Quick look on Financial Awareness - 62

Here we are sharing the next 62nd part of our Banking and Finance Awareness Series "Quick Look on Financial Awareness". Go through this now to get all the important insights which took place this week in Banking and Finance Sector in India and world. This will immensely help you in upcoming IBPS Clerk Mains and other important exams.

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1) S&P classifies Indian banks under ‘Group 5’ -

• On the basis of their economy and industry risk criteria, The Indian banking sector has been put in 'Group 5' by American rating agency Standard & Poor's (S&P).
• In its BICRA (Banking Industry Country Risk Assessment), Standard & Poor’s (S&P) provided the outlook for the banks of the countries worldwide.
• Along with India, countries Italy, Spain, Ireland, Panama, Bermuda, Poland, Peru, Qatar, South Africa and the UAE are also classified under Group 5.
• S&P said that Banks' asset quality is weak and has been deteriorating in the past four years however in terms of industry risk, the banking system's good franchise, extensive branch networks, and large domestic savings support a granular and stable deposit base .
• S&P has its headquarter in New York, United States of America.

2)India’s GDP growth at 6.5% in FY18, 7.0 % in FY19 and 7.6% in FY20: HSBC

• In a report by HSBC, India's growth rate is expected to accelerate to 6.5 % in this fiscal year 2017-18.
• For 2018-19, India's economy is expected to grow at 7.0 % and it will grow upto 7.6% for the Financial year 2019-20.
• The reason behind the improvement in growth rate is the key sectors which would revive from disruptions related to the implementation of GST and demonetisation.
• HSBC said that recovery in India's GDP growth will likely be relatively gradual which will prevent price pressures from rebounding and allowing the Reserve Bank of India to keep rates on hold for the time being.
• HSBC expects that inflation in India will settle around RBI’s 4 % target, once the Indian economy is fully in line with the two major event Demonetization and Goods and Services Tax (GST).
• HSBC is headquartered in London, United Kingdom.

3) KKR becomes the first company to get approval for India’s 1st Foreign-owned ARC

• A big Investment firm and buyout of United States KKR & Co has received approval from the Reserve Bank of India to own an asset reconstruction company (ARC) in India.
• In this way, KKR & Co has become the first foreign investor to fully own an ARC in India.
• KKR & Co to own an ARC in India. at a time when lenders are fighting with a pile of bad loans that have crippled their businesses.
  
• KKR is one of the biggest investors in financial services and it is planning to deploy a major chunk from its record Asia fund for buying troubled assets in India.
• To tackle the increasing issue of Non-Performing Asset in India, Central Government allowed foreign institutions to have 100% ownership in asset reconstruction companies in India in March 2016.'
• An Asset Reconstruction Company is a specialized financial institution that buys the NPAs or bad loans from banks and financial institutions to clean up the balance sheets of Banks. This helps banks to concentrate in normal banking activities. Banks rather than going after the defaulters by wasting their time and effort can sell the bad assets to the ARCs at a mutually agreed value
• KKR & Co is headquartered in Newyork, USA.

4) Finance Ministry is all set to relaunch Government of India bonds with 7.75% rate -

• Government is all set to relaunch the new subscription of GoI Savings (Taxable) Bonds, 2003 which will now bear 7.75 % Interest rate as compared to 8% interest rate earlier.
• It is announced by Subhash Chandra who is Secretary of Department of Economic Affairs under Ministry of Finance.
• At 7.75 % interest, Government of India (GoI’s) Savings Bonds Scheme has the highest returns when compared to other fixed-income products.It is also known as RBI Bonds Scheme.
• It has a fixed tenure of six years and there is no upper limit for investment.
• Recently the Government of India has revised the interest rates on Post Office Savings Schemes and now relaunching of the Government of India bonds with the lower interest rate is in tandem.
• For retail investors and retirees, the bonds will continue to be lucrative even though the interest rate will be 25 basis points lower.
• Those in the 30 % tax bracket would still make 5.42 % returns by investing in the new bonds that the government would issue.
• The investor who is in 20 % and 10 % tax bracket, he will make 6.2 % and almost 7 % post-tax returns respectively.
• For those who are not in the highest tax bracket, the returns are slightly better than what they can get in a debt fund, which carries either duration or interest rate risk.
• These bonds have the highest safety level as they are backed by the sovereign guarantee. The average one-year return from shorter duration debt funds is in the range of 6.4-6.6.

5) No charges on debit card, BHIM app and other payment transactions up to Rs 2000:Finance Ministry

• Now the customers will not have to pay any transaction charges for payments through debit card, BHIM app and other payment made for up to Rs 2,000 from 1st January 2018.
• It is stated by Rajiv Kumar, Secretary of Financial Services under Union Finance Ministry.
• To promote the digital transactions, the government will now bear the merchant discount rate (MDR) charges on transactions up to Rs 2,000 made through debit cards, BHIM UPI or Aadhaar-enabled payment systems. This proposal was approved by Central Government in December, 2017.
• This MDR will be reimbursed to the banks. The total cost of bearing the MDR the Government for two years will be Rs 2512 crore.
• Merchant Discount Rate is the rate charged to a merchant by a bank for providing debit and credit card services. The rate is determined based on factors such as volume, average ticket price, risk and industry.

6) Pluto Exchange announced launch of  India’s first bitcoin trading app -

• Dubai based cryptocurrency dealer Pluto Exchange is all set to launch India’s first mobile application for transacting in virtual currencies.
• It will be India's first app-based wallet which will enable bitcoin transactions using a mobile number.
• The Pluto Exchange mobile app offers a solution to the coordination problem between payment processors, financial gateways and banks.
• By using a four-digit personal identification number (PIN), users can now buy, sell, store and spend bitcoins via a mobile number.
• The app would permit a range of transactions, including payments, remittances, business-to-business commerce, supply chain finance, asset management and trading.
• Bharat Verma is the founder and Chief Executive of Pluto Exchange

7) Bank of Baroda signed MoU with POORTI to help farmers purchase agricultural inputs -

• India's public sector bank Bank of Baroda has entered into MOU with POORTI Agri Services Pvt. Ltd to create an ecosystem which will provide end to end solution to farmers.
• Now the Bank of Baroda and Poorti will jointly work which will enable the farmers to purchase agricultural inputs such as fertilizers, pesticides, seeds etc. provided by POORTI.
• POORTI (Platform for Online Ordering & Rural Transformation of India) is a well-established company which provides multi-party mobile commerce platform for easy ordering of fertilizers, pesticides, seeds by farmers with loans given by banks.
• P.S.Jayakumar is the Managing Director and CEO of Bank of Baroda. It has its headquarter in Vadodara, Gujarat.
• Mr. N. Balasubramanian is the founder and director of Poorti Agri Services Pvt. Limited.

8) RBI puts Allahabad Bank under prompt corrective action framework -

• Reserve Bank has put Allahabad Bank, the public sector bank of India under prompt corrective action framework
• The decision has been taken by RBI after an on-site inspection of high NPAs and a negative return of assets by the Allahabad Bank for fiscal 2016-17. 
• The RBI inspection has revealed high net NPAs (non performing assets) and negative ROA (return on assets) by Allahabad Bank for two consecutive years.
• This action by Reserve Bank of India will lead to the overall improvement in risk management, asset quality, profitability, the efficiency of the Allahabad Bank.
• The RBI has initiated prompt corrective action against other public sector banks which are IDBI Bank, Indian Overseas Bank and UCO Bank. 
• In April 2017, Reserve Bank of India had issued a new set of enabling provisions under the revised PCA framework. It said that if the bank does not show improvement then it could be either be merged or taken over by another bank. 
• Usha Ananthasubramanian is the MD and CEO of Allahabad Bank.
• It has its headquarter in Kolkata, West Bengal.

9)Indiabulls Housing Finance issues India’s 1st Social Affordable Housing Bond -

• Indiabulls Housing Finance Limited (IBHFL) has issued India’s first Social Affordable Housing Bond of INR 1,000 crores, to finance the Affordable Housing sector.
• India’s 5 th largest private sector Bank Yes Bank was the only investor in this landmark issue.
• The Bond issue is for a tenor of 5 years and is rated ‘CRISIL AAA’ by CRISIL and ‘ICRA AAA’ by ICRA.
• The Bond will be listed on the National Stock Exchange Limited (NSE) and Bombay Stock Exchange Limited (BSE).
• Social Bonds are debt instruments which are issued to raise funds. These are to be deployed in financing/re-financing eligible social projects such as affordable housing, water supply, sanitation, transport etc.
• Indiabulls Housing Finance has also received an approval to issue USD 750 Mn of Masala Bonds from Reserve Bank of India for which the end use is planned to be affordable housing.
• Affordable Housing will play a critical role in realising Government’s vision of ‘Housing for All’.
• Rana Kapoor is the MD and CEO of Yes Bank. It has its headquarter in Mumbai, Maharastra.
• Indiabulls Housing Finance has its headquarter in New Delhi.Sameer Gehlaut is the founder and executive chairman of the bank.

You can go through all the previous articles of this series from the link provided below -

Quick Look on Financial Awareness Series 

All the best for your exams,
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