Current Affairs March 2018 - Finance

1 - Paytm introduced insurance for PayTm wallet

In order to protect the money of Paytm customers, digital payments company Paytm has come up with two kinds of insurance covers for its wallet users. The two insurances are Paytm Life Insurance and Paytm General Insurance. Customers with limit of Rs. 20,000 or their wallet balance, whichever is lower will be insured at free of cost, based on the condition that Paytm customers will have to inform Paytm customer care within 12 hours of phone loss or theft happened.

Paytm is an Indian e-payments and e-commerce brand based out of Delhi NCR, India.

2 - RBI tightened PSL norms for banks by directing them to create sub-targets

The Reserve Bank of India (RBI) tightened the priority sector lending (PSL) norms for foreign banks by directing them to mandatorily create sub-targets of 7.5% so that they lend a portion of their loans to small and marginal farmers as well as micro enterprises (MSMEs).

The move is directed at foreign banks with over 20 branches and will come into force from 2018-19. The PSL norms mandate foreign banks to eventually lend 40% of their total loan book to the priority sector, such as agriculture, rural infra, and MSMEs among others from April 2020.

3 - RBI imposed Rs 40 lakh penalty on SBI for flouting fake note norms

The Reserve Bank of India imposed a monetary penalty of Rs 40 lakh on State Bank of India for non-compliance of its directions on detection and impounding of counterfeit notes, at two of the bank’s currency chests.

The regulator had carried out an inspection of currency chests at two branches of the country's largest lender and noticed certain violation, following which a show cause notice was issued. Earlier, RBI had imposed monetary penalties on Axis Bank for violation of non-performing asset classification norms and Indian Overseas Bank for not complying with the KYC regulations.

4 - IndusInd Bank united with Ripple for cross-border remittances

IndusInd Bank united with Ripple for cross-border remittances as Ripple platform will provide enhanced experience with its instant settlements and instant confirmations to IndusInd bank customers. Ripple is famous for its block-chain technology which provides services at reduced cost and lesser transfer times for their customers.

Ripple connects banks, payment providers, digital asset exchanges and corporates viaRippleNet to provide one frictionless experience to send money globally. RippleNet ease decentralized network of independent banks and payment providers – that connect through Ripple's technology.

5 - RBI to conduct longer term variable rate repo operations

In order to address additional demand for liquidity and with a view to provide flexibility to the banking system in its liquidity management towards March-end, RBI has decided to inject adequate additional liquidity using a combination of appropriate instruments and conduct additional variable rate repo operations for longer tenors to provide additional liquidity support to the banks during March 2018.

Reserve Bank of India will conduct 4 variable rate Term Repo auctions in March 2018. These auctions will be conducted in addition to the regular 14-day variable rate Term Repo auctions and will be held every Tuesday.

6 - RBI removed per-borrower loan limit for MSMEs

Reserve Bank of India removed per borrower loan limits to Micro, Small and Medium Enterprises (Services) for classification under priority sector lending. Initially, loan limits of Rs5 crore and Rs10 crore per borrower to MSMEs were defined in the services sector for classification under priority sector norms. In other words, all bank finance to MSMEs engaged in providing or rendering services as defined in terms of investment in equipment under the MSMED Act, 2006, will qualify for priority sector without any credit cap.

7 - European Bank approved India’s membership for Reconstruction and Development

European Bank for Reconstruction and Development board members gave nod to India's Membership for European Bank for Reconstruction & Development (EBRD). With this approval, purchase of shares by India is allowed at an estimated cost of around €1 million, so as to build ties between EBRD and India.

EBRD is a multilateral development bank meant to promote private and entrepreneurial initiative in emerging Europe. EBRD's core operations pertain to private sector development in their countries of operation which would help India leverage the technical assistance and knowledge of the bank for the benefit of development of private sector.

8 - Government makes passport mandatory for bank loans of Rs. 50 crore & above

The Union Government has made providing passport details mandatory for taking loans of Rs 50 crore and above to ensure a swift action in case of fraud and prevent fraudsters from fleeing the country. The government has asked banks to collect passport details of borrowers within 45 days.

The Cabinet has approved the Fugitive Economic Offenders Bill to impound and sell assets of escapees. The proposed law will also apply to defaulters who have an outstanding of Rs 100 crore or more and have escaped from the country.

9 - Paytm Money received SEBI approval as Registered Investment Adviser

Paytm Money, a wholly-owned subsidiary of Financial services platform Paytm, has received Securities and Exchange Board of India (SEBI) approval to become a registered investment advisor. It can now roll out investment and wealth management products to consumers across the country.

Paytm Money has planned a limited rollout of investment products, starting with direct plan mutual funds' investments with zero commissions. It will have a separate app available for both Android and iOS users.

10 - The Insolvency and Bankruptcy Board of India signed a MoU with RBI

The Insolvency and Bankruptcy Board of India (IBBI) signed a Memorandum of Understanding (MoU) with the Reserve Bank of India (RBI).

The MoU provides for −

• Sharing of information between the two parties, subject to the limitations imposed by the applicable laws;

• Sharing of resources available with each other to the extent feasible and legally permissible;

• Periodic meetings to discuss matters of mutual interest, including regulatory requirements

• Cross-training of staff

• Capacity building of insolvency professionals and financial creditors

• Joint efforts towards enhancing the level of awareness among financial creditors

11 - RBI discontinued Letters of Undertaking, Letters of Comfort for trade credit

The Reserve Bank of India discontinued Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits for imports into India by AD Category -I banks with immediate effect.

The circular added that the Letters of Credit will be continued to be issued subject to compliance with the provisions contained in Department of Banking Regulation Master Circular on 'Guarantees and Co-acceptances' dated July 1, 2015.

12 - ICICI Bank launched country’s first online and instant overdraft facility for MSMEs

ICICI Bank has launched an instant overdraft ‘InstaOD’ facility for MSME (Micro, Small and Medium Enterprises) customers where they can get overdraft facility up to Rs 15 lakh for a year anytime, anywhere using the bank’s Internet and mobile banking app.

The online facility will enable pre-qualified current account customers of the bank to instantly avail of the facility in a completely online and paperless manner. ICICI Bank will also offer the facility for instant online sanction of overdraft facility to MSME customers of other banks shortly.

13 - SBI inked MoU with IMGC

The State Bank of India has signed a Memorandum of Understanding with India Mortgage Guarantee Corporation (IMGC) to offer mortgage guarantee scheme for prospective non-salaried and self-employed home loan customers. It will help increase home loan eligibility up to 15% within the regulatory norms.

Under this product applicant can avail higher finance based on risk grade of the borrower, by opting for IMGC default guarantee cover. IMGC is a joint venture between National Housing Bank, Genworth Inc International Finance Corporation and Asian Development Bank.

14 - Axis Bank opened its 3^rd Repesentative Office in UAE

Axis Bank opened a representative office in Sharjah, UAE. The representative

Office in Sharjah is the third such Axis Bank office in the UAE after Dubai and Abu Dhabi.

The new representative office will engage primarily in promoting the Bank's retail products and services to non-resident Indians (NRIs). The UAE has the largest NRI community in the world. The remittances market size between the UAE and India is about USD 12 billion with Axis Bank having a market share of about 20%.

15 - Linking of SWIFT to the Core Banking System made mandatory

Reserve Bank of India (RBI) has informed that it has reiterated its instructions regarding “Cyber Security Controls - SWIFT” and “Cyber Security Controls – frauds related to trade finance transactions – misuse of SWIFT”, and mandated banks to implement the prescribed measures for strengthening the SWIFT operating environment in banks within the stipulated deadlines.

These instructions aim to strengthen SWIFT-related operational controls and reinforce fraud prevention and detection frameworks in place in banks, with a view to avoid misuse of SWIFT. The Society for Worldwide Interbank Financial Telecommunication provides a network that enables financial institutions worldwide to send and receive information.

16 - Agricultural credit target for FY 2018-19 up to Rs 11 lakh crore

The government has fixed the agriculture credit target of 11 lakh crore rupees for the year 2018-19 against last year’s target of 10 lakh crore rupees. The government fixes agriculture credit disbursement targets for the banking sector every year and banks have consistently surpassed these targets.

The government is implementing an interest subvention scheme for short-term crop loans up to three lakh rupees. The scheme provides interest subvention of 2% per annum to banks on use of their own resources. Besides, additional 3% incentive is being given to the farmers for prompt repayment of the loan thereby reducing the effective rate of interest to 4%.

17 - MCX launched world’s first brass futures contracts

Multi Commodity Exchange of India (MCX) has launched futures trading in brass, a first of its kind in the world. It will facilitate brass stakeholders to hedge their price risk.

The trading commenced on March 26^th. There are three contracts in offer ending in April, May and June for trading, with a lot size of one tonne. MCX Brass Futures is the first non-ferrous contract with compulsory delivery option.

18 - Exim Bank extended $500 million loan facility to 15 African nations

Export-Import Bank of India (Exim Bank) has extended a Line of Credit (LOC) of USD 500 million to ECOWAS Bank for Investment and Development (EBID), for financing various development projects in the ECOWAS region.

With the signing of the above LOC Agreement, Exim Bank, until date, has extended four LOCs to EBID, with the support of the Government of India, taking the total value of LOCs to USD 1,000.00 million. The Economic Community of West African States (ECOWAS) has a mandate to promote economic integration in all fields of activity of the constituting countries.

19 - SWIFT introduced universal real-time payment tracking

SWIFT is extending its GPI Tracker to cover all payment instructions sent across the network. This will enable GPI banks to track all their SWIFT payment instructions at all times, and give them full visibility over all their payment activity.

The Tracker, available since May 2017, enables banks that have signed up to SWIFT GPI to track their GPI payments in real-time. The introduction of the unique end-to-end transaction reference (UETR) in payment instructions will be effected through the mandatory annual Standards MT Release in November 2018.