population of the country. The growth in retail advances is driven by robust economic development and urbanisation.

SNIPPETS- 22/09/2018

1. INDIA POST INVITES PROPOSAL FOR CONSULTANCY FOR SETTING UP INSURANCE ARM : India post has invited bids to appoint consultant for setting up separate insurance service arm. The consultant thus appointed will prepare project report on setting up of Postal Life Insurance (PLI), Strategic Business Unit (SBU), Impact assessment and overseeing the implementation thereof. The pre-bid in this regard was held on September 18Th.

2. SBI TO INSTALL SOLAR PANELS OVER 10,000 ATMs IN 2 YEARS: State Bank of India is planning to install solar panels over around 10,000 ATMS across country in the next two years. Currently nearly 1,200 of the Bank’s ATMs are running on solar power. The bank has already installed rooftop solar panels on 150 of its buildings across country and is in the process of identifying more such locations. The bank is also planning to replace all its bank vehicles with electric vehicles by 2030. The route map is to turn totally carbon neutral by 2030.

3. BANK OF BARODA, VIJAYA BANK AND DENA BANK TO BE MERGED: The government has proposed the merger of Bank of Baroda, Dena Bank and Vijaya Bank and once the merger is through then this will be the country’s third largest bank. The combined entity will have a strong presence across nation with more than 34% of low-cost deposits (Savings + Current), a capital buffer of around 12%, and a total business of around 15 lakh crore. Bank of Baroda is the biggest of the three with a total business chunk of Rs.10.29 lakh crore, followed by Vijaya Bank at Rs. 2.70 lakh crore and Dena Bank at Rs. 1.72 lakh crore. Shortly all the three bank boards will meet and after adequate consultation, will take a decision.

4. GOVERNMENT DOUBLES NPA RECOVERY FOR PSBs FOR THIS FISCAL: The government expects the state-run banks to recover Rs 1.5 lakh crore of bad debts during the current financial year. This is double the amount that banks had managed to recover last year. Total NPA recovery during 2017-18 was Rs 74,000 crore. NPAs have been a major concern for public sector banks as almost all banks have been under losses because of this.

5. E-COMMERCE FIRMS TO COLLECT 1% TAX AT SOURCE FROM OCTOBER 1st : The Finance Ministry has notified that from 1St October 2018, all E-Commerce firms shall collect an amount of 1% as Tax Collected at Source (TCS) under the Goods and Services Tax (GST) on the supplies made by them. Out of this, half will go to the state where the supply takes place and half to the Centre.

6. SMALLER PSBs ASKED TO CONSOLIDATE OPERATIONS, AVOID COMPETING WITH LARGER BANKS: The government has asked smaller public sector banks to consolidate their banking operations in the same geographic area, close overlapping branches and avoid competing with larger banks and instead has asked them to focus on niche areas. The move comes close on the heels of government’s proposal to merge Bank of Baroda, Vijaya Bank and Dena Bank to create country’s third largest bank. Smaller banks should not be competing for large corporate loans or for sectors where they don’t have strength or capacity to lend. The government is planning National banks and Regional banks and existing lenders have to make plans for reorganising their organisational resources, human resource and Information technology systems. Finally the government is looking at trimming the number of banks to around 10 from the existing 21.

7. BANKS UNDER PCA HAVE BEEN TOLD TO PRESENT THEIR TURN AROUND PLANS: Banks that are under Reserve Bank of India’s Prompt Corrective Actions (PCA) framework have been asked to present their turn-around plans and look at leveraging their competitive advantage for regional market business. Finance Minister will hold a quarterly review of the performance of these banks which are under PCA.

SNIPPETS- 15/09/2018

1. BANK CREDIT ROSE BY 13.49% AND DEPOSITS BY 8.9%: Bank credit grew by 13.49% in the fortnight ended August 31, 2018. The total bank credit as on 31 St August 2018 stood at Rs. 87,89,259 crore. The credit during the same period a year ago stood at Rs. 77,44,237 crore. In the fortnight ended 31 St August 2018, deposits grew by a mere 8.8% to Rs 116,45,870 crore from Rs. 106,96,099 crore in the same period last year. Loans to Agriculture and allied activities rose by 6.6% during the same period.

2. RAHURAM RAJAN CAUTIONS ON MSME LENDING: Mr. Raghuram Rajan, former governor of RBI has warned that the next build-up of Non-Performing Assets (NPAs) could be in the loans to Medium Small and Marginal Enterprises (MSMEs) under the credit guarantee schemes. Mr. Rajan said that the government should now concentrate on sources of the next crises and should refrain from setting ambitious targets. He said that credit targets were sometimes achieved by abandoning appropriate due-diligence, thereby creating the environment for future NPAs. Both Mudra and Kisan Credit cards have to be examined more closely for potential credit risk. He also pointed out that the Credit Guarantee Scheme for MSME (CGTMSE) run by SIDBI is a growing contingent liability and needs to be examined with urgency.

3. MUTUAL FUND ASSETS SURPASS Rs. 25 TRILLION: The assets managed by domestic Mutual Funds Industry have crossed the Rs 25 trillion mark at the end of August 2018, marking a year-on-year growth rate of 25%. Out of this, Rs. 4.6 trillion was added in the last one year. This feat has been achieved by the industry in 25 years after it was opened for private investors. The Industry now has aimed to achieve the next 25 trillion in five years.

4. GOVERNMENT MAY END EPFO REGULATORY: The government is considering relieving the Employees’ Provident Fund Organisation (EFPO) of its regulatory duties and plans to create a separate entity to handle such regulatory functions. The idea and rationale behind the proposal is to avoid conflict of interest as now the EFPO is India’s largest provident fund provider and as well a regulatory.

5. NOW PAY TAX ON PROVIDENT FUND WITHDRAWAL: Provident Fund withdrawal consists of principal portion and interest earned on it portion. The taxability of the two differs based on the time of withdrawal. If the withdrawal is made before 5 years of continuous service then the entire contribution made by the employer is taxable and the tax would be deducted if the amount exceeds Rs. 50,000/-. And if the deduction has been claimed under section 80C while making such investment over the tenure of the service, then the entire contribution will be taxed.

6. INDIANS ARE MORE ADHERED TO PERSONAL LOANS: According to RBI data, in May 2010, the total outstanding personal loan amount with banks was Rs. 5.89 lakh crore. This amount as on June 2018 was Rs. 19.33 lakh crore. Consumer durable loans as on May 2010 were Rs. 8,010 crore, and on June 2018 it was Rs. 20,300 crore. Outstanding credit cards amount as on May 2010 was Rs. 19,579 crore, and on June 2018 it was Rs 74,400 crore. Sine 2010 banks have changed their strategies and have started focussing on these un-secured loans. A large proportion of customers taking personal and consumer durable loans are working class in the age group of 25-45 years.

SNIPPETS- 08/09/2018

1. BANKS WITH MORE THAN 10 BRANCHES TO HAVE INTERNAL OMBUDSMAN: The Reserve Bank of India has instructed all the Scheduled Commercial Banks with more than 10 branches to appoint an Internal Ombudsman (IO). Regional Rural Banks are excluded from this. The Internal Ombudsman scheme is introduced by RBI to strengthen the internal grievances of the bank and to ensure that the complaints of the customer are redressed at the earliest. The bank shall escalate all such complaints which are not fully redressed to their respective IOs before conveying the final decision to the complainant. The customer need not approach the IO directly.

2. RBI SLAPS Rs. 1 CRORE FINE ON SOME BANKS: Reserve Bank of India has imposed a fine of Rs 1 crore each on Union Bank of India, Bank of Maharashtra and Bank of India. The penalty has been imposed taking into account the delay on the part of the banks to detect and report fraud in an account. The penalty has been imposed in exercise of powers vested in RBI under Banking Regulation Act.

3. PAYTM BUILDING NEW TECHNOLOGY TO CHECK “CREDIBILITY SCORE” OF BORROWER: Paytm is evolving a mechanism to determine the “Credibility Score” of a person seeking loan from banks. The company’s team in Toronto is actively working on a reliable system that can be relied upon by banks to ascertain the credibility of a loan seeker. Paytm’s Toronto team is working on an algorithm based on a person’s digital transactions to present a solution. If reliable system is evolved, it can predict with sufficient accuracy about the capacity and willingness of an individual to repay his loan.

4. AIRTEL PAYMENTS BANK OFFERS CARD-LESS CASH WITHDRAWAL AT SELECT ATMs: Airtel Payments Bank has tied up with Empays Payment systems to enable its savings account holders to withdraw cash using their mobile phones through the card-less cash technology of Empays which is called Instant Money Transfer (IMT). So now Airtel Payment Bank customers can make card-less cash withdrawals at select ATMs across the country using IMT technology. IMT is the largest interoperable card-less cash ATM network in the world, built and run by Empays Payment Systems India Pvt Ltd.

5. BANKS ASK RBI TO EASE ATM CASH MANAGEMENT RULES: Banks have approached RBI to relax rules on how cash is carted to ATMs on the grounds that the revised rules are very hard to follow. Banks were expected to put in place a host of measures from July 2018 with respect to cash movement. These were aimed at preventing various kinds of frauds. In an attempt to prevent such frauds, the RBI had come out with some stringent steps which included refilling ATMs using the “cassette-swap method”, under which cash would be filled inside locked cassettes which would then be inserted in ATMs by service providers.

6. TAX RETURNS FILED BEFORE DEADLINE SURGES BY 70%: With the government introducing fine for delayed filing of income tax returns after 31 St august 2018, the number of I-T returns filed before deadline touched to 5.42 crore which is 70% more than last year. Last year 3.17 returns were filed before deadline. The improvement is on account of the gentle and sustained persuasion by the tax department by way of SMS messages and Emails. 7. MONETARY LIMIT FOR FILING CASES IN DRT INCREASED TO Rs 20 LAKH: The government has increased the monetary limit to Rs. 20 lakh for filing loan recovery application in the Debt Recovery Tribunals (DRTs) by banks and financial institutions. As a result any bank or financial institution cannot approach DRTs if the claim amount is less than Rs. 20 lakh. This amount is enhanced to help reduce pendency.

8. IDEA-VODAFONE MERGER TO BECOME LARGEST TELECOM SUBSCRIBER: Vodafone India & Idea Cellular announced completion of their merger, creating the country’s largest telecom subscriber with a subscriber base of over 408 million, revenue market share of 32.2% and subscriber market share of 41.1%. The combined entity also has largest spectrum holding around 1850 MHz across bands.

SNIPPETS- 01/09/2018

1. ICICI BANK REPORTS FIRST QUARTER LOSS: ICICI Bank reported a historic loss in the first quarter ended June 2018 due to the rise in its provisions. The bank reported a loss of Rs.120 crore as against a profit of Rs 2,049 crore during the same period last year. The provisions were more than doubled to 5,971 crore from 2,609 crore last year.

2. BANKS SERVING SUMMONS TO DEFAULTERS THROUGH WhatsApp AND EMAILS: Banks are using WhatsApp and Email to pin down those defaulters who slip through the banks grip when more traditional mode of correspondence is used. Banks are issuing court summons through WhatsApp and Email. This digital means of correspondence is being followed after a judgement earlier this year. A letter through post can get unduly delayed and addresses keep on changing but phone numbers and Email addresses can remain constant, making these digital modes of correspondence handier to the lenders. HDFC Bank has already issued 214 court summonses through WhatsApp and Email.

3. BANKS WILL HAVE TO STOP LENDING TO INFRA PROJECTS: State Bank of India has said that banks will have to stop lending to infrastructure projects, especially to Power sector because of the bad experiences of the past as most of the loans given in the last decade have turned bad. Due to the changes in Non-Performing Assets recognition after February 12, 2018 RBI circular, wherein RBI had given August 27TH as the deadline, as many as 30 power projects with accumulative exposure of Rs. 1.7 trillion ( Rs 1.7 lakh crore) are now facing bankruptcy proceedings. If the banks fail to resolve the issues within the next 15 days, then they will have to be sent to National Company Law Tribunal (NCLT).

4. UIDAI CRACKS DOWN ON BANKS MISSING TO MEET AADHAAR UPDATE DATA TARGET: The Unique Identification Authority of India (UIDAI) has withdrawn electronic Know-Your-Customer (KYC) facilities for 13 Indian Banks and many authentication agencies for failing to meet targets on enrolment and updating citizen information for its Aadhaar biometric database. For these banks, the suspension of electronic KYC facility means they will not be able to offer several financial services linked to the authentication facility.

5. IBA ASKS BANKS TO GET CYBER SECURITY INSURANCE: The Indian Banks Association (IBA) has asked member banks to buy Cyber Insurance covers in the wake of several incidents of digital attacks on banks. Such a policy has turned into a basic need for the banks now. While large banks have cyber insurance covers ranging from Rs. 350 to Rs. 500 crore, many of the smaller banks have not yet opted for the same. Usually these smaller banks have only the Banker’s Blanket Policy which does not cover cyber heists.

6. RBI MAY SOON DO AWAY WITH MCLR: The Reserve Bank of India, in its annual report of 2017-18 has indicated that it would review the Marginal Cost of Lending Rate (MCLR) guidelines. The review is imminent because MCLR system has not reflected the changes in interest rates. And moreover, World-wide the bank rates have moved to an external benchmark which leads to uniform pricing. From April 2018 onwards RBI has asked all banks to link all old loan interest rates to MCLR, which most of the banks are yet to implement.

7. INCOME TAX SCRUTINY TO GO ELECTRONIC: The Central Board of Direct Taxes (CBDT) has mandated “e-proceedings” for all income-tax scrutiny in 2018-19. E-proceeding refers to the communication of date and documents between the Income-Tax department and the assessees through electronic mode and where the assessments are done electronically. It has also specified situations where e-proceeding will not be mandatory.

SNIPPETS- 25/08/2018

1. RECORD INCOME TAX COLLECTION FOR FINANICIAL YEAR 2017-18: Income Tax collection for the financial year 2017-18 has touched new heights. The Income Tax collection for FY 2017-18 stood at 10.03 lakh crore with a record number of 6.92 crore I-T returns. During FY 2016-17 there were 5.61 crore IT Returns, a growth rate of almost 24%. The data show that net Direct Tax collections are 17.1% higher than the net collections for FY 2016-17.

2. WRONG REPORTING HIDES SMALL BUSINESS LOANS WORTH Rs 10 LAKH CRORE: According to a report by Boston Consulting Group (BCG) on behalf of IBA and FICCI, the size of Micro Small & Medium Enterprises (MSME) market is around 25 lakh crore. The report splits the borrowings by MSMEs into two categories—Rs 15 lakh crore availed in the name of the business entity and Rs 10 lakh crore in the name of the proprietor. This portion of Rs 10 lakh crore is mis-reported as personal advances made to their proprietors. These loans which are mostly financed by MNC Banks, Private Sector Banks and NBFC’s are sometimes backed by gold and property or sometimes clean loans as well depending on the credit history of the borrower. Most of the loans are availed in the name of the proprietor and family and then channelled to support the business needs.

3. NO ATM TO BE REPLENISHED WITH CASH AFTER 9 pm FROM NEXT YEAR: as per the directive of Home Ministry, no ATMs will be replenished with cash after 9 pm in urban areas and 6 pm in rural areas. In a notification, the Home Ministry said the new Standard Operating Procedures (SOPs) would come into effect from February 2019.

4. AFFORDABLE HOUSING RACING AHEAD IN REALITY SECTOR: With government allotting subsidies for economically weaker sections for low cost housing schemes, the developers have focussed more on affordable housing schemes. The total residential sales in low cost housing has gone up to 21% from just 8% three years ago. Affordable housing has become the fastest growing segment in Indian reality market with maximum new launches. One in every five houses sold in India now costs less than Rs 25 lakhs.

5. BANKS SHARE IN MSME FINANCING REDUCING OVER THE YEARS: The share of credit financed by banks to Micro, Small & Medium Enterprises (MSMEs) has declined since 2016. This share is being taken up by Non-Banking Financial Companies (NBFCs). The share of credit financed by NBFCs to MSMEs has nearly doubled to 10%. NBFCs with their rigorous marketing and increased risk taking capacity will continue to eat the market share from banks in future as well.

6. RBI ASKS RATING AGENCIES TO SCAN COMPANIES’ BANK ACCOUNT DETAILS: The Reserve Bank of India has directed rating firms to scan bank account details (capturing the flow of funds in and out of the Company) in assessing its capacity or ability to repay loans. There would be resistance from companies as most of the companies will be reluctant to part with such information. Such information is only shared with external agencies only when the banks or the regulatory body order a forensic audit. A rating agency, when it tracks such data on money flows could be in a position to identify possible diversion of funds through subsidiary shell companies.

7. TOP INDIAN TALENT RETURNING TO JOIN DOMESTIC INVESTMENT BANKS: The appeal of plum jobs at foreign banks is fading away as domestic outfits are becoming more attractive with the promise of expanding opportunities. More than three dozen top Indian executives have moved to domestic investment banks in the last one year. There is an increased inclination to work with domestic investment banks. Indian Investment banks have also stitched up strategic alliances with foreign groups to offer full service to its clients and hence the overall investment banking activity has improved in India over the last three years in terms of fees and revenue.

SNIPPETS- 18/08/2018

1. SEBI MAY MAKE SUBMISSION OF NET WORTH STATEMENT COMPULSORY FOR RETAIL INVESTORS: On a recommendation by the committee on fair market conduct headed by former Law Secretary Mr. Vishwanathan, Securities and Exchange Board of India (SEBI) may soon ask retail investors to submit a Net-Worth statement to their brokers. The aim is to keep a check on Retail Investors’ trading limits. This is as per a news report by Business Line.

2. INDIRECT TAX BASE INCREASES BY 65% SINCE GST ROLL-OUT: Since the roll-out of GST in July 2017, the Indirect Tax base has expanded by 65% to 1.6 million in a year. Under the previous tax regime it was 7 million. The number of people filing Income Tax (Direct Tax) has also increased to 67.50 million compared to 40 million in 2013-14, which is a rise of 68%.

3. FINANCE MINISTRY SEEKS A CLEAR DIVIDEND POLICY FROM RBI: The Finance Ministry has asked the Reserve Bank of India to review its dividend and capital conservation rules. The government wants a clear policy on the pay-outs it gets from RBI. These matters were discussed during a meeting between Finance Ministry officials and RBI Deputy Governors.

4. BANKS TO COME OUT OF PCA FRAMEWORK BY THIS YEAR END: Financial Services Secretary Mr. Rajiv Kumar has expressed that the banks would come out of Prompt Corrective Action (PCA) framework by the end of this fiscal. As many as 11 banks are under PCA. Of these, Dena Bank and Allahabad Bank are facing restriction on expansion of business. Noting that Public Sector banks are growth engines, Mr. Kumar said that Banks have made a recovery of Rs 36,551 of bad loans during the first quarter, registering a growth of 49% over the last fiscal.

5. COSMOS BANK’S SERVER HACKED, Rs.94 CRORE SIPHONED OFF IN 2 DAYS: Hackers managed to siphon off over Rs.94 crore through a malware attack on the server of Pune- based Cosmos Bank by cloning thousands of bank’s ATM cards over a period of two days. In two days around 91 crores were withdrawn from various ATMs in 28 countries and another Rs.2.5 crore were taken out in India.

6. RBI LENS ON 200 BAD-LOAN ACCOUNTS: The Reserve bank of India has started examining about 200 bad-loan accounts from as far as 2011 onwards as part of its annual inspection of bank books to rule out any nasty surprises in bankruptcy court or subsequent to debt resolution. These include the accounts of Videocon, Essar Steel, ABG Shipyard, Bhushan Steel etc. RBI is looking at repayment history, classifications, provisions and debt restructuring among other things to ensure that all procedures were correctly followed.

7. 88% OF RURAL HOUSEHOLDS HAVE SAVINGS ACCOUNTS: As per a survey conducted by NABARD, The Financial Inclusion drive has resulted in increasing of bank accounts in rural areas with 88% of rural households having savings accounts. Incidence of Indebtedness (IOI), which is a proportion of households having outstanding debt on the date of the survey, was 52.5% and 42.8% for agricultural and non-agricultural households respectively. Similarly about 26% of agricultural households and 25% of non-agricultural households were found to have been covered under insurance. 20.1% agricultural households and 18.9% of non- agricultural households have subscribed to pension schemes.

SNIPPETS- 11/08/2018

1. SBI POSTS Rs. 4,876 CRORE LOSS IN THE FIRST QUARTER OF FY’18-19: State Bank of India has reported net loss of Rs. 4,876 crore for the quarter ended June 2018. This is due to fresh slippage of Rs. 26,249 crore in the Non-Performing Asset (NPA) category for which the bank had to keep provisions. The profits were also hit by large depreciation in the value of its bond portfolio following an increase in interest rates.

2. BANKS COLLECTED Rs. 5,000 CRORE FROM CUSTOMERS FOR NOT MAINTAINING MINIMUM BALANCE IN FY’ 17-18: As many as 21 Public Sector Banks and 3 private banks collected around Rs. 5,000 crore as penalties from customers’ for not maintain minimum balance in their accounts in 2017-18. State Bank of India, who suffered a staggering net loss in this period, was the highest grosser in penalising its customers.

3. OVER 2,00,000 “NON-FILERS” FILED ITR IN FY’18 : As many as 2,00,000 “non-filers” have filed their Income Tax Returns in last fiscal. I-T department had issued notices to 3,04.000 individuals who had deposited cash of more than Rs 1 million in their respective accounts post demonetization but had not filed returns before the due date. As a result returns were filed by 2,09,000 persons and have paid self-assessment tax of Rs 64.16 billion. This was told by Minister of State for Finance Mr. Shiv Pratap Shukla in Rajya Sabha.

4. RBI CANCELS LICENCES OF 368 NBFCs IN 2018: The Reserve Bank of India has cancelled licences of 368 Non-Banking Financial Companies (NBFCs) in six months ended June 20018 for failing to meet regulatory norms. The move is being seen as an attempt to clean up the sector, which has more than 11,402 NBFCs of which 222 are non-deposit taking NBFCs. Industry experts say that majority of the licences thus cancelled belong to NBFCs which had failed to meet RBI’s requirement of net owned fund of Rs. 2 crore.

5. PNB IN TALKS WITH GOVERNMENT DEPARTMENTS TO SELL ITS HQ: Punjab National Bank (PNB) is in negotiation with a few of government departments, including Income tax and central excise, to sell its headquarters situated at Bhikaji Cama Place in New Delhi. The bank is going for second round of valuation of the property due to high demand. The bank expects to raise nearly Rs. 700-800 crore from the sale of its earlier head office in New Delhi. The bank has set a target of Rs.8,600 crore from sale of its non-core assets in FY 18-19.

6. SBI LAUNCHES “MOPAD”: State Bank of India has launched a payments machine called “MOPAD” (Multi Option Payment Acceptance Device) that would help merchants eliminate the multiple choices that they keep to facilitate transactions from cards to QR code based payments. MOPAD is a Point Of Sale (POS) terminal that would accept payments from cards, UPI, Bharat QR, and SBI Buddy wallet which till now required different modes of tools to receive payments.

7. RBI DECLARES Rs. 50,000 CRORE DEVIDEND FOR 2017-18: The Reserve Bank of India (RBI) has announced the transfer of Rs. 50,000 crore to the centre from its 2017-18 surplus. The amount included Rs. 10,000 crore transferred as an interim dividend to aid the Centre’s efforts to control the FY18 fiscal deficit.

8. 10 PSU BANKS WILL BE HEADLESS BY THIS MONTH END: Seven Public Sector banks are already functioning without their Chiefs and the term of three more bank CEOs will end this month end, making it 10 banks without CEOs. This has created a huge void in state-run banks, that too at this time when most of the banks are grappling with bad loans and are in a bad shape.

SNIPPETS- 04/08/2018

1. INCOME TAX RETURN FILING DEADLINE EXTENDED TO AUGUST 31: The Finance Ministry has announced the extension of Income Tax Return (ITR) filing deadline by a month to August 31ST 2018. Until last assessment year there was no penalty for delayed filing of ITR. But from Assessment Year 2018-19 there is a penalty of Rs 5,000/- for delayed filing of ITR till December 2018 and thereafter Rs 10,000/- If Total Income is less than Rs.5 lakhs then the penalty is Rs.1,000/- only.

2. MULTI YEAR THIRD PARTY INSURANCE FOR VEHICLES: Last week Supreme Court gave a decision to have mandatory multi years third party insurance of two years for cars and five-years for two wheelers. This may lead to inflation adjusted pricing due to which consumers may have to shell out at least 10-12% more for their multi-year third party motor insurance.

3. RBI RAISES REPO RATE BY 25 BASIS POINTS: The Reserve bank of India has raised the repo rate by 25 basis points (bps) to 6.5%. The bank lending rates may be hiked because of this in future. This is the second hike by RBI during this financial year. Loan rates have been going up for the past few months as banks are looking to protect their margins. With deposits growing up steadily there is a need for banks to increase the deposit interest rates as well.

4. INDIA POST PAYMENTS BANK TO START OPERATIONS SOON WITH 650 BRANCHES: India Post Payments Bank (IPPB) is expected to go live with 650 branches across India with around 17 crore accounts by August 2018. RBI has given its approval to IPPB after testing its entire system. The final approval for the launch is pending before RBI. IPPB is the third entity to receive payments bank permit after Airtel and Paytm.

5. PUBLIC SECTOR BANKS PLAN TO LINK PAY WITH PERFORMANCE: Senior Management staff of Public Sector Banks (PSBs) may now have to perform to earn more. In a first of its kind move for PSBs, SBI, Punjab National bank and Bank of Baroda are planning to introduce performance-linked pay. It will have a component of fixed and variable pay. But this will take time to evolve. Performance-linked pay is widely used in private sector to reward the better performers in the organisation.

6. RBI INSTRUCTS PAYTM PAYMENTS BANK TO STOP OPENING FRESH ACCOUNTS: The Reserve Bank of India has instructed Paytm Payments Bank (PPB) to stop opening fresh accounts till all the concerns it has raised against the PPB are solved. Firstly RBI has asked PPB to go for a physical verification of Know-Your-Customer (KYC) process instead of e-KYC for adding new customers. RBI is also not in agreement with the close relations between PPB and Paytm’s parent body One97 Communications, which has been giving away cash backs and other promotional offers to PPB account holders.

7. ICICI BANK WARNS OF RISK TO REPUTATION IN REPORT TO SEC: ICICI bank has warned its domestic and international shareholders that the bank faces reputation risk and regulatory action. It has highlighted the on-going investigations into the allegations relating to its CEO Ms Chanda Kochar as risk factor. The bank has filed its Annual Report both for Indian and international investors. The balance sheet was filed with the Securities Exchange Commission (SEC) to comply with the listing requirements for bank’s American depository receipts (ADRs).

SNIPPETS- 28/07/2018

1. SEBI PROPOSES FRAMEWORK ON 25% BORROWING VIA CORPORATE BONDS FOR LARGE COMPANIES: With a view to deepen the corporate bonds market to make it more vibrant and liquid and to reduce the reliance of big corporates on banks for financing, Security Exchange Board of India (SEBI) has come out with a proposal that will require Large Corporates to raise 25% of their borrowings through corporate bond market from next fiscal. If implemented this will come in force from 1ST April 2019.

2. PRIVATE BANKS SHOWING INTEREST IN FUNDING HIGHWAY PROJECTS UNDER PPP MODE: Private Banks including HDFC, have shown interest in funding highway projects in Public Private Partnership (PPP) mode. Road Transport & Highways Minister Mr. Nitin Gadkari has informed the Lok Sabha that private Banks have assured funding to the tune of 1.30 lakh crore for highway construction.

3. AMENDMENT IN PREVENTION OF CORRUPTION ACT WILL ENCOURAGE BONAFIDE DECISION MAKING IN BANKS: Bankers who are presently living under the fear of investigative agencies for foisting cases even where a bonafide decisions go wrong, are a lot relieved with both the houses of Parliament passing certain amendments to the Prevention of Corruption Act that provides a shield against random arrests by the police. Now it is mandatory for the police to seek prior permission from a relevant authority before initiating prosecution against government officials, including bankers. Further a case has to be closed within 4 years. According to Mr Rajnish Kumar, CMD SBI, this will have a very positive impact on decision making among bankers.

4. GOVERNMENT ASKS RBI TO SUGGEST ON PSU BANK MERGER: The government has asked the RBI to examine the possibility of merger among public sector banks to achieve synergy and increase scale of operation. But it has not set any timeline for merger of PSU banks. With a view to facilitate consolidation among PSU banks to create strong and competitive entities, serving as catalysts for growth with improved risk profile of the bank, the government has put in place an Alternative Mechanism (AM) comprised of three Ministers. The proposals received from banks for in-principle approval to formulate schemes of amalgamation shall be placed before the institution although there is no proposal for consideration yet.

5. TOP STATE-RUN BANKS SIGN INTER-CREDITOR AGREEMENT: More than a dozen lenders led by State Bank of India have signed the Inter-creditor agreement (ICA), potentially paving the way for speedy resolution of stressed assets. No Foreign Bank or any private Bank has signed the agreement yet. An Inter-creditor agreement is an agreement signed amongst the bankers which stipulates how their competing interests are resolved and how to work in tandem in service to their mutual borrower. The objective is to use this ICA for faster facilitation of resolution of stressed assets.

6. BANK OF BARODA SETS UP “WAR ROOM LAWYER TEAM” FOR BAD LOAN RECOVERY: Bank of Baroda has set up a dedicated team of lawyers which is named as ‘War Room Lawyer Team” to speed up recovery of bad loans that get embroiled in litigation. The bank has 380 high-value bad loan accounts with a total outstanding of about Rs 15,000 crore. Such recovery measures are expected to reap benefits to the bank and bring back the bank’s profits.

7. 25% ATMs OF PUBLIC SECTOR BANKS MAY BE VULNERABLE TO FRAUD: The government has indicated that nearly 25% of the ATMs run by public sector banks may be vulnerable to frauds as 74% of the cash dispensers are running on outdated software and they lack basic security features. The government however did not disclose details of such ATMs that were run by private sector banks.

8. RBI TO ISSUE NEW Rs. 100 NOTES : The Reserve Bank of India will shortly issue new Rs.100 denomination notes in Mahatma Gandhi series. The base colour of the note will be lavender. The note has other designs as well aligning with the overall colour scheme on both sides.

SNIPPETS- 21/07/2018

1.NO VEHICLE INSURANCE WITHOUT PUC CERTIFICATE: Insurance Regulatory & Development Authority of India (IRDA) has issued instructions that vehicles without a valid Pollution Under Control (PUC) Certificate will not be insured. The Insurance regulator’s move follows an order of the Supreme Court in this regard.

2. GOVERNMENT WANTS BANKS TO START ISSUING NEAR FIELD COMMUNICATION-ENABLED CREDIT & DEBIT CARDS: The Finance Ministry wants banks to start issuing Near Field Communication (NFC)– enabled contactless cards to their customers so that the government can expand the use of card payments beyond simple merchant transactions. These contactless cards are the next generation innovation in the cards space which can bring added security and convenience for digital payments. NFC-enabled Contactless cards can be used for mass transit like Metro, Railways and even buses where consumers can just tap these cards and the ticket price will be directly debited to their bank account.

3. FINANCE MINISTRY APPROVES Rs. 11,336 CRORE CAPITAL INFUSION IN 5 PSU BANKS: The government has approved capital infusion of Rs. 11,336 crore in five public sector banks. These five banks are Punjab National Bank ( Rs. 2,816 Crore), Corporation Bank ( Rs. 2,555 Crore), Indian Overseas Bank ( Rs. 2,157 crore), Andhra Bank (Rs. 3,019 crore) and Allahabad Bank (Rs. 1,790 crore). This capital infusion would come out of the Rs. 65,000 crore remaining from the Rs. 2.11 lakh crore announced by the government in October 2017. The capital thus infused would be used by these banks to make interest payments on additional tier 1 (AT-1) bonds they had issued.

4. PNB’s NPA RECOVERY IN FIRST QUARTER OF FY’18 IS THE HIGEST IN THE BANKING INDUSTRY: Punjab National Bank has recovered over Rs. 7,700 crore in bad loans during the first quarter in the current fiscal which is the highest in the banking industry. This amount is more than the total amount it had recovered in the entire 2017-18 financial year. This recovery indicates that the bank has embarked on the turnaround path. The Insolvency & Bankruptcy Code (IBC) resolution process has helped the bank in the recovery.

5. MOODY’S REPORT WARNS OF HIGH DELINQUENCIES IN SME LOANS AGAINST PROPERTY: Small & Medium Enterprises (SMEs) are already reeling under the impact of demonetization and GST. And now due to the interest costs on Loan Against Property (LAP) which are set to rise due to hardening rates, these SMEs which have availed loans under LAP will be adversely affected and delinquencies in this sector will increase. This is as per a report submitted by rating agency Moody’s.

6. BANGALURU START-UP DEVELOPS MACHINE LEARNING TOOL TO GENERATE LAND RISK SCORE: CropIn, a Bangaluru–based farm technology start-up has developed a tool on Machine Learning Algorithm, that helps banks/FIs generate the land risk score for farmers. The banks bring the farmers on to CropIn’s platform. In addition to the KYC of the farmers, other details such as geo co-ordinates that latitude and longitudinal details of the said farm land for which risk score has to be assessed are taken. It provides the details like what the farmer grew on the farm land in the past three years, the crop size, yields and his potential earnings for the period based on average prevailing prices. All these inputs are fed by the bank into their system and then the bank can take a call on financing the farmer. They will also provide post sanction periodic data on what the farmer has grown and the crop health using the satellite imagery. And when the crop approaches maturing stage, the bank will get a trigger, which will help it get in touch with the farmer to initiate repayment process.

SNIPPETS- 14/07/2018

1. RBI’S NEW CASH MANAGEMENT NORMS HIKE BANKS’ COSTS: With Reserve Bank of India’s new standards for cash logistics companies starting from July 6th 2018, some banks are raising the issue of higher costs and demanding higher inter-bank payments for use of ATMs. As per the new norms, banks must ensure that service providers and their sub-contractors they engage, must have a net worth of at least Rs. 100 crore. In case of existing contracts the bank must ensure that the net worth criteria is met by March 2019. The cash logistic companies must have a fleet size of minimum 300 specifically fabricated cash vans and these vans should be equipped with GPS, tubeless tyres, emergency hooters and CCTV covering.

2. IMPS FUND TRANSFER DOUBLES IN THE FIRST QUARTER OF FY’ 19: IMPS (Immediate Money Transfer) offers instant round-the-clock interbank electronic funds transfer service that can be accessed through multiple channels like mobile, internet, SMS. Transfer of funds through IMPS crossed a whopping Rs. 3.23 lakh crore in April-June quarter of 2018-19 financial year. The figure stood at 1.17 lakh crore during the same period in the last fiscal. The number of transactions through IMPS crossed 10 crore mark in March 2018 and touched a high of 12.04 crore in June 2018.

3. PUBLIC SECTOR BANKS MAY NEED Rs. 1.3 LAKH CRORE FOR LOAN RECAST PLAN: The committee on Stressed Assets has estimated that public sector banks will need around Rs. 1.30 lakh Crore over a period of two years to deal with resolution of stressed loans , including funding of the proposed Asset Management Company and the stressed asset fund. The capital requirement may be over and above the additional funds that banks would need to set aside for potential losses from loans that are classified as Non-Performing Assets during the two year period. While the government is set to provide Rs. 65,000 crore, the remaining amount will come through the sale of non-core assets, internal accruals and planned equity raising.

4. PUNJAB NATIONAL BANK MAY POST NATION’S BIGGEST BANK PROFIT IN QUARTER 2 OF FY 2018-19: Punjab National Bank that saw its earnings wiped out by an unprecedented fraud, aims to report the nation’s biggest bank profit in the second quarter ending September 2018. This may materialise through sale of assets and recovery of bad loans. Much of its earnings will come from a planned sale of PNB’s stake in its housing finance unit.

5. FITCH WARNS AGAINST AUTO-LOAN DELINQUENCIES: Rating agency Fitch has warned against fresh auto-loan delinquencies if fuel prices continue to rise. It said that high petrol and diesel prices could strain India’s commercial vehicle operators and lead to a rise in auto-loan delinquencies. Freight rates have so far not kept pace with the fuel price increase and this would bleed the commercial vehicle operators.

6. RBI MAKES IT MANDATORY TO MENTION BUYER’S NAME ON DEMAND DRAFT: Reserve Bank of India has decided to make it mandatory to mention the buyer’s name in the demand draft at a bank branch. This is one of the measures taken by RBI to make banking instruments safe and stronger.

7. GROSS NPAs OF PSBs STOOD AT 14.5% AT THE END OF FY 18: The Gross Non-Performing Assets (GNPAs) have continued to rise. The bad loans have surged to a staggering 11.6% of the total advances at the end of FY 2018, up from 9.6% in FY 2017. Public Sector Banks are badly hit by this bad loan scenario with 14.5% of their loans turning bad at the end of FY 2018.

SNIPPETS- 07/07/2018

1. “PROJECT SASHAKT”—BANKS GIVE SHAPE TO INTER-CREDITOR PACT FOR BAD DEBTS: Banks have finalised an inter-creditor agreement and are working on details of an Asset Management Company as part of Five-pronged mechanism they have identified to resolve the mounting issue of Non-Performing Assets under “ Project-Sashakt”. Under “Project Sashakt”, financial institutions will enter into an inter-creditor agreement to authorise the lead bank to implement a resolution within 180 days. The agreement is the base for the Bank-Led Resolution Approach (BLRA) for loans between Rs. 50 – 500 crores. The inter- creditor agreement will be a legal document and enforceable in any court of law.

2. RBI REGULATIONS ON AUDITORS PUT BANKS IN A SPOT: Reserve Bank of India has come out with a framework for statutory auditors and has issued certain regulations around auditors and in case of errant auditors, they can be barred from auditing. Now several banks and NBFCs have approached PwC and other big audit firms seeking clarity on likely implications of a clause that could bar audit firms accused of irregularities from servicing financial institutions.

3. SBI CARD LAUNCHES ARTIFICIAL INTELLIGENCE POWERED VIRTUAL ASSISTANT ELECTRONIC LIVE ASSISTANT: SBI cards, the country’s second largest credit card issuer has announced the launch of “ELA” (Electronic Live Assistant), a virtual assistant for customer support and services. Driven by Artificial intelligence and Machine Learning, ELA is designed to enhance customer experience by providing relevant and instant responses to customer queries.

4. RBI GRANTS LICENCE TO BANK OF CHINA TO SET UP BRANCHES IN INDIA: The Reserve Bank of India has issued licence to Bank of China to launch operations in India. Bank of China is one of the very few state owned commercial banks in China. India and China are focussing on expanding their economic ties notwithstanding differences on several sticky issues.

5. UNSECURED BANK LOANS RISE FOUR –TIMES IN LAST THREE YEARS: Banks’ unsecured loan book has grown four times in the bank credit during the past three years, helped by a rise in discretionary spending, technology-driven disbursements and lower interest rates. Between 2015 and 2018, unsecured credit, comprising of personal, MSME and credit card loans have grown on a compounded annual growth rate of nearly 27% which is almost four times growth in bank credit.

6. PSU BANKS TO SET UP AMCs FOR LOAN RESOLUTION: Public Sector Banks will take lead in setting up an Asset Management Company (AMC) for resolution of loans above Rs. 500 crore as part of further efforts aimed at rescuing bad assets and restoring lenders to health so that they can focus on further credit growth to push forward India’s ongoing economic recovery. The initiative will be run by the banks without any government support, will be in harmony with all current laws and will function as an additional supporting element to the Insolvency and Bankruptcy Code (IBC) process.

7. COMPANY DIRECTORS’ TO FURNISH PERSONAL NUMBERS FOR VERIFICATION: In a significant move, the Corporate Affairs Ministry has decided to carry out KYC (Know Your Customer) process for all Directors of a Company, including those who have been disqualified. The Directors will have to share their personal mobile numbers and E-mail ids with the government as part of verifying their credentials, amid continuing efforts to weed out shell companies.

SNIPPETS- 30/06/2018

1.RBI TO PUNISH AUDITORS FOOR LAPSES IN BANK AUDIT: Reserve Bank of India has said it would punish statutory auditors for lapses in conducting Bank’s audit. It may even bar the said auditors from taking fresh audit assignment. RBI said the quantum of punishment will depend on the magnitude of the divergence from prescribed norms and the auditors would be provided sufficient hearing before any such action is taken. Their role has recently been called into question for lapses in identifying bad loans. RBI had found significant divergence in asset classification in almost all the leading banks.

2. PNB LAUNCHES CENTRALIZED LOAN PROCESSING CENTRE (CLPC): Punjab National Bank launched its first CLPC as part of its efforts to strengthen internal system and process. Many steps have been taken by the bank under its “Mission Parivartan”, an initiative to push the bank forward on its transformation journey. It has also launched a new initiative called Reach In Reach Out (RIRO). RIRO and CLPC are efforts to improve its credit quality and ensure faster processing of loans. The bank said this will improve turn-around-time and will also serve as a strong communication tool with customers and staff. In our opinion many banks are already having their respective CLPCs and our experience says that CLPCs don’t reduce the turn-around-time but instead it delays the process.

3. GOVERNMENT REJECTS “BAD BANK” IDEA BUT OK WITH ARC: The government has rejected the “Bad Bank” idea but is ok with launching of an Asset Reconstruction Company (ARC) that will take over the state-run banks’ bad /toxic loans as it is not keen on diverting more taxpayers money towards their resolution. Big cases of loan defaults are already in the process of resolution under IBC so it will not make much sense to have a bad bank for smaller bad loans as not much value can be derived from them.

4. NEARLY 25% OF BANK LOAN BOOK HAS TURNED SOUR: As per the Financial Stability Report released by RBI, nearly 25% or one-fourth of banks loan book has turned sour and the worst is not yet over. The bi-annual report further says that lower profits could prevent banks from building cushion against unexpected losses or shocks. Bad loans of 11 PSU banks placed under PCA may worsen from 21% in March 2018 to 22.3% and six PSBs facing PCA may not be able to meet required minimum capital requirement as per the Basel norms of 9%.

5. PNB INTERNAL REPORT REVEALS LAPSES THAT LEAD TO $ 2 BILLION FRAUD BY NIRAV MODI: A 162 page report submitted by PNB internal auditors tasked with probing the fraud, lays bare lapses that go far beyond a few Branch officers. The report points out how 54 PNB officials –ranging from clerks to foreign exchange officers, and auditors to head of regional offices, allowed the fraud to be perpetuated. PNB CEO Mr. Sunil Mehta told the press that they have already suspended 21 officials and no one will be spared.

6. SAY GOOD BYE TO SHARE CERTIFICATES, YOU HAVE TIME TILL DECEMBER TO CONVERT THEM TO DEMAT FORM: About 2.3% of India’s $ 2 trillion plus market capitalisation is still held in physical stock even after two decades after Stock Exchanges went online. Holders of these physical shares in listed companies now face December 2018 deadline to convert them into dematerialised form if they have to sell or hold them.

7. NUMBER OF CREDIT CARD ACCOUNTS GREW 50% SINCE DEMONETIZATION: A CIBIL study has revealed that the number of credit card accounts following the note-ban reform in November 2016 has increased by nearly 50%.

SNIPPETS- 23/06/2018

1. MICROFINANCE LOAN CAP RAISED TO Rs. 80,000 PER BORROWER: Microfinance lenders including private banks such as Axis Bank, RBL Bank etc. have raised their cumulative micro loan cap per borrower to Rs. 80,000 from Rs. 60,000, a clear hike of 33%. This is prompted by strong demand and rise in self-employment amid poor industrial sector.

2. PUBLIC MONEY EXTREMELY SAFE IN PSU BANKS: Finance Minister Mr. Piyush Goyal has said that public money is extremely safe in state-owned banks. He was speaking against the backdrop of several recent fraud cases including the $ 2 billion PNB scam. He also said that the government is open to the question of giving more powers to RBI for effectively regulating the public sector banking.

3. 18,000 BANK BRANCHES/POST OFFICES HAVE AADHAAR FACILITY NOW: In July 2017 the Unique Identification Authority of India (UIDAI) had asked private as well as public sector banks to set up Aadhaar updation centres in at least one out of ten branches. In less than one year, the banks and post offices have set up as many as 18,000 Aadhaar centres for enrolment and updation of the biometric ID at such locations. Out of this, around 10,000 Aadhaar centres have been set up by banks and around 8,000 centres by post offices.

4. RBI REVISES THE HOUSING LOAN LIMITS UNDER PRIORITY SECTOR: With a view to bring convergence of the Priority Sector lending guidelines for housing loans with Affordable Housing Schemes, and to give a fillip to low-cost housing for Economically Weaker Sections and Low Income Groups, the housing loan limit for eligibility under priority sector lending has been raised to Rs. 35 lakhs (earlier 30 lakhs) in metropolitan centres and Rs. 25 lakhs (earlier Rs 20 lakhs) in other centres. However there is a condition that the overall cost of the dwelling unit in the metropolitan centre and other centres should not exceed Rs. 45 lakhs and Rs. 35 lakhs respectively. In a further notification, the RBI has announced that the existing family income limit of Rs. 2 lakh per annum for loans to housing for Economically Weaker Section (EWS) and Low Income Groups (LIG) stands revised to Rs. 3 lakh and Rs. 6 lakh respectively.

5. P2P LENDING COMPANIES CHANGE TRACK IN A BID TO BECOME NBFCs : Peer-to-Peer (P2P) lending companies are changing their business model as they intend to migrate to Non- Banking Finance Companies (NBFCs). After the RBI came out with new regulations for these companies, most of them had literally stopped lending. While mandating Rs. 20 million as minimum net worth, RBI had also imposed a Rs. 1 million cap for individual lending on such platforms. Now a couple of P2P companies have NBFC licence from RBI.

6. PRIORITY SECTOR LOANS HAVE LOWEST WRITE-OFFs: Write-offs by banks for priority sector loans (agriculture, MSMEs and smaller home loans) account for just 25% of the total write-offs. Rest 75% relates to big companies like working capital and project loans. As per RBI guidelines banks must lend 40% of their total advances to priority sector lending and in this, 18% must go to agriculture. During 2016-17 banks have written off Rs. 24,682 in priority sector loans and Rs. 79,580 crore in other loans.

7. INDIANS FACE 25% HIGHER RISK TO FINANCIAL FRAUDS: As per a report by Experian, a global financial information company, Indians are at a higher risk of online financial fraud. With more and more Indians becoming digitally more active the risk of frauds has increased as one in four customers becoming victims to these frauds. 24% of Indians have experienced frauds while transacting online.

SNIPPETS- 16/06/2018

1. GOVERNMENT PLANS TO FORM A LARGE PUBLIC SECTOR ASSET RECONSTRUCION COMPANY: The government is planning to set up a large Public Sector Asset Reconstruction Company (ARC), sort of a big Bad Bank. The government wants to fast track the resolution of stressed assets in the banking system. This way it can set right the PSBs’ impaired capacity to ease credit flows, especially to Medium & Small Enterprises. A committee under Sunil Mehta, Non-Executive Chairman of PNB has been asked by the government to appraise on this issue.

2. 90,000 NON-FILERS ON TAX RADAR: More than 90,000 persons who had deposited Rs. 10 lakh or more in their bank accounts during demonetization period are on the radar of Income-Tax department for not filing tax returns by March 31, 2018. Department had served notices to nearly 3 lakh persons who had deposited Rs. 10 lakh or more during the said period and of these nearly 2.1 lakh persons filed their returns by March 31, 2018. The rest will now face action.

3. RESERVE BANK OF INDIA ISSUES GUIDELINES ON LOAN SYSTEM FOR DELIVERY OF BANK CREDIT: The Reserve bank of India has issues guidelines on loan system for delivery of bank credit. According to this, the borrowers who have a total working capital limits of Rs. 150 crores and above should have at least 40% of it as Term Loan component FROM Ocober1, 2018. The same will be revised to 60% from April 1, 2019. This is a move to instil discipline among large borrowers with working capital limits.

4. GOVERNMENT TO SET UP NBFC FOR FOOD COMPANIES: The government is planning to set up a Non- Banking Finance Company (NBFC) dedicated for funding food processing industry. This NBFC will exclusively fund food processing projects. This would be named as Agro Processing Financial Institute. It will be a lending institution driven by private sector, where government will have a stake. The government will have 20% stake and soon will issue a Request For Proposal (RFP), inviting both private and foreign sector financial firms to hold the residual stake.

5. PSU BANKS’ NPA WRITE-OFFS SURGE TO 140% OVER THEIR LOSSES IN FY-18: Public Sector Banks (PSBs) have written-off Non-Performing assets (NPAs) worth Rs. 1.2 Trillion, ( Rs 1, 20,000 Crores), an amount that is nearly 1.5 times more than their total losses posted in 2017-18. This is the first time that banks have made huge writ-offs on bad loans. A write-off means the bank has made 100% provision from its earnings against the loss asset and this loss asset (NPA) is no longer a part of bank’s balance sheet.

6. BANKS MAY ASK BIG BORROWERS FOR MORE PROOF BEFORE SANCTIONING LOANS: The government may ask state-run banks to run a re-check on big borrowers with Corporate Affairs Ministry or Registrar of Companies (ROC) before sanctioning high value consortium loans. The idea is to find out if the borrower has any associated shell companies, get a fix on subsidiaries with direct or indirect beneficiaries and to determine whether there are any red flags against the prospective borrower. This follows the fraud and diversion of funds being uncovered at present, where in most of the cases it was found that the loans from banks were diverted to shell companies. State owned banks may also seek such information on their own for smaller value loans if they want a higher degree of comfort.

7. RBI MUST ACT AS AN ALERT INSPECTOR, NOT JUST OFF-SITE SURVEYOR: Reserve Bank of India Union has requested Governor Mr. Urjit Patel to monitor banks through a combination of risk-based supervision, off-site surveillance and on-site inspections of operational systems. In a written letter to the Governor, the union has suggested that the RBI should undertake random supervision of bank branches in all parts of the country periodically, possibly 10% of bank branches comprising all regions on an annual basis which will give the best result.

SNIPPETS- 09/06/2018

1.BANKS’ BAD LOANS CROSS Rs. 10 LAKH CRORE: Indian Banks’ Gross Non-Performing Assets (NPAs) stood at Rs. 10.25 lakh Crore as on 31/03/2018. As on 31/12/2017 the bad loans were Rs. 8.86 lakh Crore. That means in the last quarter of FY 2018 the pile has grown by Rs. 1.39 Lakh crore or 16% jump from December quarter which is really alarming. A break-up of NPAs shows that 21 Public Sector Banks (PSBs) have a Gross NPA of Rs 8.97 lakh crore and that of 18 private sector banks stood at Rs 1.28 lakh crore as on 31/03/2018.

2. AFFORDABLE HOME LOANS A WORRY FOR RBI: Reserve Bank of India has said that it is closely monitoring the small Housing loan segment of up to Rs. 2.00 lakh and after careful analysis of the said data, it has been observed that the level of NPAs (Bad loans) for ticket size of up to Rs. 2.00 lakh is very high and has been rising briskly. Reserve Bank has warned all banks that it will be constrained to make small ticket housing loans more expensive under the affordable housing scheme and force borrowers to pay up more money if banks don’t tighten the standards and address the rising bad loan scenario in this segment.

3. CO-OPERATIVE BANKS COULD BECOME SMALL FIANANCE BANKS: Reserve Bank of India has opened the doors for Urban Co-operative Banks (UCBs) to convert into Small Finance Banks giving them more freedom and access to open branches pan India and thus opening up a larger market for these lenders which at present are of local nature. The details of the scheme will be announced separately.

4. CAPITAL FIRST’S MERGER WITH IDFC BANK GETS RBI NOD: Reserve Bank of India has issued a No Objection Certificate for the merger of IDFC Bank and Capital First. Now IDFC Bank has to approach the shareholders and creditors of the merged companies. A clearance from NCLT is also required to clear the way for both the entities to merge. Capital First Home Finance and Capital First Securities will also merge with IDFC bank.

5. TROUBLED MSMEs GET A BREATHER FROM RBI: In a relief to Micro, Small & Medium Enterprises (MSMEs) affected by the rollout of GST, RBI has given them a temporary breather by allowing them to delay their loan repayments by 180 days without being classified as NPA. This facility will be available to all MSMEs with aggregate credit limits of up to Rs. 25 crore, irrespective of whether they are registered under GST or not. Accordingly, eligible MSME accounts, which were standard as on 31/08/2017 shall continue to be standard asset if payments due as on 01/09/2017, and falling due thereafter up to 31/12/2017 were paid not later than 180 days from their original due date.

6. PSBs’ FY18 LOSSES HAVE WIPED OUT GOVERNMENT’S $ 13 BILLION INFUSIONS: Losses by state run banks have entirely wiped out $ 13 billion ( Rs 87,100 Crores) capital infusion by the government and the situation is not likely to improve in the current fiscal as well. Rating agency Fitch has said that the big losses will pressure the banks viability rating.

7. BANKS PLAN TO SELL Rs. 28,000 CRORE NPAs: Seven banks including the big brothers like SBI and ICICI Bank are in the process of selling their bad loan portfolio totalling to Rs. 28,000 crore to asset reconstruction companies in the coming weeks without waiting for the resolutions. SBI and ICICI bank have already disclosed their list of assets that would be put on sale and other banks are in final stages. The largest share is that of IDBI bank which has identified 30 accounts with Rs. 21,399 crore. SBI has identified 12 accounts worth Rs. 1,325 crore while ICICI bank has identified 16 accounts amounting to Rs. 2,330 crore.

8. AXIS BANK LAUNCHES NEW CHAT BOT SERVICE: Axis bank has launched a virtual assistant for its customers armed with artificial intelligence and machine learning algorithms and named it “AXIS AHA” The chatbot is designed to provide relevant contextual responses to customer queries and even help them make transactions on the chat window itself.

SNIPPETS- 02/06/2018

1. INDIA’S STRESSED AND DEBT-LADEN BANKS GET CHEAP OVERSEAS LOANS: Indian Banks are getting syndicated loans at a very low interest rate from international lenders. Indian banks will have cleaner balance sheets and stronger credit portfolios in the long run as a result of RBI’s multi-year push to recognise bad assets (Non-Performing assets) more accurately in Indian banking system. Axis Bank, State Bank of India and IndusInd Bank Ltd are some of the banks which are getting cheaper funds in international market as confidence in World’s fastest growing economy increases.

2. GOVERNMENT LOOKS AT WAYS TO APPOINT TOP OFFICIALS AT ALLAHABAD BANK AND PNB: The government is exploring ways to appoint top executives in Allahabad Bank and Punjab National Bank (PNB) after existing executives were divested of their official charge, pending investigations in to Nirav Modi fraud case. The managing Director of Allahabad Bank along with two Executive Directors of PNB was divested of all powers recently. Since these executives have not been removed from the service but have been just divested from their official powers, it is technically not possible for the government to appoint fresh MD and ED for the said posts. The government is looking at all options including the removal under the Banking Regulation Act.

3. UIDAI GIVES BREATHER TO BANKS: Unique Identification Authority of India (UIDAI) had instructed each of the Indian Banks to ensure that 10% of their branches to have Aadhaar enrolment centres and these centres had to meet the target of 16 daily enrolments or updation. As per the new circular, the stipulated bank branches with Aadhaar facility will have to ensure at least 8 enrolments or updation each day from July 1, 2018. These targets will then be raised to 12 per day from October 1, 2018 and to 16 per day from January 1, 2019 onwards.

4. NPA LADEN UNITED BANK OF INDIA TO CAP LOANS TO A SINGLE BORROWER: Kolkata based United Bank of India (UBI), which has a gross Non-Performing assets (NPA) ratio of 24.1% will cap corporate loans to a single borrower at Rs. 150 crore. Because of the deteriorating asset quality, the bank has allowed its corporate loan book to shrink by around to Rs. 6,000 crore during FY 2017-18. The share of corporate loans in the bank’s total assets is at 28% now. It will be brought down to 25% in this fiscal.

5. GOVERNMENT MAY ASK LARGE BANKS TO BUY SMALL BANKS’ RISKIER LOANS: The government may ask loss-making public sector banks to sell their riskier loans to their larger peers, such as SBI so as to reduce the capital requirement of public sector banks that have been hit hard by the latest norms of RBI on provisioning for bad debts. Riskier loans are those loans given to companies with weak finance. This is because the government has ruled out further fund infusion beyond Rs. 65,000 crore that was announced as part of the Rs. 2.1 lakh crore re-capitalisation plans. Further, these lenders are being pursued to aggressively sell non-core holdings including stake in mutual funds and insurance arms.

6. 37 BANKS SEE Rs. 1.3 TRILLION JUMP IN GROSS NPA IN QUARTER 4: Weighed down by RBI’s new rules on restructured assets, domestic banks ( both public and private) have added over 1.3 trillion in gross Non-Performing Assets (NPAs) in the fourth quarter ended March 2018. Provisions and contingencies set aside for these NPAs also rose to Rs. 1.4 trillion in the same period.

7. MHA LAUNCHES ONLINE ANALYTICAL TOOL TO MONITOR FOREIGN FUNDING OF NGOs: Ministry of Home Affairs (MHA) has launched a new online analytical tool to facilitate closer monitoring of the flow and utilisation of foreign contributions received by NGOs and other organisations registered under Foreign Contribution (Regulation) Act 2010 (FCRA).There are hundreds and thousands of transactions annually which can be monitored effectively through this tool. This will help the government to regulate the acceptance and utilisation of foreign contributions by these NGOs.

SNIPPETS- 26/05/2018

1. GOVERNMENT BEGINS WORK ON MERGERS OF INSURANCE COMPANIES: The Finance Ministry has started the process for appointing a consultant to take forward the merger of three general insurance companies – National Insurance Company, United India Insurance Company and Oriental India Insurance. The consultants thus appointed will prepare a road map and then the government will invite bids. But merger and listing would not be possible in this fiscal as mergers of such huge scales take a long time.

2. INDIA NOW IS THE SIXTH WEALTHIEST COUNTRY IN THE WORLD: According to a report by Afr-Asia Bank Global wealth Migration Review, India is the sixth wealthiest country in the World with a total wealth of $ 8,230 billion. United States of America is the wealthiest country in the world with a total wealth of $ 62,584 billion. China stood second with $ 24,803 billion and Japan was at the third position with $ 19,522 billion. Other countries in the top 10 wealthiest list include United Kingdom, Germany, Australia, Canada France and Italy.

3. FINANCE MINISTRY TIES UP WITH 40 ENTITIES TO EXTEND MUDRA FUNDING: The Finance Ministry has announced that it has tied up with 40 entities including Flipkart, Swiggy, Patanjali, Make My trip, Zomato Meru cab, Muthoot, Edelweiss, Amazon, Ola, Big Basket and Amul etc, for extending loans to small entrepreneurs under Mudra Scheme. Under the scheme these companies will identify small entrepreneurs who need loans and underwrite them and will extend loans to them under the Mudra Scheme.

4. OVER 2,100 COMPANIES SETTLE Rs 83,000 CRORE BANK DUES: The fear of losing control over their companies and assets has prompted promoters, who have defaulted on repayment of loans to banks, to settle their dues of around Rs. 83,000 crores involving around 2,100 companies before action was initiated under the newly enacted Insolvency & Bankruptcy Code ( IBC).

5. HDFC BANK ACHIEVES Rs. 1,000 CRORE THROUGH DIGITAL LENDING: HDFC Bank has clocked Rs. 1,000 crore per month through digital platforms across products and expects it to go up further with its launch of an online platform for loan against mutual funds. The bank has launched this new product offering loan against mutual funds in association with CAMS, which controls 65% of market share. The bank has an approved credit limit of Rs. 10,000 crore on loans against mutual funds and insurance policies. The digital alternative will reduce the time taken to pass the loan to just three minutes as against the current the current time of up to 6 days.

6. DIRECT TAX COLLECTION FOR FY 2017-18 SEES 19.3% GROWTH: The government’s direct tax collection has gone up by 19.3% to 6.95 lakh crore. Net Direct tax collected so far represents 69.2% of the total revised direct taxes. Gross collections (before adjusting for refunds) have increased by 13.3% to Rs 8.21 lakh crore during April 2017 to January 2018.

7. SBI REPORTS RECORD LOSS OF Rs. 7,718 CRORE IN MARCH QUARTER: State Bank of India reported a loss of Rs. 7,718 crore ($ 1.1 billion) in January-March quarter of FY 2017-18. This is because of the provisions made for bad loans after a change in banking regulations. SBI had posted a loss of Rs. 2,416 in December quarter.

8. INTEREST ON PROVIDENT FUND FIXED AT 8.55% FOR 2017-18: The government has fixed 8.55% as the rate of interest for PF accounts for 017-18, the lowest rate since 2012-13 fiscal. Around 5 crore PF account holders will be affected by this. The Employees’ Provident Fund Organisation (EPFO) had provided 8.65% interest for 2016-17, 8.8% in 2015-16 and 8.75% each in 2013-14 and 2014-15. In 2012-13 it was 8.5% , thus at 8.55% for 2017-18, it is the lowest since FY 2012-13.

SNIPPETS- 19/05/2018

1. PNB POSTS BIGGEST EVER QUARTERLY LOSS: Punjab National Bank (PNB) reported Rs 13,416 crore loss in the fourth quarter of 2017-18 as against a profit of Rs 262 crore in the same period last year. As a result of this, PNB posted a consolidated net loss of Rs 12,282.82 crores against a profit of Rs 1.324 crores last year. The significant reason for this huge loss was the rise in provisions to Rs. 20,353.51 crore in quarter ended March 2018. PNB’s Non-Performing Assets grew to a whopping 86,620 crore in the quarter and the gross NPA ratio rose to 18.38%.

2. RBI ISSUES FINAL NORMS ON NET STABLE FUNDING RATIO (NSFR): RBI has issued final guidelines on Net Stable Funding Ratio (NSFR). The concept of NSFR emerged in the aftermath of global financial crisis proposed by Basel Committee on Banking Supervision to make banks more resilient. NSFR ensures banks have sufficient stable sources of funding to finance their activities over long run. The ratio can be defined as the amount of available stable funding (ASF) in relation to the amount of required stable funding (RSF). ASF is the portion of capital and liabilities expected to be realisable over a year.

3. SBI CARD BASE GROWS 20% IN 6 MONTHS: SBI card has been increasing its card numbers at a compounded annual growth rate of 40%. Small cities are driving the growth rate for SBI Card. It took SBI cards one year to increase the card base from 4 million in September 2016 to 5 million in September 2017. But since then, the card base has grown to 6.3 million in March 2018, an increase of 1.3 million cards in 6 months. The market share of SBI cards in number of cards is now 16%.

4. COMBINED FOURTH QUARTER LOSS OF 4 PSU BANKS IS $1.74 BILLION: Four Public Sector Banks reported huge losses in the fourth quarter of FY 2017-18 which amounts to a combined net loss of $ 1.74 billion ( Rupees 117.29 billion). This is due to a jump in bad loan provisioning following tightening of the RBI rules in respect of NPAs. Out of the four banks, Canara Bank posted a net loss of Rs.48.6 billion, Allahabad Bank reported a net loss of Rs. 35.10 billion, UCO Bank Rs. 21.34 billion and Dena Bank Rs. 12.25 billion Net loss.

5. NO GST FOR FREE BANKING SERVICES, INCLUDING ATM WITHDRAWAL: Free banking services like cheque book issuance, ATM withdrawals are likely to remain out of the ambit of GST. The revenue department is likely to instruct the financial services department that GST will not be levied on free banking services. The Indian Banks Association (IBA) on behalf of the management of all banks too had made representation to tax authorities.

6. ALLAHABAD BANK BOARD DIVESTS ITS CEO FROM FUNCTIONAL POWERS: After the government initiated removal of Allahabad Bank Chief Executive Officer (CEO) Ms Usha Ananthasubramaninan following a CBI charge sheet in Nirav Modi scam, the bank’s board divested her of all her functional responsibilities. After similar government action against 2 Executives of PNB, K V Brahmaji Rao and Sanjiv Sharan, the PNB board too has divested them of their financial and executive powers.

7. RBI PUTS FRESH LENDING RESTRICTIONS ON ALLAHABAD BANK: Reserve bank of India has placed additional restrictions on Allahabad Bank, which is already under Prompt Corrective Action (PCA) since January this year. RBI has debarred the bank from high risk lending and raising high cost deposits. The RBI has also restricted the bank from creation of non-banking assets and has advised it to restrict from accessing or renewing wholesale or costly deposits. The bank’s board has already taken note of the same.

8. CENTRE MAY ASK RBI TO EASE PCA FRAMEWORK: The government may ask RBI to ease the Prompt Corrective Action (PCA) framework so that a complete restriction on fresh lending does not affect credit flow to business, particularly to Small and Medium Enterprises. This was decided after the Ministry held a review meeting with 11 PSU banks which are under PCA.

SNIPPETS- 12/05/2018

1. HDFC BANK POSTS RECORD PROFIT OF Rs 4,799 CRORE FOR Q4: HDFC Bank Ltd posted a record 4Th quarter net profit of Rs. 4,799 .28 crores, a 20.27% year-on-year growth. This is also driven by stable asset quality. Net Interest Income (NII) increased to 17.70% and Asset Quality remained stable, as percentage of gross Non-Performing assets (NPAs) were at 1.30% against 1.29% as compared to last year. The consolidated net profit for the year ended March 2018 was Rs. 18,510 crores, up by 21.4% as compared to last year. When most of the banks (both public and private sector) are reeling under the bad loans scenario, HDFC Bank has come out successfully in these difficult times as well because of its business mantra of “Retail Banking” all along.

2. BANKS UNDER TAXMAN SCANNER FOR GST REFUND ON ATM TRANSACTIONS: The Indirect Tax Department is scrutinising the 100% input GST credit availed by most of the banks on taxes paid by their ATM vendors. The scrutiny started when banks started claiming 100% input tax credit on the amount paid to ATM vendors who are responsible for maintenance and cash supply to the machines. These vendors charge per transaction and add GST to the bills. The tax officials believe that since banks don’t charge on many ATM transactions which are free to customers, 100% input credit cannot be claimed by them.

3. LENDERS FIND RESCUE PLAN FOR STRESSED POWER ASSETS: Lenders to the power sector led by SBI have decided to float a fund to take over 14 stressed power plants. The decision is aimed to prevent power generation plants from going in to liquidation, receiving better valuations and securing speedy resolution. It was decided that lenders will have to make investments according to their share of exposure in each power plant.

4. GOVERNMENT LIKELY TO WITHDRAW TAX NOTICE ON FREE BANKING SERVICES: The tax department is likely to withdraw the show-cause notice issued to several banks asking them to pay service tax on “free services” provided to the customer. Following the Finance Ministry’s instructions, the Department of Financial Services (DFS) has presented its views and is likely to withdraw the notice.

5. GST DIGITAL DISCOUNTS MAY COST Rs. 15,000 CRORES TO THE GOVERNMENT: The government has estimated that the centre and states may lose up to Rs. 15,000 crores by offering discounts of up to Rs.100 on GST for every digital transaction, including those done using credit and debit cards or mobile wallets. This figure is arrived at, based on the average ticket size of each transaction being Rs. 1,400 and a 2% discount being proposed on it.

6. PNB BANKS ON ARTIFICIAL INTELLIGENCE TO CHECK FRAUDS: Punjab National Bank has said it plans to rely on Artificial Intelligence (AI) for reconciliation of accounts and incorporate analytics for improving audit systems as it seeks to clean up the process. The bank has also discussed its road map with a target of reaching a total business of Rs. 12,000 lakh crore.

7. MONTHLY GST RETURN SYSTEM TO BE IMPLEMENTED: The GST council has finally approved the single monthly return with an aim to boost collections and compliance. The new system is scheduled to be implemented in next six months. Though the council has approved the new system but the software will take six months to get fully operationalized. However the new system will be implemented in 3 phases.

8. NBFCs HIRE TALENT FROM BANKING INDUSTRY AMID RISING GROWTH: Non-Banking Financial Companies (NBFCs) are recruiting candidates from banking industry. According to industry estimates, 60 to 70-% of the NBFCs hiring pertains to the candidates from banking industry. While banks are struggling to come out of bad loan mess, NBFCs are in a comfortable position. By hiring these candidates from banking industry they tend to get experienced hands.

SNIPPETS- 05/05/2018

1. TCS IS THE FIRST INDIAN IT COMPANY TO TOUCH 100 BILLION DOLLAR MARKET VALUE: Tata Consultancy Service (TCS) is the first Indian IT Company to touch 100 billion dollar (Rs 6.49 lakh crores) in market capitalization. Reliance Industries (Energy-Telecom) is the only other Indian Company to reach $100 billion mark in the year 2007. It is also heartening to note that TCS gave its employees 120% payout of target variable pay (bonus).

2. GROWTH IN BANK DEPOSITS FALLS TO FIVE DECADE LOW: Bank Deposit growth fell to a five decade low in fiscal year ended March 2018. Data from RBI website shows aggregate deposits in the banking system grew a mere 6.7% in 2017-18, the lowest since fiscal year 1963. There was huge influx of bank deposits during demonetization but now due to low interest rates, people have started saving in mutual funds and insurance which has eroded banking competitiveness.

3. NPAs HIT MONETARY POLICY TRANSMISSION IN INDIA: Bad loans have impaired Monetary Policy transmission in India as Banks were unable to increase their lending rates and protect Net Interest Margin (NIM—means the difference between the yield the bank earns on loans and that it pays on deposits). This is as per a research report by RBI. The report says that as gross NPAs of banks rose, they were unable to increase interest rates due to competitive pressures. Gross NPAs in banks rose from 3.4% in 2013 to 9.9% in 2017.

4. PNB TIGHTENS OFF-SITE CREDIT MONITORING RULES TO AVOID FURTHER FRAUDS: Punjab National Bank has tightened bank’s credit underwriting norms and has put in place an off-site monitoring to identify risks. The process has been divided into four components with different employees focussed on sourcing, appraisal, processing, documentation, disbursal and recovery. Internal Audit process has been strengthened to give higher weightage to off-site credit monitoring mechanism.

5. REGIONAL RURAL BANK EMPLOYEES TO GET PENSION AT PAR WITH NATIONALISED BANKS: A Supreme Court verdict has paved way for Regional Rural Bank (RRB) employees to draw pension at par with nationalised banks. About 27,000 RRB employees are set to gain from this verdict. Currently there are 56 RRBs spread across the country with a work force of 95,000.

6. GST MONTHLY REVENUE TOUCHES Rs. 1 LAKH CRORE: The GST revenue for the month of April 2018 has crossed Rs. 1 lakh crore. This is for the first time that GST collections are crossing the Rs. 1 lakh crore mark since GST was rolled out. The Finance Ministry has announced that the total Gross GST revenue collected in April 2018 is Rs. 1,03,458 Crore.

7. NBFCs TOOK 40% OF ALL NEW CORPORATE LOANS BY BANKS: Loans to Non-Banking Financial Companies (NBFCs) accounted for nearly 40% of the total new corporate loans disbursed by banks in financial year 2018. The quantum of increase of loans to corporate sector was Rs. 2.68 Lakh Crore of which Rs. 1.05 lakh Crore (around 39.3%) was availed by NBFCs.

8. GST COUNCIL MAY SOON ANNOUNCE CASH BACKS TO BUSINESSES FOR DIGITAL TRANSACTIONS: The GST council may soon announce cash backs to businesses and price benefits to consumers who are paying through digital mode. Consumers paying through digital mode would be offered a discount over maximum retail price. Businesses will get cash back based on the quantum of turnover through digital mode.

SNIPPETS- 28/04/2018

1. TAX DEMAND AGAINST FREE SERVICES PROVIDED BY BANKS: The Director General of Goods & Services Tax Intelligence has sent notices to many banks to pay taxes on free or bundled services (free services provided to customers who maintain balance in the account) provided by the banks to the account holders. The total demand as per ET report could exceed Rs. 6,000 crore. The demand is retrospective with a 12% service tax claimed since 2012, 18% interest on the amount and a 100% penalty. The notice has shocked the banking industry which is already reeling under an enormous amount of bad loans. The Indian Banks’ Association is planning to appeal against the arbitrary tax notice.

2. DEPOSITS IN JAN-DHAN ACCOUNTS CROSS Rs. 80,000 CRORE: Total deposits in Jan Dhan accounts crossed Rs. 80,000 crore mark with more people joining the flagship financial inclusion programme. The latest report of the World Bank titled “Global-Findex Report 2017” released last week cited the success story of the Jan Dhan Yojana. Deposits under these accounts are on the rise after the demonetization exercise.

3. SBI TO SAVE Rs. 30 CRORE EVERY YEAR FROM WIND, SOLAR POWER INSTALLATIONS: State Bank of India has announced that it has saved Rs. 125 crore in the last 8 years by installing windmills and many solar power units and expects to save Rs. 30 crore annually through its “renewable energy” investments. The bank has installed 10 windmills with a capacity of 1.5 MW each, of which three are in Tamil Nadu, six in Maharashtra and one in Gujarat. It has also invested in solar power and now possesses a capacity of 21.23 MW in renewable power sources. Energy generated through these renewable sources is solely for captive use by the bank’s various offices and branches across the country, making them free of any carbon emission.

4. PNB TO HIRE DETECTIVE AGENCIES TO LOCATE UNTRACEABLE BORROWERS: Fraud hit Punjab National bank has invited applications for empanelment of detective agencies to locate its untraceable borrowers as it looks to strengthen and supplement its efforts to recover bad loans which surged to Rs. 57,519 crore as on 31/12/2017. All NPA accounts(Sub-standard, Doubtful and loss assets category) would be allocated to detective agencies thus appointed for gathering information.

5. CREDIT GROWTH OUTSTRIPS DEPOSITS IN FY’18: Banks have ended Financial Year 2018 (FY’18) with more credit growth than the deposits. During this period credit growth was at Rs. 8,29,187 crore, while the Deposit growth was Rs. 7,28,765 crore. The incremental credit-deposit (CD) ratio for FY’18 works out to 114%. But what is alarming is during the last fortnight of FY’18, banks seem to have gone all out to disburse loans in a hurry. Credit disbursal during this last fortnight jumped by Rs. 2,79,361 crore, which almost amounts to 34% of the total credit disbursed in FY’18. In our opinion, this kind of last minute disbursals just to meet the year end targets may further lead to more deterioration in quality of credit.

6. I-T DEPARTMENT SAVES Rs. 977 CRORE IN 5 YEARS ON POSTAGE AFTER RISE IN ONLINE COMMUNICATION: The Income Tax Department has said that it has saved up to Rs. 977 crore over the last 5 years due to the rise in online communications or E-mails. The department has saved on postage cost due to the increase in online communications. Online communication of the department has more than doubled since 2013-14.

SNIPPETS- 21/04/2018

1. KOTAK MAHINDRA BANK BECOMES SECOND MOST VALUED BANK: Kotak Mahindra Bank Ltd pipped State Bank of India to become India’s second most valued bank after HDFC Bank in terms of market capitalisation. Data from BSE shows that Kotak Mahindra Bank now has a market capitalisation of Rs. 2,22,970 crores where as SBI’s Market cap is Rs. 2,22,043 crores. HDFC remains the country’s most valued bank with a market cap of Rs. 5.04 lakh crore.

2. LIC PROFIT BOOKING RISES TO Rs. 25,000 CRORE IN FINANCIAL YEAR 2018: Life Insurance Corporation of India (LIC) has booked record equity trading profits of Rs. 25,000 crore in 2017-18, up from Rs. 19,000 crore during 2016-17. LIC’s record profit booking is a positive sign for market and this means the insurer now will be able to announce better bonus to its policy holders and pay better dividends to the government. LIC will also be in a better position to pump in more funds in to the market.

3. AS BANKS SHY AWAY FROM EDUCATION LOANS, NBFC’s SEE A LUCRATIVE OPPORTUNITY: While public sector banks are facing high accretion levels of Non-Performing Assets (NPAs) in the education loans, leading to a slowdown in education loans in PSBs, Non- Banking Finance Companies (NBFCs) are expanding their education loan books. Over the last few years many standalone education loan NBFCs have come up, and many of them are experimenting new products as well, by adopting student-led approach which includes an overall screening of students, these NBFCs are redefining the norms of education loan lending.

4. E-WAY BILLS HIT TRUCK DISPATCHES, INTER-STATE GOODS MOVEMENT DOWN BY 15%: By introducing the E-way Bill concept in GST, truck movement is becoming more difficult. Because of this, dispatches by Road transport under GST were almost down by 15% in the first 15 days of E-way bill mechanism. In our opinion these are initial teething problems which will become normal in days to come.

5. PSBs FAILING TO RECOVER BAD LOANS: Public Sector Banks are having lot of difficulty in recovering bad loans. The recovery rate in NPAs which were written off is declining. As per a RBI report, 90% of written off loans could not be recovered during the period 2014-15 to 2017-18. The worst performer is UCO bank, which had written off Rs. 6,087 crore during the above mentioned period, has failed to recover a single rupee.

6. ICICI BANK LAUNCHES DIGITAL FORM FOR OPENING CURRENT ACCOUNT: ICICI Bank has introduced a “Digital form” which will help open current account in a few hours. The bank captures the information about the customer and the business digitally and verifies KYC documents in real-time at the premise of the customer. This is for the first time that any bank has introduced digital format for opening current account and as per the bank it will help in “ease of doing business” and help increase the bank’s market share.

7. INCOME TAX DEPARTMENT WARNS AGAINST TAX EVASION BY SALRAIED EMPLOYEES: The I-T Department has cautioned salaried tax payers against under-reporting their income or inflating their deductions in assessment year 2018-19. It has also warned intermediaries like chartered accountants and other consultants against abetting such tax evasion. Any infractions will invite action under various provisions of Income Tax Act. The I-T Department will also ask their employer to take action against such erring employees.

SNIPPETS- 14/04/2018

1. BANK OF BARODA SLAPPED WITH Rs. 9 CRORE FINE OVER REMITTANCE SCAM: The Financial Intelligence Unit (FIU) has slapped Rs. 9 crore penalty on Bank of Baroda for failing to adhere to Anti-money Laundering norms and not having an effective system of reporting suspicious transactions linked to the Rs. 6,000 crore scam in Delhi based branch.

2. REGIONAL RURAL BANKS COME UNDER PROMPT CORRECTIVE ACTION PLANS: Prompt Corrective Action (PCA) framework will also be applicable to Regional rural Banks (RRBs). The National Bank for Agriculture & Rural Development (NABARD), which supervises RRBs, has directed them to initiate self-corrective action plans based on parameters such as capital adequacy, asset quality and profitability which largely is based on the framework for bigger commercial banks. Accordingly, RRBs will also slow down their business if their capital adequacy falls below 9%, net non-performing assets rises over 10% of total advances and return on assets falls below 0.25%.

3. SBI AND PNB PUT 15 NON-PERFORMING ASSETS WORTH Rs. 1,063 CRORE FOR SALE: Leading public sector banks, State Bank of India and Punjab National Bank have put their 15 Non- Performing Assets worth Rs. 1,063 crores for sale. They will be conducting the E-Auction of the said assets on 20 Th April.

4. START-UP INVESTORS MUST DISCLOSE DEAL VALUATIONS IN TAX RETURNS: Promoters and Investors in new age start-ups can no longer expect to make easy profits from any exits without paying taxes on them. The Income Tax Department has introduced new disclosure norms in the latest edition of I-T Return forms which requires the Individual tax payer to provide the fair value of the unlisted shares and disclose the full value of the consideration received or receivable in respect of unquoted shares sold by them during the year. This norm is included to ensure that promoters and investors disclose the information correctly.

5. 5 STATES ACCOUNT FOR 61% OF E-WAY BILL GENERATION : The 5 states, Gujarat, Uttar Pradesh, Telangana, Kerala and Andhra Pradesh have accounted for 61% of the inter-state E- way bill generation. The Electronic Bill or E-bill has become mandatory for movement of goods valued over Rs. 50,000 from one state to the other from 1 ST April. These 5 states have emerged as the leaders in generating E-way bills and is an example for other states to follow.

6. BANKS CANNOT DENY PENSION PAYMENT FOR LACK OF AADHAAR: There is good news for senior citizen who are drawing their monthly pension. In a major relief to pensioners, Employees Provident Fund Organization (EPFO) has asked all the pension-disbursing banks not to turn away pensioners for want of Aadhaar. EPFO has issued circular to heads of all pension disbursing banks, instructing them to provide with alternate options of identification in cases where the pensioner is unable to provide Aadhaar proof.

7. CANTEEN SERVIVCES TO EMPLOYEES WILL ATTRACT GST: Henceforth providing canteen meals to its staff for a price will attract GST. According to a decision of the Authority for Advance Taxes, Recovery of food expenses from the employees for canteen services provided by the employer would come under the definition of outward supply as defined under the GST Act 2017.

SNIPPETS- 07/04/2018

1. PSBs MADE Rs. 3.79 LAKH CRORE PROVISIONS FOR STRESSED LOANS BETWEEN MARCH 2014 TO JUNE 2017: Due to the Asset Quality Review and transparent recognition of restructured loans as Non-Performing Assets (NPAs), the Public Sector Banks (PSBs) gross NPAs increased by over Rs. 4,54,000 crore between March 2014 and June 2017. As a result of this, PSBs made upfront provisions of Rs. 3.79 lakh crore during this period. This is nearly twice the provisions made by these banks in the preceding 10 years.

2. RBI BANS BITCOINS, OTHER VIRTUAL CURRENCIES AND PROHIBITS BANKS TO DEAL WITH THEM: Reserve Bank of India has barred all banks and financial institutions from dealing with virtual currencies including Bitcoin and said that it was time and again warning the users of virtual currencies regarding the risks associated with it.

3. RBI GIVES PROVISIONING RELIEF TO STRESSED BANKS FOR LOAN ACCOUNTS UNDERGOING BANKRUPTCY RESOLUTION: The Reserve Bank of India has temporarily relaxed provisioning norms for lenders in case of defaulters facing bankruptcy resolution. This move could give a temporary boost to their financial results for FY 2017-18. Provisions for accounts referred to the National Company Law Tribunal ( NCLT) have been reduced to 40% at the end of March 2018 for secured loans. However these provisions will move back to 50% at the end of June’18 quarter.

4. INDUSIND BANK CUSTOMERS WILL SOON SEE TRANSACTIONS ON WHATSAPP: IndusInd Bank has announced that its customers will soon be able to see their transactions on WhatsApp and also converse with the bank through a dedicated number. This message service on WhatsApp will be rolled out to customers in a phased manner. There will be a two-way communication for queries raised and it will also provide basic banking services like checking balance, mini statement and updation of Aadhaar through WhatsApp etc.

5. TAX-FREE GRATUITY CEILING RAISED TO Rs. 20 LAKH: The government has notified doubling of the limit of tax-free gratuity to Rs. 20 lakh. This has been now extended to private sector as well. The notification follows changes in in the payment of Gratuity Act which empowers the government to fix the ceiling of the retirement benefit through an executive order.

6. INCOME TAX RETURNS SURGE 26% IN 2017-18: The numbers of new income tax filers increased by nearly a crore in 2017-18. Now the total has touched to 6.84 files which is 26% jump from previous year. The higher filings have enabled the government to meet the direct tax collection target for the financial year.

7. NEW ITR FORMS SEEK MORE INFORMATION: New Income Tax return forms (ITR Forms) notified for FY 2018-19 seek more details from individual tax payers about their salary structure and income from property. For small businesses it is now mandatory to report their GST identification number and turnover reported under GST. The forms give Non-Resident Indians (NRIs) some relief as they can now provide details of their foreign bank accounts to claim credit or refund.

8. WORKING CAPITAL LIMITS (CASH CREDIT & OVERDRAFT LIMITS) NOW COME WITH WITHDRAWAL COMMITMENT AND FEES: The Reserve Bank of India on Thursday tightened norms for firms who use bank’s cash credit and overdraft facilities for their working capital needs. Now the firms/companies will have to pay fees and commit on the amount of usage of funds in the sanctioned limits. This has been done to help banks to shore up their treasuries to handle surplus funds. From now on the borrowers will have to stipulate minimum level of usage of funds as “loan component” in fund based limits. This will promote better usage of funds and greater credit discipline.

SNIPPETS- 31/03/2018

1. BUSINESSES WITH “NIL” TAX LIABILITY MAY GET TO FILE GST RETURNS BI-ANNUALLY: Business entities having zero tax liability for 6 consecutive months under GST may get relief of filing “NIL” GST returns twice a year. The said proposal is being sanctioned by GST council and the same will be implemented soon. According to a recent data, nearly 40% of GST return files have “NIL” tax liability and henceforth these entities need not file monthly tax returns.

2. GUARANTEES OFFERED BY BANKS OUTSIDE INDIA TOUCH 1.95 LAKH CRORE: The Non-Fund exposure (Guarantees, LOUs, and Foreign Exchange Contracts) of banks which fall under the category of Contingent liability has drawn ample attention after the Nirav Modi LOU Scam in PNB. As per the RBI data, out of the total contingent liabilities, Guarantees outside India by all scheduled commercial banks have grown at an annual growth rate of 21% since 2004-05. The total guarantees outside India stood at 1.95 lakh crore in 2016-17.

3. IBC PANEL EASES INSOLVENCY RULES FOR MSMEs: The Insolvency & Bankruptcy Code (IBC) review panel has called for sweeping changes in the law aimed at easing insolvency rules for Micro Small and Medium Enterprises (MSMEs). The committee has proposed that the promoters of MSMEs who are not termed as wilful defaulters should be allowed to bid for the assets of their companies during insolvency process.

4. WORRIED BY IDBI BANK’S POOR HEALTH, RBI WRITES TO FINANCE MINISTRY: The Reserve Bank of India has written to the Finance Ministry expressing concerns over the poor financial position of IDBI Bank and has called on the government to take remedial steps. The letter points out several shortcomings, including the recognition of non-performing assets. RBI says that it has found out during their inspection that the bank’s mechanism for identifying bad loans is also deficient. And having said that, RBI also adds that the Bank’s Non-performing assets could be higher than what has been reported so far.

5. PNB APPROVES PAYMENT TO 7 BANKS OVER FRAUDULENT LOUs: Punjab National bank has announced that it will make payments of around Rs. 6,500 crore to 7 banks against the Letter of Undertaking (LOUs), and Foreign Letters of Credit (FLCs) it issued in the fraud allegedly committed by jewellers Nirav Modi and Mehul Choksi and their companies. Around 350 such LOUs and FLCs are maturing on 31ST March 2018.

6. ARUNDHATI BHATTACHARYA AMONG THE NAMES WHO COULD LEAD BBB: The government has initiated the process of selecting the next Chairman for the Banks Board Bureau (BBB). State Bank of India’s former Chairperson Mrs. Arundhati Bhattacharya, is considered to be one of the frontrunners for the post. But the government officials said they are open to get someone from the private sector also to head the advisory body. The government is not inclined to expand the role of the BBB and is of the opinion that the advisory body should continue to make holistic recommendations.

7. IDBI BANK DISCLOSES Rs. 770 CRORE FRAUD: IDBI Bank has said that it has identified fraudulent loans of Rs.770 crore disbursed from 5 of its branches in Andhra Pradesh and Telangana. The loans were sanctioned and disbursed during fiscal years 2009-2013 for fish farming businesses. These loans were obtained against non-existent fish ponds and by inflating the value of collaterals. It has found major lapses in processing and disbursing the loans by two of its officials. The case has been handed over to CBI.

SNIPPETS- 24/03/2018

1. SBI CLOSES 41.16 LAKH SAVINGS BANK ACCOUNTS: State Bank of India has closed as many as 41.16 lakh savings bank accounts from April 2017 to January 2018 for not maintaining the average monthly balance. In April’17 SBI had re-introduced penal charges on non-maintenance of average monthly balance. Later on in October’17 it had revised down the charges to some extent. SBI has 41 crore savings bank accounts of which 16 crores are under Pradhan Mantri Jan-Dhan Yojana, pensioners, minors and social security benefit holders which are exempted from the penalty for not maintaining minimum balance.

2. NO DEADLINE FOR LINKING AADHAAR CARD TO SERVICES : Supreme court has extended the March 31ST deadline for mandatory linking of Aadhaar to avail various services and welfare schemes run by the government till its constitution bench delivers its verdict on the validity of the 12 digit biometric number.

3. SAVINGS FROM DIRECT BENEFIT TRANSFER PEGGED AT Rs. 83,000 CRORE: The government has estimated that the Direct Benefit Transfer (DBT) has helped it to save around Rs. 82,985 crore overall. The scheme, which entails transfer of subsidies directly to the beneficiary’s account, has helped to save around Rs. 25,956 Crore in the 10 months up to January 2018 in this fiscal. The DBT scheme initially launched by UPA government in 2013 has been significantly extended by the present government, with the number of beneficiaries rising to 118.3 crore. The 45% jump in the savings is the result of pruning of fake or duplicate beneficiaries and plugging leakages which the present government has achieved by linking Aadhaar to the bank accounts.

4. FRAUDS TO COST PNB NEARLY Rs. 14,500 CRORE THIS YEAR: The Punjab National bank (PNB) expects Rs. 14,500 crore loss this year on account of frauds (including contingent liabilities) following the scam by diamond traders. PNB has appraised that the total loss reported by it due to frauds was Rs. 341.03 crore in FY 2015-6, Rs. 2,633.39 crore in FY 2016-17 and Rs. 14,506.39 in FY 2017-18 (including contingent liability).

5. Rs. 11,300 CRORE LYING UNCLAIMED WITH 64 BANKS: As per RBI’s latest report, an amount of Rs. 11,302 crore belonging to over 3 crore account holders is lying unclaimed with 64 Indian Banks. The largest amount – Rs. 1,262 crore is lying with SBI, Rs. 1,250 crore with PNB, while the remaining Rs. 7,040 crore with all other nationalised banks. However all this unclaimed money is just a fraction of the total deposits of over Rs. 100 lakh crore handled by these banks. Most of the unclaimed deposits would be cases of deceased account holders or people with multiple bank accounts.

6. 25% OVERSEAS BRANCHES OF PUBLIC SECTOR BANKS REPORTED LOSSES IN FY 17: The Union government has said that 25% (one fourth of all foreign branches of PSBs) have reported losses last financial year. As per the data available out of the 159 branches of PSBs operating overseas, 41 branches have incurred losses.

7. HOME BUYERS TO GET FINANCIAL CREDITOR TAG: A 14 member panel set up to review the Insolvency & Bankruptcy Code (IBC) is likely to recommend an amendment by which all home buyers will get a status of “Creditor”. This means that the home buyer will get the status of a financial creditor like banks and accorded similar benefits, in case their builder goes through insolvency proceedings before giving rightful possession of the flats. Here Home buyers will be third in the preference of order to get the proceeds—after the clearance of the cost of resolution and workers’ dues.

SNIPPETS- 17/03/2018

1. EFFECT OF PNB SCAM - IMF CALLS FOR REFORMS AT PSBs: With the recent Punjab National Bank LOUs fraud the International Monetary Fund (IMF) has commented on the status of Indian Banks. It said the Indian banking reforms like the insolvency code and recapitalization will be ineffective unless the governance standards are improved. IMFs Deputy Managing Director Mr. Tao Zhang has said that mere reforms are not enough and should be accompanied by governance reforms which improve the internal controls which in turn will be crucial for financial stability.

2. PSU BANKS NEED GOVERNMENT APPROVAL FOR ISSUING AT1 BONDS: The government has instructed Public Sector Banks to take its permission before floating Additional Tier-1 bonds (AT1 Bonds), which have turned out to be loss making for bankers and the government. AT1 bonds are perpetual bonds without fixed maturity. The decision was taken after the government had to step in for a troubled PSU bank that could not repay its AT1 bond investors because of a regulatory restriction. AT1 Bond has a clause that if a bank is loss making, it cannot pay AT1 coupon and then the bank would default on interest payments purely on regulatory reasons.

3. PSBs PLAN TIGHTER LENDING NORMS FOR CORPORATE LOANS ABOVE Rs 250 CRORE: Public Sector Banks (PSBs) will discourage multiple banking arrangements for companies with exposure of more than 250 crore in the banking system and will move all such loans under the consortium of banks for better monitoring. Under consortium arrangement there will be more discipline and effective monitoring.

4. IDBI BANK WITHDRAWS SANCTIONED LIMITS TO SEVERAL INDIAN COMPANIES: IDBI Bank has suddenly withdrawn and reduced the sanctioned credit limits to several of its corporate customers without stating any valid reasons. Since the bank has cut credit facilities like Cash credit, vendor financing etc., the affected companies are facing lot of problems in their working capital cycle. Corporates affected by this sudden and unexpected move have come together and approached the Finance Ministry seeking reprieve.

5. RBI BARS BANKS FROM ISSUING LOUs: The Reserve Bank of India has discontinued issuance of Letters of Undertaking (LOUs) and Letters of Comfort (LOCs) with immediate effect. This is an attempt to prevent further fraudulent transactions. The immediate effect of this would be it will increase the import cost and the profitable business avenue of foreign Branches of Indian Banks would close down. And since the importers will now have to buy dollars from market, the rupee could come under pressure.

6. PSBs TO LINK SWIFT WITH CORE BANKING SOULTION BY APRIL 30TH : As directed by Reserve Bank of India, all Public Sector banks (PSBs) will link their SWIFT Systems with their respective Core Banking Systems (CBS) by April 30Th as a measure to prevent frauds like the recent one that happened in Punjab National Bank. Along with this, the State run banks also decided to speed up the process of taking out “Cyber Insurance” at the earliest.

7. GOVERNMENT ASKS ALL BANKS TO “NAME & SHAME” WILFUL DEFAULTERS: Tightening the noose around “WILFUL DEFAULTERS”, the government has asked all banks to “name & shame” such borrowers by publishing their photographs and other details in newspapers. The number of wilful defaulters rose to 9,063 at the end of December 2017. Now Banks will formulate a policy with the approval of their Board of Directors which clearly sets out the criteria for publication of photographs of wilful defaulters.

SNIPPETS- 10/03/2018

1. GOVERNMENT TO REVIEW BAN ON SALE OF GUARANTOR’S PERSONAL ASSETS UNDER INSOLVENCY LAW: National Company Law Tribunal (NCLT) had recently ruled that the personal assets of guarantors cannot be seized during moratorium on the disposal of assets that is in place, while the insolvency process is underway in case of corporate debts. Now the government will review the issue of the bar on liquidating the assets of directors who have given their personal guarantees for corporate loans.

2. GOVERNMENT INSTRUCTS PSB EMPLOYEES TO LEARN RISK MANAGEMENT: The Department of Financial Services (DFS) at the Finance Ministry has directed Public Sector Bank executives to attend a 3 day workshop at the SBI training Academy Gurgaon, to train and learn the latest topics on technology and risk management. The Ministry believes that it is important to have a session on the systems, controls and processes that are not being followed in banks.

3. RBI SLAPS Rs. 5 CRORE PENALTY ON AIRTEL PAYMENTS BANK FOR VIOLATION OF NORMS: The Reserve Bank of India has imposed a penalty of Rs. 5 crore on Airtel Payments Bank for violating operating guidelines and Know Your Customer (KYC) norms. The fine was imposed by RBI after scrutinising bank’s documents relating to opening of bank accounts without any specific or clear consent from the customers.

4. PUNJAB NATIONAL BANK SEEKS PROVISIONING RELIEF FROM RBI FOR Rs. 13,000 CRORE LOSSES: Punjab National Bank has requested RBI to allow it to provide for losses in the Rs. 13,000 crore Nirav Modi- Gitanjali Gems scam over four quarters instead of at one go as it expects to recover 40% of the defaulted loan amount. Further, bearing full provisioning loss of over Rs. 13,000 crore in March 2018 quarter alone could wipe out more than 25% of PNB’s net worth of Rs. 48,000 crore.

5. RBI ASKS BANKS FOR DETAILS OF LOUs AS FAR BACK AS 2011: The Reserve Bank of India has asked all banks to provide details of LOUs (Letter of Undertaking) issued by them as far back from 2011 onwards including outstanding as on date and whether the banks had pre-approved credit limits or kept enough cash margins before issuing the LOUs. RBI has given a deadline of one week to respond.

6. PSBs MAY BE TOLD TO TAKE PASSPORT DETAILS FOR LOANS ABOVE Rs. 50 CRORE: The Finance Ministry may ask Public Sector Banks to seek certified passport details of the borrowers with an exposure of Rs. 50 crore and above to help prevent them fleeing the country in case of default or wrong doing. The idea is under consideration and will be taken up for discussions.

7. E-WAY BILL MAY NOT BE COMPULSORY FOR SMALL ORDERS: Small orders that are part of a large consignment out for multiple deliveries within the state may not require an electronic- way bill (E-way bill) in the Goods &Services Tax (GST) regime. The E-way bill requirement will be limited to items priced over Rs. 50,000 within the state.

8. NBFCs’ SHARE IN CREDIT MARKET TO TOUCH 20% BY 2020: Non Banking Financial Companies (NBFCs) have been steadily growing their share in the credit market and will consolidate their position further in a couple of years. As per a report from CRISIL, the NBFC share in credit market will touch to 20% by the year 2020.

SNIPPETS- 03/03/2018

1. 70,000 HOUSING SOCIETIES IN MAHARASHTRA TO FALL IN GST NET: Around 70,000 Co-operative Housing Societies (CHS) in Maharashtra will have to register under Goods & Services Tax (GST) regime as their annual collections are likely to exceed the Rs 20 lakh mark. Out of the 70,000 of such societies, around 50,000 are in Mumbai Metropolitan Region (MMR).

2. CABINET LIKELY TO DISCUSS TIGHTER NORMS: Perturbed over the recent spate of banking frauds, the Union Cabinet is likely to consider measures to strengthen the regulatory regime for auditors to prevent such fraudulent incidents in future. Cabinet may consider setting up of National Financial Reporting Authority (NFRA). Last week, Finance Minister expressed his displeasure over laxity by auditors in the backdrop of the scam at Punjab National Bank.

3. GOVERNMENT SHUTS DOWN 35 OVERSEAS BRANCHES OF PSU BANKS: The government has ordered shutting down 35 overseas branches of Indian Public Sector banks (PSBs) over viability and profitability. 69 more such international branches are being considered for closure. The Government is looking to consolidate PSBs overseas operations as it is planning to close all non-viable overseas operations for cost efficiency and synergy.

4. FINANCE MINISTRY ORDERS PUBLIC SECTOR BANKS TO SCAN NPAs OVER Rs. 50 CRORE FOR FRAUD: Stung by the recent Punjab National Bank fraud, the Finance Ministry on 27th February has directed all Public Sector Banks (PSBs) to scan their Non-Performing Asset (NPA) accounts worth more than Rs. 50 crore for possible fraud and refer any such fraud cases to Central Bureau of Investigation (CBI). The ministry has given 15 days deadline to take “pre-emptive action” to identify the gaps and brace up for increasing operational and technical risks.

5. PEER-2-PEEAR (P2P) LENDING PLATFORMS ARE GAINING POPULARITY IN SMALL CITIES: According to a social impact report by Faircent, the tech driven approach of P2P lending has been empowering Indian Businesses in Tier-2 and Tier-3 cities. In October last year RBI published guidelines to regularise P2P lending platforms as Non-Banking Financial Companies (NBFC). These P2P firms either operate as NBFC, intermediaries for banks/NBFCs or operate as P2P direct lenders to small businesses and these are becoming more popular in Tier-2 and Tier-3 cities as they use a wide variety of non-traditional data to evaluate credit risk.

6. BANKS TOLD TO LINK CBS WITH SWIFT SYSTEM: Considering the recent PNB fraud case where the SWIFT mode was mis-used, the Reserve Bank of India has set an April 30th deadline for all banks to link the Society for Worldwide Interbank Financial Telecommunications (SWIFT) with their respective Core banking Solutions (CBS). The Indian Banks Association (IBA) Chairperson Mrs. Usha Ananthsubramanian said there is urgency to fast track SWIFT-CBS linkage.

7. LOW-COST HOUSING LOANS FACE HIGHER RISK OF DEFAULTS: Recent report on low-cost Housing loans has revealed that there are elevated risks in the low-cost housing loan segment because of the higher propensity among the borrowers to default. As against the overall 1.96 % of home loans which have become NPA, the contribution of loans under Rs. 25 lakhs was 2.33% and in case of home loans under Rs. 10 lakhs it is 4%.

SNIPPETS- 24/02/2018

1. IDEA PAYMENTS BANK BEGINS OPERATIONS: Aditya Birla Idea Payments Bank became the fourth such entity to begin its operations since issuance of licenses to 11 firms by Reserve Bank of India to form payment banks. Telecom major Airtel was the first to begin payments bank operations in November 2016 followed by Paytm. Department of Posts has started the payments bank operations on a pilot basis and has plans to start operations pan India by April 2018.

2. NIRAV MODI FRAUD CASE MAY TRIGGER PCA ON PUNJAB NATIONAL BANK: The Rs. 11,400 crore Nirav Modi scam detected by Punjab National Bank may trigger Prompt Corrective Action (PCA) by RBI, which may lead to stoppage of lending by it for some time. The bank may consider selling some stake in some of its subsidiaries and joint ventures to raise money but since they are contractual agreements it may take some time.

3 CAs (AUDITORS) CANNOT GET AWAY JUST BY CITING RED FLAGS: Auditors may not be able to get away by citing “Red Flags” raised by them in fraud hit companies as the government is set to crack down on errant entities. Report says that Companies Act puts enough responsibility on auditors to ensure that corporate accounts are in order, while the auditors have full option not to sign the accounts if the management does not address their concern.

4. PUBLIC SECTOR BANKS TO TRANSFER OFFICERS COMPLETING 3 YEARS: In the wake of Punjab National Bank fraud case, the Central Vigilance Commission has issued an advisory to all the public sector banks ordering them to transfer all officers who have completed 3 years term in their present respective posts as on December 31 2017. The advisory also says that all the clerical staff who have completed 5 years term as on December 31 2017 also should be transferred immediately. However, as per the Bank’s transfer policy for officers, this rule (no officer shall be retained in the same post for 3 years and in the same station {same municipal limits} for a period in excess of 5 years) is already prevailing in banks but not strictly followed in all cases.

5. DEADLINE FOR FILING REVISED OR BELATED INCOME TAX RETURNS FOR THE PAST TWO YEARS IS MARCH 31st: The last date for filing revised and belated Income Tax returns (ITR) for assessment years 2016-17 and 2017-18 is March 31, 2018. And there will be interest on late filing. The dead line for filing ITR for the current year (AY 2018-19) is July 31, 2018.

6. KYC MANDATE WILL SHAVE OFF A BIG CHUNK OF MOBILE WALLET USERS BY MARCH 2018: As per the directions issued by RBI under the master direction on issuance and operation of Prepaid Payment Instruments (PPI), all the wallet users must submit their KYC (Know Your Customer) documents. Since less than half of wallet users have opted for KYC process, the mobile wallet issuers (service providers) may lose over half of their customer base once the February 28, 2018 deadline for completing KYC norms for all wallet users expires.

7. PNB APPOINTS PwC TO PROBE Rs. 11,400 CRORE FRAUD: Punjab National Bank has appointed Price waterhouse Coopers (PwC), one of the big 4 accounting firms to conduct an investigation into the alleged Rs. 11,400 crore fraud case involving jewellers Nirav Modi and Mehul Choksi and their companies. PwC has been asked by PNB to identify how the mechanism was misused and track down the money and its end use so that it can be used as evidence in the court of law.

SNIPPETS- 17/02/2018

1. 17 PUBLIC SECTOR BANKS MAKE LOSSES IN DECEMBER’2017 QUARTER: Out of the 22 Public Sector Banks, 17 Public Sector Banks have made losses during the December’ 2017 quarter. Provisions for bad loans have taken the toll on their profit margins. Provisions of these 17 banks almost doubled over the same quarter last year to Rs. 60,742 crore. These 17 banks put together have a total loss of Rs. 18,943 crore for December 2017 quarter. Whereas the remaining 5 banks have a cumulative total profit of Rs. 850 crore. Compared to this, 6 major private sector banks have made a cumulative total profit of Rs. 10,082.61 crores for the same period with HDFC Bank alone making a profit of Rs 4,642.60 crore.

2. PNB INCIDENT SHOWS VULNERABILITY OF INDIAN BANKING SYSTEM: The Associated Chamber of Commerce & Industry of India ( ASSOCHAM) has criticised the functioning of Public Sector Banks in a first reaction to the $ 1.8 billion fraud that took place in Punjab National Bank. The detailed statement says “Alleged fraudulent transactions worth Rs. 11,300 crore from a single branch of Punjab National Bank with connivance of the junior officials shows the vulnerability of public sector banks”. ASSOCHAM further states “ the said fraud shows how the risk management is lacking in these entities and how a chain of command system was not there or was not followed”

3. RBI’S NEW NPA RESOLUTION: The Apex bank in a dramatic move has discontinued the existing programmes for banks to restructure their defaulted large loans, such as Corporate Debt Restructuring (CDR), Sustainable Structuring of Stressed Assets(S4A), and Strategic Debt Restructuring (SDR) and made the Insolvency & Bankruptcy Code as the main tool to deal with defaulters. Now the Banks have been asked to report credit information, including classification of an account as Special Mention Account (SMA) to Central Repository of Information on Large Credits(CRILC) on all borrowers having an aggregate exposure of Rs. 5 crore and above on a weekly basis.

4. PNB FRAUD CASE: ICAI TO LOOK INTO AUDITORS’ ROLE: Chartered Accountants’ apex body ICAI will review the $ 1.80 billion fraud at Punjab National Bank to look at whether there have been any lapses on the part of auditors and has sought information from SEBI and from the investigation agencies.

5. NO LTCG TAX IF U SELL SHARES OR MUTUAL FUND UNITS BEFORE 31ST MARCH 2018: The proposed Long-Term Capital Gains ( LTCG) tax on equity in the union budget 2018 came as a blow to investors. However any LTCG earned till March 31, 2018 will not be taxed, as the provision of 2018 Budget are effective from 01/04/2018 .

6. PUBLIC SECTOR BANKS NEED Rs. 2.06 TRILLION CAPITAL FOR 8—9% CREDIT GROWTH IN FY 19: Public Sector Banks may need capital of Rs 2.06 trillion ( or Rs 2.06 lakh Crore) for a credit growth of around 8 to 9% for the financial year 2019. This is as per a report released by India Ratings and Research.

7. 3.6 BILLION HIDDEN $ BAD LOANS SPOTLIGHT INDIAN BANKING STRESS: Reserve Bank of India in its audit has unearthed about 3.6 billion $ (Rs. 232 billion) of bad loans in the books of State Bank of India. This shows the under reporting of bad loans in the financial sector.

8. ATMS CAN NOW VERIFY TRANSACTIONS VIA AADHAAR: The ATMs are set to become smart. Banks are replacing the existing ATMs with new digital machines which are compact and come with a 15 inch tablet like multi touch screen and these can perform Aadhaar based biometric authentication and all other transactions via net banking also.

SNIPPETS- 10/02/2018

1. RBI TO INITIATE CUSTOMER GRIEVANCE MECHANISM FOR NBFCs: The Reserve bank of India has said it will soon roll out a customer grievance redressal mechanism for Non-Banking Finance Companies (NBFCs). With a view to providing customers of NBFCs a cost free and speedy grievance redress mechanism, RBI will introduce an Ombudsman Scheme for NBFCs.

2. RBI TO SCRAP SUBSIDIES FOR INSTALLATION OF ATM AND CASH RECYCLER MACHINES: The Reserve Bank of India has announced the scrapping of subsidies given to banks for installation of ATM and cash recycler machines. Currently RBI used to disburse subsidy amount at 50% of the actual cost of machine or Rs 2 lakh whichever is lower in urban areas and Rs 2.50 lakhs or 60% of the actual cost of the machine whichever is lower in Semi Urban and rural areas. RBI said this would lead to a further push to digital transactions.

3. CABINET APPROVES CHANGES IN CLASSIFICATION CRITERIA FOR MSMEs: Cabinet has approved the changes in the basis of classifying Micro, Small & Medium Enterprises(MSMEs) from investment in Plant & Machinery requirement to ANNUAL TURNOVER. Now as per the new changes the classification will be as follows: A) Micro Enterprise- Annual turnover of less or equal to Rs. 5 crore. B) Small enterprise- Turnover more than Rs. 5 crore but does not exceed Rs. 75 crore. C) Medium Enterprise—Turnover more than Rs. 75 Crore but does not exceed Rs. 250 Crore. This will now encourage ease of doing business, will make norms of classification growth oriented and will align to the new regime revolving around GST.

4. RBI RELAXES PRIORITY SECTOR LENDING RULE FOR BANKS: Reserve Bank of India has made priority sector norms more lenient. Henceforth all loans to Micro, Small & Medium Enterprises (MSMEs) will qualify as priority sector lending. Till date loans up to Rs 10 crore per MSME borrower was considered as priority sector lending.

5. MSME LOANS UP TO Rs. 25 CRORE GET MORE REPAYMENT TIME: In a major relief to the Micro, Small & Medium Enterprises (MSMEs) sector, the RBI has said GST registered MSME borrowers, whose aggregate exposure does not exceed Rs. 25 crore will get a further 180 day window to pay their dues if their accounts were standard as on August 31, 2017. This move allowed to Banks and NBFCs will be applicable for dues between September 2017 and January 2018 and Banks need not be required to downgrade asset classification of these MSMEs.

6. RBI MONETARY POLICY—BANKS’ BASE RATE AND MCLR TO BE LINKED: Reserve Bank of India in its latest Monetary policy has said it is working on a framework to link the calculation of banks’ base rates with their Marginal Cost of Lending rates( MCLR). This will come into effect from April 1St 2018.

7. INDIAN BANKS MAY LOSE MORE ON NEW ACCOUNTING RULE: Indian Banks already struggling with $210 billion of stressed assets , may have to prepare for another hit in the coming financial year if new accounting norms are affected from April 1st 2018. The IndAS—based on IFRS9 standards, would require banks to make provisions for expected bad loans instead of the current system where presently they only cover actual losses incurred on bad loans.

SNIPPETS- 03/02/2018

1.AFFORDABLE HOMES GET FURTHER BOOST AS GOVERNMENT REDUCES GST: Affordable housing got further boost from the government as the Goods & Services Tax (GST) council has recommended reduction of GST from 12% to 8% for houses under the Pradhan Mantri Awas Yojana (PMAY) that provides credit linked subsidy scheme ( CLSS) .

2. GST E-WAY BILL INTRODUCED: As a 15 day trial, the nationwide E-way bill came in to effect from 1 ST February 2018. Under this bill every transporter will have to carry a system generated bill to move goods from one place to the other. This bill can be generated from the GSTN portal. This system has been introduced for bringing in a seamless inter-state movement of goods.

3. BANK OF INDIA RECOVERS Rs. 3,000 CRORE BAD LOANS IN ONE MONTH: Bank of India has recovered Rs. 3,000 crore of bad loans in the last one month. The said recovery was done by invoking standby letter of credit (SBLC) and guarantees of the respective defaulters. The Bank’s official statement said that they will recover hefty amounts in this month also by invoking the remaining SBLC and guarantees.

4. SBI TO OFFER CREDIT CARDS TO FARMERS: State Bank of India is planning to sell Credit Cards to farmers on easier terms. It has tied up with its credit card issuing subsidy- SBI Card to make it happen. This is perhaps the first time that a bank is offering credit card product to farmers. Till now small farmers have access to bank credit by way of Kisan Credit Card (KCC), which are linked with bank accounts and offer cash credit facility to KCC card holders. Initially these credit cards will be offered to Farmers in Gujarat, Rajasthan and Madhya Pradesh.

5. BANKS RELUCTANT TO LEND TO REALTY SECTOR ON RISING NPA: The share of bank credit to real estate sector has fallen sharply to 17% from over 68% in 2013. Banks are reluctant to provide credit to this sector due to rising NPAs and lower profit in property business. This is according to the economic survey.

6. USHA ANANTHASUBRAMANIAN BECOMES FIRST WOMAN CHAIRPERSON OF IBA: Mrs. Usha Ananthsubramanian, Managing Director of Allahabad Bank has become the first woman Chairperson of Indian Banks’ Association (IBA). She will be the Chairperson till August 31 St 2018 as she will be superannuating on August 31 ST . Earlier to this she was the Deputy Chairperson.

7. FINANCE MINISTRY NUDGES PSU BANKS TO SWAP ASSETS, OPTIMISE OPERATIONS: The Finance Ministry has asked the PSU Banks to consider asset swaps, including exchange of their corporate portfolios and branches to optimise nation-wide operations and to further strengthen its move on consolidation/merger of banks. Banks may also swap same rated loans- both corporate and retail to attain cohesive portfolio.

8. RBI DECLINES GOVERNMENT’S DEMAND FOR ADDITIONAL DIVIDEND: Reserve Bank of India has reportedly declined government’s demand for additional dividend. The government had asked an additional dividend of Rs. 13,000 crore. Reserve Bank of India has already transferred dividend of Rs. 30,659 crore to the government for the financial year 2016-17.

9. PSU BANKS IDENTIFY 41 OVERSEAS UNITS FOR RATIONALISATION: Public Sector Banks have started reviewing their overseas operations by identifying 41 units for rationalisation. This move could mean consolidation of operations, trimming of staff strength, exiting some non-core and non-profit activities or closing down some unviable overseas offices.

SNIPPETS- 27/01/2018

1.GROSS NPA MAY RISE TO Rs. 9.5 LAKH CRORE BY MARCH 2018: Gross Non-Performing Assets (NPAs) in Indian banks are expected to rise to Rs. 9.5 lakh crore by March 2018, from Rs. 8.00 lakh crore last year. This is as per ASSOCHM-Crisil joint study. High level of stressed assets in the banking industry provides enormous opportunity for Asset Reconstruction Companies (ARCs) which play an important role in NPA resolution process. But owing to capital constrains, growth of ARCs is expected to come down significantly.

2. PHYSICAL BANKS WILL BE IRRELEVANT IN NEXT 3 YEARS IN INDIA: Niti Aayog CEO Mr. Amitabh Kant opines that physical banks will be irrelevant in the next three years as data consumption growth and data analytics are likely to further boost financial inclusion. According to Mr. Kant, India will have more than a billion biometrics and smart phones due to which new bank model will come out, which will phase out physical banking.

3. GOVERNMENT MULLS THE IDEA OF 100% FDI IN BANKING SECTOR: The Central government is mulling to allow 100% Foreign Direct Investment in banking sector. The Finance Ministry and IBA are presently discussing and assessing the hike in FDI cap in banking sector from 74% to 100%. The government may also hike FDI in Public Sector Banks ( PSBs) to 49%.

4. AGRICULTURE BAD LOANS JUMP BY 23%: Banks have witnessed a spike in agriculture bad loans of Rs. 11,400 crore to cross Rs. 60,000 crore. Demonetization and farm loan waivers have added to the woes of the banks. NPAs rose over 23% from Rs. 48,000 crore in 2016 to Rs. 60,000 crore in 2017. Bad Loans in agriculture sector have jumped 142.74% from Rs. 24,800 crore in fiscal 2012, indicating distress in this sector in the last 5 years.

5. ONGC TIES UP WITH 3 BANKS FOR Rs. 18,000 CRORE LOAN FOR HPCL TAKEOVER: Oil & Natural Gas Corporation (ONGC) has tied up with three banks to avail loan up to Rs. 18,000 crore to part finance its Rs. 36,915 crore acquisition of Hindustan Petroleum Corp Ltd. (HPCL). It has entered into loan agreements with Punjab National Bank, Bank of India and Axis Bank Ltd for loans of Rs.18,060 crore for this acquisition. 6. SBI SEES BAD LOAN PROVISIONS AS BIGGEST CHALLENGE: State Bank of India sees provisioning for bad (NPAs) loans as the biggest challenge for Indian Banking system even as credit growth is reviving. Mr. Rajnish Kumar, the present Chairman of SBI says that whatever process they resort to for the resolution of NPAs, there will always be a gap in the provisioning and that is precisely where the support from the government is required.

7. AFFORDABLE HOUSING NOW A MAJOR THEME AMONG PEs: Driven by the demand and government incentives, majority of residential launches in 2017 were in the affordable and mid-range housing projects. Because of this, Private Equity Firms’ interest has tilted more towards affordable housing and is expected to increase in future also. Affordable housing has emerged as a significant theme among PE-RE (Private Equity-Real Estate) investors, especially in the second half of 2017.

8. INDIA 5TH MOST ATTRACTIVE MARKET FOR INVESTMENTS: India has become the 5th most attractive market for investments and business optimism is at record high levels globally. But cyber security and climate change have become areas of concern for CEOs. This is as per the annual global CEO survey done by consultancy giant; PwC. Previously India was in the 6th position.

SNIPPETS- 20/01/2018

1. SOON YOU CAN MAKE PAYMENTS USING YOUR WHATSAPP: WhatsApp could go live with much-awaited payments feature as early as next month, providing a big boost to the digital payments movement in the country. The most widely used messaging App in India is at an advanced stage in integrating its Unified Payments Interface (UPI) based payments platform with many banks like SBI, ICICI Bank, HDFC Bank and Axis Bank.

2. IDFC BANK, CAPITAL FIRST MAY ANNOUNCE MERGER: IDFC Bank and Non-Banking Financial Company (NBFC) Capital First are likely to announce a merger, creating a larger institution with about Rs. 1.4 lakh crore assets and nearly 64 lakh customer base. This merger could also act as a springboard for IDFC Bank which is looking to grow its assets in this competitive market.

3. UNCLAIMED BANK DEPOSITS CROSS Rs. 8,000 CRORE: Unclaimed deposits of bank account holders have crossed a record Rs. 8,000 crores, with stricter KYC norms making withdrawal of the funds difficult specially in cases of death claims unless the next of kin of the deceased can establish the legitimacy of their claims. According to the latest report released by RBI, Rs. 8,864 Crore is lying unclaimed in 2.63 lakh accounts with all banks.

4. AFFORDABLE HOUSING LOANS UP TO Rs. 2 LAKH SEE HIGHEST NPAs: With a sharp rise in loan disbursements and number of beneficiaries in the affordable housing segment, loans up to Rs. 2 lakh have ended up with the highest level of Non-Performing Assets in home loans. Public Sector banks reported higher NPAs in sub Rs.2 lakh housing loans as compared to finance companies.

5. TO FIGHT E-CRIME GOVERNMENT TO HIRE EXPERTS FROM IITS, PVT INSTITUTES: The government has decided to hire IT experts from premier public and private institutions including IITs, to fight new age crimes like online fraud, hacking, identity theft, child pornography, and cyber terrorism. It wants to prepare a road map for Indian Cyber Crime Coordination centre.

6. HDFC BANK IS 3 RD INDIAN COMPANY TO CROSS Rs. 5 LAKH CRORE M-CAP: HDFC Bank became the third Indian company and first Indian bank to cross a new milestone of Rs 5 lakh crore in market capitalisation. TCS and Reliance Industries are the other two Indian companies which have crossed market capitalisation of Rs 5 lakh crore. HDFC bank now has a market cap of Rs 5.57 lakh crore. It surpassed ING Group to become 22 nd most valuable bank in terms of market cap.

7. SBI TO RAISE Rs. 20,000 CRORE VIA BONDS FOR AFFORDABLE HOUSING SEGMENT: At a time when the report shows lot of NPAs in the low cost housing segment and also when the rating agencies have flagged concerns over the rising delinquencies in the affordable housing segment, State Bank of India has said that its board has given approval to raise Rs. 20,000 crore for financing affordable housing, and infrastructure projects through long-term bonds.

8. DEFAULTERS USE MINOR KIN TO EVADE SCRUTINY AND RECOVERY BY LENDERS: Some defaulting borrowers with no intension of paying back their loans are using their children to conceal their assets from banks during insolvency proceedings. It is found that several promoters have diverted borrowings from banks to invest in real estate in the name of children. Since minors are not required to file tax returns, tracing assets that belong to them becomes tougher.

SNIPPETS- 13/01/2018

1. RBI INSTRUCTS BANKS TO RECALIBRE ATMs FOR DISPENSING Rs.200 NOTES: As per the directions from RBI, all banks have started recalibrating the ATMs to dispense the new Rs. 200 bank notes which were introduced in August 2017.There are nearly 2.4 lakh ATMs across the country and according to industry experts, the overall recalibration process may cost banks Rs 100 to Rs 125 Crores.

2. GOVERNMENT TO ROLL OUT 650 BRANCHES OF INDIA POST PAYMENTS BANK: The India Post Payments Bank (IPPB) which was incorporated on August 17, 2016 had launched two pilot branches in January 2017 at Ranchi and Raipur but after that it was unable to launch any further branches. Now Government has announced that it will rollout around 650 branches by April 2018. IPPB has now entered into an MOU with Punjab National Bank and PNB MetLife India Insurance Co Ltd.

3. INDIA’S FOREX RESERVES AT FRESH RECORD HIGH: India’s Foreign Exchange reserves scaled to new high of $ 409.36 billion compared to the previous week. Foreign currency assets form a key component of reserves of the country.

4. WILFUL DEFAULTERS FORM 14% OF PSBs TOTAL BAD LOANS: The total Gross Non-Performing Assets (NPAs) of 21 Public Sector Banks stood at Rs. 7.33 lakh crore as on September 30, 2017. Out of this, Rs. 1.01 lakh crore of loans, roughly around 14% have been identified as wilful defaults. Wilful Default broadly means that the borrower has failed on the agreement for usage of funds or has not paid despite having resources to pay.

5. GOVERNMENT OPENS FDI GATES WIDE OPEN: The cabinet has eased Foreign Direct Investment (FDI) in some critical areas like single brand retail, pharmaceuticals, power exchange and broking services in construction. It has now permitted for 100% FDI in single brand retail through the direct route. The cabinet has also decided to allow foreign airlines to invest up to 49% in ailing Air India.

6. SBI REVIEWING MINIMUM BALANCE CHARGES FOR SAVINGS ACCOUNTS: In April 2017, the State Bank of India had introduced charge on non-maintenance of monthly average balance in SB accounts after a gap of 5 years. Now SBI has said that it is reviewing these charges after receiving feedback/complaints from its customers. Meantime the United Forum of Bank Unions (UFBU), an umbrella organisation of all the bank unions, has sought Finance Minister’s intervention to roll back the hike in charges imposed on customers.

7. AADHAAR –“A SITTING DUCK” FOR CYBER CRIMES: A recent newspaper report claimed breach of Aadhaar database and access to crucial Aadhaar information for a paltry sum. A study by a group affiliated to Reserve Bank of India has also raised serious safety issues regarding the breach of Aadhaar database. The report says cyber vulnerability of Aadhaar is a bigger concern than the possible commercial misuse. In an era where cyber threats are frequent, the major challenge for UIDAI is to protect the Aadhaar data under its control since the biometrics is now an important national asset which has huge ramifications for various government programmes and the banking system.

8. SBI GARNERED Rs 1,771 CRORE AS FINE FOR VIOLATION OF MINIMUM BALANCE REQUIREMENT RULES: State Bank of India has collected a staggering Rs 1,771 crores as fine from customers who failed to maintain minimum balance requirements in their savings bank account from April to December 2017.

SNIPPETS- 06/01/2018

1. SEBI PLANNING A “RISKOMETER” FOR STOCK MARKET INVESTMENTS: Securities & Exchange Board of India (SEBI) is planning to introduce an early-warning system to caution about the risks of investing in stocks of overvalued companies, those with unsuitable business models and ones that may go bankrupt. The proposed system would rate a stock on a numeric scale or a colour coded system which will allow investors to easily identify the investment risks associated with a particular stock. Mutual funds already have a similar system called “Riskometer”.

2. BANKS REQUEST RBI TO ALLOW THEM TO SPREAD LOSSES OVER TWO QUARTERS: A group of state owned banks (including SBI) has approached Reserve Bank of India seeking exemption from recognising mark-to-market losses on their government bond portfolios in December quarter. They have requested RBI to allow them to spread these losses over two quarters (ending December and March). The sudden surge in yields has resulted in mark-to- market losses for many public sector banks.

3. GENERAL INSURANCE COMPANIES SEE A HUGE DEMAND IN TITLE INSURANCE: From April 2018 onwards real estate developers can buy title insurance cover- an indemnity policy which insures against financial loss arising out of claims in title to land or property. General Insurance companies are eying this product. This will be a long term policy ranging from 5 to 12 years.

4. DEPOSIT INSURANCE COVER MAY NEED TO RISE UP TO Rs 15 LAKH TO COVER ATLEAST 90% OF DEPOSITS: In the year 1993 when the government raised the limit of the deposit insurance cover on fixed deposit to Rs 1 lakh, as much as 90% of the accounts were covered with this enhancement. Now the government may have to raise the deposit insurance cover to around Rs 15 lakh to ensure a safety net for at least 90% of the present depositors.

5. RBI PUTS ALLAHABAD BANK UNDER PROMPT CORRECTIVE ACTION: Allahabad Bank has been brought under Prompt Corrective Action (PCA) by Reserve Bank of India. PCA on Allahabad Bank was imposed because of high net NPAs and negative Return on Assets (ROA) for two consecutive years. This is the 11th Public Sector Bank to be covered under PCA.

6. INDIAN OVERSEAS BANK PLANS TO WRITE OFF ITS LOSSES FROM RESERVES: Indian Overseas Bank (IOB) has said that it has planned to write off its losses from reserves. The bank said its board has approved to utilise the balance available in the share premium account amounting to Rs 76.5 billion as on March 31, 2017 to write off the accumulated losses to the tune of Rs 69.8 billion as on March 31, 2017 to present a true and fair view of the financial position of the bank.

7. FACING MERGERS AND PAYCUTS, UCO BANK STAFF LAUNCH A PLATFORM FOR TURNAROUND: In the face of the accumulated losses, merger threats and salary cuts, UCO Bank employees (both clerical and officers) have joined hands and launched a platform- United Forum of UCO Bank Unions. This is aimed at a speedier turnaround of the Bank. The mandate of the newly formed organisation is to motivate employees to work beyond normal working hours and on holidays, holding credit camps to garner fresh loans, speaking to agitated customers and intensifying the recovery of Non-Performing Assets through door-to-door campaigns. In our opinion this is a historic step taken by the bank union which will strengthen the management arm in the bank’s turnaround plans and an eye-opener for other bank unions as this is the need of the hour in almost all PSU banks.

SNIPPETS- 30/12/2017

1. RBI WILL NOT EXTEND DEADLINE FOR 2nd LIST OF DEFAULTERS: In the month of August 2017 Reserve Bank of India had announced a list of 28 large defaulting companies and had instructed the banks to find a resolution plan before 31st December 2017 in accordance with a formula prescribed by it. If the banks failed to do so, the companies had to be referred to the National Company Law Tribunal (NCLT). Now the RBI has turned down the request from banks to extend the deadline for restructuring these defaulting company accounts. This means the companies like Videocon, Jaiprakash Industries, Uttam Galva Steel, Essar Projects etc will have to be referred to NCLT.

2. COMPLAINTS AGAINST PRIVATE BANKS GROWING AT A FASTER PACE THAN PSBs: The Office of the Banking Ombudsman (OBO) has received 35,080 complaints against private banks, registering a 30.2% increase over last year. In contrast, complaints against Public Sector banks grew at about 28% over the last year.

3. RISING NPAs IN EDUCATION LOAN ADD TO BANKS’ STRESS: Education loans have started becoming NPA in large numbers with defaults in repayments rising to 7.67% of the total outstanding education loans. As per the IBA data, the total outstanding education loan in the banking sector in 2016-17 was Rs. 67,678 Crore, of which Rs. 5,191 crore was NPA. This is despite certain changes made in the education loan scheme such as extension of the repayment period to 15 years and the launch of Credit Guarantee Fund Scheme for education loans. In our opinion this means that there is very low growth as far as the employment opportunities are concerned.

4. RBI’S MANDATE FOR PROVIDING DOORSTEP BANKING SPURS BANK HIRING: with the recent mandate issued by RBI for providing doorstep banking service to the senior citizen above the age of 70 years and the differently –abled, many banks are reviving their hiring plans to meet the new norms.

5. BANKS LOST NEARLY Rs.17,000 CRORE TO FRAUDS LAST FISCAL: The Reserve Bank of India has informed that as per the fraud monitoring reports submitted by scheduled commercial banks, the amount lost on account of frauds during 2016-17 was Rs. 16,789 crore. Now RBI has formed an inter-disciplinary standing committee on cyber security comprising of Information Security Audit, forensic and cyber security experts.

6. INDIA ONE AMONGST THE MAJOR NATIONS TO HAVE HIGHER BAD LOANS RATIO: The 9.85% ratio of bad loans or NPAs in banks has put India in the group of those nations that have very high Non-Performing Assets. The only major countries with similar ratios are the troubled EU nations namely Portugal, Italy, Ireland Greece and Spain. According to a research survey done by rating agency CARE, India’s NPA ratio (Excluding Restructured assets) is one of the highest in the group of “ High-NPA” nations.

7. SIX STRESSED BANKS TO GET Rs 7,500 CRORE CAPITAL INFUSION: Bank of India, IDBI Bank, UCO bank, Bank of Maharashtra, Dena bank and Central Bank of India are the 6 most stressed banks who will get fresh equity infusion of over Rs 7,500 crore from the government. This is provided immediately to meet the prescribed regulatory capital requirement. But the government officials said that it will monitor their functioning to ensure that they undertake clean, responsible and prudent business to enhance stakeholder value.

SNIPPETS- 23/12/2017

1. FINANCE MINISTER SAYS STRENGTHENING PUBLIC SECTOR BANKS IS TOP PRIORITY: Finance Minister Mr. Arun Jaitley has said that strengthening the Public sector banks is the top most agenda of the government. The government has already announced the detailed recapitalisation move and this will ensure to some extent that banks are able to support their lending capacity. Mr. Jaitley gave more emphasis on MSME sector lending as he said that MSME sector has been on receiving end in last few years particularly with lending capacity of banks being depleted as a result of NPAs.

2. RBI PLACES RESTRICTIONS ON BANK OF INDIA: Reserve Bank of India has triggered Prompt corrective Action (PCA) on Bank of India in view of high Non-Performing Assets and negative return on assets for two consecutive years. This makes Bank of India 9th bank to face PCA in a span of 10 months.

3. CONSUMER CONSENT MUST FOR CHANGING SUBSIDY- RECEIVING BANK ACCOUNT: The government has issued notification directing banks and National payment Corporation of India (NPCI) to change the process of mapping Aadhaar linked bank accounts for receiving government subsidies. Further the government has also temporarily halted the existing provision of overwriting existing subsidy-linked bank accounts with freshly opened /mapped Aadhaar accounts. NPCI will now allow override of account request only if it is accompanied by name of his current bank on Aadhaar Payment Bridge (APB) mapper and a confirmation from the requesting bank that it has obtained the requisite consent of the account holder for switching to the requesting bank.

4. GOVERNMENT TO BEAR MDR CHARGES ON DIGITAL PAYMENT TRANSACTIONS UPTO Rs. 2,000: The government will bear the Merchant discount Rate (MDR) on digital transactions up to Rs. 2,000. Such MDR will be borne by the government for two years with effect from January 1, 2018 by reimbursing the same to the banks.

5. CABINET CLEARS AMENDMENT TO LAW FOR PAYMENT OF INTERIM COMPENSATION IN CHEQUE BOUNCE CASES: The Cabinet has approved an amendment to the Negotiable Instrument Act to allow for payment of an interim compensation in cheque dishonour cases with a view not to allow unscrupulous elements by holding payments and pending long trials.

6. RBI BLAMES I-BANKERS FOR RISE IN NPAs: RBI has blamed conflicts of interest among merchant bankers as one of the prime reasons for faulty project appraisals of big corporate/consortium advances that has led to piling up of huge non-performing assets in the system which has crossed a whopping 10 trillion mark as on September 2017. RBI in its Financial Stability Report (FSR) has pointed out certain basic deficiencies with regard to the appraisal of long-term projects with a significant gestation time.

7. AIRTEL PAYMENT BANK PENALISED FOR OPENING PAYMENT BANK ACCOUNTS WITHOUT THE USER CONSENT: Airtel Payments Bank has been penalised with Rs 2.5 crores as an interim penalty by Aadhaar-issuing body UIDAI for allegedly opening payments bank accounts of its mobile subscribers without their informed consent.

SNIPPETS- 16/12/2017

1. ATMs NOT TO BE REPLENISHED WITH CASH AFTER 9 PM: The government has proposed some changes for replenishment of cash in ATMs. Cash Transportation agencies must collect cash from the bank in the first half of the day and NO cash loading of the ATMs or any cash movement should be done after 9 pm. These Standard Operating Procedures (SOPs) have been prepared after a spurt in attacks, hijacking and looting of cash vans.

2. RBI INVOKES PROMPT CORRECTIVE ACTION ON CORPORATION BANK: Reserve Bank of India has invoked Prompt Corrective Action (PCA) on Corporation Bank as the Bank’s bad loans have increased sharply. This makes Corporation bank 8th bank to face restriction in a span of 10 months. A statement issued by Corporation Bank said, this action will not have any material impact on the performance of the bank and will contribute to the improvement in internal control of the bank in its activities.

3. INSOLVENCY AND BANKRUPTCY BOARD TO DECIDE ON THE FATE OF THE LOAN GUARANTORS: The governing body of Insolvency & Bankruptcy Board of India (IBBI) is expected to finalise broad guidelines for dealing with personal guarantors & third party guarantors of defaulting loan accounts. This is seen as an additional tool to punish truant promoters and a strong recovery mode.

4. YOUR SOCIAL MEDIA POSTS MAY DECIDE WHETHER YOU WILL GET A LOAN OR NOT: Many Private Sector Banks are spending more time in reading your ( the prospective customer’s) Facebook posts, SMS’s and payment data available on Mobile phone to decide whether to sanction a loan , rather than relying solely on credit ratings. As banks sharpen their internal assessment of risk before lending, they are investing in Data Analytics ( which is gathering data of social media) which captures the borrowing behaviour of a customer.

5. BANKS HIRE EX-RBI MEN TO AVOID SLIP-UPS: Tighter regulations, closer scrutiny and higher possibility of fines by RBI has increased the importance of compliance for banks in recent years. As a result, former officials from RBI’s Banking Supervision Department are being hired by banks and are in charge of this key functioning department. Many Private banks, small banks and recently launched Paytm Payments Bank have former RBI officials heading their compliance department.

6. CENTRE EXTENDS DEADLINE FOR LINKING OF AADHAAR TO BANK ACCOUNTS: The government has extended the deadline for mandatory quoting of Aadhaar number for certain financial transactions (like bank accounts, mutual funds) and linking of Aadhaar to Mobile numbers. Earlier the deadline was December 31st 2017, but now as per the gazette notification the extended date is till 31st march 2018.

7. ICICI BANK LAUNCHES “SMART VAULT”: ICICI bank has launched its technology driven “Smart Vault”, most advanced and first-of-its-kind locker service in India. The Smart Vault is powered by revolutionary robotic technology which minimises human intervention while operating the bank locker. The advanced Radio Frequency Identification (RFID) enabled mechanism scans your request and retrieves your locker using robotic arm and your locker is made available to you conveniently at a kiosk. After your work with locker is over, the robotic arm retracts your locker back to the locker room. Smart Vault is equipped with the most evolved and intelligent security system.

SNIPPETS- 09/12/2017

1. SBI TO REDESIGN ENVELOPS FOR DISPATCHING INCOME TAX CHEQUES: State Bank of India will “redesign” the envelops which it uses to dispatch tax refund cheques of customers. This is to conceal their PAN No and contact numbers after an active customer raised objection that the crucial information like PAN No and contact numbers are visible in the earlier envelops which may result in misuse by some miscreants. The customer had complained to both RBI and SBI stating that SBI is violating RBI’s directions on protection of customer information. Accordingly now SBI has responded positively by agreeing to redesign the envelops.

2. SEBI CLARIFIES NORMS FOR NEW MUTUAL FUND CLASSIFICATION: The Securities and Exchange Board of India (SEBI) has amended its October 6, 2017 circular and has modified certain norms for mutual fund classification that will make compliance easier for asset managers. In the reworked circular the SEBI has clarified on market capitalization norms for equity funds, while allowing certain other fund categories to invest in a wider range of securities.

3. PUBLIC SECTOR BANKS LOOK TO FRAME COMMON RULES TO VALUE STRESSED ASSETS: The Finance ministry along with the state run banks is working to frame a common set of rules for valuation of stressed assets for faster resolution of loans extended by consortia of banks. It is observed that under cases of joint lending, banks are unable to arrive at a common valuation, which stalls the resolution process. Further individual banks also fear that if they agree to a certain haircut, it may not stand the scrutiny of vigilance agencies. The new norms will address such problems.

4. PAYTM BANK AIMS FOR OVER 1 LAKH ATM BANKING OUTLETS: The newly launched Paytm Payments Bank is all set to add over I lakh ATMs pan India. These are called “Paytm Ka ATM”. The Paytm Ka ATM outlets is a step by Paytm towards ensuring that every Indian has access to banking facilities. These ATMs will be neighbourhood shops, which would act as business correspondents for Paytm and offer services like opening of SB accounts, Cash Deposits and withdrawals.

5. RBI RINGS ALARM ON BITCOINS, CAUTIONS CUSTOMERS : Bitcoin is a cryptocurrency which can be purchased and stored online in a digital wallet from any of the Bitcoin exchange service provider that is active in India. You can later convert them into local currency. Reserve Bank of India is not impressed with the cryptocurrency--- Bitcoin. Bitcoin is all set to touch a record $12,000 but RBI has cautioned Bitcoin players that they face potential risks, including financial, legal and those related to customer protection. In a statement RBI has clarified that it has not given any licence or authorisation to any entity to operate schemes or deal with Bitcoin or any other cryptocurrency.

6. RBI REDUCES FEES ON DEBIT CARD PAYMENT FOR SMALL SHOPS : RBI has decided to reduce the Merchant Discount Rate (MDR) for debit card transactions. Under the new rules there are different slabs depending on the turnover of the business. For small business (with a turnover of Rs 20 lakh or less), the MDR cap would be @ 0.4% or Rs 200/- whichever is lower. For other merchants, the MDR cap would be 0.9% or Rs. 1,000 per transaction whichever is lower. But payment gateways are crying foul stating that with no equitable distribution of MDR, the slashing of rates will only add to their pain.


As part of a host of banking reforms, the Central government has proposed some changes in Financial Resolution & Deposit Insurance Bill (FRDI) by framing rules for the resolution, which is aimed at plugging bankruptcies in the financial service sector. This includes a special provision called “BAIL-IN” which by definition allows the affected bank (which is on the brink of failure) to use its depositors’ money to absolve some of its losses. If the government goes ahead with this move, it will give enormous powers to a proposed rescuing body called Resolution Corporation. Under this “Bail-in” provision the bank which is on the brink of failure, will make (or force) its creditors and depositors to take a loss on their shareholdings and deposits.

“Bail-In” is the opposite of “Bail-out”. “Bail-out” involves the rescue of a bank by the government by infusing additional capital in to the bank by using its tax payers’ money. But under “Bail-in” the government wants the bank’s investors’ and depositors’ to take the bank’s losses. The present government plans to introduce the changes in the bill during the present winter session of the Parliament. The powers of the Resolution Corporation are so powerful and extensive that it can cancel the liability of a bank, that means it can declare the bank does not owe you anything, or it can modify the terms of the contract. Let us place these facts with some simple examples:

1. Say you have a fixed deposit of Rs 10 lakhs for 5 years with monthly interest to be credited to your Savings account, the Resolution Corporation can convert the said fixed deposit in to a lock-in fixed deposit of a certain period or it could be converted in to equity of the concerned bank. OR

2. If you are having Rs 10 lakh in your savings bank account then the Resolution Corporation can reduce your SB account deposit to Rs 1 lakh, as per the maximum amount covered presently under Deposit Insurance & Credit Guarantee Corporation Law 1978. Or it can convert your Rs 10 Lakh Savings bank account to a fixed deposit with a 5 year lock-in period at a rate of interest to be decided by Resolution Corporation.

Banks normally suffer losses due to economic slowdown or because of bad lending decisions and mis lending. In India those banks whose lending thrust is on retail and SME (Small & Medium Enterprises), are doing well and prospering. Normally this kind of lending is fully covered by collateral securities and the bank will recover its dues in full even if the loan goes bad. Those banks whose exposure is to Large Corporates are suffering badly. These large corporate loans are not fully secured and as such banks will incur huge losses in case of loan default by these large Corporates as the banks will not be in a position to recover the loan in full.

RBI and government have to come out with more stringent recovery norms to book these defaulting large Corporates and recover dues from them. In our opinion it is totally unjust on the part of the government to recover part of the banks losses from its depositors when the depositor is not at all benefitted or rewarded by the bank when it is making good profits, then why penalise him when the bank is making losses.

Now because of lot of opposition from all quarters like all political parties and Bank Unions, the government has hinted at re-working the changes in the provision. The government has said that no public sector bank has been allowed to sink in the last 70 years and in future also even with this new provision in place, that implicit sovereign guarantee continues.

But in our opinion if this provision is passed in the parliament then the public will feel unsecured as far as bank deposits are concerned and each depositor will think twice and will be unsure whether to deposit the money in bank or not.

SNIPPETS- 02/12/2017

1. GOVERNMENT PLANS GST SOPS FOR DIGITAL PAYMENTS: The Centre has proposed a 2% discount in the GST for consumers who make digital payments. The proposal is likely to be taken up in the next GST council meeting in January. The move if approved will boost the government’s efforts for cashless economy.

2. CRISIL SAYS NBFCs WILL EAT INTO BANKS’ CORPORATE CREDIT SHARE: Non-Banking Financial Companies have become aggressive in lending to mid-sized companies linked in real estate and infrastructure. The share of NBFCs in such loans in Indian credit market has increased by 3% and presently it is 19%. CRISIL has predicted that the next three years also the NBFCs will continue aggressive lending and this would eat up Banks’ share.

3. I-T NOTICES TO 1.16 LAKH INDIVIDUALS FOR CASH DEPOSIT OF OVER Rs 25 LAKH: The Income Tax Department has issued notices to 1.16 lakh individuals and firms who made cash deposits of more than Rs.25 lakhs in bank accounts post note ban but have failed to file tax returns by the due date. Besides this the I-T Department is scrutinising those individuals and firms who have deposited large sum of cash but have filed their tax returns in time.

4. AFTER GST CHANGES ROLLLED OUT, CENTRE ALLOWS FIRMS TO PASTE NEW MRP STICKERS: Following the changes being put in effect on GST rates for about 200 items, Government is allowing firms to paste stickers on packed products to reflect the new MRP. This will be allowed till December 31, 2017.

5. I-T DEPARTMENT MAY TAX UNSOLD REALTY INVENTORIES TO CURB HOARDERS: The Income Tax Department may levy fresh tax on the unsold inventories in the real estate sector from the next financial year. This is to check hoarding. Unsold flats have been lying with many developers for more than a year and this may be taxed from next year. This is a move to curb strategy of hoarding constructed property by developers in anticipation of price escalation in future.

6. INDIA BECOMES 8TH BIGGEST EQUITY MARKET IN THE WORLD: India has surpassed Canada to become the 8th biggest equity market in the world. India’s market cap has swelled by 46.4% in 2017, faster than most of its emerging market peers.

7. GOVERNMENT’S NEW PROPOSAL “BAIL-IN” FACES LOT OF OPPOSITION FROM ALL QUARTERS: The Centre’s proposed Financial Resolution & Deposit Insurance Bill ( FRDI) , which is aimed at plugging bankruptcies in the financial service sector, includes a special provision (“BAIL-IN”) which by definition allows the affected banks to use depositors’ money to absolve some of the losses. The bill has suggested the use of “Bail-in” provision, which may result in cancellation of a liability, which could include bank deposits or could lead to modification of the terms of contract or changing the form of asset class (SB amount converting to FD for a fixed term). The provision would be last in the line for payments in case of liquidation. The present Deposit Insurance Scheme will be subsumed by the new bill, but the Rs 1 lakh deposit insurance will not change. But the plan has generated lot of heat and opposition from all quarters like political parties and bank unions who have criticised the move. Now the government has hinted at reworking the provision. It says no commercial bank has been allowed to sink in the last 70 years and that implicit sovereign guarantee continues even with this new bill. So in our opinion the question arises as to how safe is our Bank Deposits?

SNIPPETS- 25/11/2017

• SPENDING ON INFORMATION-TECHNOLOGY BY BANKS AND SECURITY FIRMS TO TOUCH $9 BILLION: Information Technology (IT) spending in Indian Banking and Securities firms is expected to touch USD $ 9.1 Billion, an increase of around 11.7% over last year. This is because the transition of Indian Banking sector to a cashless society is creating many opportunities of technology investments into digital payments infrastructure.

• SBI TO USE BLOCKCHAIN FOR SMART CONTRACTS AND KYC BY NEXT MONTH: State Bank of India will roll out beta launches of Blockchain - enabled smart contracts. By next month SBI will also launch Blockchain enabled Know Your Customer (KYC) application. These two applications are part of BankChain, a community of 27 banks, which have joined hands to explore and build Blockchain solutions in India. The Blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.

• NOW GET REWARED FOR PAYING INCOME TAX PROMPTLY: The Income Tax Department has proposed monetary rewards for honest taxpayers depending on the tax paid. The reward will be for taxpayers who are consistent in filing returns and have no outstanding tax liabilities. However if a tax payer defaults in the future, the tax department will deduct the monetary reward thus paid from his refund with interest.

• GST RATE ON RESTAURANTS SLASHED TO 5%: The GST council has slashed the tax on restaurants to 5% for all restaurants, both AC and Non AC. Earlier a 12% and 18% GST was levied on Non AC and AC restaurants respectively.

• CBDT DIRECTS IT DEPARTMENT TO REDRESS TAXPAYERS GRIEVENCES ON PRIORITY: Central Board of Direct taxes (CBDT) has asked the Income Tax department to take prompt steps and address the taxpayers’ grievances, especially those related to refunds and PAN related issues. The CBDT chairman has written to all the principal chief commissioners of the department in the country, underlying the high pendency of such complaints and has asked them to resolve them at the earliest.

• GOVERNMENT SEEKS SPECIAL DIVIDEND FROM RBI FOR BANK RECAPITALISATION: The government has sought a special dividend from the RBI to fund a part of its Rs 2.11 lakh crore plan to recapitalise the public sector banks. The RBI has been asked to pay a special dividend apart from the yearly surplus that it pays to the government. This dividend if agreed by the RBI will be used only for bank recapitalisation.

• MOODY’S UPGRADES INDIA’S CREDIT RATING FOR FIRST TIME IN 13 YEARS: US based Moody’s has upgraded India’s sovereign credit rating by a notch to “ Baa2” with a stable outlook citing improved growth prospects driven by economic and institutional reforms. The rating upgrade comes after a gap of 13 years.

• PRESIDENT APPROVES ORDINANCE TO AMEND BANKRUPTCY CODE: The government has amended the Insolvency and Bankruptcy Code to prevent wilful defaulters from bidding for stressed assets. The President has given approval for the said amendment which will be followed by cabinet approval.

SNIPPETS- 18/11/2017

• RBI INSTRUCTS BANKS TO PROVIDE DOORSTEP BANKING TO SENIOR CITIZEN ABOVE 70 YEARS & DIFFERENTLY –ABLED : Reserve Bank of India has instructed all banks to provide doorstep banking facilities to senior citizens of more than 70 years of age and differently-abled persons by December 2017. This is a very positive move by RBI and senior citizens and differently-abled persons can look forward to availing basic banking services right from the comfort of their homes.

• HDFC BANK LAUNCHES SMART-UP ZONE IN ODISHA: HDFC Bank has rolled out SmartUp zone in Odisha at its Bhubaneswar Branch. The first SmartUp zone was launched by HDFC Bank in Delhi in October. SmartUp zone is an exclusive area of the branch dedicated to start ups. Through this zone, specially trained bank staff will offer tailor made banking and advisory solutions to entrepreneurs.

• WILFUL DEFAULTERS WILL NOT BE ALLOWED TO BID FOR STRESSED ASSETS: SBI chairman Mr. Rajnish Kumar has said that banks will block efforts by wilful defaulters to bid for distressed assets in insolvency proceedings. He said that there is no place for wilful defaulters or people who have diverted funds as proved in the forensic audit. However he said that legally even the promoters were within their rights to bid for the stressed assets but banks would put some pre-conditions so that the wilful defaulters/promoters will not be able to bid for the said stressed assets.

• BANKS RECAPITALISATION TIED TO REFORMS: The government which has announced the recapitalisation of state owned banks has said that the recapitalisation does not come on its own as it is followed and preceded by a whole lot of plans and reforms. Everything is linked to the reforms which each bank board will consider within a time frame and have to come out with plan of action. The reforms also include bank boards taking a stand and coming up with a clear plan on consolidation.

• RBI REJECTS ISLAMIC BANKING IN INDIA: In a major move, the Reserve Bank of India has decided not to pursue a proposal for introduction of Islamic banking in India. The Reserve Bank said the decision was taken after considering the wider and equal opportunities available to all citizens to access banking facilities.

• GOOGLE LAUNCHES “TEZ” APP: Google has officially launched a free mobile wallet in India and has named it “TEZ”. TEZ is a free mobile wallet that will let its users to link up their phones to their bank accounts for making online payments. TEZ App comes with a new technology- Audio QR ( AQR) which uses ultrasonic sounds to let you exchange money.

• DEBIT/CREDIT CARDS AND ATMs WILL BE REDUNDANT IN FOUR YEARS : Niti Aayog CEO Mr.Amitabh Kant has said that debit cards, credit cards and ATMs will be redundant in next 4 years of time. People will start using their mobile phones for doing their financial transactions. He said that 72% of Indian population is averaging below 32 years of age and this young generation will prefer to use mobiles in future for all their financial transactions.

SNIPPETS- 11/11/2017

1. LINKING AADHAAR WITH INSURANCE POLICY MANDATORY: Insurance Regulatory & Development authority (IRDAI) has said that linkage of Aadhaar number with insurance policies is mandatory and asked insurers to comply with the statutory norms. The linkage of Aadhaar to Insurance policies is made mandatory under the prevention of Money-laundering Amendment Rules, 2017. Hence IRDAI has communicated to all Life and general Insurance companies to implement the linkage without waiting for further instructions.

2. SBI NET PROFIT DOWN BY 38% ON HIGHER PROVISIONING: State Bank of India’s standalone net profit declined by 37.9% to Rs. 1,581 Crores in the second quarter of FY 2018. This is because of higher provisioning. There was robust growth in other incomes and hence the Bank’s operating profit grew by 11.4% but due to higher provisioning the net profit was down by 38%.

3. HDFC BANK MAKES RTGS/NEFT TRANSACTIONS FREE: Private sector lender HDFC Bank has made online RTGS/NEFT transactions free of cost from November 1, with an aim to promote digital economy. However, any RTGS/NEFT transactions carried out at the branch level will be chargeable. On the other hand, various charges like cheque–related transactions as well as request for additional cheque leaves will get costlier.

4. SBI EXPECTS MOST CASES FROM RBI SECOND LIST OF NPAs TO GO TO NCLT: State Bank of India expects most of the cases from RBI’s second list of large Non-Performing Assets (NPAs) to be referred to the National Company Law Tribunal (NCLT) for resolution under the Insolvency and bankruptcy Code (IBC). The country’s largest bank has an exposure of Rs. 26,636 crore to 27 of 30 such accounts listed by RBI.

5. DEMONETIZATION IMPACTS PEOPLE’S CURRENCY HOLDING HABITS: One year after the note ban, there is a significant drop in demand for currency due to a sharp rise in payments through digital means, digitization and changes in currency holding habits, according to a study by RBI. It is estimated that the total Currency In Circulation (CIC) has declined by around Rs 9 lakh crore between November 4, 2016 and January 6, 2017.

6. RBI INSTRUCTS BANKS’ TO HAVE IT EXPERTISE AT BANKS’ BOARD LEVEL: With cyber threats emerging as a major risk for the financial sector, the Reserve Bank of India has said banks need to have a an IT expert on board to ensure speedy implementation of measures to address this challenge. Reserve Bank’s Executive Director Meena Hemachandra said that with banking becoming more technology driven, IT expertise at the board level has become a necessity.

SNIPPETS- 04/11/2017

1. TOTAL MOBILE WALLET TRANSACTIONS TO CROSS 800 BILLION IN INDIA : According to Global India, a leading data analytics company, the total mobile wallet transactions in India are on track to reach Rs. 800 billion in 2017.The report further says that the market will continue to grow at a brisk pace to cross Rs. 1 trillion mark in 2018. While the government is heavily promoting digital payments, it has also introduced several regulatory guidelines for mobile wallet providers in order to safeguard consumer interests.

2. RBI IMPOSES MONETARY PENALTY ON SOME PRIVATE BANKS: The Reserve Bank of India has slapped a monetary penalty of Rs. 6 crore and Rs. 2 crore on Yes Bank and IDFC Bank respectively. The penalty is for violating regulations issued by RBI. Yes Bank has been penalised for non-compliance with the directions issued by RBI on income Recognition Asset Classification ( IRAC) norms and delayed reporting of information on security incidents. IDFC Bank has been penalised for violating rules relating to loans and advances.

3. RBI TO EMPANNEL ADVERTISING AGENCIES FOR MULTI MEDIA WORK : The Reserve Bank of India plans to empanel advertising agencies for carrying out activities ranging from regular tender notices to full-fledged multimedia, multi-language advertising. The empanelled agencies will conceptualise, design and release advertisements in newspapers and commercials on television and radio.

4. LIC MAY TAKE PART IN BANK RECAPITALISATION PROGRAMME: Life Insurance Corporation (LIC) may be roped in to participate in Rs. 2.11 trillion bank recapitalisation initiative. As a part of recapitalisation programme, LIC could also increase its stake in various public sector banks which are required to raise Rs. 58,000 crores from capital market. Besides this, LIC could participate in non-operating Holding Company (NOHC) structure to which the government may transfer its share and these NOHCs could issue recapitalisation bonds worth Rs. 1.35 lakh crore.

5. RBI ASKS LARGE CORPORATES TO OBTAIN UNIQUE CODE FROM BANKS: RBI has instructed corporate borrowers having exposure of Rs. 5 crore and above to obtain a 20-digit Legal Entity Identifier ( LEI) from banks, a move aimed at improving risk management. The code is conceived as a key measure to improve the quality and accuracy of financial data systems. A specific timeline for implementing LEI has been set as per the exposure. Corporates with more than Rs. 1000 crore will have to get the unique code by March 31, 2018. Those having exposure between Rs. 500 to Rs. 1000 crore have to get LEI code by June 30, 2018 and those having exposure between Rs. 100 to Rs 500 crore by March 31, 2019. Borrowers with an exposure between Rs. 50 to Rs. 100 crore have been given time till December 2019. A separate road map for borrowers having limits between Rs. 5 crore to Rs. 50 crore would be issued soon.

6. INDIA BREAKS INTO TOP 100 IN WORLD BANK “EASE OF DOING BUSINESS” RANKINGS: India broke into the top 100 in the World Bank’s Ease of doing Business Rankings. The rise to 100th position from 130 last year made India one of the top 10 best improved countries which will be a boost for the Indian Economy.

7. GOVERNMENT CONSIDERING SECURITY FEE FOR EVERY DIGITAL PAYMENT: A high level committee meeting on how to curb cyber fraud in digital transactions has proposed the imposition of a token “security fee” on every digital payment in India. The fee on every digital transaction could be aimed at starting a fund to create better infrastructure to secure digital transactions.

SNIPPETS- 28/10/2017

1. GOVERNMENT ANNOUNCES Rs 2.11 LAKH CRORE RECAPITALISATION PLAN FOR PSU BANKS: The Finance Ministry on Tuesday announced Rs 2.11 Lakh crore bank recapitalisation plans for Public Sector Banks. Out of this total commitment, Rs 1.35 lakh crore will come from the sale of recapitalisation bonds. The remaining Rs 76,000 crore will be through budgetary allocation and fund raising from markets. Indian Banks are sitting on a stressed asset pile of close to Rs 9.50 lakh crore, crippling their ability to give fresh loans. The bank Recapitalisation would ensure that the banks can start fresh healthy lending which will be a boost to the economy.

2. PAYTM WALLET PROCESSES $ 1.6 BILLION TRANSACTIONS DURING DEEWALI SEASON: Digital wallet major Paytm has said that it processed over $ 1.6 billion worth of payments on its platform during the month long festive season between September 20 to October 20. The platform witnessed 3.5 times increase in online and offline payments during this period.

3. BANK UNION SAYS CAPITAL INFUSION IS ONLY TEMPORARY RELEIF, FOCUS SHOULD BE ON NPAs: The All India Bank Employees Union (AIBEA) has welcomed the government’s decision to infuse additional capital in public sector banks but termed it as a short term relief but not a long term cure. The union press release said that the additional capital will help banks to lend more, but this will not help the banks to come out of the NPA web they are in now. Hence the union is of the opinion that concentrating on the on-going NPA menace and recovery of bad loans is the real long term solutions for the banks.

4. BANKS BEGIN TO ACCEPT GST INPUT CLAIMS TO GRANT WORKING CAPITAL LOANS: More than 90 days after the roll-out of GST , bankers are looking up to sanction working capital advances especially to micro and small units , against the documents used in the new GST regime. Bankers are no longer looking at just the sales of the units concerned to decide the loan sanctions. Banks are now looking at GST input credit also in deciding how much working capital loans they should advance.

5. BANKS NEED TO SET ASIDE Rs 3.3 LAKH CRORE AS NPA PROVISIONING IN FY-18: Banks are likely to need nearly Rs 3.3 lakh crore this fiscal as provisioning for large NPA accounts in the current financial year. This is as per a report by CRISIL. This will facilitate faster clean-up of their balance sheets. This will be 50% more provisions provided for NPAs as compared to last year(last year NPA provisions was 2.2 lakh crores).

6. BANKS RECAPITALISATION MAY MAKE FISCAL DEFICIT TARGET HARD TO ACHIEVE: The Fitch Ratings has said that the massive 2.11 lakh crore capital infusion to public sector banks may make the 3.2% fiscal deficit target for 2017-18 very difficult to achieve for the government.

7. PSB CONSOLIDATION OFF THE TABLE FOR NOW: The drive for consolidation among public sector banks will subside with the government announcing the massive recapitalisation scheme. Now the focus will shift to nursing ailing PSBs back to health. With the government assurance on infusion of capital, the focus in the coming quarters will shift to enhancing recoveries, risk management and improving the liability portfolio. This will eventually help banks to be ready for prudent lending, hence the government’s decision on consolidation of banks may not be taken up immediately.

SNIPPETS- 21/10/2017

1. BANKING SECTOR STARES AT AN ADDITIONAL Rs 40,000 CRORE NPA: The RBI has directed certain reclassification in the private sector banks’ asset classification and provisioning as on 31/03/2017, subsequent to the annual Risk Board Supervision (RBS) exercise conducted by them. As a result of this, more than Rs 40,000 crore of bad loans will be added to banking sector NPAs. Axis Bank alone has reclassified 9 standard accounts to NPA category, of which 8 accounts are part of consortium finance.

2. INDUSIND BANK TO TAKE OVER BHARAT FINANCIAL : Indusind Bank and the second largest micro lender Bharat Financial Inclusion ( BFIL) announced the largest merger in the MFI space. With this merger Indusind will add additional 6.8 million customers to its existing 10 million customer base. This merger will help Indusind Bank in rural lending and also help reduce its cost of funds by 3--4 %. The entire balance sheet of BFIL will move into Indusind Bank, while its operation team will continue as a wholly owned subsidiary and work as business correspondents.

3. RESERVE BANK OF INDIA SETS UP TASK FORCE ON PUBLIC CREDIT REGISTRY: Reserve Bank of India has set up a high level task force on a Public Credit Registry (PCR) with an aim to improve ease of doing business and control delinquencies. The 10 member panel will be headed by Mr. Y. M. Deosythalee, former CMD of L&T Finance Holdings. The PCR would help in enhancing efficiency of the credit market, increase financial inclusion, improve ease of doing business and help control delinquencies.

4. BANKING INDUSTRY WAGE PACT UNLIKELY BY MONTH END: The term of existing wage agreement of PSU Banks ends on October 31st. The discussions and negotiations for the fresh wage revision started 4 months ago. The prospects of arriving at a wage pact between bank managements under the aegis of Indian Banks’ Association (IBA) and trade unions by the end of this month looks very grim.

5. RBI SAYS LINKING OF AADHAAR TO BANK ACCOUNTS A MUST: The Reserve Bank of India has said that linking of Aadhaar number to the bank accounts is mandatory. This was in reply to a query raised under Right To Information (RTI)application, which suggested that the apex bank has not issued any order for mandatory Aadhaar linkage with bank accounts.

6. ONLY 2,300 BANK BRANCHES OPEN AADHAAR ENROLMENT CENTRES: Only 2,300 branches of private and public sector banks have opened Aadhaar enrolment and updation centres within their branch premises as against the targeted 15,300 branches by this month end. The September 30th deadline that was given to the banks had been extended by one month to October 31st.

7. INDIA’S FOREX RESERVES RISE BY $ 1.5 BILLION: India’s Foreign Exchange reserves (Forex) kitty increased by $ 1.5 billion as on October 13th 2017. The overall Forex Reserves rose to $ 400.29 billion. India’s Forex Reserves comprise of Foreign Currency Assets (FCAs), gold reserves, Special Drawing Rights( SDRs) and RBI’s position with the International Monetary Fund(IMF).

SNIPPETS- 14/10/2017

1.BAD LOANS CONTINUE TO HAUNT BANKS: The bad loan scenario for Indian Banking sector is increasing day by day. The bad loans of all Banks put together hit a record Rs 9.5 lakh crore ($ 145.55 Billion) at the end of June 2017. A review of RBI data obtained through right-to- information request shows that banks’ total stressed loans (including Non-Performing Asset and restructured loans) rose by 4.5% in six months. This has eaten banks’ profits and choked off new lending, especially to smaller firms.

2. AFTER MINIMUM BALANCE, SBI CUTS ACCOUNT CLOSURE CHARGES: After slashing the monthly average minimum balance requirement charges for its savings bank account holders, SBI has now revised the account closure charges. Earlier the bank used to charge Rs. 500/- + GST of 18% for closure of regular savings bank account. This will be “NIL” from 1 st October 2017.

3. INDIA MAY DELAY IMPLEMENTATION OF BASEL-III NORMS: As per SBI report, India could slightly delay the implementation of global risk norms BASEL-III as the banking sector is already under stress due to demonetization, GST and bad loans. An extended timeline to meet the capital needs under the norms would provide the much needed breather to banks to lend more.

4. CASH FLOW WILL DECIDE SBI LOANS TO SMALL ENTREPRISES NOW: The nation’s biggest bank, SBI is starting a new era of credit appraisal for funding small scale companies. SBI now will assess the borrower’s bank statements instead of the balance sheet. The bank will now evaluate a company’s ability to repay the loan based on their cash flow and for this the bank will draw analysis from their bank statement for one year and collaborate with their balance sheet. The practice of lending based on borrower’s bank statement is already being followed by NBFCs and some private banks. Basically the evaluation of bank statement will focus on the financial discipline and earning capacity of the borrower.

5. RBI INITIATES “PROMPT CORRECTIVE ACTION (PCA)” ON ORIENTAL BANK OF COMMERCE: The Reserve Bank of India has imposed Prompt Corrective Action (PCA) on Oriental Bank of Commerce (OBC) in view of high Non-Performing Assets. The bank has suffered huge losses due to sharp rise in bad loans. OBC will now face restrictions in terms of opening of branches, hiring staff and lending to sub-investment companies.

6. SOON PAY FROM ONE E-WALLET TO ANOTHER: The RBI has decided to allow payments from one E-Wallet to another by facilitating inter-operability within six months. RBI however, has incorporated a rider that the facility will be allowed only for KYC compliant users.

7. NPA-LADEN BANKS LOOKING TO AVOID BANKRUPTCY COURTS: Banks are planning to seek regulatory exemption from taking the second lot of 30 defaulters to bankruptcy courts as such a step tends to erode value of assets. As per RBI directions, these 30 companies with loans amounting to Rs 1.25 lakh crore are set to be referred to bankruptcy courts by December 31 st if a resolution is not found. At a meeting last week top bankers decided they would tell RBI that they would provide for 50% of the value of the loan amount but will not try the defaulters under the Insolvency and Bankruptcy Code (IBC) as it would lead to the potential bidders (acquirers)putting in low bids, putting the banks in to heavy losses.

SNIPPETS- 07/10/2017

1. GST GETS SIMPLER FOR SMALL BUSINESSES AND EXPORTS: The government has modified the GST rules to make life simpler for small businesses and exporters by reducing the compliance procedure from the current monthly returns to quarterly returns. Those SMEs ( Small & Medium Enterprises) whose turnover is less than 1.5 crore per anum will now file GST returns on quarterly basis. The government also has reduced the GST rates on 27 products. The 100% export units have also been given certain concessions.

2. L&T INFOTECH BAGS A BIG GOVERNMENT CONTRACT TO HELP PIN DOWN TAX EVADERS: The government which is putting lot of efforts to plug in the loopholes and shore up tax collections in the country, has decided to use the best by using data analytics. The Central Board of Direct Taxes has awarded a hefty contract to L&T InfoTech Ltd in this regard. This is an ambitious initiative to use social media analytics to identify tax non-compliance/evaders. L&T InfoTech says it is a high volume digital deal which involves creating a “sematic web” where web pages are structured and tagged in such a way that can be directly read by the computer.

3. HOME AND PERSONAL LOAN INTEREST RATES CAN SOON BE BASED ON MARKET RATES: Very soon the interest rates on Housing and Personal loans will be linked to external benchmark rates arrived at by market trading, rather than leaving it to the discretion of each banks as is being done now. The RBI committee also suggested a ban on bank charging a conversion fee whenever the bank resets the interest rate.

4. GST HAS CRASHED PRIVATE MONEY LENDERS’ INTEREST RATES: The interest rates charged by money lenders to its borrowers were always high in spite of policy decisions by the government. But now due to the demonetization and GST effect, these interest rates are collapsing because there is hardly any demand left for this informal funding. Because of GST implementation, borrowing in the informal money market is no longer lucrative.

5. RBI TO ISSUE GUIDELINES TO BANKS ON FACILITIES FOR SENIOR CITIZENS AND DIFFERENTLY ABLED CUSTOMERS: The Reserve Bank of India will soon issue necessary instructions to all banks to offer better facilities for senior citizen and differently abled persons. RBI said that some banks are discouraging senior citizen and differently abled customers to take benefit of better banking services hence it would soon issue detailed guidelines.

6. BANKS’ CONSOLIDATION MAY LEAD TO 10-15 BANKS: As per a senior Finance Ministry adviser, a planned consolidation in India’s state run banking sector may lead to 10 to 15 lenders. Currently there are 21 banks. The government may even cut its stake in state-run banks to 52%.

7. RBI ISSUES GUIDELINES FOR PEER-TO-OEER (P2P) LENDING PLATFORM: The RBI has issued directions for Peer-to-Peer (P2P) lending platform. These directions will be known as “ The Non-Banking Financial Company--Peer to Peer Lending Platform (Reserve Bank) Directions” . As per the directions the P2P lending platform should have a minimum of Rs 2 crore capital and they cannot take any loan exposure for themselves. The P2P platforms have to become full-fledged members of Credit Information Companies (CIC) and have to share all loan disbursal information.

SNIPPETS- 30/09/2017

1. LENDING RATE CUTS IS THE KEY TO ECONOMIC RECOVERY: Lending rate cuts are the only way to economic recovery as it would perk up demand and push investments. This is as per one economic survey report. The report said that structural reforms take longer time of 5-10 years to reflect in growth rate. Lending rate cuts would push demand, put idle factories to work and spark off investment.

2. SBI SAYS FINE FROM MINIMUM BALANCE DEFAULTS TO AMOUNT TO Rs 2,000 CRORE: SBI expects to realise over Rs 2,000 crore from Savings Bank account holders as penalty for not maintaining minimum balance in their account. Till June quarter end the Bank has recovered Rs 235 crore. The sum thus collected will be used to partly cover the costs incurred on linking of accounts with Aadhaar which is a very costly affair. Other than this, the cost of maintaining ATMs and business correspondents is also very high.

3. BANKING SECTOR’S CREDIT DEMAND TO GET BOOST FROM GOVERNMENT PROJECTS: State bank of India Chairperson Ms Arundhati Bhattacharya said that the banking industry is poised for a recovery in the credit demand as it stands to gain from the number of projects announced by the government. We just saw the declaration of bullet trains and various other corridors which are expected to come up soon and these projects will give a boost to the credit and investment cycle.

4. NPA RESOLUTION- BANK UNIONS ARE SCEPTICAL OF BANKRUPTCY CODE : Bank unions have claimed the bankruptcy process initiated by various lenders for NPA resolution will not help in bringing the money back. The Union press release said the bankruptcy process is not going to yield desired results in terms of NPA recovery as the recovery process is going to be very slow and there is no guarantee of banks getting back the entire dues. Banks will incur further loss on account of these accounts.

5. CARD PAYMENTS DRIVE MAY LAND BANKS WITH Rs.3,800 CRORE ANNUAL HOLE: As per a SBI research report, The government’s digital payments push, mainly online card payments through PoS machines may bleed the banks by a whopping Rs 3,800 crore annually. The number of PoS terminals post –demonetization has increased from 13.8 lakh in March 2016 to 28.4 lakh as of July 2017.There is a huge cost involved in maintaining these PoS machines and the net loss would be a whopping Rs 3,800 crore annually. (This is all banks put together).

6. ALLAHABAD BANK TO INTRODUCE 2-TIER SAVINGS BANK INTEREST RATE FROM OCTOBER 1st: Following in the footsteps of some of the PSU banks which have already reduced the interest rate on Savings bank deposit, Allahabad Bank is going to introduce 2-tier savings interest rate from October 1st. It will be 3.5% interest for accounts having less than Rs.40 lakhs balance and 4% for accounts having balance of Rs.40 lakh and above.

7. NO COUNTING MACHINES BUT SOPHISTICATED CURRENCY VERIFICATION UNITS BEING USED FOR SCRAPPED NOTES: The Reserve Bank of India is not using counting machines for tallying the scrapped demonetized notes but it is using sophisticated Currency verification and Processing Machines (CVPS) for checking the numerical accuracy and geniuses of currency notes in all its offices.

SNIPPETS- 23/09/2017

1. PEER-TO-PEER LENDING TO BE TREATED AS NBFCs: After a year or more of due diligence and analysis, RBI has notified that peer-to-peer (P2P) lending platforms need to be regulated and treated on par with Non-Banking Financial Companies (NBFCs).While final guidelines are awaited, the P2P lenders have welcomed this move as they feel these regulations would help bring credibility and trust in to the business. This will also bring in a lot of legal clarity as the P2P lenders will have the rights to take legal action against the defaulters.

2. YES BANK TRIMS ITS STAFF STTRENGTH BY NEARLY 2,500: Yes Bank Ltd has gone in for “Rationalisation” of workforce as it has reduced its workforce by nearly 2,500. Yes Bank report said that digital transformation has created certain redundancies which require rationalisation of the workforce.

3. PRIVATE BANKS’ SHARE IN CREDIT WILL TOUCH 40% BY 2020: As per a report from credit rating agency ICRA, Indian Banking is going through a transition, with both Private and public sector banks ( PSBs) facing different challenges. PSBs are plagued with poor asset quality issues, leading to higher credit costs and losses. Due to this fact the share of private sector banks in banking sector advances will reach a level of around 40% by 2020. As of March 2017 private sector banks’ share in total advances was 27.5%.

4. CHEQUE BOOKS, IFS CODES OF 6 MERGED SUBSIDIARY BANKS WILL BE INVALID FROM SEPTEMBER 30th : State Bank of India has notified its customers that cheque books and IFS codes of six of its merged subsidiary banks would be invalid from September 30th and has asked them to submit new applications for fresh cheque books.

5. AIRTEL PAYMENT BANK ROLLS OUT UPI-ENABLED DIGITAL PAYMENTS: Airtel Payments Bank has become the first payments bank in India to integrate Unified Payments Interface (UPI) on its digital platform. This will enable Airtel Payments Bank customer to make secure digital payments to online/offline merchants and making instant money transfers to any bank account in India. They will also be able to link their accounts on BHIM app and make UPI payments.

6. INDIAN BANKS NEED $ 65 BILLION CAPITAL TO MEET BASEL-III NORMS BY MARCH 2019: As per a report from Fitch Ratings, Indian Banks will need an additional capital of $ 65 billion (approximately Rs 4,16,000 crores) to meet global Basel-III banking norms by March 2019. Whereas the government has budgeted an $ 11 billion (Rs 70,000 crores) capital infusion into state-run lenders till March 2019, the state-run banks have limited options to raise the required capital.

7. CENTRE CLEARS BILL TO INCREASE TAX FREE GRATUITY LIMIT TO Rs 20 LAKH: The Centre has approved an amendment Bill that increases the limit of tax free gratuity up to Rs 20 lakh for employees belonging to public as well as private sector. Once this bill is passed, all employees that are not covered under the Central Civil Service (Pension) Rules will be able to avail the tax free gratuity of up to Rs.20 lakh.

SNIPPETS- 16/09/2017

1. CREDIT GROWTH OF BANKS SLOWED DOWN TO 8.1% IN 2016-17: As per Bradstreet Report, the credit growth of all banks slowed down to 8.1% in 2016-17, down from 10.9% in the previous year. Aggregate deposits improved to 15.9% in the same period compared to 9.3% in the previous year. The deposit growth can be attributed to the massive inflow of funds in to the banking system after demonetization. Nevertheless the banks’ rising NPAs (Non- Performing Assets) is a big headache for the PSU Banks.

2. IT MAY TAKE ATMs 3 MONTHS TO DISPENSE Rs.200/- NOTES: While RBI has already launched Rs. 200 currency notes in the system a week ago, it may take up to 3 months for ATMs to dispense the new currency as it will involve huge exercise of recalibration. The banks have not yet got the supply of Rs. 200 currency but some banks have asked the ATM companies to begin testing the new note for the recalibration. It is yet to be seen whether all the 2.2 lakh ATM machines across the country would be recalibrated for dispensing the new note.

3. SBI CARDS TO START CONTACTLESS PAYMENTS SOON: SBI Cards has doubled its base in three years to over 50 lakhs cards. SBI Cards is updating its mobile application and all its customers could soon make payments merely by tapping their smartphone on a swipe machine. Some card holders are already using this cardless payment facility on the Samsung Pay Platform. The bank plans to launch its own proprietary application which enables virtualisation of the card and any smartphone subscriber can pay by just tapping his mobile phone if he is a SBI card holder.

4. NBFCs’ SHARE IN LOANS REACH AN ALL TIME HIGH: Non-Banking Finance Companies (NBFCs) are on a roll as their share in retails lending in India has reached an all-time high of 36% at the end of March 2017. They continue to grow faster than both private and public sector banks. NBFCs have shown a growth of 17% over the previous year as against a growth of 15% as reported by private sector banks and 2.5% decline in retail loans by PSU banks.

5. GOVERNMENT MUST PUMP IN MORE CAPITAL IN TO PSU BANKS FOR EFFECTIVE NPA RESOLUTION: Fitch Ratings has said that weak capital position of PSU banks have a major negative influence on Indian Banks viability reports and these banks will come under more pressure if the problem is not addressed. The report says the government has to pump in additional capital in to PSU banks to make them tackle the NPA menace effectively and raise their loan growth.

6. HDFC BANK’S “EVA” BECOMES INDIA’S SMARTEST CHATBOT : HDFC Bank, in collaboration with Bangaluru based company Senseforth has launched “EVA”( Electronic Virtual Assistant) in March this year on its website. Since then EVA has interacted with over 5,30,000 unique users, holding 1.2 million conversations and has addressed 2.7 million customer queries to become India’s largest banking “Chatbot”.

7. BANKS WITHOUT AADHAAR ENROLLMENT CENTRES TO FACE FINE FROM OCTOBER: The UIDAI has given banks one month time to open Aadhaar enrolment centres in a stipulated 10% of branches and if this is not implemented, a fine of Rs. 20,000 per uncovered branch will be imposed after September 30 th .

8. SBI TOO LAUNCHES ITS OWN AI-POWERED “CHATBOT” : State Bank of India too has launched its own chatbot to handle customer queries and guide them through range of retail products and services. The chatbot is named “ SBI Intelligent Assistant” (SIA) and is currently undergoing beta testing.

SNIPPETS- 09/09/2017

1. GOVERNMENT EXPLORING MORE WAYS TO MAKE INDIA A DIGITAL ECONOMY: Central Government, with the help from consulting agency Price waterhouse Coopers (PWC) has identified many ways to increase the people’s proactivity to digital payments. The government is trying to digitise payments at government hospitals, canteens, unreserved railway ticket counters, fertilizer subsidy payments and school fees. The government’s immediate goal is to reach 25 billion transactions for the current fiscal.

2. PSU BANK HEADS PUT SOME CONDITIONS FOR MERGERS TO HAPPEN: Top brass of prominent state-run banks like PNB, Canara Bank and Bank of Baroda which are positioned as acquiring banks, have set certain pre-conditions to acquire smaller banks. Some of the key terms set by these acquiring banks are that the target bank be a profit making one and the current management is given at least a three year term after the merger to ensure smooth transition. Besides this, the acquiring banks have also demanded capital from the government even if the target bank is well-capitalised.

3. RBI INCLUDES HDFC BANK LTD IN “TOO BIG TO FAIL” LENDERS LIST: Private sector lender HDFC Bank Ltd has been declared a Domestic-Systematically Important Bank ( D- SIB). With this, the bank has joined State Bank of India and ICICI Bank Ltd, which have been tagged as D-SIB or “Too-Big- to Fail” banks. Such classification means the collapse of these banks could lead to cascading effect on the entire economy of the country. Such banks are also mandated to maintain a higher share of risk-weighted assets as tier-I equity.

4. CAIT SUGGESTS TAX REBATES TO CONSUMERS & TRADERS TO PROMOTE DIGITAL /CASHLESS MOVEMENT: The Confederation of All India Traders (CAIT) has suggested several measures to the government to achieve the goals of cashless economy and reaching 2500 crore digital transactions this fiscal. The confederation says that certain tax rebates to consumers for some types of digital payments and similar rebates to be extended to the traders as well.

5. ITR FILING DATE EXTENDED TO OCTOBER 31 ST : The Ministry of Finance has announced that the “Due-Date” for filing Income tax Returns and various reports of audit prescribed under the IT Act, 1961 has been extended from September 30 th to October 31 st 2017.

6. FINTECH-BANK COLLABORATION YEILDS SMARTER OUTCOMES: RBI Deputy Governor Mr. B P Kanungo has said that Fintech companies need to collaborate with Banks for providing better service to the customers. This kind of collaboration will lead to smart solutions for better customer satisfaction.

7. RBI DEPUTY GOVERNOR SUGGESTS SELLING OFF PSU BANK LAGGARDS: The Deputy Governor of RBI Mr. Viral Acharya in one of his speech has suggested that the state run banks which are not doing well and are in “Intensive care unit”, be sold off to private sector banks as the time may be running out for state-run banks to clean-up and recapitalise. We feel that such a statement from the highest authority at this juncture is not justified, considering the fact that some of the Bank heads of acquiring banks have put some conditions to the government for mergers to happen. And selling off sick state- run banks to private sector will not solve the NPA menace that is eating up the economy.

SNIPPETS- 02/09/2017

1. GDP GROWTH SLOWS TO 3-YEAR LOW: India’s GDP growth has slumped to a three year low in the June’17 quarter. GDP slowed down to 5.7% in April- June quarter from 6.1% in the preceding quarter. This is mainly because of the slowdown of manufacturing sector as the production was the lowest. The manufacturers were busy to get rid of old stocks rather than producing new ahead of July 1st rollout of GST. Along with manufacturing, slowdown in construction and mining sectors too pulled down the GDP. Experts fear full year growth to be below 7%.

2. FAKE NOTES MAY BE MORE THAN DOUBLE OF ESTIMATES: The amount of fake (counterfeit) notes in the system is more than double of what the Reserve Bank of India had estimated. The likely quantum of fake notes in the system is estimated to be as high as Rs. 23,235 crores. Immediately after the note ban, RBI conducted a survey of 1,000 currency chests across the country and the survey has revealed 7.1 pieces per million for Rs. 500 notes and 19.1 pieces per million for Rs. 1,000 notes. Going by the number of Rs. 500 and Rs. 1,000 notes in circulation as of March 2016, the amount of fake currency in the system could be a staggering Rs. 23,235 crores. Considering the amount involved, the government, RBI and the banks have to decide how to share the liability. And given the estimates of fake notes, there could be severe impact on banks’ balance sheet.

3. PSB MERGERS WILL RAISE BANK RATINGS: As per Moody’s Investors Service report, merging India’s public sector banks will improve their rating because it will provide efficiencies of scale and enhance quality of corporate governance. However, infusion of funds by the government will be a key factor for these banks as many of the banks have weak capital adequacy.

4. BUYERS’ INTEREST WILL BE PROTECTED IN THE STALLED PROJECTS THROUGH “RERA”: The government has assured home buyers that their interest will be protected in the stalled projects through newly implemented Real Estate Regulation Act (RERA). It says buyers’ interest is the government’s top priority.

5. BANKS UNDER RBI’S “PROMPT CORRECTIVE ACTION”(PCA) FACE PROBLEMS: Banks which have been placed under restrictions through PCA by RBI to improve their financials are feeling the heat, as their deposit growth have fallen below industry level. Their customers under panic are withdrawing deposits or closing their accounts with such banks.

6. BOOST FOR THE GOVERNMENT—GST REVENUE HITS Rs 93,000 CRORE MARK: The government has collected Rs 92,283 crores from GST and this is just 64% of the tax payers who have filed the returns for July 2017. So the final amount will be even more.

7. NATIONALISED BANKS EXEMPTED FROM CCI APPTROVAL FOR MERGERS: Mergers and acquisitions beyond a certain threshold compulsorily require clearance from Competition Commission of India (CCI). Now paving the way for fast-tracking consolidation amongst the PSU banks, the government has exempted mergers of nationalised banks from seeking permission/approval from CCI.

SNIPPETS- 19/08/2017

1. 9,000 WILFUL DEFAULTERS OWE Rs 92,000 CRORE TO PSBs’: Public Sector banks have reported 20% jump in the outstanding loans by wilful defaults. Nearly 9,000 wilful defaulters collectively owe an amount of Rs 92,000 crore to these banks as on 31/03/2017. There has been an increase of 10% in the number of loan defaulters over the year.

2. BAD LOAN RECOVERIES BY BANKS: It was a mixed bag for bad loan recoveries by public sector banks in the June quarter of the present financial year. While SBI has reported higher recovery, banks like Punjab National Bank, Canara Bank and Union Bank of India have shown a dip in recoveries. Whereas most of the Private sector banks have shown healthy growth in recoveries of bad loans. Axis Bank’s recoveries and up gradation has doubled in quarter one of the present financial year.

3. KARUR VAISYA BANK IS THE FIRST PRIVATE SECTOR BANK TO START AADHAAR ENROLMENT CENTRE: Following the directives given by UIDAI last MONTH, Karur Vaisya Bank has unveiled its first Aadhaar enrolment centre in one of its branch, thus becoming the first private sector bank to start a Aadhaar enrolment centre. The bank official said that once the required documents are submitted, the enrolment or any updation can be completed within 15 minutes.

4. UNUSUAL DEPOSITS WORTH Rs 1.7 LAKH CRORE DURING DEMONETIZATION: Unusual cash deposits totalling to Rs 1.6 to 1.7 lakh crore were made during the demonetization period says a research paper posted by RBI. This will be dealt firmly by the tax department.

5. DIGITAL WALLET COMPANIES WAIT FOR RBI NORMS: The Digital wallet industry is eagerly waiting for the latest release of fresh guidelines by RBI for the Prepaid Payment Instruments (PPIs). While the Central Bank is expected to open up fresh applications for PPI licences, the industry is also keeping an eye open for Know-Your-Customer (KYC) norms and cyber insurance for wallets. The top executives of the wallet industry have met the regulator and have voiced their suggestions and are now waiting for the final move from RBI.

6. RBI PLANS TO EXTEND CYBER AUDIT TO ALL THE BANKS: The Reserve Bank of India is planning to conduct cyber-audit of all the banks in the country instead of just a few bigger banks as it did in the past, a policy shift in the wake of an increase in cyber-attacks. RBI had created a cyber-cell under the department of banking supervision and used to conduct a separate IT audit for three banks, which was increased to 30 banks last year and this year RBI is covering all the banks for separate cyber-security and IT audit.

7. RBI ASKS BANKS TO ENABLE ACCOUNT NUMBER PORTABILIYTY AT THE EARLIEST: RBI Deputy Governor Mr. S S Mundra has asked banks to enable account number portability among banks at the earliest which will be a far reaching step towards enhancing competition and improving customer service. By enabling number portability a scenario will emerge wherein the unsatisfied customers would be able to walk out of the bank silently and thus banks will be compelled to provide better customer services.

SNIPPETS- 12/08/2017

1. AADHAAR MAY BECOME MANDATORY FOR FINANCIAL MARKET: Aadhaar number may soon become mandatory for buying shares and mutual funds. The government and SEBI are planning to link Aadhaar to financial market transactions which will help the government to plug taxes and curb black money. The government has already mandated that Aadhaar be linked to PAN, Bank Account and Mobile phone numbers.

2. GOVERNMENT TO INITIATE BANK MERGERS AFTER QUARTER-1 RESULTS: The Finance Ministry is expected to initiate the process of consolidation of public sector banks once the first quarter financial results of the current fiscal have been announced. There are factors like regional balance, geographical reach, financial burden and smooth human resource transition that are to be considered before taking the final decision. This is going to be a complex exercise for the Finance Ministry.

3. OVER 11.44 LAKH PAN CARDS DEACTIVATED: As per the rules it is “ One Person One PAN” which is the guiding principle for allotment of PAN. More than 11.44 lakh Permanent Account Numbers (PAN) have been deleted or de-activated in cases where multiple PANs were allotted to one person.

4. RBI INSTRUCTS BANKS TO ENSURE SAFETY OF CUSTOMERS’ LOCKERS: The Reserve Bank of India has asked banks to ensure customers’ lockers remain safe and there is no negligence that could render banks liable to claims by locker holders. The banks have been advised by RBI that it would be the responsibility of the banks to ensure safety of lockers and there is no negligence in the matter of safeguarding the lockers.

5. MERGER OF SMALL BANKS MAY HURT MSME SECTOR: Merger of smaller banks into big will hurt credit sourcing for MSMEs (Micro,Small & Medium Enterprises). The large banks will be reluctant to lend to these MSMEs as they are less keen on small sized loans. Their services will be less personalised and there will be more fees attached. This is as per the report from financial services firm- Resurgent India. MSME sector, which provides bulk of employment, accounts for 45% of India’s manufacturing, and nearly 8% of the country’s GDP.

6. RBI TELLS BANKS TO GO FOR PERIODIC VULNERABILITY TEST FOR CYBER SECURITY: Cyber security preparedness is a continuous process and the RBI has asked banks to periodically conduct vulnerability test. This is the result of the recent cyber-attacks and as India is gearing up for cashless economy, the cyber security plays an important role.

7. MONEY FLOW INTO FINANCIAL MARKETS INCREASED, POST DEMONETIZATION: Post demonetization, there has been visible channelizing of money towards financial assets like mutual funds, capital market and insurance. This was observed and stated by Mr. Viral Acharya, Deputy Governor of RBI. Mr. Acharya in his observations said that something has changed as black money transactions are not easy now and the money is flowing towards financial market, which is a positive sign.

8. AHEAD OF FESTIVE SEASON, ICICI BANK INTRODUCES INSTANT CREDIT CARD: Considering the demand due to the forthcoming festive season, ICICI Bank has introduced an instant credit card which can be availed online by its customers and start shopping on e-commerce sites even before the card is delivered to him/her.

SNIPPETS- 05/08/2017

1. SBI CUTS INTEREST RATE ON SAVINGS BANK DEPOSITS: State Bank of India has introduced a two-tier interest rate structure on savings bank deposits with effect from July 2017. A savings bank account with a balance of over Rs 1.00 crore will earn an interest of 4% per annum where as the ones with less than 1 crore balance will earn interest of 3.5% per annum. SBI in a press release has said that the decline in inflation rate and high real interest rates are the prime factors for the said revision.

2. RBI SLAPS 1 CRORE PENALTY ON UNION BANK OF INDIA FOR "KYC" NON COMPLIANCE: The Reserve Bank of India has imposed a penalty of Rs 1 crore on Union Bank of India for non-compliance with the directions on Know Your Customer (KYC) norms. RBI said it had received a complaint regarding huge cash withdrawals in in certain accounts and after verifying the documents regarding the complaint, the penalty has been imposed.

3. GOVERNMENT WANTS TO LINK AADHAAR WITH DRIVING LICENCE: The Centre is pushing for making Aadhaar mandatory for securing a driving licence and vehicle registrations. This will arrest the bogus licence menace and reduce instances of car thefts. It will create a national database and make inter-state transfer of vehicles easier and less time consuming.

4. NCLT CLEARS WAY FOR INSOLVENCY PROCEEDINGS AGAINST ESSAR STEEL: The Ahmedabad bench of National Company Law Tribunal (NCLT) has admitted an insolvency petition against Essar Steel India Ltd, paving the way for insolvency proceedings to commence against big ticket defaulters under the newly enacted Insolvency and Bankruptcy Code (IBC) 2016. State Bank of India and Standard Chartered Bank are the two banks who have filed independent petition to initiate insolvency proceedings against Essar Steel. Essar Steel has a total debt of Rs. 45,000 crore on its books.

5. AFTER ESSAR STEEL, BANKS NOW SET EYES ON VIDEOCON’S HUGE DEBT DEFAULT: A SBI- led consortium of lenders has ordered a forensic audit of Videocon Industries to find out whether the company defaulted because of adverse business conditions or financial mismanagement. KPMG, one of the Big Four Audit firms, will conduct the forensic audit. The move is preliminary to the start of debt restructuring after Videocon defaulted on loans worth Rs. 43,000 crores.

6. PSU BANKS NEED Rs. 1.9 LAKH CRORE CAPITAL BY MARCH 2019: As per a report by S&P Global Ratings, PSU banks will need at least Rs. 1.19 lakh crore additional capital by March 2019. Weak profitability and rising capital demands from Basel III implementation and substantial haircuts (settlements) on NPAs will continue to pressure these banks.

7. RBI RATE CUT IS UNLIKELY TO TRANSLATE INTO LOWER BORROWING COSTS FOR CUSTOMERS: The Reserve Bank of India’s decision to cut benchmark lending rate by 25 basis points is unlikely to translate into lower lending rates for the customers. SBI Chairperson Ms Arundhati Bhattacharya says that there is not much scope for lending rates to come down further, as the rates are low enough and the banks have already passed on the benefits to the customers.

8. RBI WIDENS BASEL-III COMPLIANT ASSET BASE OF BANKS: Ahead of the implementation of stringent capital requirements under the Basel-III regime from 2019, RBI has amended a number of previous regulations on the same, paving the way for banks to shore up their capital buffers and improve liquidity coverage ratio.

SNIPPETS- 29/07/2017

1. CORPORATE VENDORS UNDER I-T LENS: The Income Tax department has asked large corporate entities, including multinational firms to furnish details of employees not on the payrolls of the company who are being paid separately. This is to check whether they are filing tax returns after tax deductions at source (TDS). Many lawyers, chartered Accountants, Doctors, consultants and designers etc who are not on the payrolls of the company have not filed their I-T returns fearing they will have to disclose their full income.

2. BAD LOAN CRISIS—CRACKDOWN BY BANKS SENDS DEFAULTERSSCRAMBLING TO OFFER ONE TIME SETTLEMENT: The tough stance taken by the government and RBI to end the bad loan menace in the banking industry by instructing bankers to take extreme steps towards defaulters has caught many borrowers by surprise and they are scrambling to put together resolution plans to avoid harsher penalties including insolvency proceedings. This is a welcome change as seen by bankers as customers whose accounts are classified as Non-performing Assets are approaching bankers with proposals to resolve the issue in a time bound manner.

3. DIGITAL PAYMENTS—ONLY 7% INCREASE IN TRANSACTIONSTHROUGH DEBIT/CREDIT CARDS: Transactions through debit/credit cards rose merely by 7% post demonetization, as against a surge of over 23% in overall cashless transactions. Bankers say that there is lot of scope for further improvement in such transactions.

4. NO GST ON HOUSING SOCIETY RWA WITH Rs 5,000/- MONTHLY SUBSCRIPTION: Services provided by housing societies resident welfare associations ( RWA) will be required to pay GST on monthly subscription/contribution charged from its members if such payment is more than Rs.5,000 per member and the annual turnover of RWA is more than Rs. 20 lakh. However, the contribution of Rs. 5,000 is exclusive of any municipal taxes.

5. AADHAAR ENROLMENT FACILITY IN BANKS TO START SOON: The Unique Identification Authority of India ( UIDAI) has asked private as well as public sector banks to set Aadhaar enrolment facility in at least one out of 10 branches in the coming weeks. Suitable changes have been made recently in Aadhaar regulations to facilitate this. There are around 1,20,000 bank branches spread across the country and by this move 12,000 Aadhaar enrolment and updation centres will be set up.

6. 10 PUBLIC SECTOR BANKS HAVE SUBMITTED TURNAROUND PLANS: As many as 10 public sector banks have submitted their turnaround plans to the government. It is decided by the government that any future capital infusion to the banks shall be subject to achievement of select agreed upon milestones as per the turnaround plans submitted. Banks that will not be able to deliver on the agreed upon turnaround plan for a period of two years will be identified as banks eligible for alternative recourse.

7. AS COST OF EDUCATION RISES , UNPAID STUDENT LOAN SURGE: The cost of education in recent times has escalated but at the same time Non-performing assets (NPAs) within education loan book of the system as a whole has ballooned 21 % in the reporting year. Despite this increasing NPAs, banks continue to lend for higher education

SNIPPETS- 22/07/2017

1. FOR THE 12 BANKRUPTCY CASES BANKS WILL HAVE TO TAKE A HIT OF 18,000 CRORE: According to India Ratings Research report, Banks need to provide an additional Rs. 18,000 crore in Financial Year 2017-18 towards the 12 accounts identified by Reserve Bank of India for reference to the National Company law Tribunal ( NCLT) under the Insolvency & Bankruptcy code. Banks have been given 6 more months to finalise the resolution plans for other NPA accounts (around 500 more accounts). If no resolution plans emerge then banks will have to begin insolvency proceedings on these accounts as well, which in turn would mean huge provisions in Financial year 2018-19, which will impact badly on the profitability of banks.

2. BANKS TO FACE Rs. 2 LAKH CRORE HIT FROM TOP 50 STRESSED ACCOUNTS: As per CRISIL Ratings Agency estimation Banks may have to write off 60% of the value of bad loans from their 50 large stressed asset accounts or take a hit of Rs. 2.4 lakh crore. The 50 top stressed companies, which account for Rs. 4 lakh crore in stressed loans and account for nearly half of the total NPAs in the banking industry.

3. RBI NOT REVIEWING 90 DAY BAD LOANS CLASSIFICATION NORMS: The Finance Ministry has said the Reserve Bank of India is not examining any proposal to extend the 90-day period for classification of Non-Performing Assets. The prudential norms are one of the building blocks for financial soundness of Indian Banks and any deviation would render the banking system weaker. Further, any delay in recognition of deterioration in asset quality removes the pressure on banks to deal promptly with the problem.

4. RBI ALLOWS NBFCs TO OFFER NEW PENSION SCHEME: The Reserve Bank of India has allowed Non-Banking Finance Companies (NBFCs) to sell and market the new pension scheme (NPS). NBFCs with an asset size of Rs. 500 crore and above that have made a net profit in the preceding financial year will be permitted to sell NPS to their clients after registration with pension regulator.

5. RBI TO SET UP PUBLIC CREDIT REGISTRY TO IMPROVE CREDIT CULTURE: The Reserve Bank of India is planning to set up a high level Public Credit Registry (PCR) to help control loan defaults, improve credit culture and promote financial inclusion. RBI said such a registry is the need of the hour which will help the efficiency of financial market, improve ease of doing business and help control delinquencies.

6. IDFC-SHRIRAM GROUP AGREE TO MERGE: IDFC Ltd, a domestic infrastructure lender and Primal group financial services major Shriram Group have agreed to merge and thus create the largest retail- focussed bank in the country. A formal merger will take place in 12 months if all goes well as per the proposed plan. IDFC Ltd will be the holding company of the merged entity.

7. GST IMPACT—DISMANTLING OF CHECK POSTS SAVE 24-36 HOURS OF TRUCKING TIME: The Goods and Service Tax (GST) is saving fleet owners between 24 to 36 trucking hours after dismantling of check posts of VAT, Octroi and other local taxes. Besides this it also ended huge amount of corruption which was taking place at each of the check posts.

SNIPPETS- 15/07/2017

1. NEW ACCOUNTING STANDARDS MAY HIT BANKS’ LENDING TO INFRA/REALTY FIRMS: The adoption of new Indian Accounting Standards (IndAS) might compel banks to cut down on the quantum of loans they normally sanction to firms involved in Real estate and Infra Sectors. IndAS will result in a change in Debt-to Equity ratios of such firms as capital structures and financial instruments get reclassified. This will in turn increase the debts of the companies thus compelling banks’ to reassess the way they lend to these companies.

2. SBI URGES THE GOVERNMENT TO EASE PROVISIONING NORMS: State Bank of India has written to the finance Ministry raising concerns over stringent provisioning norms for companies under the Bankruptcy code, which will eat into its profit margins. Banks are reluctant to meet these norms and hence SBI has sought the ministry’s intervention on the matter.

3. AXIS BANK LAUNCHES “SUPER BIKE LOANS” : As the Higher Engine Displacement- High End models in bikes is catching the fancy of Indian consumer, AXIS Bank has introduced a special loan product – “ Super Bike Loan” which offers funding of 95% of the bike cost. This includes the cost of the bike and the accessories also. The rate of interest will be between 10 to 11% per annum. These bikes come with a price tag of Rs. 5 to Rs 50 Lakh. The segment had witnessed a sale of over 3,000 units last year.

4. SBI HAS STARTED TO OFFER GST-READY SOLUTIONS TO ITS CUSTOMERS: State Bank of India has announced its Goods & Services Tax ready solutions, including the introduction of online payment through internet banking and debit cards. SBI customers can deposit GST up to Rs.10,000/- in cash, cheque or draft from any of the SBI branches across the country.

5. GOOGLE COMPLETES UPI TESTING, AWAITS RBI NOD TO LAUNCH SERVICE: Technology giant Google has completed the testing of its Unified Payments Interface (UPI) payment service and is awaiting RBI’s approval. The National Payments Corporation of India ( NPCI), the umbrella organization for all retail payments system in India also said that Facebook and Whatsapp too were in discussion with it regarding rolling out their own UPI payment services. Very soon these three big technology giants will start their UPI operations.

6. DIRECT SELLING AGENTS UNDER WATCH IN HOME LOAN TRANSFER CASES: To check possible instances of mis-selling, the housing finance regulator- NHB is examining data on home loan transfers from one bank to the other and may issue guidelines for direct selling agents ( DSAs) in the interest of the borrowers. NHB wants to check whether the balance transfers are genuine transactions or the agents are playing a game on it. The ultimate goal of NHB is to bring in a very well trained set of Agents in the interest of the borrowers.

7. CURRENCY BAN IS NOT A GROUND FOR BANKING OMBURDSMAN TO HANDLE COMPLAINTS: The Reserve Bank of India has clarified that customer complaints regarding the problems like cash withdrawal and exchange of notes faced during demonetization period cannot be entertained under the Banking Ombudsman scheme. Banking Ombudsman Scheme 2006 specifies 27 grounds of complaints under which complaints can be lodged and complaints related to demonetization is not a ground of complaint specified under the scheme.

SNIPPETS- 08/07/2017

1. CUSTOMERS SHOULD REPORT FRAUDULANT TRANSACTIONS WITHIN 3 DAYS TO AVOID LOSSES: The Reserve Bank of India had earlier capped the customer liability at Rs.25,000 if they reported the unauthorised transactions within 7 working days. Now further modifying this clause, RBI said that customers can’t be made liable at all if they notify the unauthorised transactions within 3 working days. These rules will be applicable for third party breach, where deficiency lies neither with the bank nor with the customer but lies elsewhere in the system.

2. RBI MAKES MOBILE PHONE MANDATORY FOR DOING ELECTRONIS BANKING TRANSACTIONS: The Reserve Bank of India has said that owning a mobile phone is mandatory for customers wishing to do electronic banking transactions and has instructed banks to make SMS alerts mandatory in such cases. It has instructed banks not to offer electronic banking facility to customers who do not provide mobile numbers to the bank.

3. OVER 90% INDIAN CUSTOMERS STILL PREFER BRANCH BANKING OVER ONLINE BANKING: While the government has been pushing for cashless transactions and asking the public to go online when it comes to banking, a new study has revealed that 94% of retail banking customers have visited the bank branches at least once in the past 12 months. Most banking relations still begin and continue at the branch. However, there is great potential for banks to move more into digital space.

4. IT IS NOT MANDATORY TO LINK YOUR BANK ACCOUNT WITH AADHAAR CARD: There is no notification from RBI to link a bank account with Aadhaar number. By collecting Aadhaar details from their customers the banks are trying to pre-empt the possibility of it becoming compulsory in future. Another reason why banks are linking Aadhaar with the bank accounts is to promote Aadhaar enabled transactions without the use of debit or credit cards.

5. CREDIT CARD BILL PAYMENT EXEMPT FROM CASH DEALING LIMIT: The Finance Act 2017 has banned cash transaction of Rs. 2 lakh or above with effect from April 1, 2017. However restrictions on cash dealings of Rs. 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments. This has been clarified by the revenue department.

6. HOW “BHIM APP” IS TRYING TO CATCH UP WITH OTHER MOBILE WALLETS: The Bharat Interface for Money ( BHIM) has seen a great many downloads of around 19.16 million since its launch but only 5.1 million users are able to link their bank accounts with the App. In contrast other payment apps like Oxigen wallet currently has 30 million active users and Mobikwik has 55 million active users. Recently BHIM has come up with additional features like Aadhaar Pay, Referral bonus and cash back offers to make it more popular.

7. BANKING STAFF THREATENS STRIKE ON AUGUST 22 OVER MERGERS AND NPA ISSUES: Employees of PSU banks are going on one day strike on August 22nd against the government proposal to merge state-owned banks. Besides, they want the government and RBI to declare wilful default as a criminal offence and desist from writing off the corporate Non-Performing Assets (NPAs) or bad loans. They also have urged the government to look into the GST rates on bank service charges because of which the service charges have increased, which in turn has burdened the customers.

SNIPPETS- 01/07/2017

1. RBI STARTS THE PROCESS OF PRINTING Rs. 200 CURRENCY NOTES: Reserve Bank of India has started the process of printing new Rs.200 currency notes. This appears to be the last exercise under the re-monetization steps taken by the government and this step is taken to help ease consumer transactions. For day-to-day transaction purposes, the introduction of Rs.200 notes will add to the comfort of the public at large.

2. RBI SAYS- BANKS NOT RESPONSIBLE FOR THEFT FROM BANK LOCKERS: Banks are not liable to compensate its customers in case of theft or burglary in safe deposit lockers. This is revealed in an RTI response by RBI and 19 PSU banks. Some banks, in their locker hiring agreements, have made it clear that any item stored in the locker is at the customer’s own risk and he/she may insure the same in his/her own interest.

3. BANKS FACE 60% “HAIRCUT” ON TOP 12 BAD LOANS: Dragging defaulters to the National Company Law Tribunal ( NCLT) and initiating insolvency proceedings will take heavy toll on bank finances. According to CRISIL, banks will have to sacrifice nearly 60% of the value of the loans extended to 12 indebted companies which the banks have referred to the NCLT at the instance of RBI.

4. RBI PROVISIONING “DIKTAT” SHOCKS THE BANKS: The Reserve Bank of India shocked the banks this week by demanding a steep hike in provisioning requirements for loans being referred to the bankruptcy courts, a move likely to take a Rs. 50,000 crore toll on their earnings this fiscal. RBI has instructed banks to set aside 50% of the loan amount as likely losses for all cases referred to the insolvency process. RBI also said that provisioning should be 100% in those cases that do not get resolved in the initial mandatory period for restructuring and instead are forced into liquidation. But banks have been given time of three quarters to spread the provisioning requirements from June 2017 till March 2018.

5. RBI ASKS BANKS TO RESOLVE 55 DEFAULT CASES IN 6 MONTHS OR FACE IBC: The Reserve Bank of India has asked banks to resolve 55 high value cases of bad loans within 6 months or face the prospect of being directed to go in for the new insolvency resolution mechanism as a part of the strategy to tackle the bad loans scenario on a war footing basis.

6. FINANCIAL YEAR LIKELY TO BE CHANGED FROM 2018: The financial year in India could commence from January instead of April from the year 2018. The government appears set to make the historic transition to end the 150 year old tradition. Accordingly, the next budget could be presented by the centre in November this year.

7. AADHAAR-PAN LINKING MANDATORY FROM JULY 1st: Finance Ministry has made it mandatory to link Aadhaar with PAN Number. Individuals having PAN No. will have to link it to their existing Aadhaar Number from July 1st onwards. Every person who has been allotted PAN shall intimate his Aadhaar number to the tax department.

SNIPPETS- 24/06/2017

1. PASS ON THE GST BENEFITS TO CONSUMERS OR GET LICENSE SCRAPPED: Any business entity that fails to pass on the benefit it derives from lower taxes under GST regime to its consumers, faces penalties and cancellation of license under the new antiprofiteering rules. The new National Antiprofiteering Authority would be empowered to force reduction in the prices to the extent of lowering of taxes, and impose penalty or even cancel the registration under the Central GST Act in case the benefit is not passed on to the consumers.

2. SUPREME COURT RULING ON AADHAAR-PAN LINKING AND CBDT CLARIFICATION: Further to the ruling by Supreme Court ruling on the constitutional validity of Aadhaar-PAN linking provision, the Central Board of Direct Taxes (CBDT) has clarified that every tax payer has to quote his Aadhaar number /Aadhaar enrolment ID while applying for obtaining PAN card number and also while filing his/her tax returns from July 1st 2017.

3. RBI INSTRUCTS BANK TO PROVIDE ADEQUATE TRANSACTION DETAILS IN PASSBOOKS: The Reserve Bank of India has instructed all banks to provide “adequate details” in the passbooks and account statements so that the customers can cross check the entries easily. RBI has advised banks to avoid inscrutable entries in the passbooks /statement of accounts and ensure that brief and intelligible particulars are entered with a view to avoid inconvenience to the customers.

4. SEBI RELAXES NORMS FOR LENDERS BUYING STAKE IN DISTRESSED COMPANIES: Securities & Exchange Board of India (SEBI) has relaxed the norms for lenders to purchase stakes in distressed companies, exempting them from making open offers for shareholders. The relaxation would be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution. SEBI said this is aimed at facilitating “turnaround” of listed companies which are in distress which will benefit the shareholders and the lenders.

5. NO TIMELINE ON IDENTIFYING ADDITIONAL LOAN DEFAULETERS: The RBI Deputy Governor has said that there is no specific timeline set for banks to identify additional defaulters on which bankers would need to start bankruptcy proceedings. Earlier this week the RBI had identified 12 largest loan defaulters to pursue bankruptcy proceedings against them.

6. GOVERNMENT IN TALKS WITH RBI TO DEFER BASEL-III NORMS FOR BANKS: The RBI has laid down norms for implementation of international capital norms or “BASEL-III” norms for Indian Banks by March 2019. According to these norms the banks have to maintain a minimum common equity ratio of 8.5% and total capital ratio of 11.5% by March 2019. However banks are struggling to maintain these ratios as they are saddled with huge bad loans scenario. Considering the current bad loan scenario, the government is in discussion with RBI to explore the possibility to defer the full implementation of “BASEL-III” norms.

7. RECORD INCOME TAX COLLECTIONS THIS YEAR: Net Income Tax collection till June 15th 2017 grew at a healthy 26.2% to Rs. 1,01,024 crore from across the country. Last year up to June 2016 the tax collection was Rs. 80,075 crore.

SNIPPETS- 17/06/2017

1. FARM LOAN WAIVERS DISRUPT CREDIT DISCIPLINE: Farm loan waivers are the populist actions and lead to disruption of credit discipline among borrowers. Frequent farm loan waiver schemes will have a negative impact as farmers expect future loan waivers from time to time and thus delay or stop repaying the loans. Frequent occurrence of such populist actions (loan waivers) may lead to impaired credit repayments and thus reduced credit availability to farmers.

2. RBI TO DIRECT BANKS TO START BANKRUPTCY PROCEEDINGS AGAINST 12 BIG DEFAULTERS: The Reserve Bank of India has identified 12 of the largest loan defaulters and has instructed the bankers to initiate bankruptcy proceedings against them. The move comes about a month after the government gave RBI greater power to deal with bad loans, including banks to initiate an insolvency resolution process in case of a default. These 12 accounts constituted about 25% of the overall gross Non-Performing Assets (NPAs), and have been identified, as the committee focussed on those accounts owing more than Rs.5,000 crores, out of which more than 60 % of the loan had been classified as NPA.

3. ONLINE BANKING TO KILL PHYSICAL BANKING IN 5-6 YEARS: As per NITI Aayog CEO Mr Amitabh Kant, low cost internet based banking transactions and business efficiency due to technology advancements are expected to kill the physical banking trend in 5-6 years. In 5-6 years it will be very difficult for physical banks to survive because the cost of physical banks will be enormous. This cost will be very huge to bear for the banks compared to the cost of an online fintech company and their ability to do data analysis and providing credit.

4. NPCI TO LAUNCH RUPAY CREDIT CARD BY JULY: The National Payments Corporation of India (NPCI) has said it will launch a RuPay credit card by July this year. As many as 56 different banks have shareholding in NPCI despite it being a non-listed entity with no dividend declarations. Presently there are 241 million RuPay debit cards in circulation in India comprising 35% of the card base in India.

5. RBI EXAMINING RELAXING BAD LOAN CLASSIFICATION LIMIT OF BEYOND 90 DAYS FOR SMEs: Currently an account turns into a Non-Performing Asset (NPA) or bad loan if it is not serviced for 90 days. In case of Small Businesses and SMEs, their receivables usually come late (absence of vibrant factoring or trade receivable market) and once this cycle is delayed, they miss the 90 day period of repayment, they fall into NPA category and coming out of NPA category is very difficult for these SMEs. Some people have made a true representation in this matter to the Ministry of Finance and hence RBI is looking into it, to extend the classification norm of 90 days period for Non-Performing Assets to help Small and Medium Enterprises ( SMEs).

6. BHARAT FINANCIAL TO ROLL OUT 2 LAKH “KIRANA POINTS” IN 16 STATES: Bharat Financial Inclusion (Earlier known as SKS Microfinance) is planning to launch 2 lakh “Kirana Points” across its network in 16 states in partnership with leading banks. With introduction of Kirana Points, the company’s borrowers can walk into the nearest kirana point store and make basic financial transactions like repaying loan, deposits and withdrawals from savings account and make bill payments. For this the company will appoint agents to set up kirana points.

7. PE FIRMS, NBFCs FIND INVESTMENT OPPORTUNITY IN AFFORDABLE HOUSING: Private Equity and Non-Banking Financial Companies (NBFCs) are looking at affordable housing projects. A few Institutions have already invested money in affordable housing projects, bringing in the much needed liquidity. This is the result of the government’s thrust on the segment and recently accorded infrastructure status.

SNIPPETS- 10/06/2017

1. RBI DIRECTS BANK BRANCHES TO COMPLY WITH PPO ORDER: The Reserve Bank of India has directed all the bank branches to record Pension Payment Order number (PPO) in the passbooks of pensioners to avoid any hassle in case the PPO is lost. This is affected to nullify the difficulties reported by pensioners or their family pensioners to get duplicate PPO.

2. SBI SNAPS “LINE OF CREDIT” TO STRESSED TELECOM COMPANIES: State Bank of India has cancelled existing but unused credit lines to some financially weak telecom companies, following the banking regulator’s direction to make immediate provisions against the credit given to telecom sector including their standard assets. As per the line of credit, a borrower can draw from the credit as per his requirements. By scrapping the facility, bank will be able to bring down its requirement of capital that otherwise needs to be set aside as provisions. SBI is also waiving the commitment charges.

3. BANKS NEED Rs.95,000 CRORE ADDITIONAL CAPITAL OVER NEXT TWO YEARS: As per Moody’s Investors Service report, new stressed assets of Indian Banks will increase through 2019 and capitalisation will remain a key credit weakness for state owned banks. The asset quality outlook for banking sector will remain weak as Gross Non Performing Assets (NPAs) or bad loans will increase to around Rs. 8.5 lakh crores by the end of financial year 2017-18. Since Public Sector Banks (PSBs) have limited ability to raise external capital, infusion by the government remains the only viable source for shoring up capital base. As per the plan, the PSBs need to raise Rs.1.10 lakh crores from markets to meet Basel III capital adequacy norms.

4. IDBI BANK TO SET UP SEPARATE DEPARTMENT TO MANAGE BAD LOANS: IDBI Bank has created a special department for managing bad loans and monitoring credit after taking a serious hit as RBI has put the bank under PCA (Prompt Corrective Action) and ICRA has downgraded the bank’s credit rating. This department will have experienced officials who will give focussed attention to each case. Besides this, the bank also aims to raise around Rs. 5,000 crores by selling its non-core assets in the current fiscal.

5. EQUITY MUTUAL FUNDS INVESTMENTS ACHIEVE 2 YEAR HIGH: Equity Mutual Funds saw an inflow of Rs.10,790 crore in May 2017, making it the highest in nearly two years. This is the 14 th straight month of inflows into equity schemes. The strong inflows have pushed the asset base of equity mutual funds by 2.6 % in May 2017 from the preceding month.

6. BANK NPAs ARE ROADBLOCKS TO GROWTH: As per the trade body ASSOCHEM, Non- Performing Assets of Indian Banking sector are one of the biggest roadblocks for the growth of the economy. It has urged the RBI to make NPA norms more flexible and take pragmatic approach while resolving the complex issue of NPAs of banks so that the banks can be nursed back to health.

7. SBI OFFERS FREE CREDIT CARDS TO THOSE WITH NO CREDIT HISTORY: If you don’t have a credit history, banks are generally reluctant to offer you a credit card. But to help such customers and increase the card penetration in India, SBI has come out with a credit card “ UNNATI” which will be available to its customers even if they do not have a credit history provided they have a minimum deposit of Rs 25,000 with the bank. Any SBI customer with or without a credit history can apply for the card. The card will be available free of cost for the first four years.

SNIPPETS- 03/06/2017

1. SBI WANTS DEPARTMENT OF TELECOM TO PROTECT BANKING SECTOR’S Rs.4 LAKH CRORE EXPOSURE TO TELECOM SECTOR: Indian Banking sector has a huge exposure of nearly Rs.4 lakh Crore to the telecom sector. This could come under stress due to declining telecom revenues. Hence State Bank of India has written to the Department of Telecom to work out a bailout plan for the telecom operators, including deferred payment for spectrum and rationalising spectrum fees.

2. SOON YOU MAY SWITCH YOUR BANK ACCOUNT AND RETAIN YOUR ACCOUNT NUMBER: Every time you change your Bank, you will change your bank account number too as you will be allotted with a new number in the bank where you open an account. But very soon, like your mobile number portability you will be able to retain your old bank account number even if you change your bank. With the technological advancements in the payment system, account number portability will be a reality in near future.

3. SENSEX WILL TOUCH 32,200 MARK BY MARCH 2018: As per Citigroup Global Markets, Sensex will touch 32,200 by March 2018. The firm said that implementation of Goods and Service Tax (GST), strong flows from domestic mutual funds and foreign investors will push the share market index to 32,200 by March 2018. The firm believes that in this, the foreign investors are likely to impact the market’s direction considering their contribution of over 20%.

4. BANKS CAN CHECK 3 YEARS RECORD OF BORROWERS: Banks are now armed with more information than before on card holders. They can now tell which card holder is likely to default, and which defaulter’s case is worth to pursue and recover funds. A next generation algorithm enables banks to check customer transactions for the past three years across multiple banks and financial institutions and figure out which customer is undergoing a downturn as far as finances are concerned and who is improving.

5. BANKS WRITE OFF Rs.2.25 lakh CRORE IN FIVE YEARS: All scheduled commercial banks ( SCBs) wrote off Rs 2,25,180 crore of bad loans cumulatively in the last five years period till March 2016. SCBs represent all public and private sector banks, foreign banks, regional rural banks and some co-operative banks. These represent over 95% of total bank credit given.

6. RBI MAY HAVE A DEPUTY GOVERNOR FROM PRIVATE SECTOR FOR THE FIRST TIME: The government for the first time has advertised to choose a deputy governor for the country’s central bank. The government intends to include directors and consultants with significant experience in banking and financial markets. RBI has sought applications from candidates with over 15 years of experience in banking and financial market operations and they must also have been whole time directors or board members. This means potentially RBI may appoint a Deputy Governor from the private sector for the first time.

7. BANKS RECOVERED ONLY Rs.47,000 CRORE OF LOANS IN FY-2016-17: Gross NPAs of 37 listed banks were at a level of Rs 7.1 lakh crore as on March 2017. An analysis of the top banks of the country has revealed that these banks have managed to recover only Rs 47,240 crore in the financial year 2016-17 out of which Rs.16,000 crore was recovered in the last quarter of FY 2016-17. Among the PSU banks only Punjab National Bank and Canara Bank managed to deliver by reaching their targets. PNB recovered Rs.10,677 crore and Canara Bank recovered Rs.10,017 crore.

SNIPPETS- 27/05/2017

1. HDFC LTD, AMONG THE WORLD’S TOP 10 CONSUMER FINANCIAL SERVICES FIRM: Mortgage lender HDFC Ltd has been ranked 7th among the world’s top ten biggest and powerful companies in consumer financial services sector on Forbes list. American Express tops the list. In the regional banks category State Bank of India is ranked 20th.

2. RBI ALLOWS CO-OPERATIVE BANKS TO ISSUE MOBILE WALLETS: In a notification issued this week, the Reserve Bank of India has allowed co-operative banks to issue prepaid payment instruments like mobile wallets. Besides this, co-operative banks can also install ATMs and issue debit cards.

3. NOW BANKS FEAR LOAN DEFAULT BY COMMODITY COMPANIES: After infrastructure firms, now it may be commodity firms that may default on repayments of loans. Bankers estimate that at least a dozen companies in commodity sector that have got their debt restructured will fail to service their loans after being hit by sharp price movements.

4. IDBI BANK UNVEILS TURNAROUND PLAN: IDBI Bank has formulated a turnaround plan that includes raising of additional capital and selling non-core assets. The plan also includes curbing its rising corporate loan book and cutting costs. The bank is looking at all the avenues to improve its capital position and bring the bank on the recovery track.

5. RESERVE BANK OF INDIA CREATES POST OF “CFO”: The Reserve Bank of India is creating a post of a Chief Financial Officer ( CFO) and has sought applications for the said post. The CFO, who will be of the rank of Executive Director, will be responsible for accurate and timely presentation and reporting of financial information of the Central Bank and establish accounting policies and procedures and ensure compliance with regulations.

6. SMALL BUSINESSES SUFFER AS BRUISED BANKS RELUCTANT TO GRANT LOANS: Banks’ worsening asset quality has made them reluctant to grant new loans, especially to smaller businesses that are perceived as riskier. With the mountain of bad loans in Indian Banking system, the banks are reluctant to lend and this has badly affected the small and medium sized enterprises ( SMEs’). India has 45 million such small enterprises, accounting for 40% of gross domestic product. Smaller businesses also account bulk job creation.

7. INDIA’S MEGA REFORM –GST SET FOR JULY 1 ROLLOUT: The GST ( Goods and Service Tax) , set to be launched by the government from July 1 onwards will have tax rates of 5,12, 18 and 28% for various goods and services as announced by the government. Some tax experts feel that it could complicate compliance and leave businesses and services at the mercy of an intrusive tax bureaucracy.

8. YOU WILL HAVE TO SHELL OUT MORE FOR BANKING TRANSACTIONS FROM JULY: Transaction Fees in financial services are likely to become expensive after the implementation of GST. The government has put these services under the 18% tax bracket. These services were so far taxed at 15%, this means all the transaction fees will be costlier by additional 3%.

SNIPPETS- 20/05/2017

1. Rs 2.6 TRILLION OF BANK CREDIT MAY TURN BAD IN NEXT 12-18 MONTHS: Domestic rating agency India Ratings & Research has said that around 2.6 trillion (Rs 2.6 lakh Crores) of corporate and SME loans in the banking system may turn bad in the next 12 to 18 months. The report says that Indian banks are sitting on unrecognised stressed loans worth 7.7 trillion, out of which a potentially Rs 2.6 trillion of corporate and SME loans will be recognised as bad loans by fiscal 2019. If this happens, then banks are in for a tough time which will affect their bottom line very badly.

2. RBI EASES NORMS TO SET UP BANK BRANCHES: The Reserve Bank of India has eased the norms of setting up bank branches. Any bank outlets manned by either their staff or its business correspondents where services are provided for a minimum of 4 hours per day for at least 5 days a week will be called a bank outlet. And any branch opened in any tier III, tier IV centre of North-Eastern States, Sikkim and Left wing Extremism ( LWE) affected districts, then it will be considered as equivalent to opening a branch in unbanked rural centre( URC).

3. NBFCs’ CASH IN ON INDIAN BANKS’ BAD LOAN PAIN: With Indian Banks struggling with bad loans for the past two years, Non-Banking Financial Companies (NBFCs) have started lending rigorously as they are not as strictly regulated as banks. With this their share of total lending is rising year on year. With the stressed loans scenario, Indian Banks have become extremely cautiousin extending new credit. The process of approving loans has become lengthier and requires lots of paperwork. NBFCs’ SME loans though a bit costlier than those offered by banks, are processed more quickly and require less paperwork. The share of NBFC in overall loans will rise by 3% to nearly 18% over the next two years.

4. INDIA NOW WORLD’S MOST EXPENSIVE STOCK MARKET: With the markets soaring to record highs, India now is the world’s most expensive market. At a lifetime high of 30,658.77, the benchmark Sensex trades at a price-earnings multiple of nearly 18 times estimated one year forward earnings. India’s market capitalization hit $2 trillion for the first time ever.

5. SBI TO ALLOW ATM WITHDRAWALS VIA e-WALLET: State Bank of India will introduce new facility that would enable withdrawal of cash through ATMs using the bank’s mobile wallet. However, the bank will charge Rs 25 for each cash withdrawal from mobile wallet via ATM.

6. BANKING SCENARIO CHANGING RAPIDLY, THEY SHOULD HAVE “CFOs,” AND “CTOs”: With rapid changes in banking sector, the RBI has urged banks to appoint qualified chiefs to head critical finance and technology functions. The RBI has urged the banks to appoint Chief Financial Officers ( CFOs) and Chief Technology Officers ( CTOs) and has come out with minimum qualifications for these posts. It said a CTO should be an engineering graduate or hold Masters in Computer Applications, and the CFO should be a chartered accountant with an experience of 15 years in both the cases. It says a CFO and CTO in banks’ management structure would play a crucial role in strengthening and sustaining the banks’ risk governance framework.

7. LIC BOOKS 72% PROFIT AT Rs.19,000CRORES IN FY’17: Life Insurance Corporation of India has booked a whopping 72% more profit at Rs 19,000 crores in FY’17. LIC’s market share in terms of number of policies stood at 76.09%, nearly 2% increase compared to last year. It has increased its market share to 71.07% from 70.61%.

SNIPPETS- 13/05/2017

1. BANK UNIONS URGE THE GOVDERNMENT AND RBI TO REVEAL NAMES OF TOP CORPORATE WILFUL DEFAULTERS: All major Bank Unions have urged RBI and the government to reveal the names of top corporates who are “wilful-defaulters”. According to the Union, the position of non-performing assets ( NPAs) of public sector banks will worsen if names of top corporate wilful defaulters is not revealed. It said that the RBI and government should act fast in this aspect and along with naming them, they should be treated as criminal offenders. The large corporate NPAs account for more than 60% of public sector banks’ NPAs.

2. MINISTRY OF FINANCE SHOULD BE ABLE TO INFUSE $27 BILLION INTO PUBLIC SECTOR BANNKS BY 2019: As per a report by Bank of America Merril Lynch ( BOfMAL), a global financial services, the Ministry of Finance should be able to infuse $27 billion of capital into PSU banks by 2019. According to the report the PSU banks capital risks are overdone and the government is ready to address their asset quality to support recovery.

3. RBI GETS GOVERNMENT’S NOD TO PROCEED AHEAD ON INDIA’S BIGGEST BANKING CLEAN-UP: The Reserve Bank of India will begin the course of action on its biggest banking clean-up exercise as President Shri Pranab Mukherjee promulgated an ordinance, authorising RBI to issue directions to banks to initiate insolvency resolution process in the cases of loan defaults. This will help the banks in a big way to tackle toxic loans.

4. NEW FACILITY LAUNCHED TO LINK AADHAAR WITH PAN : The Income Tax Department has launched a new e-facility to link a person’s Aadhaar with PAN. This is a mandatory procedure for filing income tax returns. For this the department’s e-filingwebsite ( has created a new link on its home page making it easy to link the two unique identities of individuals. The link requires a person to punch in his/her PAN no , Aadhaar No and the exact name as given in the Aadhaar card. After verification from UIDAI, the linking will be done and if here is any mismatch then Aadhaar OTP will be required.

5. RBI DECLINES TO PROVIDE DETAILS OF NOTE BAN PROCESS: Six months after the demonetization, the Reserve Bank of India has declined to share details of the note ban process, saying it would be detrimental to the country’s economic interest. The Central Bank said that disclosing such details may impede future economic or fiscal policies of Government of India.

6. IDBI BANK PUT UNDER WATCH BY RESERVE BANK: Reserve Bank of India has initiated “prompt Corrective action” (PCA) on state owned IDBI Bank in view of its high non-performing assets (NPA) and negative return on assets. According to IDBI Bank officials this will not have any material impact on the performance of the bank and will contribute to improving internal controls of the bank and improvement in its activity.

SNIPPETS- 06/05/2017

1. ACCOUNTS WITHOUT "FATCA"CERTIFICATION TO BE BLOCKED FROM MAY 1st ONWARDS: Bank accounts of individuals and entities who have not submitted self-certification in order to comply with the provisions of the Foreign Account Tax Compliance Act ( FATCA), by April 30th will be blocked as per the directions of CBDT( Central Board of Direct taxes). This means those who have not complied with the said self-certification will not be allowed to transact any business in his/her account.

2. RBI, COMMERCIAL BANKS SPEND Rs. 21,000 CRORE ON CURRENCY MANAGEMENT: NITI Aayog CEO has said that the Reserve Bank of India and other commercial banks spend Rs. 21,000 crore every year on currency management operations. This roughly works out to 1.7% of GDP. But since India is moving towards cashless society, as the digital transactions rise in volumes, this cost will come down due to less printing, storing, transporting, verifying and replacing of currency.

3. RBI DEPUTY GOVERNOR Mr. VIRAL ACHARYA CALLS FOR "ALL-OUT" SALE OF SOME WEAK PUBLIC SECTOR BANKS: Reserve Bank Deputy Governor Mr. Viral Acharya has said that the time may have come to “Re-privatise” some of the weak public sector banks, as the government is taking steps to arrange funds to capitalise bad banks. According to Mr. Acharya, this would reduce the overall burden of the government to inject the capital and will help the government to preserve its hard earned fiscal discipline. This remark has raised a storm in the banking industry as most of the Bank Unions have strongly condemned the statement.

4. INCOME TAX NET WIDENS, NUMBER OF TAX PAYERS INCREASE BY NEARLY A CRORE: As the government turns the heat on black money, the number of people who filed tax returns increased by around 95 lakhs. The government has been looking to widen the tax net as barely a little over 3 % of the population is said to pay income tax. But this time around, as the government tightened the noose through demonetization and other measures, as many as 5.28 crore returns were e-filed in FY 16’, a rise of 22% over the preceding year.

5. FINALLY GOVDERNMENT PROPOSES ORDINANCE TO HELP BANKS DRIVE OUT OF NPA NET: Finally the cabinet has cleared the non-performing asset (NPA) resolution package that includes proposing an ordinance to empower the Reserve Bank of India to more effectively deal with bad loans. This move will pave the way for a long awaited initiative aimed at cleaning up the balance sheets of banks burdened with bad loans. This resolution has been sent to the President for approval and once this is approved the details of the resolution will be shared. Changes will be affected in Section 35A of Banking regulation Act and these changes will empower RBI to give directions to banks to effectively resolve NPA issues.

6. GOVERNMENT KEEN TO MOVE AHEAD WITH MORE PSB CONSOLIDATION: With the recent success of the merger of associate banks with SBI, the government is keen on further consolidation of some of the public sector banks with an aim to create only a few banks of global size and scale. The government will soon undertake the study on further consolidation of Indian Banks and look at various options for merger among the remaining 21 public sector banks.

SNIPPETS- 22/04/2017

1. BANK CREDIT SLOWEST IN FINANCIAL YEAR 2017: Growth in bank credit in financial year 2017 has turned out to be the lowest in over 60 years. The state owned banks have achieved a growth of only 5.1% in FY 2017. According to a report released by RBI a large part of the growth in lending has come in the last month of March 2017 when banks disbursed Rs 3.16 lakh crore. But even after this last minute surge in disbursements, loan growth for the whole year was Rs 5.1% as against 10.3% last year. As against this, the banks have ended the year with an 11.8% growth in deposits.

2. SECURITIES AND EXCHNAGE BOARD OF INDIA (SEBI) MAY ALLOW INVESTORS TO BUY MUTUAL FUNDS VIA DIGITAL WALLET: SEBI is considering a proposal to allow investors to buy mutual funds worth up to Rs 50,000/- through digital wallets to make it easier for investors to purchase these instruments, especially by young generation. This would help in speedy and easy transactions.

3. FINANCE MINISTRY EXPESCTS 6 BANKS TO RAISE FUNDS VIA FPO: The Finance Ministry is expecting that at least 6 banks will hit the capital market to raise funds and ease the pressure on the government of pumping in capital to these banks. The Finance Ministry Official states that it is up to the individual banks to decide to tap the capital market but they expect that at least half a dozen banks would take advantage of the opportunity and raise capital from the market.

4. GST: GOVERNMENT LOOKING TO KEEP SINGLE RATE FOR EACH PRODUCT GROUP TO AVOID COMPLEXITY: After having opted for multiple rates under the upcoming GST ( Goods and Service Tax) regime, government is looking in to the aspect of keeping single rate of tax on the same type of products to ensure that the tax structure does not get too complicated. For example all types of air conditioners/mobile phones/footwear etc., will attract single rate of tax. This kind of single rate structure for one product group will bring simplicity and make implementation easy.

5. SBI SAYS MERGER TO BOOST PROFIT BY Rs 3,000 CRORES IN THREE YEARS: SBI chairperson Ms Arundhati Bhattacharya has said that as a result of the merger of 5 of its associate banks with SBI ,there will be a boost to annual profits of as much as Rs 3,000 crore in three years. This is the result of cost and efficiency gains from absorption of associate banks. She has also predicted a turnaround in India’s weak credit cycle this financial year.

6. RBI INSTRUCTIONS FOR MORE PROVISIONING TO HIT BANKS’ PROFITABILITY : Reserve Bank of India has asked banks to increase provisioning for even standard assets as a precautionary measures. Due to this higher provisioning, profitability of the banks will take a hit. Particularly large banks like SBI, ICICI Bank, Axis Bank, Yes Bank, to name a few, are likely to set aside a higher amount than previously anticipated as some loans would have to be classified as non-performing.

SNIPPETS- 15/04/2017

1. RBI PROPOSES LONG-TERM FINANCE BANK: Reserve Bank of India has proposed setting up of Long-Term Finance Banks, specially to fund infrastructure and green field projects of industries. The minimum capital requirement will be Rs. 1,000 crore. As per the eligibility criteria, big Industrial houses cannot take more than 10% stake in these banks. These banks will be exempt from opening branches in rural and semi urban areas and will not lend to agriculture and weaker sections of the society.

2. BANKS GET TIME TILL JUNE 30 TO OBTAIN PAN FROM ACCOUNT HOLDERS: The tax department has given banks three more months till June 30th to obtain Permanent Account Number (PAN) or Form-60 from all account holders as it looks to tighten the grip around tax evaders. After an estimated Rs. 15 lakh crores in junked currency notes coming back into the banking system post demonetization, the tax department has started analysing the bank deposit trends.

3. NO DEADLINE FOR INTRODUCTION OF SHARIA BANKING IN INDIA: Islamic or Sharia Banking is a finance system based on the principles of not charging interest, which is prohibited under Islam. Responding to an RTI application, the RBI has said that it has not taken any steps to introduce “Sharia Banking window” in banks across India. However, on instructions from the central government RBI has examined the legal, technical and regulatory issues in this respect and has submitted a detailed report to the government.

4. FINANCE MINISTRY MAY ASK SEBI TO EXTEND PUBLIC FLOAT DEADLINE FOR PSBs: As per the Public Float guidelines of SEBI, government stake in Public Sector Undertakings should be 75% or less by August 2017. There are seven public sector banks where the government holding is above 75%, post second round of capital infusion in March 2017. Efforts are being made to reduce the government stake and to meet SEBI’s public float guidelines but in case some banks are unable to do so then the government will seek exemption in such cases.

5. AMAZON GETS RBI NOD FOR E-WALLET IN INDIA: Amazon India has received approval to launch its own digital wallet, paving the way for the online retailer to gain a slice of India’s fast growing digital payments business. Amazon’s new wallet service will try to address a vital problem in the world of payments as it will help customers to bypass the two-step authentication process for online payments using credit or debit cards thus making the process smoother for online shoppers.

6. RBI TALKS TOUGH ON WEAK BANKS: The Reserve Bank of India has come out with a revised set of “ Prompt Corrective Action” (PCA) – steps that it will take to get failed banks on track. Banks with unsound financials may face the prospects of a merger or winding up or even risk their board and management being sacked by RBI. These are some of the extreme measures/steps that the Central Bank has in mind for banks that badly breach the threshold for bad loans and minimum capital requirements. RBI has said that a shortfall of the common equity tier I capital by 3.625% from the prescribed limits, then that bank will be identified as a likely candidate for resolution through tools like amalgamation, reconstruction or even winding up. There are new trigger points for the net non-performing assets as well, which call for tougher actions.

SNIPPETS- 08/04/2017

1. RESERVE BANK OF INDIA TO ISSUE Rs.200 NOTES: The Reserve Bank of India has cleared a proposal to issue Rs.200 currency notes from June 2017. According to a report by India Today, the new note is already in the pipeline but RBI is only awaiting instructions from the Central government to go ahead with the printing procedures.

2. BAN ON CASH TRANSACTIONS OF ABOVE Rs 2 LAKH NOT APPLICABLE TO BANKS AND POST OFFICE WITHDRAWALS: The Finance Act 2017 provides that no one can deal in cash in excess of Rs 2 lakh in a single day, in respect of a single transaction or transactions relating to one bill/event or occasion. The Central Board of Direct Taxes has clarified that the ban on cash transactions of more than Rs 2 lakh a day will not apply to withdrawals from banks, post office savings account, and cooperative banks. The restriction will also not apply to any receipt by government, banking company, post office savings bank and cooperative banks.

3. BANKS WANT RBI TO RELAX NORMS FOR LOANS TO HIGHLY INDEBTED FIRMS: Effective April 1, banks have to set aside higher provisions for loans given to highly indebted firms. But, under the International Financial Reporting Standards ( IFRS) norms, banks will not get any relief on any kind of exposure to indebted companies. Hence banks have requested the RBI to give them more time.

4. GOVERNMENT ASSURES THAT THERE IS NO PLAN TO DEMONETISE Rs.2,000 NOTES: The government has assured that there is no plan to demonetise Rs.2,000 notes. The government has clarified that these are only rumours and has requested the public and the press not to go by such rumours.

5. LINK AADHAAR CARD AND PAN CARD: Both PAN Card and Aadhaar card are unique identification cards that serve as proof of identity that are necessary for registration and verification purposes. Now the government has urged all entities across the country to link the PAN cards with the Aadhaar Cards. By linking these two cards the government will be able to keep tabs on taxable transactions of a particular individual or entity. This will also not allow anyone to avail multiple PAN cards. Those who have linked their PAN and Aadhaar cards will be able to file their E-returns with ease and they no longer have to submit their IT acknowledgement to the department. There are rumours that linking of PAN card with Aadhaar card will be made mandatory in future.

6. NEFT TRANSFERS TO BE FASTER AS RBI CUTS CLEARANCE TIME: RBI has decided to slash the clearance time for National Electronic Funds Transfer (NEFT) which will enhance the efficiency and speed of the electronic payment system. Henceforth the NEFT settlement cycle will be reduced from hourly batches to half hourly batches, as a result of which the number of settlement batches will be 23, adding 11 more additional settlement batches.

7. PAYMENT VIA UNIFIED PAYMENTS INTERFACE (UPI) INCREASES: The value of transactions made through UPI channel in March 2017 rose by 25.7% over the previous month to Rs. 2,390 crores. The volume of such transactions jumped by 47.6%. Out of the 2.2 lakh transactions per day, around 80,000 to 90,000 transactions are done through BHIM app.

SNIPPETS- 01/04/2017

1. SBI TO CUT WORKFORCE BY 10%, TO REDUCE HIRING: Post-merger with 6 of its associate banks, SBI’s total workforce will see a reduction by at least 10% over next two years due to attrition, reduced hiring, announcement of VRS and digitisation. Currently the workforce of SBI is 2,07,000 and post-merger it will be 2,77,000. Post-merger the hiring will also be reduced by 50%. In 2016-17 the Bank hired 19000 people but post-merger it may hire only 5000-6000 fresh recruits for the next few years.

2. GOVERNMENT SET TO TARGET TOP WILFUL DEFAULTERS: The government could launch a crackdown on 5-10 big companies perceived to be among the top 50 wilful defaulters that account for a bulk of banks’ non-performing assets ( NPAs) . The finance ministry and RBI are stepping up efforts to tackle the issue of massive bad loans. Although a detailed final course of action is still in the process, the specific action plan will be decided in consultation with Prime Minister’s Office.

3. KOTAK BANK LAUNCHES “811- ZERO BALANCE, ZERO CHARGE ACCOUNT”: Private sector lender Kotak Mahindra Bank has announced the launch of “811” savings bank account scheme. This scheme is inspired by Prime Minister Sri Narendra Modi’s November 8 (Demonetization) move. “811” is part of Bank’s existing banking app. It will offer an interest rate of 6% on savings account balances with “zero balance with zero charges”. Only Aadhaar number and PAN no are required to open the account. It is an UPI enabled app, which offers over 100 features and is a combination of regular bank account, mobile account and digital wallet.

4. SBI LAUNCHES “UNNATI” CREDIT CARD SCHEME: State Bank of India has launched “ Unnati Credit Card Scheme” for its customers holding an account with a minimum balance of Rs 25,000/- . Only valid KYC documents and an application are needed to get the said credit card. The Bank’s aim is to bring more users in digital mode. For the first four years the bank will not charge any credit card fees.

5. BANKS LOOKING AT LOWERING SAVINGS ACCOUNT INTEREST RATES: With falling loan-deposit ratios, a weak loan growth and compressing spreads combined with increasing bad loans (NPAs), banks are looking at the possibility of lowering savings bank interest rates so as to improve their operating profits. This is as per a report by investment banking firm- Jefferies. According to the report, a 50 basis point cut in savings interest rate would result in around 8% improvement in the sector’s core pre-provision operating profits.

6. E-WALLET COMPANIES CHOKE ON NEW RBI NORMS: A fresh guideline issued by RBI for digital wallet companies has left the sector gasping. The fresh guidelines has raised the minimum capital requirement for a digital wallet provider to Rs 25 crore, mandated full compliance with Know Your Customer (KYC) norms and introduced limitations on domestic remittances.

7. FILING OF TAX RETURNS TO BE LESS PAINFUL AS GOVERNMENT SIMPLIFIES ITR FORMS: A crisp and simplified income tax form for the salaried individuals will be introduced from 1st April. Some of the columns have been removed to make the form simpler and easier to fill.

SNIPPETS- 25/03/2017

1. SBI CHIEF AMONG FORTUNE’S 50 GREATEST LEADETRS OF THE WORLD: Ms Arundhati Bhattacharya, Chairperson of State Bank of India has been named by Fortune magazine among the world’s 50 greatest leaders who are transforming the world and inspiring others to do the same. She is ranked 26th on the list of Fortune’s Greatest leaders. Ms Bhattacharya is the first woman to be ranked among the fortune’s top 50 leaders.

2. RBI PUTS 4 PSU BANKS UNDER WATCH ON ASSET QUALITY CONCERNS: The Reserve Bank of India has put 4 public sector banks under watch and advised them to stay off risky assets so that their financial health is not stressed further. IDBI Bank, Indian Overseas Bank and UCO Bank are in the list while the fourth bank’s name could not be immediately ascertained. These four banks have been advised both by RBI and Finance Ministry to improve their financials, look for avenues for capital infusion and create self-sustaining model by selling assets.

3. NPA RESOLUTION MECHANISM NEED MORE TEETH: RBI Deputy Governor Mr. S. S. Mundra has said that there is need to further strengthen existing stressed asset resolutions mechanisms like oversight committees and joint lenders forums. However no timeline has been finalised as to when RBI will come out with modifications.

4. RBI SAYS FARM LOAN WAIVER AFFECTS CREDIT DISCIPLINE: Reserve Bank of India has expressed concern over farm loan waiver affecting credit discipline. Earlier SBI Chief Ms Arundhati Bhattacharya had expressed the same feelings as she said that it will disturb credit discipline among borrowers, since they will keep expecting more such loan waivers in future and then those future loans will remain unpaid.

5. SBI TO SHUT DOWN 47% OF ASSOCIATE BANKS’ OFFICES AFTER MERGER: State Bank of India which will see 5 associate banks merge into it on April 1st, has decided to shut down almost 47% of the offices of these banks, including the head offices of three banks. The process will start from April 24th.

6. ASSOCIATE BANK BRANCHES TO BECOME SBI BANK BRANCHES FROM APRIL 1st : With the merger of all the five associate banks, SBI is expected to become a lender of global proportions with an asset base of Rs 37 lakh crores ( $ 555 billion) with 22,500 branches and 58,000 ATMs. The branches of all these 5 associate bank branches will begin to function as SBI branches from April 1st.

7. GOVERNMENT APPROVES SECOND TRANCHE OF CAPITAL INFUSION IN PSU BANKS: The government has approved the second instalment of capital infusion in public sector banks to enhance their capital base. The second round of funding entailing about Rs 8,000 crore is based on strict parameters. The first tranche was announced in July 2016 with the objective of enhancing their lending operations and enabling them to raise more money from the market.

SNIPPETS- 18/03/2017

1. PSU BANKS RUSH TO SELL STRESSED ASSETS: Public Sector Banks have started rushing to sell Non-Performing assets (NPAs) in the last quarter of the fiscal ending March 2017. As strict norms on sale of stressed assets come into effect from April 1, 2017, all banks have lined up more than Rs.20,000 crore of NPAs to be sold to Asset Reconstruction Companies ( ARC). However banks putting these stressed assets on blocks do not mean they will be sold, as most of the time these loans end up not being sold as there is a big difference in the price banks demand and what the ARCs are willing to pay.

2. SBI ANNOUNCES Rs.6,000 CRORE TRACTOR LOAN SETTLEMENT SCHEME: State Bank of India has announced a one-time settlement scheme for tractor and farm mechanism loans, which are in the doubtful or loss asset category as on 30th September 2016. This scheme will remain open till March 31st. Loans worth Rs.6,000 crore would be eligible under the said settlement scheme. The bank is willing to write off up to 40 % of the outstanding principal amount of the loan under the scheme.

3. NO LIMIT ON CASH WITHDRAWALS FROM MARCH 13th: The Reserve Bank of India has ended all the curbs on withdrawals from savings bank account from March 13th onwards. Earlier the weekly withdrawal limit per savings bank account had been raised to Rs. 50,000/- from Rs. 24,000/- with effect from February 20th and all limits on cash withdrawal have now been withdrawn.

4. SBI CREATES WHOLLY-OWNED SUBSIDIARY TO MANAGE REAL ESTATE: State Bank of India has incorporated a specialised firm- SBI Infra Management Solutions Pvt Ltd (SBIIMS) , which will manage its premises and real estate property across the country. The primary role of the new entity will be to handle transaction management, advisory services, project management etc. The move is seen as public sector bank’s efforts to exit non-core activities to improve balance sheet as per government guidelines.

5. HDFC BANK DIGITISES OVER 1,200 DAIRY CO-OPERATIVES ACROSS INDIA: In line with government’s initiative for a cash-less society, HDFC Bank under the aegis of its “ Milk to Money” (M2M) programme has digitised payments at over 1,200 diary co-operatives in the country. M2M programme will benefit about 3.2 lakhs dairy farmers across 16 states, bringing these farmers into the organised banking system.

6. BANKS MAY GET INCENTIVES FOR DIGITAL PUSH: Government may give banks an incentive of up to Rs 10/- for each transaction to encourage merchants to adopt digital modes of payment. This is aimed at achieving the objective of cash-less economy. The incentive is aimed at encouraging banks to bring more merchants into the new payments ecosystem and build the requisite infrastructure.

7. RBI TO OPEN UP UPI FOR DIGITAL WALLETS: Reserve Bank of India prepares to open up the Unified Payment Interface (UPI) platform for digital wallets such as Paytm and Mobikwik. Once this is done, the wallet companies will become inter-operable. RBI is set to issue guidelines shortly on inter-operability and Know your Customer (KYC) norms for digital wallet companies.

SNIPPETS- 11/03/2017

1. NBFC CASH LOAN AGAINST GOLD RESTRICTED TO Rs.25,000/-: As per the latest guidelines from RBI, Non Banking Finance Companies( NBFC) cannot lend more than Rs 25,000/- in cash against gold. The earlier provision for NBFC was of Rs 1 Lakh. Now RBI has reduced the limit to Rs.25,000/-, in line with the provisions of Income Tax Act. This is an important guideline considering the government’s focus on cash less economy.

2. SBI JUSTIFIES PENALTYFOR NON-MAINTENANCE OF MINIMUM BALANCE IN ACCOUNTS: Last week the country’s largest bank SBI decided to re-introduce penalty on nonmaintenance of minimum balance in SB accounts and also revised charges on other banking services, which come into effect from April 1. The move has faced lot of criticism from all corners. But SBI has justified its move saying the bank needs to impose some charges to balance the burden of managing a large number of no-frills Jan Dhan Accounts. It further clarified that the penalty would not apply to Jan Dhan accounts.

3. NPAs AT RECORD HIGH, ITS TIME TO ANNOUNCE THE NAMES OF DEFAULTERS: A key parliamentary panel- Public Accounts Committee ( PAC) has now favoured naming and shaming Corporate houses which default on repayment of bank loans. The PAC feels that such a move may help financial institutions get back their money. Out of the 6.8 lakh crore of Non-Performing Assets ( NPA) of public sector banks, a whopping 70% are those big corporate houses. In case of farmers and retail loans banks act strong and they go to borrowers homes to recover money and even their name and photograph is published in the newspapers. But when it comes to big corporates they don’t reveal the names.

4. FINANCE MINISTRY GIVES IN-PRINCIPLE NOD FOR ESOPs BY PSU BANKS: The Finance Ministry has given its approval to allow public sector banks to offer Employee Stock Option plans (ESOPs) to their employees from next fiscal. This is a move to retain experienced hands by way ofproviding better incentives.

5. STATE BANK OF INDIA LAUNCHES “WORK FROM HOME” FACILITY FOR EMPLOYEES: Country’s largest lender State Bank of India has launched a new facility to enable its employees to work from home. This enables its employees to work while at home using mobile devices to address urgent requirement. The bank will use mobile computing technologies and shall have continuous control over all the enabled devices centrally to manage and secure data and applications. The use of technology and services shall be monitored through carefully designed MIS and dashboard to enable improvements.

6. HDFC BANK LAUNCHES ARTIFICIAL INTELLIGENCE – DRIVEN CHATBOT EVA: HDFC bank has announced the launch of an electronic virtual assistant ( EVA), an artificial intelligencedriven chatbot for customer service. EVA is India’s first such chatbot and can answer millions of queries across multiple channels instantly.

7. FINANCE MINISTRY INSTRUCTS STATE-OWNED BANKS TO EXIT NON-CORE BUSINESSES: As a part of capital raising exercise, the Finance Ministry has advised state-run banks to prepare a list of their non-core businesses and look at disposing them at an appropriate time. Most of the banks have insurance ventures or capital advisory firms, besides holding stake in financial institutions such as stock exchanges.

SNIPPETS- 04/03/2017

1. IDBI BANK FREEZES LENDING & BRANCH EXPANSION PLANS: The government owned IDBI Bank has decided to freeze lending and branch expansion plans. This decision has been taken by the bank’s management after it posted a historic loss of Rs 2,255 crores in the third quarter. This is an effort to conserve its capital. Now the Bank has decided to concentrate on bad loan recoveries which have touched almost 20% of its loan book. Knowing that its capital is depleting, the bank has started a real war on its defaulters, as they have created crack teams and bad accounts have been distributed to individuals across the bank for recovery.

2. GOVERNMENT SAYS NO PLANS TO INTRODUCE Rs.1,000/- NOTES: The government has no plans to introduce Rs.1,000/- notes. There are lot of complaints of cash shortages at ATMs and this is being addressed by focussing on increasing production of lower denomination currency notes.

3.NEW RBI DEPUTY GOVERNOR Mr. VIRAL ACHARYA TALKS TOUGH ON UNDER-PERFORMING STATE RUN BANKS: RBI’s new Deputy Governor Mr. Viral Acharya has said India’s under-capitalised banks should be restricted from expanding deposits and loans, to help revive the banking sector burdened by increasing bad loans. Under-capitalised banks should be subjected to some tough and corrective actions. He said such actions should entail no further growth in deposits base and lending and they must not be allocated with any capital infusion. The RBI Deputy Governor further said it’s not clear why so many public sector banks were needed,while the system will be better off if they are consolidated into fewer but healthier banks.

4.GOVERNMENT INSTRUCTS BANKS TO GET ALL ACCOUNTS ON NET BANKING BY MARCH 31st: The government has instructed banks to enable internet banking across all accounts by March 31 and mandatorily link them to Aadhaar number to facilitate digital payments and online transactions. This measure will further enable the rapidly evolving digital payments setup in the country and will help in adding new set of consumers to the world of online transactions.

5. CIBIL SAYS MAJOR MSMEs MAY DEFAULT: As per the forecast made by CIBIL , close to Rs 55,000 crore worth bank loans to micro and medium enterprises ( MSME) are close to default. The forecast is based on a machine learning algorithms to predict default probability based on its credit history. As per CIBIL around Rs 12 lakh crore of bank loans are lent to MSMEs, this represents 21% of total bank lending.

6. INDIA WILL SOON HAVE ITS OWN LIVEABILITY INDEX: Taking cue from international practice of rating cities on liveability, India is all set to introduce its own liveability index. Beginning with 100 smart cities, the liveability index would rank all Indian cities on 77 parameters including how they fare in terms of grievance redressalof citizens, pollution control, crime rate, availability of water and power, upkeep of historical buildings, increase in tourist footfalls, education etc. So very soon you will know how “LIVEABLE” your city is.

7. INCOME TAX RETURNS: NO TAX ON Rs 20 LAKH GARTUITY FOR PRIVATE EMPLOYEES: The government has amended the Payment of Gratuity Act where private sector employees will now be able to withdraw up to Rs 20 lakh in tax free gratuity. Till now this tax free gratuity limit of Rs 20 lakh was only for government employees.

SNIPPETS- 25/02/2017

1. ONGC MAY TAKE OVER HPCL OR BPCL: The Economic Times report says that the government is planning to create an integrated oil company under an arrangement in which Oil and Natural Gas Corporation (ONGC) may take over either Hindustan Petroleum Corporation ( HPCL) or Bharat Petroleum Corporation ( BPCL). This is being planned to compete against big rival international and domestic private sector oil firms. The government is a majority stake holder in both HPCL ( 51.1%) and BPCL ( 54.09%). It was highly speculated that the government will merge all three entities to create an industry giant. However, the government feels a takeover will be a profitable route.

2. RBI DEPUTY GOVERNER Mr VIRAL ACHARYA SAYS USING RBI FUNDS TO RECAPITALISE BANKS NOT A GOOD IDEA: RBI Deputy Governor Mr. Viral Acharya has suggested that using part of the Reserve Bank reserves for recapitalising state-run banks may not be a good idea. As per Mr. Acharya when the government dips in to RBI’s balance sheet, for re-capitalisation of state run banks, then ultimately you are dipping into it for fiscal expenditure.

3. SBI CHIEF Ms. ARUNDHATI BHATTACHARYA MOOTS FOR DEDICATED SPECTRUM FOR FINANCIAL TRANSACTIONS: SBI Chairperson Ms. Arundhati Bhattacharya has called for better telecom infrastructure to drive the digital payments agenda of the government and suggested this can be achieved by ensuring dedicated spectrum for financial transactions alone. .

4. STATE RUN BANKS HAVE TO ADOPT LATEST TECH AND BE AGILE: Reserve Bank of India Deputy Governor Mr. S SMundra has warned that traditional banks should quickly convert themselves into a new-age digital banks or else they face the risk of becoming history. Mr. Mudra opines that the age of fintech is here as the fintech companies are disrupting every facet of the traditional financial services business and have emerged as a challenge to the banking industry. He quoted a recent PwC global report which says up to 28% of the banking and payments business are at risk by 2020.

5. EXPECT A VISIT FROM TAXMAN IF YOU HAVE IGNORED I-T DEPT’S EMAIL: Income tax officials could soon be at your door step if you have deposited huge amount of cash during note-swapping exercise last year, and have not yet explained the source of funds. If people have not come forward to explain the source then some kind of verification is needed especially in cases that involve deposits of large sums.

6. CASHLESS ECONOMY- NPCI LAUNCHES "BHARAT QR CODE": In a bid to motivate people to switch to electronic payments, and to change the Indian economy to cashless economy, the National Payments Corporation of India (NPCI) in association with Visa and MasterCard, has launched Bharat QR code. The Bharat QR code is mandated by the government to enable digital payments without card swiping machines. A QR code allows payments without entering the merchant’s ID or phone number. Users can make payments by scanning the code and entering the transaction amount. It does not require swiping of any card either. For the user, it requires a smart phone with internet connection. As of now 15 banks have come on board to deploy the Bharat QR code. This is in addition to the steps already taken by the Government by way of Demonetization of high value currency and BHIM App

SNIPPETS- 18/02/2017

1. STATE RUN BANKS TO OFFER “ESOPS” TO STAR PERFORMERS: Employees of state run banks may stand eligible for Employee Stock Options (ESOPS) from next fiscal. This is as per the suggestion made by the Banks Board Bureau (BBB). This will be kind of a reward to bank staff based on their performance. The total ESOPs will be a certain percentage of Bank’s net profit. For large banks the employee stock option plan could be as much as 5% of profit after tax.

2. RBI PROPOSES LOW MDR FROM APRIL 1st TO KEEP DIGITAL PAY MOMENTUM: The Reserve Bank of India has proposed to drastically cut the Merchant Discount rate (MDR) charges on debit card payments from April 1st with a view to maintain the momentum of digital transactions post note ban. The Merchant Discount Rate charge, which is charged to merchants on debit card transactions will be as low as 0.4% or 0.3% of the transaction value.

3. RBI TO REIMBURSE BANKS’ MDR CHARGES ON DEBIT CARD PAYMENTS TO GOVERNMENT: RBI in a notification has said that it will reimburse banks the MDR ( Merchant Discount Rate) charges on debit cards used for payment of tax and non-tax dues to the Government of India with effect from January 1, 2017. Banks have been asked to forward their claim for reimbursement of MDR along with statutory auditor’s certificate on a quarterly basis.

4. SBI CHIEF SEEKS MORE CLARITY, DISPENSATIONS TO RESOLVE NPAs: State Bank of India Chairperson Ms. Arundhati Bhattacharya has said banks need more clarity and dispensations to resolve the stressed assets problem. Banks should be allowed to amortise losses on account of haircuts (estimating Investor losses in debt restructuring) they will have to take while resolving a bad asset ( NPA) .

5. BANKS RUSH TO BUY CYBER SECURITY COVER AS DIGITAL PAYMENTS RISE: At a time when cyber threats are on the rise for banks for increasing cashless transactions and effects of demonetization, insurers see rise in demand for cyber insurance and cyber liability insurance. The present industry base cyber insurance is currently as low as Rs 60 crore. There are various cyber insurance covers available but it is the cyber liability insurance which is in maximum demand.

6. INDIA RATING SAYS BANKS’ CAPITAL NEEDS IS Rs 91,000 CRORES: The Government , which owns majority in nearly two dozen banks, has plans to inject Rs 20,000 crore in to those banks over the next financial years beginning April. But as per the India Rating & Research, banks need almost Rs 91,000 crore to grow at a bare minimum pace of 8 to 9% on an average. Some of the eminent analysts have said that the government will have to increase the capital injection significantly to keep some weak banks afloat as global Basel III banking norms are due to be fully implemented by march 2019.

7. TAX DEPARTMENT SCANS OVER ONE CRORE ACCOUNTS IN CLEAN MONEY DRIVE: The income tax department has done data analytics in more than one crore accounts through its data bank and has tried to match with tax payer profile. In a bid to clamp down on un-accounted money deposited in to the bank accounts post demonetization, the income tax department has scrutinized as many as one crore accounts and has asked 18 lakh people to explain the source of funds.

SNIPPETS - 11/02/2017

1. CASH WITHDRAWAL CAP TO GO FROM MARCH 13th: The Reserve Bank of India has announced that restrictions on cash withdrawals from savings bank account would be lifted by March 13, in two phases considering the current pace of remonetisation and infusion of currency in the market. In the first phase from February 20, the limits on cash withdrawals from savings bank accounts would be increased to Rs 50,000/- a week, and from March 13, there will not be any ceiling on withdrawals. From February 1St onwards the RBI has lifted the cap on cash withdrawals from ATMs provided it is within the weekly limit.

2. RESERVE BANK OF INDIA TO SET PANEL TO STRENGTHEN CYBER SECURITY: The Reserve Bank of India on Wednesday decided to set up an inter-disciplinary panel on cyber security in a bid to strengthen cyber security system, examine various threats and suggest measures to deal with it. The panel will review the threats inherent in the existing or emerging technology on an on-going basis. RBI has issued guidelines to banks, mandating cyber security preparedness for addressing cyber risks.

3. RESERVE BANK OF INDIA WANTS MORE TIME TO TALLY OLD NOTES: The Reserve Bank of India has still not divulged the details about how much in demonetized currency had been deposited with banks after the general window for depositing old notes got closed on December 30. RBI said that the cash received was still being checked with the accounts. A window to deposit old notes is still open with the RBI. So in all probability it will be somewhere in June that the RBI will tally all the notes and will be in a position to declare the exact amount of deposit of old notes.

4. RESERVE BANK SAYS “BAD BANK” CONCEPT COULD HELP IF DESIGNED RIGHT: The Reserve Bank of India Deputy Governor Mr. Viral Acharya has said that creating a so called “Bad Bank” to handle record NPA ( bad) loans in the banks’ could help if designed properly. In its Economic survey released on January 31ST , the Finance Ministry had suggested setting up a “Bad Bank” which would buy NPA (bad) loans from banks’ and deal with them separately through methods including conversion of debt to equity.

5. HDFC BANK SAVINGS ACCOUNT HOLDERS WILL HAVE TO PAY EXTRA FOR CASH TRANSACTIONS: In a bid to discourage cash transactions, HDFC Bank has decided to increase the fees for savings bank account holders on activities involving cash transactions. This is a move to encourage its customers to shift to cash-less or less-cash regime and use digital mode for transactions.

6. RESERVE BANK OF INDIA TO PUT NEW Rs 100 BANK NOTES IN CIRCULATION: The Reserve Bank of India will shortly announce Rs 100 denomination notes in Mahatma Gandhi series -2005, with the inset R in both the number panels and will bear the signature of Dr. Urjit Patel, Governor, RBI.

7. DEMONETIZATION IRREGULARITIES---156 SENIOR PUBLIC SECTOR BANK OFFICIALS SUSPENDED: As many as 156 senior bank officials of various public sector banks have been suspended and 41 officers have been transferred. These officers have been found involved in irregularities relating to demonetization. On the basis of prima facie involvement in the irregularities, these many officials have been placed under suspension.

SNIPPETS - 04/02/2017

1. RBI LIFTS CAP ON DAILY WITHDRAWALS FROM ATMs, & CURRENT ACCOUNT: After nearly three months of cash rationing finally Reserve Bank of India lifted the cap on daily cash withdrawals from ATMs and current accounts effective from 1st February 2017. But retained the cap of Rs 24,000/- from savings bank accounts.

2. BUDGET GIVES MORE RELIEF TO START-UPS: More than 4700 start-ups in the country can now look forward to certain tax benefits. The government has extended the profit-linked deduction for start-ups to three years out of seven years from the earlier norm of three years out of five years. Further there are relaxations on income tax exemptions for carry forward losses, provided the holding of the original promoters remains.

3. DIVIDEND OF FAMILY TRUSTS TO BE TAXED IN FUTURE: Promoters holding shares through private trusts will have to pay 10% tax on dividend income for more than Rs 10 lakh. At present income by way of dividend in excess of Rs 10 lakh is chargeable at the rate of 10% for individuals, Hindu undivided Family (HUF) and partnership firms. But now the rule has been extended to include private trusts as well.

4. GOVERNMENT GIVES SWEEPING POWERS TO TAX OFFICERS FOR SERACH AND SURVEYS: The government has armed tax officers with sweeping powers to conduct search and surveys. Now junior officers can conduct an inquiry in a case where no proceedings are pending, without getting sanction from higher authority. This move could lead to lot of harassment for income tax assessees.

5. NOW CYBER CRIMES HAVE TO BE REPORTED TO RBI WITHIN 6 HOURS: The Reserve Bank of India has instructed banks to report any cyber security incidents within two to six hours. This warning has come at a time when the government is pushing digital payments in a big way, including new channels such as Aadhaar Enabled Payment System (AEPS) and the BHIM app launched by the National Payments Corporation of India (NPCI) which runs on the Unified Payment Interface (UPI).

6. FINANCE MINISTER LAUNCHES INDIA POST PAYMENTS BANK: Union Finance Minister Mr. Arum Jaitley inaugurated the India Post Payments Bank ( IPPB) through video conferencing from Delhi. The pilot branches have been launched at Raipur and Ranchi. These payments bank will pose serious competition to traditional banks due to lower cost involved. The launch of India Post Payments bank will prove to be a great step towards financial inclusion in the country. The postman connects every household. They can reach every house for banking activity and if this is tapped and planned properly it will open the doors for door to door banking.

7. ORDINANCE PAVES WAY FOR PSU INSURERS TO GO PUBLIC: State owned general insurance companies can now get listed on the stock exchanges with the recent ordinance by the government on the insurance bill. Government looks to raise Rs.11,000 crores from listing of PSU insurers. This is a step towards meeting the government’s disinvestment target of Rs.72,500 crores in the next fiscal.


•  FY 18 revenue deficit pegged in at 1.9% of GDP.
•  Fiscal deficit for 2017-18 pegged at 3.2% in line with market expectations.
•  Total Budget of Rs.21.47 Lakh Crores for 2017-2018.
•  No Income tax on income up to Rs.3 lakhs.
•  Income tax rate from Rs.2.50 lakhs to Rs.5 lakhs reduced to 5%.
•  10% surcharge for income between Rs.50 lakhs and Rs.1 crore.
•  One page income tax return proposed.
•  No transaction over Rs.3 lakhs will be permitted in cash.
•  6% presumptive tax for companies with a turnover up to Rs.2 crore doing digital transactions.
•  5% tax exemption for companies having a turnover below Rs.50 crores.
•  Holding period of Long Term Capital Gains for Land & Building reduced to 2 years.
•  Increase in Direct tax collection by 34% after demonetization.
•  Maximum donation receivable from unknown sources by political parties will be Rs.2 lakhs.
•  Propose to reduce tax for small companies with a turnover of less than Rs.50 crore to 25%.
•  Defence capital expenditure Rs.80,000 crores.
•  New FDI policy under consideration.
•  Aadhaar-Pay will be launched shortly. For senior citizens, Aadhaar based Health Cards will be introduced.
•  Govt. doubles lending target of banks to Rs.2.44 lakhs crores
•  Amend Negotiable Instruments Act to protect payees dishonoured cheques.
•  National Highway allocation at Rs.64,000 crores.
•  Unmanned Railway lines to be eliminated by 2020
•  Propose to feed 7000 solar railway stations in medium term.
•  Propose to amend drug rules to ensure drugs available at reasonable prices.
•  Affordable housing to be given Infra status
•  100% rural electrification by May 01, 2018.
•  Propose to finish 1 crore houses by 2019 for those living in kachcha houses.
•  To up crop insurance coverage to 50% in FY 2019.
•  Govt. to set up dairy processing fund.
•  Focus on Rural India - Total allocation for rural sector up by 24% at Rs.187,000 crores.
•  NABARD to digitise 63,000 primary agri co-ops.
•  Additional Rs.20,000 crore allocated to NABARD for long term irrigation fund.
•  SEC 40A (3) amended—cash expenses reduced from Rs 20,000 to Rs 10,000( Foe example, cash salary, cash rent, cash conveyance etc.)
•  New Section 234F introduced for delay in filing income tax returns beyond due date – late filing fee of Rs.5,000/- up to 31st December of the year in which due date of income tax return filing is due and thereafter Rs.10,000/-.
•  Budget agenda was to - Transform Energize and Clean India - TEC India.
•  Oil prices, rising dollar and volatile commodity prices seen as risks to Indian economy.
•  Focus on digitizing India to continue.
•  Service charge on rail tickets booked through IRCTC to be withdrawn.
•  Maximum cash donation any Political party can receive will be Rs.2,000 from one source.

SNIPPETS - 28/01/2017

1.EVEN RBI DOES NOT HAVE ANY IDEA ABOUT FAKE NOTES: The Reserve Bank of India has no confirmed data on the value of the fake currencies detected since the demonetization of Rs 500 and Rs 1000 notes. This is in reply to a query raised under RTI.

2. CASH WITHDRAWAL RESTRICTIONS TO GO AWAY BY FEBRUARAY END: The Reserve Bank of India has recently raised the ATM withdrawal limit to Rs.10,000/- a day but it has maintained the weekly cap of Rs.24,000/- for savings account and Rs.1 lakh for current account holders. But as per SBI estimates, over 80% of currency could be back in circulation by February end, and hence the restrictions on cash withdrawals may be completely lifted by February end.

3. RESTRUCTURED EDUCATION LOANS NOT TO BE TREATED AS NPAs: In order to encourage banks to provide education loans , The RBI has clarified that rescheduling of payment period of such loans due to unemployment of the borrower will not be treated as restructured accounts for computing NPAs. Banks may allow three spells of moratorium ( not exceeding 6 months each) during the life cycle of theeducation loan, taking into account the unemployment/underemployment, and this will not be treated as restructuring of loan account.

4. RBI WORKING ON PLAN TO REDUCE ONLINE CHARGES: The Reserve Bank of India is working on a plan to reduce online transaction costs which the banks at present are charging. This is a positive move to encourage more digital banking.

5. MORE PSU BANKS MAY SKIP DIVIDEND PAYOUT THIS FISCAL: Some Public Sector Banks have already indicated to the Finance Ministry that it may not be possible for them to pay dividend this year as their profits are likely to remain very low due to very poor credit offtake, after effects of demonetization and increase in bad loans.

6. BORROWERS MAY SWITCH FROM BASE RATE TO MCLR: Declining interest rates, driven by demonetization, will prompt existing bank borrowers to shift from base rate system to the new MCLR mechanism as it will help them reduce interest burden and also reduce their repayment cost. MCLR linked advances are estimated to be around 15-20% of the total banking sector advances. This is as per ICRA press release.

7. BANKS’ SEEK TAX RELIEF TO EASE NPA BURDEN: Banks have asked the government for lower taxes in the forthcoming budget, to compensate them for their efforts on financial inclusion and demonetization. They have demanded tax exemption of 100 % on provisions against bad loans. At present only 7.5% of the capital set aside for NPAs and 10% of the rural advances are deducted from gross income of the bank while all other earnings are taxable.

8. ELECTION COMMISSION (EC) REQUESTS RBI TO INCREASE CASH WITHDRAWAL LIMIT IN 5 STATES: The Election Commission has requested the RBI to enhance the weekly cash withdrawal limit from Rs. 24,000/- to Rs.2,00,000/- for candidates contesting elections in the 5 states which will have the state elections soon. The candidates have representedtheir difficulty to Election Commission in meeting their campaign expenditure.

SNIPPETS - 21/01/2017

1. Rs.2 LAKH INSURANCE COVER FOR 3 YEARS FOR JAN-DHAN ACCOUNT HOLDERS ON CARDS: The government is considering an insurance scheme under which all Pradhan Mantri Jan Dhan Yojana ( PMJDY) account holders will be offered Rs.2 lakh free insurance for three years . This will be a big push by the government to create strong social security for the poor. There are around 27 crore account holders under PMJDY and if the proposed insurance scheme provides both accident and life insurance cover, the benefit could cost the government more than 9,000 crores as the government would bear the premium cost for three years.

2. GOVERNMENT MAY LOWER LIMIT FOR QUOTING PAN NUMBER FOR CASH TRANSACTIONS: In a move to further push the momentum it gained for cash-less economy after demonetization, the government may announce big disincentives in the upcoming Budget for usage of cash. One amongst them will be to reduce the threshold limit for quoting PAN card number for cash deposit. The present limit which is Rs 50000/-, may be brought down to Rs 30000/- . In addition to this the government may also announce cash- handling charges for cash payments above a certain limit.

3. REVEAL THE SOURCE OF INCOME IF YOU HAVE DEPOSITED Rs 10 LAKH OR MORE IN BANK ACCOUNT AFTER NOVEMBER 8TH: In the next fortnight, the I-T Department will ask everyone who deposited more than 10 lakh or more in their bank accounts after November 8th to spell out the source of income. A new e-platform put in place by the Central Board of Direct Taxes, will be used to reach out to these account holders who will have to file their response online.

4. THIS YEAR’S BUDGET HAS LOT OF “FIRSTS” : Mr. Arun Jaitley will be the first Finance Minister to have ushered in many changes in this year’s Budget. Here are some of the “FIRSTS” in this year’s Budget:
A) Budgets are normally announced on the last working day of February. But this year, it has been advanced by a month to February 1ST .
B) There won’t be a separate railway Budget. Railway Budget is merged with General Budget from this year onwards.
C) Economic Survey, a snapshot of the state our country is in, will be out on the first day of the Budget session.
D) This is the first time that the finance ministry is going paperless for the Budget. There will be no hard copies of the circulars. All the important documents will be submitted through Union Budget Information System ( UBIS).
E) There will be no plan and non-plan distinction in finance bill. And hopefully the abolition of the Planning Commission will find reflection in the general Budget.

5. WHAT WILL HAPPEN TO YOUR PAYTM-WALLET WHEN PAYTM BECOMES PAYMENT BANK?: The Parent Company, One 97 Communications is preparing to merge Paytm wallet services with the payment bank. And if you are a Paytm wallet holder then your balance amount in Paytm will be transferred to the Paytm Payment bank Limited and this will happen automatically and you need not do anything. The app will continue to work as before and you will continue to use it as before. The company will give you an offer to open a separate account and if u choose to open a payment bank account then you will earn interest on your money in your wallet.

SNIPPETS - 14/01/2017

1. BANK OF BARODA BEATS SBI IN OFFERING CHEAPEST HOME LOAN: Traditionally as it always happens, it is the India’s largest Bank, State Bank of India which offers home loans at cheapest rates. But this time Bank of Baroda has lowered its home loan rate of interest to as low as 8.35% which is the cheapest in the banking industry. This rate will be applicable for customers having a strong CIBIL score, which is a measure of creditworthiness of the borrower. This according to us, will pave way for a literally interest rate war amongst the banks across the country.

2. VERY SOON YOUR CREDIT RATING WILL DETERMINE YOUR HOME LOAN RATE: The interest rate you would pay on your home loan will soon be linked to your credit rating or the discipline you maintain in repaying your existing loans. If your credit score improves you will pay less EMI and is vice-versa. Bank of Baroda is the first bank to link interest rates on home loans to credit scores of the borrower. The bank will initially rely on credit scores of Credit Information Bureau of India (CIBIL) and if this score is above 760 then the lowest rate of 8.35% will be offered. Other banks will take cue from Bank of Baroda’s initiative.

3. LOAN REPAYMENTS WORTH Rs 80,000 CRORE MADE IN CASH AFTER DEMONETIZATION: The government’s financial intelligence agencies which normally analyse data from multiple sources, have found that an estimated that Rs 3 to 4 lakhs crore of tax-evaded income have found its way in the form of cash deposits during the demonetization period. The agencies have also compiled a data where in it is found that more than Rs 80,000 crore in cash deposits in loan accounts as repayments during this demonetization period.

4. YOUR CASH WITHDRAWALS FROM BANK ACCOUNTS MAY BE TAXED IN FUTURE: Among many moves which the government is taking to push the digital transactions in the country, the government may consider a “cash tax” on cash withdrawals from bank accounts. The government is weighing the pros and cons of the proposal under which tax can be levied on cash withdrawals above a certain ceiling from bank accounts. The main aim of the new tax is to curb the scope of cash economy and encourage digital transactions.

5. CURRENCY CIRCULATION DOWN BY ALMOST 50%: The currency circulation or the currency with the public has gone down to 8.9 lakh crore, according o the latest figures released by Reserve Bank of India. The Remonetisation exercise is not keeping pace with the Demonetization. The currency circulation in March 2016 was Rs 16.63 lakh crore.

6. BANK’S BOARD BUREAU SEEKS LONGER TERMS FOR BANK CHIEFS: Vinod Rai, the Chairman of Bank’s Board Bureau (BBB) opines that chief executive officer/ Managing Directors/Executive Directors of public sector banks should have a minimum tenure of six years in order to ensure accountability. Rai further noted that the compensation package of these public sector institutions needs to be improved. The package needs to be more attractive in order to attract talent.

7. NRIs CAN DEPOSIT OLD NOTES TILL JUNE 30th: The Reserve Bank of India has allowed non-resident Indians to exchange the scrapped currency of Rs 500 and Rs 1000 notes till June 30. This facility will be available through RBI offices in Mumbai, Delhi, Chennai Kolkata and Nagpur. While there is no monetary ceiling for exchange of old notes, the limit for NRIs’ will be as per the relevant FEMA (Foreign Exchange Management Act) regulations which is Rs 25000/- per person.

SNIPPETS - 07/01/2017

1. RBI CLARIFIES REGARDING OLD NOTE DEPOSITS: The Reserve Bank of India has issued clarification after various news agencies, citing sources, had come out with estimates of old notes deposited in the banking system. Neither the RBI nor the government has come out with a final official figure in this matter. The Reserve Bank of India in its last official release said that till December 10th, Rs 12.44 lakh crore worth of old notes were returned to the banking system. RBI has already initiated the process and the final figure will be announced soon.

2. GOVERNMENT TO FINALISE SECOND TRANCHE OF CAPITAL INFUSION IN STATE-RUN BANKS: Finance Ministry is likely to finalise the second tranche of capital infusion in public sector banks in the next few days and the decision will be crystallised before the budget. The government has already announced a fund infusion of 22,915 crores, out of the 25,000 crores earmarked. Of this, 75% has already been released. The remaining amount will be linked to performance with particular reference to greater efficiency, growth of both deposits and credit in addition to the reduction in cost of operations.

3. PM MODI ANNOUNCES SOPS FOR MSMEs, RURAL INDIA AND HOUSING SECTOR: Prime Minister Shri Narendra Modi has announced new schemes for rural and urban housing, farmers, senior citizen and MSME sector. The Prime Minister has announced a 60 day waiver of interest on farm loans. Home loans up to Rs 2.00 lakhs, Rs 9.00 lakhs and Rs 12 Lakhs will now be eligible for interest relief of 3%, 4% and 3% respectively. The government has also waived interest on existing farm loans for the latest kharif and rabi crops. Under MSME the CGTSME coverage has been increased to Rs 2.00 crore from the existing 1.00 crore. Besides this, the cash credit limit for small businesses has been raised to 25% from 20%. The Senior citizens will now be eligible for 8% interest on their deposits up to 7.5 lakh for 10 years.

4. RBI IMPOSES RESTRICTIONS ON WITHDRAWAL FROM CERTAN ACCOUNTS: Tightening the noose around the people who misused banking channels to park their un-accounted money, the Reserve Bank of India has now imposed restrictions on withdrawal of more than 2.00 lakhs from bank accounts. Withdrawal/transfer will not be permitted without quoting PAN or submission of Form 60. These restrictions have come in effect after the misuse of Jan-Dhan and dormant accounts. As per RBI notification, withdrawal and transfer of funds (more than Rs 2.00 lakh) will not be permitted in account without quoting PAN or submission of Form 60.

5. SBI’S NEW HOME LOAN SCHEME—"HAMARA GHAR": In an effort to push home loans, SBI has floated a new scheme offering fixed rate for first two years at 8.50% for women and 8.55% for men. In this new schematic “Hamara Ghar“ housing loan, once the fixed tenure of two year ends, the interest rate will be linked to the prevailing one year Marginal Cost of Lending rate ( MCLR) with a normal spread over MCLR, which is 50 basis points.

6. TWO LARGE PSU BANKS MAY MERGE: The Centre may merge two large state-run banks in the coming financial year once a clean-up of bad assets is completed. Consolidation of India’s public sector Banks (PSBs) would be the final step of the government in rebuilding a financial system capable of underwriting credit growth and job creating investment in Asia’s third largest economy.

SNIPPETS - 31/12/2016

1. DEMONETIZATION IMPACT ON BANKS’ ASSET QUALITY WILL SHOW IN Q4: The asset quality problems for banks and finance institutions are rising as small customers are finding it very difficult with the adverse effect of demonetization on their business. But since RBI has given an additional 60 days’ time for borrowers to repay their dues, the banks have time to classify these assets as non-performing. Added to this, because of the demonetization work pressure, banks are unable to concentrate on recovery which will show its impact in the fourth quarter.

2. ONLINE LENDING FIRMS SEE HIGHER GROWTH: As Indian economy is taking a formal shift to cashless economy, lending companies who are engaged in online lending are seeing a huge potential to grow. Some online companies are rolling out plans for lending to restaurants and small traders against their sale through point-of-sale machines. Some of the online companies like Capital Float and LendingKart may double their business figures.

3. LINK FINANCIAL DATA OF CORPORATES TO DETERMINE CREDITWORTHINESS, SAYS CII: Confederation of Indian Industry (CII) has said that linking financial data and consolidating the existing data of small and medium enterprises and corporates can provide banks with the necessary information to assess creditworthiness of borrowers. It said it is possible to thread the said data accesses together for a well-connected digital infrastructure so as to enable banks to lend to credible borrowers and that too at a tailored interest rate.

4. PAY WITH YOUR AADHAAR CARD SOON: No card, No smartphone, No point-of-sale machine but if you have Aadhaar card and if the same is linked to your bank account then very soon you also can make payment. The use of Aadhaar-enabled payment system and opening up of Aadhaar database is on the verge of making it a reality. IDFC Bank and SBI have already introduced biometric readers at merchant outlets. There are 109 crore people enrolled with Aadhaar and hence this mode could be the most preferred mode of payment in future.

5. LOAN REPAYMENT WINDOW EXTENDED TO 90 DAYS BY RBI: In an effort to bring further relief to the people hit by demonetisation, the Reserve Bank of India gave borrowers another 30 days over and above 60 days for repayment of housing, car, farm and other loans up to Rs.1 crore.

6. CABINET MAY PASS AN ORDINANCE ON OLD NOTES: The government is all set to pass an ordinance to settle all issues regarding demonetization, extinguishing of the Reserve Bank of India’s liability in respect of the cancelled currency. The ordinance is likely to provide for a limited window to return cancelled currency in special cases only at RBI counters till March 31st 2017. But this will be enabled with stiff conditions and only for people who can give valid reasons for not being able to deposit the cancelled currency before 30th December 2016. An Ordinance for imposing heavy penalty has already been announced for possession of more than 10 notes of banned currency after 31/03/2017.

7. RBI WARNS BANKS ABOUT THE BENEFIT TO NBFCs FROM THE STRESS IN BANKING SECTOR : RBI is proposing to go ahead with a new bunch of Banks, such as Custodian and Wholesale Banks. Also it asked existing banks to rework their strategies, as Non Banking Finance Companies(NBFCs) are benefiting from the stress in banking sector.

SNIPPETS - 24/12/2016

1. LESS TAX FOR SMALL TRADERS ON DIGITAL TRANSACTIONS: With a drive to move the cashless economy in the country, the government has said that small traders and businesses with a turnover of up to 2 crores will pay less tax if they accept payments through banking and digital modes. Presently as per Income Tax Act, 1961 small business with a turnover of up to 2 crores or less, the profit is deemed to be 8% of the turnover for taxation.

2. PRADHAN MANTRI GARIB KALYAN YOJANA (PMGKY): PMGKY is a tax disclosure scheme floated by the government from December 17 and will be open till 31st March 2017. The new disclosure scheme comes with 50% tax including penalty. Further, declarations under the said scheme will be kept confidential and information will not be used for prosecution.

3. BANKS SET TO LIMIT ELECTRONIC FUND TRANSFER CHARGES: In another measure to boost cashless economy, the government has directed all state run banks not to charge fees for transactions settled on Immediate Payment Service ( IMPS) and Unified Payment Interface ( UPI) in excess of that levied for National Electronic Funds Transfer (NEFT) of over Rs 1,000/-. RBI has also directed banks not to charge for debit card transactions up to Rs 2,000/- . Both these directions will be in force till 31/03/2017.

4. BETTER IDEA FOR ELIMINATION OF BLACK MONEY: According to Mr Kaushik Ghosh, professor of Economics and ex-chief Economist -World Bank, Demonetization mostly hurts people who are not government’s intended targets and it only dents the corruption temporarily. But if the idea is to fully eliminate black money forever, then abolishing personal income tax is a better idea. Further elaborating his point of view he says that only 2 to 3 % of Indians are paying income tax and around 5% of Indians file tax returns. When there is no income tax deduction, people will have more spending power. And when there is no income tax to be paid people will freely declare their income. People will freely unlock their unproductive assets such as gold and real estate and convert to those instruments that generate annual return. This will lower our import bill and strengthen the rupee. Bank deposit will shoot up, bringing down interest rates. And then there is cost of compliance. Tax payer wastes his otherwise productive hours each year assembling supporting documents, meeting accountants, and devising ingenious ways of paying the tax. Since there is no tax, rich will not venture their funds to tax heaven countries and will keep the funds here in India which they will use for more productive purpose thereby paving way for economic growth. The government would lose an important source but this can be covered by plenty of other means. Finally eliminating Income tax would shut the sprawling I-T Department and its vast bureaucracy and the present income Tax work force can be utilised by the government for other productive purpose.

SNIPPETS - 17/12/2016

1. BILLIONAIRE PREM WATSA BUYS STAKE IN CATHOLIC SYRIAN BANK: Canadian billionaire Mr Prem Watsa’s Fairfax Financial Holdings has bought 51% stake in Kerala based private sector bank Catholic Syrian Bank Ltd in an unprecedented deal. This is a far reaching development for the banks who are desperately looking for capital to meet Basel III norms.

2. CASH DELIVERY- RBI CUTS PROCESS TIME: The Reserve Bank of India has decided to ease the process related to transfer of currency notes to banks by start of the day itself. At present it is nearly by the afternoon that the transfer of currency to banks is affected. Following the criticism of mismanagement, the RBI has decided to transfer currency by 9 am every day. This may ease the pressure faced by bankers.

3. BANK CREDIT PLUNGES BY 61,000 CRORE IN POST DEMONETIZATION PHASE : Because of the demonetization after effects, the bank credit has shrunk by a vast margin of Rs 61,000 crore. Percentage wise it amounts to 0.8% . But at the same time the banks have been benefitted as many borrowers, including some default accounts have paid back.

4. RAIDS BY I-T DEPT AT BRANCHES IMPACTING STAFF MORALE: Added to the stress levels due to the long hours of working since demonetization, fear of raids by I-T Dept has added to stress for banking staff. Respective bank managements are taking serious steps to keep the morale up. These steps include reaching out to the bank employees manning the front desks and cash, and creating Whartsapp groups to spread awareness about unscrupulous operators and point out the risks involved.

5. RBI’s SMALL STEP TOWARDS e-KYC IS A GIANT LEAP TOWARDS DIGITISING FINANCE: The Reserve Bank of India has now allowed the opening of deposit and borrower accounts through OTP e-KYC. This small step by RBI is a giant step towards digitising banking in India. It will help the Financial Inclusion drive in a big way as it will bring in potentially millions of unbanked Indians under ambit of formal banking. The traditional KYC process by way of submitting certain documents is more time consuming and expensive. However, e-KYC through OTP is instant and happens in real time which will be paperless.

6. SOON IT WILL BE NO CHEQUES WITHOUT AADHAAR DETAILS: Banks may make it mandatory for customers to mention the recipient’s Aadhaar details while carrying out cheque transactions. This move resonates with the Central governments’ plan to link all bank transactions with Aadhaar card. Since Aadhaar card stores demographic and biometric information of the card holder, Aadhaar linked Unified Payment Interface (UPI) will enable an individual to carry transactions using a single platform.

7. REASONS FOR CASH CRUNCH IN THE MARKET: Even after 38 days of demonetization, the cash crunch doesn’t seem to be easing out. Hoarding of bulk new currency by some by some influential people across the country may be one of the reasons. However, hoarding may not be the only reason for the cash crunch. The other reason is that two of the government mints responsible for printing currency notes do not seem to be capable of printing so much money on short notice. But as per the latest reports the condition will improve in a few days.

SNIPPETS - 10/12/2016

1.RBI LIFTS INCREMENTAL CRR BURDEN ON BANKS: The Reserve Bank of India (RBI) has announced that the incremental 100% Cash Reserve Ratio ( CRR) requirement imposed on banks on November 26th will be withdrawn, effective from 10th December 2016. This additional CRR was for the deposits received between September 16th and November 11th. This was over and above the 4% CRR that banks already maintain with RBI. The additional CRR had been put in place to absorb excess liquidity which the banks have received by way of demonetization.

2. COMMON “QR” CODE SOON FOR PAYMENTS: As a part of multi-pronged push towards cashless economy, the government has asked RuPay, MasterCard and Visa to have a common “Quick Response” (QR) code based payment solution which will help merchants across India to accept payments without a card or swipe machine. This will be in line with the mode used by PAYTM now. A merchant will display his QR code, which the buyer scans through his smartphone app and can make payment using any of the three networks- RuPay, MasterCard or Visa.

3. PAYTM TO START PAYMENT BANK SOON: Paytm has got an in-principle approval from RBI for launching a payments bank. For this Paytm is transferring its wallet business into a newly created entity which is mandatory step to fulfil the rules laid by RBI. The wallet business is being transferred to the newly incorporated Paytm Payments Bank Ltd (PPBL). The transfer will be complete once the payment bank license is obtained.

4. AMAZON STARTS A NEW LAUNCHPAD PLATFORM TO HELP INDIAN START-UPS:, the Indian arm of has launched Amazon Launchpad in India to help Indian Start-ups to gain access to global markets. Amazon will lend its delivery and advertisement services to these start-ups and features their products on a dedicated store under the programme. Amazon charges Rs 5,000/- per merchant per month for the said services.

5. BAD LOANS CAUSE COLLATERAL DAMAGE AMID CASH CRUNCH: Banks are so busy to cope with cash crunch caused by demonetization that the critical task of following and going after bad loans has lost its track in banks. Not only that, bankers are worried that due to the demonetization there is a practical slump in asset value which means that the collateral value is depreciating making things worse.

6. EXCISE DUTY EXEMPTION FOR POS DEVICES: In yet another move to push the Indian economy towards digital economy, the government has provided excise duty exemption on point-of-sale (POS) devices manufactured in India. The excise duty exemption is also extended to all raw materials used for manufacture of POS machines. However, this exemption will be available only till 31st march 2017.

7. GOVERNMENT UNVEILS SPECIAL BONDS TO FREEZE DEMONETIZATION FUNDS: The government has created provisions to issue special bonds worth Rs 6.00 lakh crore to absorb the temporary flow of surplus funds with banks created due to demonetization. These bonds are called Market Stabilisation Scheme Bonds (MSS) and RBI will sell these bonds to banks on behalf of the government. Money raised by these bonds cannot be used by the government and does not add to fiscal deficit.

SNIPPETS - 03/12/2016

1. PRACTICAL (POSITIVE) ASPECTS OF DEMONETIZATION: We are herewith highlighting some of the true facts which have a positive effect on the economy as a whole due to demonetization. Though this may sound a bit crude but these are the real facts:

A) TRADERS/BUSINESSMEN GOT THEIR LONG OVERDUES BACK: Many a businessmen who had lost long lost hopes of recovering their long overdue amount were in for a surprise as many of them have received back their dues in the form of old currency notes.

B) MANY A TRADERS COULD SELL THEIR OLD STOCK OF PRODUCTS: Traders who were hoarding their old stock of products could dispose them in exchange of old currency notes.

C) WORKERS GOT UP TO 6 MONTHS ADVANCE SALARY: The rich class who were hoarding black money, in a hurry to dispose the old notes have given hefty advance salaries ( up to 6 months also in some cases) to their staff like factory and office workers, servants, drivers etc. This is a big boost to these poor people.

D) POOR JAN DHAN ACCOUNT HOLDERS HAVE BEEN BENEFITTED: The rich class who were hoarding black money have found a new way to deposit their ill wealth by convincing the poor to deposit their money into their respective Jan Dhan accounts, of course may be for a monetary benefit. And this is the main reason why these Jan Dhan accounts are flush with funds now as reported by the media.

E) MUNCIPAL CORPORATIONS RECEIVED THEIR LONG PENDING DUES OF PROPERY TAX: Respective Municipal Corporations of various cities have been benefitted as they have received the long outstanding dues of property tax. People who were reluctant or deliberately not remitting their property tax to the corporations have remitted all the arrears by making payment in old currency notes.

F) LOCAL POLITICIANS HAVE DISBURSED INTEREST FREE LOANS: Local politicians in some of the rural areas across the country have disbursed interest free loans to the local people in the form of old currency notes, as reported by media.

G) BENEFITS TO LOW PROFILE YOUTH, IN EXCHANGE OF OLD CURRENCY: Many affluent businessman have utilised the services of low profile youth for exchanging old currency in various banks, of course for a monetary benefit to these youths.

2. GOVERNEMENT WILL LEVY 50% TAX ON UNEXPLAINED DEPOSITS: Unaccounted deposits made in old currencies up to 30th December 2016 will attract 50% income tax and a lock-in period of 4 years –IF IT IS DECLARED TO THE INCOME TAX DEPARTMENT. After levying tax at 50%, the half of remaining deposit (25% of the original deposit), will not be allowed to be withdrawn for four years & will not fetch any interest. But undisclosed money detected in bank accounts could attract a penalty up to 90% and a longer lock-in period.

3. DEMONETIZATION COULD HIT THE BANKS’ PROFITS FOR THE THIRD QUARTER: Due to the factors linked to the demonetization of high currency notes, the banks’ profits for the third quarter of this fiscal could take a serious hit. The reasons include the requirement that banks need to park 100% of their incremental deposits, under CRR temporarily with the RBI at zero % interest rate, slowdown in loan growth due to resources getting diverted for the on-going demonetization exercise, and operational expenses incurred in recalibrating the ATMs.

SNIPPETS - 26/11/2016


A) PAN REQUIRED IF COMBINED CASH DEPOSITS EXCEED Rs.2.5 LAKHS TILL DECEMBER 3Oth : The limit for cash deposit in an account is less than Rs.50000/- per transaction per day without PAN card. But now the government has announced that cash deposits made between 8th November to 30th December will require PAN proof if the combined deposits cross Rs.2.5 lakhs.

B) SUSPECT CASH DEPOSITS WILL ATTRACT IMPRISONMENT: The I-T department has warned people that if it is found that they are depositing their unaccounted money in someone else’s account, they will be charged under the Benami Transactions Act that carries penalty, prosecution and rigorous jail term.

C) RBI GIVES BORROWERS 60 MORE DAYS TO REPAY LOANS: The reserve Bank of India has allowed banks, District cooperative banks and NBFCs to retain “Standard” asset classification on loans up to 1 crore for another 60 days from the date it would have turned non-performing(NPA).

D) RBI SETS STIFF RIDERS FOR Rs.2.5 LAKH WITHDRAWALS FOR WEDDINGS: The RBI has permitted banks to allow withdrawals up to 2.50 lakhs for wedding purpose but with stiff riders. It says the money can be withdrawn only from the credit balance prevailing in the account before 8th November. Further it states that such cash withdrawals should be used only to make payments to those who do not have any bank account and names of such recipients should be mentioned at the time of withdrawal.

E) RBI BALANCE SHEET MAY TAKE A HIT: All the banks are parking their accumulated cash with the RBI and this will have a negative impact on RBI balance sheet. RBI is already strained at meeting the pressure of supplying fresh notes to banks. RBI could be running out of enough securities to offer to banks against heavy cash deposits and experts say that the RBI now urgently needs policy measures to protect the financial stability of its books.

F) MUTUAL FUNDS EXPECT HUGE INFLOWS FROM RETAIL INVESTORS: Due to the demonetization which will ease inflation, and which has already resulted in reduction in bank deposit interest rate, the Mutual Fund industry is preparing for a huge inflow of funds as it may lead to investors to tap investment avenues like mutual funds.

G) FOREX SALE DECREASES OVER 50%: Demonetization has led to an overall downslide in average overall forex sales following a sharp crunch of foreign currency supply in the market.

2 AIRTEL LAUNCHES INDIA’S FIRST PAYMENTS BANK: Airtel has rolled out India’s first payments bank from Rajasthan. After getting its licence from RBI, Airtel has entered into an MOU with Kotak Mahindra Bank. Airtel is offering 7.25% interest on savings bank accounts. The account will be fully digital and paperless. It will not issue any ATM/debit cards to its account holder but will allow cash withdrawals from its designated Airtel retail outlets. Customers with an Airtel mobile connection will have the mobile number as their account number.


AFTER EFFECTS OF DEMONETIZATION OF CURRENCY: The Indian Economy as a whole has reacted sharply to the recent demonetization decision of Government to withdraw Rs.1,000 and 500 currency notes from the market. Some of the points which are of much importance are being emphasised here:

A) WINDFALL GAIN FOR RBI: Demonetization will bring windfall gains to Reserve Bank of India (RBI) as it will reduce RBI’s liabilities, to the extent that the old notes do not come back into the system. RBI could gain as much as Rs.6 lakh crores, assuming that even less than half of the notes valued at Rs.15 lakh crores do not get re-deposited in the banking system.

B) RBI WAIVES CHARGES ON ATM TRANSACTIONS:The Reserve Bank of India has instructed all banks to waive ATM transaction charges (both financial and non-financial charges). This waiver will be effective till 30 th December, 2016, subject to further review.

C) REDUCTION IN INTEREST RATES FOR BOTH DEPOSITS AND LOANS: Because of currency demonetization all the banks will be flush with huge liquidity and this will force them to reduce interest rates for both deposits and advances (loans). This has been already implemented by some banks, as SBI has brought down its bulk deposit rate to 6.95%, Axis Bank has reduced its Marginal cost of lending rate ( MCLR) by 20 basis points .

D) BANK LOAN – DISBURSAL AND REPAYMENTS TO TAKE A HIT:Demonetization will hit the business of banks in the third quarter of the fiscal. The impact is due to both the internal and external factors. Internally, banks are unable to start their normal business operations such as processing of loans. They are unable to keep a watch on their recovery aspects as well. Externally, due to the slowdown in the business many borrowers will not be in a position to repay their loans in time.

PENALTY LIKELY ON UNEXPLAINED HIGH DEPOSITS EVEN BEFORE FILING IT RETURNS: The I-T Department may slap a hefty 200% penalty on unexplained high cash deposits in banks even before annual income tax returns are filed so as to prevent black money being converted to white. It is also collecting data on spurt in deposits in zero-balance Jan-Dhan accounts and will slap 200% penalty on unexplained high value cash deposits.

F) YOU CAN WITHDRAW MONEY NOW AT PETROL PUMPS: With as many as 50% ATMs’ across the country not operationalized yet, the government has permitted the state run petrol stations to disburse cash by swiping your debit card. This is done to normalise the panic situation in the country. Presently around 2,500 Petrol stations where State Bank of India swipe machines are used are enabled with this facility and within two-three days around 20,000 more petrol stations will be enabled where swipe machines of HDFC Bank, ICICI bank and Citibank are being used. One can withdraw Rs.2,000/- per day at these petrol stations by swiping his/her debit card.

G) SHORT TERM DEFLATIONARY TREND IN THE ECONOMY: Initially the economy as a whole will suffer adversely as most of the trade/industry will be slowed down. This is because of the diminishing trend in the currency circulation, there by lack of purchasing power with the general public. But this deflationary trend is temporary and will only last for a few months. Once the money circulation becomes normal the trade and industry will pick up.

SNIPPETS – 12/11/2016

1. GOVERNMENT WITHDRAWS Rs 500, Rs 1,000 NOTES TO FIGHT BLACK MONEY AND FAKE CURRENCY MENACE: In an Extraordinary and Historical move, Honourable Prime Minister Shri Narendra Modi withdraws the circulation of Rs 500/- and Rs 1,000/- currency notes from midnight of 8th November 2016. We have already covered the details in our separate BLOG- IMPACT OF DEMONETIZATION OF CURRENCY IN INDIA.

2. MULTIPLE TAX SLAB & CESS TO COMPLICATE GST: While the Indian trade, commerce and Industry is getting ready for the “GST”( Goods and Service Tax) regime, Industry experts say that multiple tax slabs coupled with the cess will complicate the GST. The GST council has almost finalised the four-tiered rate structure of GST—5%, 12%, 18% and 28%. And cess on demerit items like tobacco, pan masala, luxury cars, aerated drinks etc. The 28% slab will be mostly on majority of consumer durable sector. The cess is to compensate states for a possible revenue loss.

3. SBI 2nd QUARTER PROFIT PLUNGES 99.6% ON HIGHER BAD LOAN PROVISIONING: State Bank of India recorded 99.6% dip in consolidated net profit at 20.70 crore for September 2016 quarter on account of 3-fold jump in bad loan provisioning. Its profit was Rs 4991.70 crore during the same quarter of the last financial year.

4. NEW NOTES WILL NOT HAVE “TRACKING CHIPS”: With introduction of new Rs 2,000 and Rs 500 notes, reports were abuzz with rumours that the new notes will have “nano GPS tracking chips” embedded in them which will enable tracking. Now Reserve Bank of India has denied the same saying there is no such thing in the notes and is just a rumour and there is no reality in it.

5. NEW Rs 1,000 NOTES WITH EXTRA SECURITY FEATURES IN A FEW MONTHS: Government will re-introduce Rs 1,000 bank notes in a few months along with new series of lower denomination notes with enhanced security features.

6. RBI ASKS BANKS TO CHANGE DEBIT CARDS WITH MAGNETIC STRIPS: Considering the on-going chaos over debit card breach, the Reserve Bank of India has asked all the banks to change their magnetic strip based debit cards with “chip based” cards. Banking experts claim that chip-based cards are comparatively more secure than magnetic strip cards. The chips are more secure and are difficult to hack. However these chip-based cards are in the premium category and involve more cost. But looking at the security aspects, many banks will start issuing chip-based cards soon to all its customers.

7. INDIA’S FIRST BANKING ROBOT- “LAKSHMI” MAKES ITS DEBUT IN TAMILNADU : Endearing, interactive and superfast with data, india’s first banking robot LAKSHMI made her debut in Chennai, launched by City Union Bank. ROBOT LAKSHMI will be the first onsite bank helper.


In an Extraordinary and Historical move, Honourable Prime Minister Shri Narendra Modi withdraws the circulation of Rs.500/- and Rs.1,000/- currency notes from midnight of 8th November 2016. The driving force behind the historical decision was to eradicate black money and fake currency menace.

A) BLACK MONEY HOARDERS: A recent study had pegged India’s black market economy at over Rs.30 lakh crore, which is about 20% of total GDP. By banning the Rs.500/- and 1000/- currency, black money hoarders will have a tough time. They either have to route this money through bank which will attract heavy penalty or they have to burn the stashed cash.

B) FAKE NOTE CIRCULATION:India is facing the fake money menace and fake currency infiltration in the country by the terrorists. Hence by withdrawing the circulation of this currency and introducing new currency is a big blow to these groups. This is nothing less than a kind of “Super Surgical Strike” on these groups.

C) IMPACT ON RURAL ECONOMY: A strong criticism of the scheme that came across is the possible negative impact on rural economy. India has more than 6.8 lakh villages and most of these village population does not have any banking facility. This is likely to come across as a huge shock for such sections of our population. It will be long before the entire rural India moves towards cashless economy.

D) DOMESTIC/HOUSEHOLD SECTOR: Domestic and household sector or rather the middle income group is going to suffer a lot because of this currency ban as they would face lot of inconvenience. But this is just for a few days and once the new currency is issued and lower denomination currency circulation comes to normal there will be relief.

E) BANK DEPOSITS WILL SPIKE: Banks are expected to witness a surge in deposits. The banks’ low cost deposit will be on the rise immediately. Banks will see huge rise in their term deposits as well and banks will have more liquidity. This will result in fall of interest rates.

F) IMPACT ON JEWELLARY AND REAL ESTATE BUSINESS: The Decision of the government is widely welcomed by the jewellery industry all over the country. The general opinion is that Gold will be in vast demand as people will have more faith in gold than currency. It will indeed create destabilisation for a while, but overall it is expected to benefit the industry. In the real estate sector the unorganised and secondary (resale) property market would be adversely impacted. According to this sector, the Housing prices would witness a drastic downfall, which will in turn help to revive the low demand in this sluggish market.

G) IMPACT ON CAPITAL MARKET: With initial day of slump in the market, the market is seeing an upward trend from the next day. The capital market will be bullish in the near future as investors expect the Bank Deposit rates to fall, and thereby they will start investing in equities.

H) TILT TOWARDS CASHLESS ECONOMY:Due to the currency ban the government has fixed new limits on the ATM withdrawals at Rs.2,000/- per day, withdrawals from bank accounts to Rs.10,000/- per day. Perhaps the government is trying this on a pilot basis and if the situation stabilises then it will drive the card payments across the country, there by paving the way for a “Cashless Economy—card transactions replacing cash transactions

SNIPPETS - 05/11/2016

1. RBI WANTS 10% OF BANK ATMs TO DISPENSE ONLY Rs 100/- NOTES: Reserve Bank of India has said that it will conduct a pilot project wherein 10% of ATMs in the country will exclusively be made to dispense only Rs 100/- banknotes. This is undertaken to address the genuine requirements of members of the public.

2. BANK TO REPORT FRAUDS OF Rs 1 CRORE AND ABOVE TO CVC: With several High-ticket alleged frauds coming to the fore, Central Vigilance Commission ( CVC) has now made it mandatory for public sector banks to report to it, all such matters involving funds over Rs one crore. For this purpose CVC has hired four General Manager ranked officers from banks as advisors, who will recommend whether CBI probe can be further initiated or not.

3. AXIS BANK ENABLES SUBMISSION OF YOUR 15 G/H THROUGH MOBILE: Axis bank has launched “Insta Services” to enable electronic submission of Form 15 G/H through its mobile application. With this, their customers need not visit the branches to submit these forms and can submit the forms at ease from their homes. Form 15 G/H are self-declaration forms required to be furnished by the assesse to the bank for “nil” deduction of TDS (Tax Deduction at Source) on interest income. Form 15G is for everyone and Form 15H is for senior citizen.

4. E&Y (ERNST & YOUNG) SAYS RURAL INDIA CAN GET FINANCIAL COVER VIA MOBILE SERVICES : London based professional service firm E&Y says that there is a large untapped Indian rural population waiting to be covered under the financial net and this can be made possible through mobile based services. Initiatives such as Jan Dhan Yozana that led to the opening of 125 million new bank accounts indicate the appetite of financial services in the country. According to its survey, there is still a large (nearly 47%) untapped population to be covered under the financial net.

5. 57 BORROWERS OWE BANKS WHOPPING Rs 85,000 CRORES: Only 57 borrowers have defaulted on banks worth whopping Rs 85,000 crores. The Supreme Court (SC) said this after perusing a report submitted by RBI about persons who have taken loan worth Rs 500 crores and above and defaulted. The SC asked the central Bank as to why their names should not be made public. The SC bench also remarked that if the bar was lowered below 500/- crores, then the amount would cross over Rs one lakh crore.

6. WHAT HAPPENS TO YOUR MONEY WHEN YOU LOSE MONEY AFTER A DATA BREACH: Indian Banks carried out the country’s biggest card replacement move after a massive data breach that had its source in China. While this has been a proactive measure to protect the interest of the customer, there are a few things one must be aware. If a customer loses money due to the data breach then according to a draft issued by RBI, the concerned bank is responsible for the same and the bank should credit the amount involved in the unauthorised electronic transaction to the customer’s account within 10 working days.

SNIPPETS - 29/10/2016

1. RBI TO AUDIT CYBER SECURITY AT BANKS: In view of the latest financial data leakage that has happened recently, RBI is looking to take matters in its own hands and scrutinise security of banks. For that RBI is looking to rope in outside help that would try and exploit the loopholes in the information technology system of the banks so as to rule out repeated breaches in future. This would be a kind of IT (Information Technology) audit which directly deal with the loopholes in IT system of banks.

2. BANKS TOLD TO ADHERE TO CYBER NORMS: Indian Banks were recently stung by the biggest financial data breach to hit the banking industry as a result of which the banks were forced to compromise as many as 3.2 million debit cards. As a result of this, Reserve Bank of India has directed banks to strictly adhere to the cyber security norms and guidelines issued in June 2016. Banks have been advised to review the extant cyber security arrangements.

3. HUNDREDS OF SMALL NBFCs FACE CLOSURE THREAT ON TIGHTER RATING NORMS: Nearly 200 Non-Banking Financial Companies (NBFCs) face closure in the next few months as they don’t meet the Reserve Bank of India’s mandated requirement of minimum investment grade credit rating to accept deposits. These companies which are mainly localised small time lenders have now approached the regulator seeking relaxation in the said norms.

4. BSE INTRODUCES PAPERLESS “SIP” FACILITY FOR MUTUAL FUND INVESTORS: The BSE has introduced paperless “SIP”( Systematic Investment Plan) facility to mutual fund investors. This move will drastically cut the registration time and allow subscribers to transact through different payment modes including Net Banking.

5. BANKS MAY ACQUIRE CORE SECTOR ASSETS: The government has decided to encourage state run banks to acquire assets of loan defaulters in steel, power and shipping sectors. State run banks will manage these companies. This will necessarily involve the banks to invoke power under the contract, converting part of their debt into equity, taking control of those units and appointing a management team of established people to manage these units.

6. BANKS MOVE TO LOWER CREDIT CARD EXPOSURE: Banks are slowing their exposure to their credit cards business amid fears that they may be fuelling growth in a segment that may come under pressure due to slowing pay rises and uncertainties over jobs.

SNIPPETS - 22/10/2016

1. RBI EASES NORMS FOR FOREIGN INVESTMENT IN START-UPS: The Reserve Bank of India has now permitted Foreign Venture Capital Investors ( FVCIs) to invest in Indian start-ups without any prior approval. SEBI registered FVCIs have also been permitted to invest in un-listed firms without any prior permission from RBI. They do not require any prior approval and can invest in equity or equity linked instruments or debt instruments issued by Indian start-ups.

2. RBI PERMITS 100% FDI IN MORE FINANCIAL SERVICES: The Reserve Bank of India has permitted 100% Foreign Direct Investment (FDI) in “Other Financial Services” carried out by NBFCs under automatic route. The “Other Financial Services“ will include activities which are regulated by any financial sector regulator like RBI, SEBI, Insurance Regulatory, Pension Fund Regulatory etc. Such foreign Investment will be subject to certain conditions like minimum capitalization norms.

3. SBI BLOCKS OVER 6 LAKHS DEBIT CARDS ON SECURITY BREACH FEAR: Sate bank of India has said that it has blocked and will replace 6,25,000 debit cards fearing data/security breach. SBI said it will compensate its customers in case of lapses. On getting information from VISA/MASATERCARD and RUPAY, as a measure of precaution, they have decided to replace these cards.

4. PSU BANKS ASKED TO REFER HIGH-VALUE BAD LOAN RESOLUTION CASES TO OVERSEEING PANEL: The Finance Ministry has asked public sector banks to approach the newly formulated Over Seeing Committee ( OC) for resolution of all High-value bad loans and not just accounts considered under Scheme for Sustainable Structuring of Stressed Assets ( S4A). The Over Seeing Committee (OC) is a two member committee which includes former SBI Chairman Mr. Janki Ballabh and former chief vigilance commissioner Mr. Pradeep Kumar which is set up by Indian Banks’ Association in consultation with RBI and vigilance and investigating agencies.

5. MERGERS ARE NOT QUICK FIX SOLUTIONS FOR BANKING SECTOR: As per the report of The Associated Chambers of Commerce and Industry of India (Assocham), an Industry body, it says the government should focus on making banking system more stronger and give the lenders independence to find their own solutions instead of stressing on mergers. Assocham President Mr. Sunil Kanoria while releasing the report said that mergers and consolidation of public sector banks is certainly no answer to the present crisis, which can only be resolved by professionalising these banks with the government keeping an arm’s length.

SNIPPETS - 15/10/2016

1. TOTAL BANK DEPOSITS CROSS Rs 100 LAKH CRORE FOR THE FIRST TIME: India’s banking system reported total deposit of Rs 100.00 lakh crores for the first time ever in September 2016. This is as per the data released by RBI. With demand deposits crossing Rs 10 lakh crores and time deposits crossing Rs 90 lakh crores. The month of September saw the highest ever monthly rise of 5.32 lakh crores. Although 100 lakh crores is a big milestone, historical data reveal that the deposit growth has slowed down considerably in the last five years. While banks’ deposit grew at a CAGR of 12.88% in the previous five years, it had grown at a CAGR of 19.9% in the previous five years.

2. PSBs LOSSES MAY HAMPER ABILITY TO PAY INTEREST ON BONDS: As per CRISIL Rating’s report, a sharp decline in profitability and mounting losses of some of the Public Sector Banks could wipe out their revenue reserves and hamper their ability to pay interest on bonds issued to meet Basel III norms. While the government has committed capital infusion to PSBs, the coupon on AT1 bonds can only be serviced through current year’s profit or from revenue reserves and hence any capital infusion by government alone cannot improve the banks’ ability to service coupon ( interest) on the bonds.

3. GOVERNEMENT PLANNING MERGER OF TWO BIG PSU BANKS AFTER DEBT CLEAN-UP: Government of India is planning and may merge two big banks in the coming fiscal once the clean-up of bad asserts is completed. Consolidation of India’s public sector banks would represent a final step in rebuilding a strong financial system capable of underwriting credit growth and more job creating investment.

4. FIRST HALF FINANCIAL STATEMENTS (H1) TO BE SUBMITTED BY BANKS TO RBI BY NOVEMBER 30TH: The Reserve Bank of India has asked banks to submit the first- cut reporting of their financial statements for the first half of the fiscal ending September 30 with regard to Indian Accounting Standards by November 30th. This will help RBI to ascertain the difficulties faced by these banks as part of the transition to the International Financial Reporting Standards from April 2018.

5. RBI CHIEF WARNS OF RISKS FROM BREXIT AND U.S. ELECTIONS: Reserve Bank of India Governor Mr. Urjit Patel has warned India and fellow BRICS countries( Brazil, Russia, India, China and South Africa) to be prepared to confront potential “political risk” events such as Britain’s exit from European Union and U.S. Elections. Mr. Patel said that India has already moved in this regard to improve its defences, through measurable progress in price stability, fiscal rectitude and sustainable current accounts. He further added that government initiatives such as ‘’Make in India” intended to turn it into a manufacturing hub.

SNIPPETS - 08/10/2016

1. RBI LOWERS BENCHMARK REPO RATE BY 25 BPS TO 6.25%: Reserve Bank of India has cut the interest rates by quarter points and now the new repo rate would be 6.25%, which is the lowest in 6 years. With this, Mr Urjit Patel the new RBI Governor, by dropping the interest rate to a near six year low, appears to be making way for a different way of doing things despite the inflation forecast for financial year 2016 nudging over the target.

2. NEW GUIDELINES ON STRESSED ASSETS : Indian Banks which are burdened by bad loans are likely to get a breather in the way they classify restructured stressed loans, opening up the possibility of more bailouts for the ailing companies. RBI has said that banks need not classify the sustainable part of restructured loans as bad. The relaxation in the said guidelines will help most banks and will be a relief for the banking system.

3. FINETECH STARTUPS TO GRAB BUSINESS FROM FINANCIAL INSTITUTIONS AND BANKS: Finetech startup companies are rolling up their sleeves to get share in the financial market. As consumption is picking up, the banks are struggling to keep up with the growing market and then NBFCs are still slow to learn the ways of online business, these Finetech startups are grooming up day by day. A few companies are plugging the e-commerce sites directly to provide consumers with easy EMI options, others are trying the personal loan segment by filling their wallets before they go out for shopping.

4. DELINQUENCIES IN LAP (LOANS AGAINST PROPERTY) MAY RISE, NBFCs MAY HAVE MORE STRESS: Delinquencies in LAP portfolio of financial institutions is likely to rise to over 5% over the next four quarters. This is due to stagnant property prices and risk aversion. More than the banks, NBFCs will have more stress as out of the total LAP portfolio of Rs 2.5 lakh crores for the entire financial sector, about 1.2 lakh crores is estimated to be on the books of NBFCs.

5. BANKS MAY DELAY IFRS IMPLEMENTATION ON ACCOUNT OF CAPITAL WORRIES: Reporting agency Fitch has said that migrating to the International Financial Reporting Standards (IFRS) format is likely to be delayed in the domestic banking sector as banks are finding it difficult to meet Basel III requirement. Basel III capital requirements are to be met by Indian banks by end of March 2019.

SNIPPETS - 01/10/2016

BANKS CAN’T PUBLISH DEFAULTERS PHOTO RANDOMLY: Reserve Bank of India has said that Banks can publish photographs of only those borrowers in newspapers who have been declared “Wilful Defaulters “as per central Bank’s guidelines. It directed the Banks to formulate a policy in this regard and the policy should clearly set out the criteria based on which the decision to publish photographs of the defaulters is taken.

2. PSBs ASKED TO USE “NEIN” DATABASE TO CHECK ANTECEDENTS OF ECONOMIC OFFENDERS: Public Sector Banks (PSBs) have been asked to use the National Economic Intelligence Network (NEIN) database to check the antecedents of borrowers and inform the authorities about the financial irregularities. Intelligence agencies have asked the banks to submit the information in a standard format. With this, promoters with questionable financial track record may find it very difficult to get credit from PSBs. This is a part of a strategy to prevent bad loans from piling up.

3. NPAs TO DIP ON HIGH INDUSTRIAL CAPACITY UTILISATION: SBI Chairperson Ms Arundhati Bhattacharya has said that the stressed assets level in the banking sector will come down once the key industrial sectors start functioning at their optimum capacity. Presently most of the industrial sectors are working at 60 to 65% of their capacity and once this is accelerated to 80 to 85%, we will see NPAs coming down as the demand comes back in the economy and will see more and more capital utilisation.

4. LENDERS TO GAUGE BORROWERS INTENT TO PAY, NOT JUST ABILITY TO PAY: So far banks and finance companies have factored borrower’s ability to pay the loan rather than his intent to pay. Borrowers may no longer be judged solely on the ability to repay the loan, their intent to repay too may become a critical parameter to avail loan. A number of finance companies have tied up with consulting firms which specialise in psychometric testing in lending that gauges the borrower’s creditworthiness on the basis of their intent to repay, instead of their ability. This issue has gained importance after the Vijay Mallya’s King Fisher loan fiasco.

5. ELEVEN INDIAN BANKS RISK BREACHING BASEL III CAPITAL TRIGGERS: As per the rating agency Fitch, Eleven of India’s Banks will likely be in danger of breaching Basel III capital triggers. The agency had estimated that India’s banks will need $90 billion in new capital to comply with Basel III banking norms which are due to fully kick in by March 2019. State run banks accounted for 80% of that amount.

6. BLACK MONEY: I-T RAIDS INCREASE THREE FOLDS: In the backdrop of the lack lustre results in the Centre’s Income–Disclosure Scheme (IDS) which has not yielded desired results so far, the government has started building pressure across the country by increasing the number of income tax raids, which have gone up by three times in the first four months of this financial year.

SNIPPETS - 24/09/2016

1. GOVERNMENT APPOINTS MONETARY POLICY COMMITTEE TO HELP RBI SET INTEREST RATES: The government appointed three members in the Monetary Policy Committee (MPC), putting the seal on India’s new architecture for setting interest rates and ending the Reserve Bank of India governor’s role as sole arbitrator. The three members will be joined by three Reserve Bank members, with Governor of RBI having a casting vote. Its first policy review is slated to be held on October 4th.

2. CABINET CLEARS MERGER OF RAILWAYS AND UNION BUDGETS: In a sweeping change of India’s annual budget process, the government ended the 92 years old practice of having a separate rail budget. The union cabinet has decided that from the coming year the rail budget and the general budget will be amalgamated. The Union cabinet also approved the finance ministry’s proposal to advance the general budget’s presentation by a month.

3. INDIA LESS PRONE TO BANKING CRISIS RISKS: According to Bank for International Settlements (BIS) India is less vulnerable to banking distress among the major economies while neighbouring China faces higher risks. As per data compiled by BIS of more than 40 economies show that credit-to-GDP gap was among the least for India.

4. SEBI WANTS RATING AGENCIES TO MAKE FULL DISCLOSURE: SEBI is asking credit rating agencies to come out with a slew of disclosures while doing corporate ratings and fix accountability in view of the recent surge in corporate indebtedness. Now the rating agency will have to spell out how the rating is conducted, responsibilities of the analysts, and evaluate the performance of their respective rating committees, particularly if there is an unforeseen default.

5. RBI PLANS FUND TO PUSH CARD SWIPE MACHINES: Reserve Bank of India is planning to create a fund to push card swiping machines. Concerned over low use of debit cards in electronic payments, the RBI wants banks those who are not installing card accepting machines to contribute to this fund that will subsidise installation of point of sales (PoS) terminals. There are 68 crores debit cards in India. But the number of PoS machines is only 14 lakh. The average debit card use at PoS machines is one transaction for every 10 transactions in an ATM.

6. RBI SAYS BANKS MUST REPORT ALL CYBER CRIMES: The Reserve Bank of India has issued an ultimatum to Indian banks on cyber crimes, asking them to immediately report any breach of security so that the overall network is not compromised. Some banks are reluctant to report such frauds in order to avoid negative publicity. RBI has set an deadline of March 31st 2017, for banks to put in place a mechanism to report cyber-crimes immediately.

SNIPPETS - 17/09/2016

1. BASEL-III NORMS MAY RESULT IN HALF OF INDIAN BANKS BRAECH CAPITAL TRIGGERS: Increased capital requirement under Basel-III norms may result in half the Indian banks breaching the trigger levels. This is as per the report released by credit rating agency- Fitch. With poor existing capital buffers and weak prospects for raising capital through market channel, the state run banks are more at risk.

2. CBDT TO HONOUR HONEST TAX PAYERS: The Central Board of Direct taxes (CBDT) will soon honour lakhs of “honest and compliant“ tax payers who have paid their tax dues diligently over the years. CBDT has created four broad categories of tax payers for the purpose: Large, Regular, Compliant and Diligent tax payers. Such people will be issued commendation certificates by policy making body of the IT department signed by CBDT Chairman.

3. PSBs CANNOT SELL PERPETUAL BONDS TO RETAIL INVESTORS: Public Sector Banks (PSBs) will not be able to sell perpetual bonds to its retail customers. The Securities & Exchange Board of India (SEBI) has struck down requests of PSBs to sell these securities to smaller investors, siting potential risks of mis-selling.

4. CRITERIA REVISED FOR RECAPITALISATION OF PSU BANKS: The Finance Ministry has revised its norms for recapitalisation of Public Sector Banks. PSBs looking forward for the next round of capital infusion will need to fulfil the new set of criteria. The second round of capital infusion to these banks would be based on cost of operations, recovery of credit, quality of credit on the basis of risk weighted assets. Only those banks fulfilling these criteria for the third quarter (October-December) in this fiscal will be eligible for capital infusion. The government had released its first round of capital infusion of Rs 22915 crores to 13 banks. The next round of capital infusion is linked to greater efficiency, growth of both credit and deposits and reduction in cost of operations.

5. NEW LENDING NORMS MAY NUDGE BANKS TOWARDS RETAILS LOANS: State Bank of India Chairperson Mrs. Arundhati Bhattacharya has said that stringent norms proposed by RBI for corporate lending will force state run banks to tilt more towards retail lending. Reserve Bank of India, last month had come out with draft guidelines on credit to large corporate borrowers asking banks to make additional provisions if the loan amount crosses the prescribed limit. The latest norms towards lending to large corporates make corporate lending costly, both for banks as well as the borrowing companies.

6. NO CLOSURES, ONLY BRANCH RELOCATIONS AFTER ASSOCIATE BANKS MERGER WITH SBI: The State Bank of India (SBI) may relocate many of its branches after the merger of its associate banks with itself and none of the branches would be shut down. As per the statement made by its chairperson Mrs Arundhati Bhattacharya, these branches will be relocated as it will have better reach. With this the productivity will improve with same number of employees and will have more customer coverage. The merged entity will have more than 24000 branches, will continue to have same number of branches.

7. EQUITAS SMALL FINANCE BANK BEGINS OPERATIONS FROM CHENNAI: Equitas Small Finance Bank Limited (ESFBL) has commenced its business from Chennai with three branches. This is the first private sector Bank from Tamil Nadu post-independence. By the end of 2016-17 the bank plans to have a network of around 400 branches across 11 states with 25% of branches to open in un-banked villages.

SNIPPETS - 10/09/2016

1. SBI RAISES MONEY FROM PERPETUAL BONDS ISSUE : State Bank of India, country’s largest Bank, has raised Rs.2,100 crores through perpetual bonds at coupon rate of 9%. Private Sector lender Yes Bank Ltd has invested the entire sum. PERPETUAL BONDS are bonds with no maturity, and the issuer of the bonds pays interest forever. Investors do not have to redeem the bonds except on call date announced by the issuer. Here SBI has given a five year call option. So Yes Bank has the option to withdraw the money after five years. Perpetual bonds are treated as safe investment but there is catch here- If the issuer incurs losses then he may delay or may not pay the interest. With interest rates falling, some wealthy investors are investing in these bonds, but some of the investors are not fully aware of the inherent risk it carries.

2. SARFAESI ACT TO COVER NBFCs: Now as per Budget proposal Non-Banking Financial Companies (NBFC) with assets of more than Rs.500 crore, will now be covered under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. This will allow NBFCs to enjoy the benefits of SARFAESI Act, 2002 that presently apply only to Banks. The measure is a big boost to NBFCs. This will help them to strengthen their recovery capabilities. This will also enable NBFCs to lend with greater confidence as they can be assured of speedier recovery.

3. TWO INDEPENDENT VALUATIONS A MUST BEFORE SALE OF BAD LOANS: the Reserve Bank of India has tightened the recovery norms for banks by mandating that banks to have two mandatory valuations for assets of bad loans of more than 50 crores, before selling them to Asset reconstruction Companies(ARCs). These measures could accelerate the sale and bring down the unrealistic price expectations by banks.

4. RESERVE BANK WIDENS THE SCOPE FOR SALE OF STRESSED ASSETS: In a bid to improve the sale of bad loans by banks, the Reserve Bank of India has now allowed banks to sell these bad and stressed assets to other banks, non-banking Financial companies (NBFCs) or financial institutions. It has also made banks’ boards more accountable for stress resolution.

5. DELINQUNCIES OF PERSONAL LOANS LOWER THAN HOUSING LOANS: Personal Loans, a type of unsecured (clean) loans which typically has a higher rate of delinquencies (defaults), has seen surprisingly lower rate of delinquency as compared to housing loans. This is as per the report released by the credit agency Equifax. According to the report the delinquency of personal loans stands at 0.47% at the end of January-March quarter of 2016. During the same period the housing loan delinquency stood at 0.49%. Home loans, being a secured product, usually have lower rate of delinquencies. For some other products such as auto loans and business loans the percentage of delinquency during the said period stood at 1.11% and 3.22 % respectively. This may be because of the reason that banks have become more vigilant and choosy in granting personal loans.

6. INDIA’S SAVINGS RATE NEEDS A BOOST: As per the report of DBS there is a decline in the gross savings by Indians, estimated to have fallen to 31% of GDP. This needs to be contained as relying on foreign savings puts pressure on the growth path. Increase in Domestic savings is required to fund investments, which otherwise must be financed with foreign capital.

SNIPPETS - 03/09/2016

1. HDFC BANK TO LAUNCH “ROBOT” IN SOME OF ITS BRANCHES: The country’s second largest private sector Bank is planning to launch a Robot (Humanoids) in some of its branches. HDFC Bank is trying to match its Japanese Counterpart as Bank of Tokyo- Mitsubishi has launched a Robot named Nao. HDFC Bank will name its Robot “Project AI”( Artificial Intelligence). The Bank’s first Robot will only perform a limited role, acting as a receptionist. 2. RBI POINTS OUT LOW TRANSMISSION OF RATE CUTS INTO BANK LENDING RATES: Reserve Bank of India has reiterated that there has hardly been any transmission of policy rate cuts into bank lending rates. The Reserve Bank of India has cut the policy rate by 150 basis points ( bps) from January 2015 to April 2016, whereas the median base rate of banks has fallen only by 60 bps. At the same time the decline in median deposit rate is 92 bps. This is because the banks’ deteriorating asset quality and higher provisioning. With Banks turning stingy in passing the RBI’s rate cuts to its consumers (rate cuts in home loans is fallen only by 0.26%), corporates have managed to bring down their borrowing cost by 1.44 % points by tapping bonds market.

3. FUTURE OF INDIAN BANKING SYSTEM BRIGHT DESPITE NPAs: As per a report from Boston Consultancy, despite the on-going stress of deteriorating asset quality, the Indian banking system is expected to be the third biggest in the next decade. Boston Consultancy predicts the Indian banking revenue will be close to $ 400 billion by 2026. Here it says private banks will continue to outshine the state run banks as they will continue to grab more market share year on year.

4. RBI REFORMS HAVE OPENED UP CURRENCY MARKET: The measures RBI announced for development of corporate bond and currency markets covers all the three areas, A) Market Regulations and institution support—here RBI has proposed to cap banks’ exposure to any group companies, this will force corporates to move to bond markets, B) Market participants—At present participation in bond repos is restricted to entities like banks, primary dealers, Mutual funds, Insurance companies etc. But now individual authorised brokers will be allowed to participate in corporate bond repo market, C) Instruments—here RBI has proposed to permit banks to issue perpetual debt instruments (PDI) and debt capital instruments. When these things are implemented it will have deep impact on the corporate debt market.

5. RELIEF FOR BANKS, AS FINANCE MINISTRY RELAXES “FATCA”COMPLIANCE NORMS: Banks and financial institutions have received a breather as regards complying with US enacted Foreign Account Tax Compliance Act (FATCA). The Finance Ministry has said that banks and financial institutions need not enforce “closure“ of accounts by 31st August, 2016 in respect of accounts where self-certification is not obtained and due-diligence not completed. The revised time-lines for completing due diligence and obtaining self-certification will be further notified.

SNIPPETS - 27/08/2016

1. MASALA BONDS IN FOREIGN MARKETS: Masala Bonds is a way for Indian Companies to raise funds from abroad without incurring the risk of depreciating exchange rates. They borrow not from a bank but by selling bonds to investors. These bonds are denominated in Indian rupees and are to be repaid in Indian rupees only. So there is no currency risk to the borrower. That risk is to be borne by the foreign investor. The Reserve Bank of India has formally approved of such bonds and HDFC was the first company to avail this facility last month. It sold Masala bonds at 8.37%, still cheaper than 9 or 10% which they might have paid in India. These bonds are free to trade in London stock exchange.

2. LARGE FIRMS HAVE TO PAY MORE FOR BANK LOANS: RBI has proposed a major overhaul in the way large companies borrow from banks. Starting next financial year, large Indian companies will have to pay more for borrowing from banks, a part of an effort by the Central Bank to curb lenders’ exposure to stressed corporate entities. The Central Bank is also taking steps to increase liquidity and participation in the corporate bond market.

3. PRADHAN MANTRI FASAL BIMA YOZANA: The Hon’ble Prime Minister of India has announced a brand new crop Insurance scheme on 13th January 2016 and this scheme is called Pradhan Mantri Fasal Bima Yozana ( PMFBY). This will be implemented in every state. The main motto of this crop insurance is to provide efficient and low cost insurance support to the farmers which will give financial support to thousands of farmers so that they can sustain even if the yield is damaged. Every Bank Branch in India has been now provided with a portal and details of farmers have to be made in that portal. RBI has directed Banks for strict compliance for implementation of this Fasal Bima Yozana.

4. TRANSFER FUNDS WITHOUT AN ACCOUNT NUMBER VIA UNIFIED PAYMENT SYSTEM( UPI): Reserve Bank of India has cleared the Unified Payment Interface ( UPI), a platform which links bank account numbers to virtual payment addresses. So you can now transfer funds to anyone without even knowing the recipient’s account number through a mobile banking app. The UPI enabled app in effect turns your smartphone into a bank. This has come as a boost to a cashless economy. This mode is even better than RTGS and NEFT as it allows access to more than one bank account, does not need 16 digit bank account, and 11 digit IFSC code. Presently up to Rs 1.00 lakh can be transferred and no charges on money transfer as of now.

5. RBI CURBS LARGE LOANS TO SINGLE BORROWER: The Reserve Bank of India on Thursday announced series of measures to prevent banks from giving large exposure to a few big corporates. The measures come after a handful of distressed borrowers wiped out profits of several banks due to large loans going bad. As a first step the RBI proposed to cap the exposure limit of banks to a single borrower group to 25% of the bank’s equity capital. At present the banks can go up to 55% of their Tier I capital in case of Infra loans. In case of individual entities, the limit has been raised from 15% to 20%. At the same time RBI has paved the way for the corporates to move towards bond market.

6. DOMESTIC SYSTEMATICALLY IMPORTANT BANKS (D-SIB) : SBI and ICICI Bank have been given the status of Domestic systematically Important Banks ( D-SIBs) by Reserve Bank of India for a second consecutive year. As these banks are named as D-SIBs it imposes additional capital requirement. RBI follows the Systematic Importance Score (SISs) for selecting a bank .The selection is also based on the Bank’s size as a percentage of annual GDP.

SNIPPETS - 20/08/2016

1. CUSTOMERS ARE NOT LIABLE FOR E-FRAUDS, IF REPORTED IN TIME: The Reserve Bank of India has introduced a policy of “zero liability” for customers in third party frauds if reported within 3 days. This means banks will have to make good the losses suffered by customers in E-frauds if reported in time. In cases where the customer reports the fraud between 4 and 7 days after coming to know about it, his liability will be capped at Rs.5,000/-. It is further notified that if the bank employee is responsible for the fraud, the customer must get his money back irrespective of whether it is reported well within time or not.

2. BANKS CAN CONFISCATE SECURITY IN CASE OF LOAN DEFAULT: The Enforcement of Security Interest and Recovery of Debts Law and Miscellaneous Provisions (Amendment) Act 2016, has received a GO AHEAD from the President of India and it has been notified. The Act amends four laws—the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest( Sarfaesi) Act, 2002, The Recovery of Debts due to banks and Financial Institutions (RDDBIT) Act, 1993, The Indian Stamp Act, 1899 and the Depositories Act, 1996. This amendment simplifies the procedure to ensure quick disposal of pending cases of banks and financial institutions by the Debt Recovery Tribunal ( DRT). The new legislation is not applicable to agricultural loans as well as student loans.

3. INSURERS WILL HAVE TO DEAL WITH MORE TAXES IN GST REGIME: Insurance companies will potentially have to deal with more taxes once the GST is implemented with the emergence of the Centre and state as dual stakeholders, as per the report. The number of taxes will increase as the calculation of input-output tax credits will be done separately for each individual state in which they are earned..

4. INCOME DECLARATION SCHEME-2016 (IDS), INCOME TAX DEPARTMENT ALLAYS CAPITAL GAINS WORRIES: Under the present Income Declaration Scheme the potential declarants would require to sell their assets to meet IDS tax liability. Here the declarant has to pay 45% tax ( on the fresh market value of the asset as on date) while declaring undisclosed assets and an additional capital gains tax if the said property is to be sold. The Central Board of Direct taxes has clarified that the period of holding the immovable property will be taken on the basis of the actual acquisition date of the property and not from June 2016, thereby capital gains tax burden will not be there. Also the Department further clarified that either the department or the Financial Intelligence Unit will not take any adverse action solely on the basis of cash deposits made in banks from the sale of proceeds for IDS declaration.

5. FIVE THINGS YOU SHOULD KNOW ABOUT CREDIT CARDS: 1. If you miss a payment in a month, the interest amount is calculated from the date of purchase. 2. Do not think the “minimum due amount” is a good reason for delaying your payments as the company still charges you interest for the period. It however does not impact your credit score as you are not termed as a defaulter. 3. Trailing interest is something not understood by many. If you had not made full payment as per previous balance on your card, the interest is calculated from the day of your purchase. Grace period ceases to exist for fresh payments if the payment is not made on your card. 4. Interest is calculated on the full amount even after making a partial payment. 5. Know the date when your credit card bill is generated. By making a purchase on the date of the bill, you can increase the interest free period by almost two months.

6. SBI LAUNCHES NEW HOME LOAN SCHEM TO ATTARCT NEWGEN CUSTOMERS: To woo young customers, SBI has launched a new home loan scheme offering higher amount and up to 5 years of interest moratorium, which looks like a controversial teaser loan. This is SBI’s “FlexiPay Home Loan”, offering its customers an interest moratorium for an initial period of 3 to 5 years and then start paying EMIs. To lower the impact of higher EMI after 3 to 5 years as the interest gets added to the principal amount, the customer is also offered the option of paying only interest during the moratorium (pre-EMI) period of 3 to 5 years.

7. RBI CAUTIONS BANKS ON MIS-SELLING THIRD PARTY PRODUCTS: RBI Governor Mr. Raghuram Rajan said that as per the study undertaken by some academicians/consumer activists, it is found that Banks are mis-selling third party products, especially insurance products. The Reserve Bank of India has asked the Indian Banks Association (IBA) to come out with an appropriate industry practice in regard of sale of third party products.



Most Bankshave announced the shift from Base Rate(BR) to Marginal Cost of Lending Rate (MCLR)from April 2016 as per RBI Guidelines. .

The new methodology uses the marginal cost or latest cost conditions reflected in the interest rate given by the banks for obtaining funds (from deposits and while borrowing from RBI) while setting their lending rate. This means that the interest rate given by a bank for deposits and the repo rate (for obtaining funds from the RBI) are the decisive factors in the calculation of MCLR.

In essence, the MCLR is determined largely by the marginal cost for funds and especially by the deposit rate and by the repo rate. Any change in repo rate brings changes in marginal cost and hence the MCLR should also be changed.

How MCLR is different from base rate?

The base rate or the standard lending rate by a bank is calculated on the basis of the following factors:

1. Cost for the funds (interest rate given for deposits),
2. Operating expenses,
3. Minimum rate of return (profit), and
4. Cost for the CRR (for the four percent CRR, the RBI is not giving any interest to the banks)

On the other hand, the MCLR is comprised of the following main components.

1. Marginal cost of funds
2. Negative carry on account of CRR
3. Operating costs
4. Tenor premium

It is very clear that the CRR costs and operating expenses are the common factors for both base rate and the MCLR. The factor minimum rate of return is explicitly excluded under MCLR.

But the most important difference is the careful calculation of Marginal costs under MCLR. On the other hand under base rate, the cost is calculated on an average basis by simply averaging the interest rate incurred for deposits. The requirement that MCLR should be revised monthly makes the MCLR very dynamic compared to the base rate.

Under MCLR: 1. Costs that the bank is incurring to get funds (means deposit) is calculated on a marginal basis
2. The marginal costs include Repo rate; whereas this was not included under the base rate.
3. Many other interest rates usually incurred by banks when mobilizing funds also to be carefully considered by banks when calculating the costs.
4. The MCLR should be revised monthly.
5 A tenor premium or higher interest rate for long term loans should be included.

The MCLR should be revised monthly by considering some new factors including the repo rate and other borrowing rates. Specifically the repo rate and other borrowing rate that were not explicitly considered under the base rate system.

As per the new guidelines, banks have to set five benchmark rates for different tenure or time periods ranging from overnight (one day) rates to one year.




Goods and Services Tax (GST) is an indirect tax that brings most of the taxes imposed on goods, services, manufacture, sales and consumption of goods under its ambit in to a single domain at the national level. It will change the taxation pattern that is levied separately on goods and services and will introduce a consolidated tax, based on a uniform rate of tax fixed by the government for both goods and services and it is payable at the final point of consumption.

GST has two components, CGST (Central Goods & Service Tax) and SGST(State Goods & Service Tax). Both Centre and State will simultaneously levy tax across the value chain. Under GST since the taxes will be integrated hence it will bring transparency as the burden will be shared between manufacturing and services. It will promote growth, create more employment opportunities and boost the economy as a whole.No tax reform has generated such enormous interest among business and general public as GST. It has in some ways has become a barometer for government’s success. And for the first time the Centre and State have come together on a common platform for GST implementation.

GST makes India a common unified market. There will be just one tax on the supply of goods and services right from sourcing to customer. The new tax regime may be effective from April 01st 2017. Some companies will gain as the GST rate will be lower than the tax now it is paying and some companies will lose as the GST will be more than the tax now they are paying.

BENEFITS OF GST TO BUSINESS & INDUSTRY: 1. Easy Compliance. 2. Common tax rates.3. Removal of cascading effect of taxes. 4. Improved competitiveness.

BENEFITS OF GST FOR THE GOVERNMENT: 1. Easy to administer. 2. Better control of tax leakage. 3. Higher revenue.

BENEFITS OF GST TO THE CUSTOMER: 1. Single and transparent tax. 2. Relief from overall tax burden.


SOME OF THE SECTORS WHICH WILL BE BENEFITED BY GST: Textiles, Auto and Auto dealers, Engineering & capital goods, Power equipment industry, Pharmaceuticals FMCG, Cement.


CONCLUSION:The present taxation of goods and services in India is misallocation of resources resulting in to lower productivity and thus lower economic growth. But with the implementation of GST the problems will be effectively addressed as the tax burden is equally distributed from Production/Trade to final consumption. Under GST all different stages of production/distribution and consumption will be covered and taxed.

SNIPPETS - 13/08/2016

1. MCLR REVISION ON CARDS, SAYS RBI GOVERNOR Mr. RAJAN: Reserve bank of India (RBI) governor Mr. Raghuram Rajan said that the central Bank will soon revise the marginal cost of fund –based lending rate ( MCLR) mechanism. This MCLR concept was implemented from April 1 st 2016 , replacing base rate mechanism. Mr.Rajan says it is disappointing that banks had not passed on the benefits of lower interest rates to customers despite ample liquidity. Now banks are sighting the reasons of FCNR(B) redemptions as the reasons for not lowering the interest rates. But most banks have ruled out any immediate transmission of rates despite RBI chief Raghuram Rajan blaming them of not passing the benefits to the customer. They say that the rates will fall once the credit growth picks up.

2. ON TAP BANK LICENCING TO BENEFIT NBFCs: Reserve Bank of India’s decision to herald ‘’ on tap ‘’ universal banking licence regime will benefit non- banking finance companies(NBFC). This is as per the report of Moody’s Investor Service. However it cautioned that more bank licences will be ‘’ credit negative’’ for existing banks as it will increase competition.

3. RELAXATION OF NORMS IN CHEQUE DISHONOURCASES OF Rs 1 CRORE AND ABOVE: As per the existing norms, presently banks are not allowed to issue fresh cheque books in the event of cheque dishonour valuing Rs.1 crore and above on four occasions in a financial year for want of sufficient funds. Relaxing this existing norm, RBI now has left it to Bank’s discretion on whether to issue fresh cheque books or not. Each Bank can now take its own stance in this issue.

4. RBI LAUNCHES WEBSITE “ SACHET” TO TACKLE FRAUD: The Reserve Bank of India has launched a website “SACHET” from which anyone can obtain information regarding entities that are allowed to accept deposits, lodge complaints and share information regarding illegal acceptance of deposits by unscrupulous entities. This will help in curbing unscrupulous money raising activities.

5. RECENT ISSUE OF MASALA BONDS PAVES WAY FOR OPENING UP OF MARKETS: The recent issuance of the first off shore masala bonds ( rupee- denominated bonds in overseas market) by Indian companies could pave the way for a broader opening and development of the market, according to Fitch ratings. This will help in taking advantage of offshore markets to diversify their funding resources without assuming currency risk.

6. 25 YEARS OF REFORM PERIOD: Twenty five years have been completed since economic reforms were set in motion by the then Narasimha Rao government. These far reaching reforms have transformed the economy in a positive way and set it on a growth path. The stock Market which is the barometer of the economy has also gone a sea change during this quarter.

SNIPPETS - 06/08/2016

1. RBI RELEASES GUIDELINES FOR “ON TAP”LICENSING OF PRIVATE SECTOR BANKS: Reserve Bank of India has released guidelines for licensing of universal private sector Banks. Under this, applicants can apply for a banking license anytime. Indian residents with a 10 years senior level experience are eligible to promote a bank but large industry houses have been excluded as eligible entities, although they can invest up to 10%.

2. DHFL BECOMES THE 1st INSTITUTION TO FLOAT BONDS LINKED TO INFLATION: Dewan Housing Finance Ltd is the 1St to raise funds which are inflation linked. It was decided to raise Rs.4,000 crores through a retail bonds sale, which for the first time will also offer interest rates linked to consumer price-based inflation. Here investors can earn interest income in the range of 8.90 – 9.50% irrespective of any wild swings in CPI (consumer price index). This issue has already got record Rs.19,000 crore subscription.

3. YOU TURN A YEAR OLDER A DAY BEFORE YOUR BIRTHDAY- AS PER CBDT: Central Board of Direct taxes (CBDT) has decided that, for tax purpose, a person will be deemed to have attained a certain age on the day preceding his birthday, rather than on the birthday itself. This will benefit mostly the senior citizen, turning 60 or 80 years of age on April 1St, since these two ages bring with them income tax enhanced limit exemptions.

4. RETAIL INVESTORS CAN ACCESS G-SEC MARKET FROM AUGUST 2016: As per Reserve Bank of India latest guidelines, Retail investors can now access Government securities (G-sec) market. Presently it is being used only by large institutional players.

5. ALL STARTUPS ARE NOW ELIGIBLE FOR EXEMPTION FROM ANY PRIOR EXPERIENCE IN PUBLIC PROCUREMENT: All startups have now been made eligible to get exemption from the prior experience criteria in public procurement, a benefit that was till now enjoyed only by micro and small enterprises. Now as per the new criteria all startups are eligible to participate in public tendering process.

6. RAJYA SABHA PASSES THE MUCH AWAITED GST BILL: After a long wait India finally gets the tax regime that is globally competitive and economically gainful. The much awaited GST (Goods and Service Tax) bill was passed by Rajya Sabha on 3rd August. The rate and scope of GST, a single tax which replaces the multiple indirect taxes, are yet to be defined. Lok Sabha has already passed the GST bill last year. Now it will need the President’s assent and approval of 15 Indian states, half of India’s 29.

7. SBI LAUNCHES NEW INNOVATIVE HOUSING LOAN SCHEMES FOR GOVERNMENT EMPLOYEES: State Bank of India has launched cheaper home loans to attract the beneficiaries of 7th pay commission hike, for the Government and Defence personnel. The Bank will offer new Housing loan products—SBI Privilege Home Loan for government employees and SBI Shaurya Home loans for Defence personnel without any processing fees.

SNIPPETS - 30/07/2016

1. INDIAN DIGITAL PAYMENTS TO BE $ 500 BILLION INDUSTRY BY 2020: Due to the ever rising smartphone usage and positive regulatory changes, India will have the most advanced digital payment ecosystem over the next five years. This is ably backed by Unified Payment Interface (UPI) and Aadhaar. This is as per the report issued by Google.

2. COMPANIES TO GET PAN, TAN WITHIN A DAY: Companies can now obtain PAN or TAN registration within a day if they submit digital signature based application. Besides this, individuals can now get a new Permanent Account Number (PAN) through Aadhaar based e-signature facility which will reduce the time gap. Overall this will be a paperless application process.

3. PUBLIC SECTOR BANKS WRITE OFF Rs 1.14 LAKSH CRORE BAD LOANS DURING 2012 T0 2015: A whopping 1.14 crore lakhs of bad loans have been written off by 27 public sector Banks (PSBs) during FY 2012 – 2015. RBI Governor Mr. Raghuram Rajan had recently announced a March 2017 deadline for banks to clean up their balance sheet. For fiscal year ended 2015 alone, PSBs have written off loans amounting to Rs 52,542 crores, an increase of 52.6% over the previous fiscal.

4. RESERVE BANK OF INDIA RELAXES RULE FOR BASEL-III LIQUIDITY COVERAGE RATIO: RBI has relaxed Basel III – mandated liquidity coverage ratios for banks, allowing them to apply an additional one percentage point of deposits they currently hold as government bonds under their statutory liquidity ratios (SLR). Banks can now apply up to 11 % of their deposit base held as SLR or government securities, that banks must hold with RBI. Earlier the same was 10%.

5. YES BANK GETS SEBI APPROVAL FOR SPONSORING A MUTUAL FUND: The Securities Exchange Board of India has given an in-principle approval to YES Bank for sponsoring a mutual fund. The Bank will also set up an asset management company (AMC), besides a trustee company. The AMC and the trustee company would be wholly owned subsidiaries of the Bank. Yes Bank has announced a 32% hike in its net profit for the 1st quarter of 2016.

6. SBI KICKSTARTS THE PROCESS OF MERGER: State Bank of India has kick started the formal process of merging its associate banks and Bharatiya Mahila Bank. The bank has appointed merchant bankers, valuation consultants and law firms. The bank says the proposed mergers should be completed by March 2017.

7. AMAZON’S PREMIUM SERVICE “AMAZON PRIME”LAUNCHED IN INDIA: Amazon has launched their membership service “Amazon Prime” in India. Under this service the members would get guaranteed and assured 1 or 2 day delivery for their purchases on Amazon. This is a bid to outdo Indian e-commerce giant Flipkart.

SNIPPETS - 23/07/2016

1. FREE CIBIL REPORTS ONCE A YEAR FOR ALL: Reserve Bank of India has said that Credit Information Bureau of India ( CIBIL) will soon provide one free credit report to those applying, free of cost once a year. Currently the said report, used by financial institutions to approve loans to individuals costs Rs 500/- per report to individuals. The new provision will come in to effect soon where in each individual desiring to check his/her credit score can do so once in every year.

2. GOVERNEMNT PLANS TO EASE THE PROBLEMS RELATED TO TDS: A lot of tax payers every year complain that often their tax is deducted by their vendors/employers but not transferred to government account, resulting in lot of harassment to the public. To address this issue the Finance Secretary has instructed Officials of Central Board of direct taxes (CBDT) to find a solution for this at the earliest. Some of the problems may be sorted out by upgrading the relevant software.

3. ICICI PRUDENTIAL FILES FOR FIRST IPO BY AN INDIAN INSURANCE COMPANY: ICICI Prudential Insurance Company plans to raise an estimated Rs.4500-5000 crore through IPO. This is the largest Public Offering since 2010. The IPO is exclusively the sale by ICICI Bank, which will offload 18.3 crore shares or 10% in the ICICI Prudential. The pricing would be between Rs 248- 276.

4. SBI- BROOKFIELD TIEUP FOR STRESSED ASSET FUND: State Bank of India has tied up with Brookfield Asset Management to set up a stressed asset fund. An MOU has been signed to this affect, wherein Brookfield will invest Rs 7000/- crores and SBI will invest 5% of total investment. The JV will evaluate and invest in various stressed assets and this will enable banks in general and SBI in particular, to find alternative solution for resolution of stressed assets. Such an approach will be more acceptable to both lenders and borrowers as well.

5. PUBLIC SECTOR BANKS GET Rs 22915 CRORE CAPITAL INFUSION: In line with the announcements made in the union Budget, the government has released over 22000 crores for recapitalization of public sector banks. 13 PSU banks have been benefitted from this, highest being SBI.

6. COMPANIES ACT TO BE AMMENDED FOR GIFT IFSC VENTURES: The government will soon amend the Companies Act to relax provisions for Gujarat Gift City’s international finance centre. The amendments will relax certain company norms. Companies operating in Gift IFSC set up by Indians will not be considered as foreign companies and will be provided with several operational freedoms. These companies will have flexibility in formation of their boards and on independent directors.

7. ROTATION OF AUDITORS BY INDIAN COMPANIES: As per the New Companies Act , every Indian company having a paid-up capital of Rs 20 crores or more needs to change its auditors once in 10 years if it has kept the same auditor for 10 years in a row. As per the recent survey only 18% of the companies are ready for the said rotation.

SNIPPETS - 16/07/2016

1. GROSS NPA LEVEL OF BANKS TO INCREASE, AS PER ICRA: Domestic rating agency ICRA has said that with banks recognizing large NPAs following RBI’s asset quality review, gross NPA level of Indian banks is set to increase. As most banks are yet to fully recognize NPAs, it is likely that NPA addition will remain high in Q4 of FY 16 as well. The report says that around 15-16% of total bank credit is under stress, involving NPAs, restructured advances or other exposures to entities which are facing credit issues.

2. SIT ON BLACK MONEY ISSUE , RECOMMENDS BAN ON CASH TRANSACTIONS ABOVE Rs 3 LAKH: The Special Investigation Team ( SIT) on Black Money has recommended a total ban on cash transactions above Rs 3.00 lakh and a separate law to declare such transactions as illegal and punishable. SIT has also suggested an upper limit of Rs 15.00 lakh on cash holding.

3. NPCI TO AUDIT FINANCIAL INCLUSION TECH PLATFORMS: National Payments Corporation of India ( NPCI) will audit the financial Inclusion technology platform of all banks after it was found that 80% of interbank transactions failed for accounts opened under government’s Jan Dhan Scheme. During a review it was found that the Financial Inclusion switch of some banks was not working leading to such transaction failures. The government has asked NPCI to look into the issue as it looks to push various social sector schemes through the Jan Dhan.

4. BANKS’ STATE GOVT DEBT PILE AT STAKE : The Reserve Bank of India is bracing for the major changes on the proposed global regulatory framework as per Basel norms. It would hit the Indian Banks with higher capital charges for the already piled up government debt in their books. Tighter rules in this front will bite Indian Banks, already struggling with surging bad loan scenario and provisions thereon. With nearly 30% of their total advances in state debt, these Indian banks will take a hit if the Basel Committee on banking supervision raises capital requirements on sovereign Bonds.

5. RBI ASKS BANKS TO EXCHANGE UPTO 20 SOILED NOTES FREE OF CHARGE: Reserve Bank of India has instructed Indian Banks to exchange up to 20 pieces of soiled currency notes per day free of charge with a maximum value of Rs 5000/- across the counter. If the number of currency notes exceeds 20 then the bank may charge appropriate service charges. This is an effort to improve customer service.

6. HDFC RAISES Rs 3000/- CRORE IN 1St EVER “MASALA BONDS” ISSUE: HDFC has raised Rs 3000/- crores in its first ever “Masala Bond” issue. This Rupee–denominated bonds got over- subscribed by 4.3 times. These Masala Bonds are Indian currency bonds and bear a fixed semi-annual coupon rate of 7.875% per annum and has tenure of 3 years and 1 month.

7. FINANCE MINISTRY TO SOON CLEAR 1st INSTALLMENT OF CAPITAL INFUSION IN PUBLIC SECTOR BANKS: The Finance Ministry is likely to clear its 1st instalment of capital infusion in public sector banks. The government has made Budget provision of Rs.25,000/- crores capital infusion in PSBs for the current fiscal. Each bank has made a detailed request for fresh fund infusion taking into account issues pertaining to NPAs and growth projections. However the Finance Ministry has said the 1st instalment would be less than Rs.20,000/- crores.

SNIPPETS - 09/07/2016

1. “FITCH”DOWNGRADES INDIAN BANKING OUTLOOK TO NEGATIVE: Rating agency “FITCH” has downgraded its outlook on Indian Banking Sector to “Negative”, from “Stable”, due to more downside risks arising out of stressed loans and weak corporate earnings which may further rock Indian Banks. The agency has affirmed long term ratings of nine (9) large Indian Banks including SBI to “BBB-“. According to the agency the asset quality will further deteriorate unless they are counter balanced by sizable capital infusions.

2. RBI MAY SOON ALLOW INTEROPERTABILITY OF INDIA POST’S PAYMENT BANK ATMs: India Posts which had last year won a licence to start and operate a payment bank, has not been able to make much headway on starting the operations. But of late, India Posts, world’s largest mail delivery network, is carving out a separate vertical to manage its banking services. And soon it may get the nod from RBI for interoperability of its ATMs with those of PSU banks.

3. RESERVE BANK OF INDIA ALLOWS BANKS TO ASSIGN HIGHER VALUE TO HIDDEN ASSETS IN BALANCE SHEET: RBI has revised norms allowing lenders to assign higher values to “Hidden Assets” in their respective balance sheets. The “Hidden Assets” include undervalued real estate, taxes paid but not reckoned and foreign currency reserves. Until now Banks could re-value real estate assets and recognize half of the gains as reserves but these reserved were considered part of Tier II capital and this did not help as the main shortfall is in Tier I capital, which until now could be improved through equity infusion or ploughing back profits. Now banks can recognize 45% of the valuation gains of hidden assets in Tier I capital even as they continue to use the premises. This new norm will reduce Rs 35000/- crores worth of capital requirement burden for public sector banks.

4. NEW DIVIDEND TAX MAY NOT HIT PROMOTERS MUCH: The additional 10% tax on dividend income announced in the recent Budget would not affect many wealthy promoter groups. The additional 10% tax on dividend income is applicable for the equity shares held in individual capacity, through HUF and partnership firms. Trusts and holding companies would not attract the proposed additional tax on dividend. Since most of the holdings in blue chip companies are held by the promoters through their trusts and holding companies, the dividend thus received by the said trust and holding company would still remain tax free.

5. BANK OF BARODA PLANS RATING BASED RETAIL LENDING: Bank of Baroda will be the first Bank in India to offer rating based lending to its retail mortgage loan seekers. This means the Bank will offer loan to retails customers based on their credit scores and not as a uniform rate irrespective of the credit rate till now.

6. GOVERNMENT OF INDIA MAY CHANGE THE EXISTING FINANCIAL YEAR : The government has set up a committee to deliberate whether india needs a new financial year and the implications of such a shift. India currently follows April-March as the financial year.

SNIPPETS - 02/07/2016

1. NBFCs PERFORM MUCH BETTER THAN BANKS: As per RBIs latest Financial Stability Report (FSR) NBFCs (Non-Banking finance Corporation) financial performance is unchanged for the last two years. Net profit as percentage to total income remained at 15.3% and return on assets (ROA) stood at 22% between March 2015 to March 2016. Loans and advances during the fiscal increased by 16.6% while total borrowings of NBFC’s went up by 15%. Bank credit on the other hand grew at only 10%. The NBFC sector is growing at the cost of Banks, which is saddled by bad loans and poor profits. 2. HIGHER TDS SCRAPPED FOR NON RESIDENT INVESTORS: Non-resident investors without PAN details are currently subjected to higher rate of TDS (20%). It is proposed to amend the relevant provision to provide that on furnishing of alternative documents like the residential address proof, tax residency certificate from the government of their home country, tax identification number or any unique identification number provided by their country of residence, tax will be deducted at normal rate.

3. BANKS BAD LOANS MAY RISE TO 8.5% OF ASSETS: As per RBI latest report Gross non-performing assets (Gross NPAs) of public sector banks may rise to 8.5% of the total assets by March 2017, from the present level of 7.6% in March 2016. This is as per the latest “Stress Tests” conducted by Reserve Bank of India.

4. MERGING PSBs HAS MORE RISKS THAN BENEFITS: As per global rating agency- Moodys’, the government’s plan to consolidate Public Sector Banks ( PSBs) has more risks than benefits. This is because banks have weak financial metrics to execute mergers and also could face lot of opposition from employee unions demanding parity in pension. The Indian government aims to consolidate the number of public sector banks from the present 27 to around 10 strong banks.

5. MOBILE BASED STARTUPS TO GET OVER $ 8 BILLION FUNDING IN NEXT 5 YEARS: With mobile phones contributing 40% of all E-commerce sales in India, startups in M-commerce, video gaming, streaming, and m-payments segment will get majority of funding in the next five years as well. This is as per the latest Annual Indian Mobile Ecosystem Report.

6. ALIBABA RAKUTEN EYES INDIAN E-COMMERCE BUSINESS: The Alibaba Rakuten Japan, the biggest E-commerce player in Japan which earns over 40% of its revenue in Japan may soon start its e-commerce operations in India in less than two months from now. It will probably work with two business models—the conventional B2C e-commerce and cash back set up in India.

7. TAXMEN TOLD TO STEP UP EFFORTS FOR BLACK MONEY WINDOW SUCCESS: The Income Tax Department has asked its officers to make “all out efforts” to attract potential declarants under domestic black money window by assuring them of confidential and hassle free disclosures.

SNIPPETS - 25/06/2016

1. SOME OF INDIAN STARTUPS SHAKEN BY NIKESH ARORA’S RESIGNATION: Some of the Indian startups like OLA, HOUSING, SNAPDEAL etc are taken aback by the resignation of Mr. Nikesh Arora from the post of President-Indian Operations in Soft Bank. After taking over as President-Indian Operations of Soft Bank since 2014, Nikesh Arora managed to get substantial funding to the Indian Startups. Since then many a startups have got financial assistance to the tune of around $ 1.00 Billion ( App Rs 6700 Crores). Soft Bank paid around 1500 Crores to Mr. Nikesh Arora as salary in these two years. Moreover all these Indian Startups are yet to make a breakeven in their respective business with accumulated losses.

2. HDFC BANK LAUNCHES SME e-bank: The country’s second largest private sector Bank has launched a digital banking for its small and medium enterprises ( SME) customers. SME customers can do away with the hassle of physical availability and personal contacts with the relationship Manager and makes the process faster. According to the Bank it will save costs and man power. It hopes to make service to take off the said e- banking facility in tier -2 cities in a much better way.

3. GOVERNMENT “frees” STARTUPS IN INDIA OF “ANGEL TAX”: The Government Of India has removed the ANGEL TAX on Startups. Till now any new firm had to pay a tax if investments made by an Indian resident exceed the fair value of the firm’s shares. The Central Board of Direst Taxes ( CBDT) via its fresh notification has made the necessary changes where by Angel Tax will not be levied in future.

4. NON PERFORMING ASSETS ( NPAs) IS THE MAIN REASON FOR LOW CREDIT GROWTH: Reserve bank Governor Mr. Raghuram Rajan has blamed the slow growth of credit in public sector banks due to the stress of NPAs. According to Mr. Rajan the slowdown in credit growth in public sector banks has been largely due to the NPA stress in these banks and not due to high interest rates.

5. GOVERNMENT IS PLANNING FOR THE LARGEST E-MARKETPLACE : The Finance Ministry has given clearance for creation of “Government e-Marketplace” for online purchase of goods and services to various government ministries and departments. The Government’s central purchase arm has conceptualised an online portal called GeM or Governement e-marketplace. It will allow Govt Officials to make routine office purchases like cutlery, office equipment, etc. It is estimated that the purchases through the portal could touch a whopping 1.4 to 1.8 lakh crores, much higher than the rough figure of 80000/- crores sales that of Flipkart is targeting for June 2016.

6. UNITED KINGDOM VOTES TO LEAVE EU IN A HISTORIC REFERANDUM: UK has voted to leave the European Union in a historic referendum (with a majority margin of 52% to 48%). As a result the Pound plummeted to a 31 year low as market responded to the news. The Indian stock market responding to the news, the Sensex slumped around 650 points and Rupee plunged over 1.4% to 68.21 per dollar mark. British Prime Minister Mr. David Cameron resigns over the BREXIT issue.

SNIPPETS - 18/06/2016

1. STATE BANK OF INDIA SET TO MERGE ITS FIVE ASSOCIATE BANKS AND MAHILA BANK: Cabinet has given its approval for merger of five associate Banks and Mahila Bank with SBI. The much anticipated merger will be completed in financial year 2017.Following this merger, SBI will move into the ranks of top 50 banks globally and some visibility at global level will be seen.

2. STATE BANK OF INDIA CREATES A SEPARATE DEDICATED FUND FOR STARTUPS: State Bank of India has created a dedicated IT innovations and startups fund and has set aside Rs 200 crores for investment in promoting startups. The fund will extend up to 3 Crore to any Indian registered startup company for promoting its business in India using information technology for banking.

3. SOME OF INDIA’S TOP FIRMS FACE DEBT TRAP: India’s biggest companies ranked between 11 to 20 are finding it very tough to service their debt. In financial year 2016, for the first time in a decade the combined operating profit of the country’s top 11 to 20 companies fell short of their interest obligations, leading to potential loan default by some of them. This will result in lot strain on the country’s economy.

4. MAJOR BORROWERS FACE CASH CRUNCH: More than 1000 borrowers have outstandings that are substantially larger than the amounts sanctioned to them by banks. As on March 2016 the total outstandings of 1000 borrowers were 150%more than the sanctioned limit. This is the result of short term requirements met by banks to help these firms to tide over their cash crunch.

5. RESERVE BANK OF INDIA PRESCRIBES GUIDELINES ON OWNERSHIP IN PRIVATE BANKS: RBI has released and elaborate matrix of shareholding limits in private sector banks in view of the additional capital required by these banks after implementation of Basel III regulations and also to rationalize ownership limits.

6. NBFCs GIVE HANDSOME RETURNS ON INVESTMENTS TO ITS INVESTORS: Most Non-Banking Finance Corporations (NBFCs) have returned handsome returns to its investors. As per the data given by Capitaline , in a sample of top 12 stocks with a market capitalisation of over Rs 10000 crores, that returned investors more than 500% in a span of five years, NBFCs like Bajaj Finance, GRUH Finance, Cholamandalam Finance have turned out to be multibaggers, returning between 500% to 1100%

SNIPPETS - 11/06/2016

1. RBI FORMULATES TWO FUNDS BY BANKS TO FACE BAD LOAN SCENARIO: Reserve Bank of India is finalising a formulation of two funds that will help debt ridden companies and also give a breathing space to Indian Banks saddled with sticky loan portfolio. Reserve Bank of India has written to Indian Banks’ Association to set up two different funds—one to infuse equity into the stressed companies and the other fund to give working capital finance. The first fund will be called Stressed Assets Equity Fund ( SAEF) for equity infusion. The second fund is called Stressed Asset Lending Fund ( SALF) will be strictly restricted for providing last –mile financing. Both these funds may receive contribution from the Government, Banks, Insurers, as well as local and overseas investors. The modalities are being finalised.

2. RESERVE BANK EMPOWERS MORE POWERS TO LENDERS TO TACKLE NPA SITUATION: Taking a positive view in tackling the mounting NPA situation in the country, RBI is planning to overhaul the entire strategic debt restructuring ( SDR) mechanism. This includes giving more powers to lenders while resolution process. The RBI is expected to allow Banks to convert the debt into equity to initiate an SDR but without changing the current management.

3. INDIA FACES THE PROSPECT OF 20 $ BN IN OUTFLOWS: Reserve Bank of India has said that around 26 $ billion Foreign Currency Non Resident ( Bank) Deposits ( FCNR- B) is due for renewal/redemption this year. Out of this, RBI estimates that around 20 $ billion may not be renewed and this will amount to outflow. RBI has said that in case of dollar volatility due to this, RBI may intervene but Banks should not take this for granted.

4. NBFC MARKET CAPITALISATION IS TWICE THAT OF PSU BANKS: Non Banking Finance Companies ( NBFCs) may have smaller scale of operations, but when it comes to market capitalisation, they are as good as private sector Banks. Ten years ago the market capitalisation of NBFCs was just 50% of Public Sector Banks’. But now as of February 2016 figures, it is twice that of PSUs. This clearly shows that NBSCs are slowly eating the markets of PSUs.

5. STATE BANK OF INDIA ACTIVATES E- FILING OF RETURNS VIA ATMs: State Bank of India became the first Bank to launch E-filing of tax returns. The Income Tax Department has initiated and launched an ATM based validation system for filing E-ITRs by tax payers. Now Electronic Verification Code ( EVC) can be generated by pre validating your Automated Teller Machine (ATM) provided by the Bank where a tax payer has an account.

6. MOODY’S INVESTORS SERVICE SAYS INDIAN BANKS NEED Rs 1.2 LAKH CRORE CAPITAL INFUSION: Moody’s has said asset quality of Indian PSU Banks will be under stress for the next 12 months due to rising provisioning and as a result Government will have to infuse Rs 1.2 Lakh Crore into PSUs by 2020 to strengthen their balance Sheets. This is much higher than the earlier plan envisaged by the Government.

SNIPPETS - 04/06/2016

1. MUDRA DISBURSES Rs 1.43 LAKH CRORE TO SMALL AND MICRO ENTERPRISES: The Micro Units Development and Refinance ( MUDRA) , a loan scheme launched by the Government has disbursed an amount of 1.43 Lakh Crores and most of the beneficiaries are the new entrants in Small and micro enterprises. These figures are as on May 2016.

2. PRIVATE BANKS PIP PSUs IN FY 16 BALANCE SHEET GROWTH: Balance Sheets of 22 PSUs for the financial year 2016 grew by a meagre figure of just 3.4 lakh crore, as compared to the increase of Rs 4.3 lakh crore in the group of 13 private sector Banks. Private sector Banks achieved this growth by way of 18.1% growth rate as compared to a meagre growth rate of 4.1% by Public Sector Banks. This is a clear indication that Private sector Banks are taking the market away from the PSUs.

3. NEW NORMS FOR RATING AGENCIES SOON : Security Exchange Board of India ( SEBI) is taking tough stance towards the credit rating agencies ( CRA) and has said that it will come out with fresh set of regulations governing these bodies. SEBI said the underlying principle behind these norms is to ensure enhanced transparency and accountability.

4. INDIA POST PAYMENT BANK APPROVED: The Union Cabinet on 1st June 2016 granted its approval to set up India Post’s payment Bank. Initially 650 branches will be made operational by September 2017. These 650 payment Bank branches will be linked to all rural post offices. The payments bank will be managed with a professional setup, headed by a Chief Executive officer.

5. EQUALISATION LEVY ON START-UPS : Starting June 1st the Indian Start-ups will have additional financial burden and administrative overload by way of 6% equalisation Levy ( Now popularly known as GOOGLE TAX) . Indian Start-ups are largely dependent on online platforms like Google, Facebook, Twitter, LinkedIn etc to drive their business, will now have to bear a Equalisation levy of 6%. Under the new rules , Indian advertisers will have to withhold 6% of the gross amount paid for online advertisements (payment of more than 1 Lakh a year to an overseas technology company) as equalisation levy. As a result of this Indian Start-ups will have to now shell out 6% more on their marketing budget which will immensely impact their profitability.

6. START-UPS WITH MARKED DOWN VALUATIONS MAY GET TAX NOTICE: The Income Tax Department is discussing a controversial move to levy tax on those start-ups whose valuations have fallen recently on the grounds that the first premium was more than the firm’s fair value. Start-ups are already worried about lack of further funding and falling valuations, and added with the recent Equalisation levy of 6% they will find it very difficult to manage things.

SNIPPETS - 28/05/2016

1. RISING NO. OF APPLICATIONS TO SET UP ARCs: With the recent spurt in NPA levels of all the banks added with the Stress in Corporates showing no signs of letting up, Reserve Bank of India has received a bunch of applications for licences to set up Asset Reconstruction Companies (ARCs).

2. 20 PSU BANKS POST LOSS IN Q4 OF THE FINANCIAL YEAR: 20 PSU Banks have a shown a combined loss of Rs 16272 crores loss for the fourth quarter ended March 2016, as bad loans situation worsened. Non-Performing Assets in some Banks have crossed the RBI’s tolerance level and that could prompt for more corrective action in future.

3. RESERVE BANK OF INDIA PLANS CAP ON CUSTOMER LIABILITY IN ONLINE FRAUDS: The RBI is examining a proposal to cap customers’ liability in the event of online fraud. With increase in online transactions, complaints regarding online frauds have also increased. It is imperative to retain customers’ confidence in the delivery channels. By imposing such measures like capping the liability, the customer confidence can be boosted.

4. ICICI BANK INTRODUCES “POSITIVE PAY“ FEATURE : ICICI Bank has introduced Positive Pay feature in its Mobile APP. This allows a customer to transfer an image of the cheque (issued by him to his clients) to the Bank. Thus ICICI Bank becomes the first Bank to deploy “Positive Pay” to individual customers. This allows for a safe and faster processing of a cheque as it alleviates fraud risk. With this “Positive Pay” process the Bank does not have to rely on manual or electronic verification as the information received from the customer is more authentic and thus frauds can be avoided.

5. INCREASE IN SERVICE TAX FROM 01/06/2016: From 01/06/2016 onwards the service tax applicable will be 15% , from the existing level of 14.5%, an increase of 0.50%

6. SEBI TO DELIST 4200 FIRMS: Securities Exchange Board of India ( SEBI) is planning to take number of steps including delisting of non-trading and poorly traded companies. This is a step to further safeguard the interest of investors.

7. RBI ASKS BANKS TO UPGRADE ALL ITS ATMs: Reserve Bank of India has asked all banks to upgrade all ATMs by September 2017 with additional safety measures to prevent skimming and cloning of debit and credit cards. Presently the ATM infrastructure on the whole continues to process card transactions based on the data from magnetic strips. The Central Bank has issued instructions to enable all ATM to accept and process EMV Chips and PIN cards. This would enhance the safety and security of ATM Transactions.

SNIPPETS - 21/05/2016

1. Merger of SBI associate banks with SBI: State Bank Of India, India’s largest Bank has proposed merger of its five associate Banks along with Bharatiya Mahila Bank ( BMB) with itself. It sought Government’s approval for the same. It is a major bid to consolidate public sector banking in India.

2. P-note norms tighten by SEBI: The Securities Exchange Board of India ( SEBI) has tightened the screws on misuse of participatory notes ( P- Notes) in laundering black money. The regulatory board made it mandatory for users of these overseas instruments to follow Indian Anti –money laundering law and report any suspicious transactions immediately.

3. HSBC to halve its branches in India: HSBC has announced that it will halve its branches in India to 26 branches from its current 50 branches across India. The said move could lead to over 300 job losses. HSBC attributed the move to changes in the behaviour of customers who are increasingly moving towards ‘DIGITAL CHANNELS’ for their banking needs.

4. Punjab National Bank posts record loss: Punjab National Bank posted the largest ever quarterly loss ever reported by an Indian Bank. The Bank made a net loss of Rs 5367 crores in January-March 2016 quarter. This is the result of high provisioning following a surge in gross Non Performing Assets which is almost doubled compared to last year.

5. Three More PSBs may be asked to merge with bigger banks: The Government is looking at combining three other Banks - UCO Bank, Bank of India and Indian Overseas Bank with stronger entities. The Government further clarified that the move of merger proposal has to come from the Banks and that the Government will act only as facilitator.

6. Sun Pharmaceuticals to drop Payment Bank plans: Sun Pharmaceuticals along with proposed partners Telenor and IDFC has decided not to move ahead on the in-principle approval received for setting up of a Payment Bank. It is the second applicant to back out after Cholamandalam Finance.

7. Bank Panel prepares plan to resolve bad loan woes: The Bank Board Bureau ( BBB) which is a panel of experts, is preparing an intermediate mechanism to ensure early resolution with regard to the early settlement of dues. This will provide comfort to the Bank Management.

8. Bank chiefs will not be questioned over NPA resolution decisions : Banks Board Bureau(BBB) Chairman Vinod Rai has said that in the next fortnight the Board will put in place a new intermediate mechanism that will provide cover to bank chiefs on their bad loan resolution decisions.

SNIPPETS - 14/05/2016

1. Singapore’s DBS Bank offers 7% on Digital Bank accounts: Singapore’s DBS Bank enters India with an intension to make its mark in Indian Banking even as it awaits for RBI clearance to upgrade its branch to a subsidiary. It is offering 7% rate of interest with zero balance on Digital savings Bank accounts and unlimited access to ATMs. These accounts can be opened by anyone with a smart phone who is having an Aadhar card and a PAN card. The Bank will be in a position to offer better deal to customers because of its lower cost as it will avoid branch banking and people costs.

2. RBI instructs Banks to exercise caution while giving loans to discoms: Reserve Bank of India has cautioned state run banks from lending heavily to power distribution companies ( discoms). It says that any additional exposure to power distribution companies will be viewed seriously as it will result in “ ever greening” and will invite supervisory measures.

3. Financial Companies can now hold up to 40% in Banks: The RBI has relaxed the cap on maximum shareholding in private banks by individuals and financial institutions. As per the new guidelines a financial institution can hold up to 40% and individuals can hold up to 10%. Non-financial entities have been allowed up to 15%. This revision is affected considering the new licensing of private sector banks and the need for additional capital for banks after the Basel III Capital regulations come into force.

4. China pips USA as world’s No 1 investor: China has overtaken USA by signing the highest number of overseas deals in 2016. The deals are mostly for the purchase of foreign companies. Many Chines companies, flush with funds are finding it difficult to identify investment targets in China due to slowdown of economy in China.

5. “High Risk credit rating” hit Foreign banks’ India scale up: Foreign Banks have stopped opening branches in India as they need to set aside more capital due to country’s “ Higher risk “credit rating as they feel it is not worth doing so.

6. Firms with heavy debt may face credit squeeze: The Reserve Bank of India has proposed to raise provisioning and risk weights for fresh loans given to highly leveraged companies. This is to discourage banks from lending to such companies, which are said to have caused concentration of credit risk in banking sector. RBI said it would bring in a framework to progressively reduce the total exposure of banks to such corporate entities by revising down the normal borrowing limit of the company. This will come into effect from financial year 2017-18.

7. India – Mauritius Tax Treaty : The revamped india-mauritius tax treaty will now apply to investment in shares. In our opinion investors in Mutual funds, derivatives and debt will likely to escape tax, as these instruments are not mentioned in the reworked Double Taxation Avoidance Agreement(DTAA).

SNIPPETS - 06/05/2016

1. Government drops capital gains tax on start-up shares held for 2 years: Currently there is no capital gains tax on listed company shares if those stocks are held for 12 months, however the shares of unlisted companies face capital gains tax of 20% even after 3 years. Government inserted an amendment to the finance bill to provide for capital gains exemption if shares of unlisted company were held for a period 2 years. This will be a very good boost to the new start-ups.

2. RBI to open permanent window for new bank licences : RBI will open a permanent window for accepting applications to start up a full-fledged bank. There are two major changes here. Corporates have been kept out and individual promoters have been allowed. It is also not necessary for individuals to float a non-operating holding company, which was mandatory earlier. While corporates cannot promote banks, they are allowed to invest up to 10% in a new bank. This will make way for many new players trying to enter in to banking business and create lot of difficulty in sustaining business for existing Banks.

3. The valuation for E-Commerce business started bleeding: With two more prominent investors pruning down their share in Flipkart, it is apparent that E-Commerce business particularly E-Retail business has started to show a downward trend.

4. Government may offer bluechip PSU shares to FIIs and domestic buyers: The Finance Ministry is considering the option of Institutional Placement Programme ( IPP) route to dilute the stake in bluechip PSUs. This is in response to the lukewarm response it got from retail investors.

5. World’s first Diamond trading Exchange is incorporated in India: The Singapore Diamond Investment Exchange ( SDiX) World’s first and only commodity exchange trading in physically settled diamonds, has started its operation in India from 05th May 2016. At present trading is done after viewing diamonds and usually one on one basis. Once the exchange picks up, it will be portal based and with transparent pricing. This would also bring in investors in diamond trading.

6. RBI starts meeting major players in P2P lending: After releasing a consultation paper on peer-to-peer ( P2P) lending, RBI has now started meeting leading P2P players for preparing final guidelines for P2P lending platforms .

7. As per World Bank release the remittances to India by overseas Indians has decreased for the first time since 2009. This has resulted in a low growth of NRE Funds in Banks across India.

8. Bank credit registers growth of 9.7% in December quarter: RBI says that this growth is largely due to higher credit growth by private sector Banks.

SNIPPETS - 29/04/2016

1. First Small Finance Bank—Capital Small Finance Bank starts operation in Chandigarh. It commenced business with 10 Branches and has approval for 27 branches.

2. Gold Imports dip to 8% in 2015-16. Gold imports in 2015-16 declined to around 8% due to weak Global prices.

3. No Interest subsidy on Crop Loans above Rs 3.00 lakh. A Government panel set up to suggest Better implementation of Farm credit has SUGGESTED that interest subvention should not be Provided to short term crop loans of above Rs 3.00 lakhs.

4. Parliamentary panel clears Bankruptcy law, sets stage for passage of the Bankruptcy law.

5. The rising Number of Bad Loans in Public Sector banks added by the Vijay Mallya Issue has Prompted the CVC ( Central Vigilance Commission) to ask public sector Banks to draw up a Proper second layer of verification process for valuation reports and legal reports and such Documents submitted by potential borrower.

5. Public Sector banks have been informed and instructed by the Government to gear up their recovery measures in NPA accounts, if they are expecting capital infusion from the Government.

6. Government to set up National Infrastructure Investment Fund ( NIIF)with a initial corpus of Rs.40000/- crores. Under this the NIIF will deal with stressed Bank assets. It will look for viable Projects which are stressed, acquire it from Banks and financial institutions at a discounted price, nurse them back to good financial health and sell it back to prospective investors.

7. The Reserve Bank of India has suggested that Peer To Peer ( P 2 P) lenders be treated as Non Banking Finance Companies ( NBFC) with a minimum capital infusion of Rs 2.00 crores. The RBI has allowed P2P lenders to continue connecting lenders and borrowers through an online platform. They have specifically been restricted from taking any form of Deposits. RBI has clearly stated that P2P lenders will not indulge in any lending or borrowing activities.

8. Luxury Items like Gold Jewellery can’t stay out of tax net. The Government has ruled out roll Back of 1% excise duty on Gold jewellery levied in the recent budget, calling it an luxury item. It said Gold cannot stay out of tax net when goods used by common man were being taxed.

SNIPPETS - 22/04/2016

1. RBI informs Banks to provide for the fraudulent loans as well besides NPA accounts, even though EMI / Interest service is regular in fraudulent loans.

2. RBI allows Banks to bring down SLR to 20.50% by March 2017.

3. SBI partners with Snapdeal to offer loans to E-commerce sellers.

4. MasterCard may soon introduce a face recognition system that enables bill payment after user clicks a selfie and blinks . Blinking is made mandatory to assure that the person is live and not a photo. This will replace the present usage of password or PIN.

5. Peer to Peer ( P2P)Lenders Fear Strict Regulations from RBI may hurt their growth.

6. RBI Governor says India is growing fast but still a long way to go , as he says that we are still one of the poorest large countries in the world on a per capita income basis.

7. THE REAL ESTATE BILL 2016: Recently Rajya Sabha passed the Real Estate Bill 2016. This bill is designed to protect the consumer interest, ensure efficiency in all property related transactions, improve accountability of developers, more transparency which will boost the investor confidence thereby increase in more real estate investments. Some of the fine points of the Real Estate Bill 2016 are : A) It provides for setting up of Real Estate Regulators Authorities ( RERAs) at the state level which will ensure timely execution of projects. B) It is now mandatory for all residential and commercial projects to register with the Regulatory and this will apply for the existing and new projects as well. All properties with a size greater than 500 sq mt ( 8 Flats) will fall under the scope of this law. C) The Developer will have to deposit 70% of their project cost in an Escrow account. This is to ensure that they do not consolidate and divert the funds of one project to the other. This will ensure timely completion of the project. D) The bill provides for an imprisonment of up to 3 years for the promoters and up to 1 year to the real estate brokers for any violations of Appellate Tribunals and also monetary penalties or Both. E) As per the Bill it will become mandatory for sellers to disclose all information like project cost, all approvals, land status, contractor details, scheduled and completion of the project with the customer ( Buyer) as well as RERA. It is debated that this bill will bring agony to the Promoters and builders. But when you go through the finer points of the said bill we can conclude that without a tough housing regulatory in place, it is difficult to differentiate a good builder from a bad one.

SNIPPETS - 16/04/2016

1. International Arbitration Centre to open in Mumbai in August 2016. Instead of sending these large contractual disputes beyond Indian borders like Singapore, Dubai and London, now the disputes can be well settled in Mumbai itself.

2. Oriental Bank Of Commerce is the First Public Sector Bank to announce monthly interest credit in Savings Bank accounts.

3. RBI launches new Payment system called “UNIFIED PAYMENT INTERFACE ( UPI). This will enable people to send and receive funds across Bank accounts just through a single identification code. While using UPI, account holder need not share any account details.

4. RBI bets on payment banks for innovation in Banking field.

5. Bharati Airtel is the first Company to receive the formal licence to form the payment Bank under a joint venture with Kotak Mahindra Bank.

6. RBI Governor hints at further rate cuts if Monsoon is good.

7. Total Bank Deposit growth for the financial year 2016 slows to 53 year low of 9.1%

8. Many Banks announce certain schematic Deposit Schemes for number of days like 444 days, 555 days, 1111 days etc. Under such deposit schemes the Interest payment should be calculated in the form of simple interest for the actual number of days for which period the deposit is held. But some Banks calculate interest on quarterly basis for the completed quarters and balance interest on the number of days remaining. This actually reduces the total interest paid as compared to interest to be paid purely in terms of total number of days.

SNIPPETS - 09/04/2016

1. RBI cuts Repo rate by 25 bps

2. Gold Imports drop by 34%

3. Tata Steel Reviews European Operations.

4. Credit Slowdown may affect SME sector very Badly

5. Bankers decline Mr. Mallya’s offer of loan settlement.

6. Tax Collection in 2015-16 exceeds the target.

7. RBI details plans on differentiated bank licences.

8. Prime Minister Launches STAND UP INDIA – START UP INDIA Scheme under the Prime Minister Mudra Yojana.—It is a loan scheme wherein the SC/ST and Women Entrepreneurs will be given financial assistance from Rs 10.00 lakhs to 100.00 Lakhs for setting up of greenfield enterprises in Manufacturing and trading sectors. Repayment will be up to 7 years with a margin of 25%. Loan is to be covered under the Credit Guarantee scheme of the Government.