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J.S. DIGEST OF From the Editor’s Pen... CONTENTS
BANKING AND FINANCE
Monthly Magazine Vol. - XIII March - 19 Issue - 7
Vol.-XIII Mar.-19 Issue-7 SBI Didn’t Know of husband’s biz dealings,
Sale of electoral bonds in 3 tranches from says Chanda to ED ________________________ 19
We have immense pleasure March: Fin Min _____________________________ 7 ING sells 3% in Kotak Bank for over $1 billion,
Annual Subscription- Carlyle buys 9% in SBI Life for Rs.4635 Cr via exits lender ______________________________ 20
Rs. 660/- block deal _________________________________ 7 13 Indian banks seek disclosure of details
in placing before our readers SBI, PNB may buy other banks’ exposure to Jet 7
SBI links large savings a/cs and overdrafts to
on Mallya’s UK properties _________________ 20
Lenders realise Rs.44,500 crore from
Single Copy - Rs. 55/- repo rate __________________________________ 8 Insolvency Resolution of Steel Assets ______ 20
Microfinance loans grow by 43% YoY in FY19,
March 2019 Digest. SBI offers doorstep services for seniors _____ 9
SBI to auction _____________________________ 10 says Mof Fin: _____________________________ 21
Published by NCLAT RCom’s plea to release tax Refund ___ 10 ED attaches NiMo’s assets worth Rs.148
J. S. INSTITUTE OF SBI Yono App to allow cashless withdrawals _ 10 Crore ____________________________________ 21
SBI inks pact with Bank of China for business Will adopt a different strategy for PCA
BANKING AND FINANCE
PVT. LTD. The issue contains the latest opportunities _____________________________ 11 Banks: Govt ______________________________ 21
Bank of Baroda to sell NPAs worth
Fraud worth Rs.7951 cr detected in Apr-Dec,
#19, 3rd Floor, Sneha Centre, says SBI in RTI reply ______________________ 11 Rs.6000 cr _______________________________ 21
Opp. Vijaya College, developments in Banking, Finance RBI
Fund infusion for PSBs not sufficient for
lending growth: Fitch ______________________ 22
12th Main, 30th Cross, RBI extends KYC deadline by 6 months ______ 11 Off PCA hook, banks betting on SME loans ___ 22
Jayanagar 4th Block, RBI proposes to rein in pay of pvt bank IL&FS lenders to continue making
Bangalore - 560 011. and Economy, Recent RBI CEOs ____________________________________ 12 provisions _______________________________ 22
E-mail : 3 more banks exit RBI’s framework of PCA __ 12 IL&FS sees management collusion, fraud in
subscription@jsinstitute.co.in New Rs.100 bank notes to be circulated soon 13 IFINs bad loans ___________________________ 23
Website :
Instructions, Recent Banking Foreign entities need RBI nod for having India Grant Thornton report points to IL&FS
office ____________________________________ 13 irregularities in Rs. 13k-cr deals ___________ 23
www.jsinstitute.co.in RBI slaps fine on four banks _______________ 13 SC allows arrest of Amrapali CMD, 2 other
Mob.: 7760870006 Developments, and Concept RBI norms to carve Rs.1.4 trillion headroom Directors ________________________________ 23
PNB best among govt banks in implementing
for bank credit: CRISIL ____________________ 13
Tel: 080-49709989 Banks want RBI to defer IndAS roll-out ______ 14 reforms agenda __________________________ 24
E-Mail Briefs. It also contains Objective RBI circular has one-size-fits-all approach,
power firms tell SC ________________________ 14
ED searches Kochhar’s premises __________ 24
When will you return and face the law? HC
Please send messages in In meet on DeMo, RBI had raised doubts about asks Mallya ______________________________ 25
our new mail addresses it curbing black money ____________________ 14 PMLA court allows banks to liquidate Vijay
Questions for JAIIB exams. RBI set to become 10th largest holder in gold 15 Mallya’s equity holdings ___________________ 25
RBI to infuse Rs.12,500 crore via OMOs _____ 15 Over Rs.2 trillion bad loans settled says
subscription@jsinstitute.co.in RBI defends Feb 12 circular, says Firms MCA secretary ___________________________ 25
programs@jsinstitute.co.in didn’t submit plan _________________________ 15 Ravneet Gill takes charge as Yes Bank
We are sure these will be found RBI puts auditors of banks on notice ________ 16
RBI issues guidelines to prevent market
MD & CEO ________________________________ 26
Adhia named BoB non exec chairman _______ 26
Visit us at our abuse ____________________________________ 16 Ready to take over BPSL operations by
Website very useful by the readers. We RBI refuses to relax power biz NPA norms month- end: Jindal ________________________ 26
www.jsinstitute.co.in for banks ________________________________ 17 Banks need to lend Rs.1 trn to meet FY19
RBI Governor to hold pre-policy meet with MUDRA target ____________________________ 26
traders on March 26 ______________________ 17 PSBs may go on fundraising spree to reduce
wish success for our readers in the RBI not in favour of changing IDBI Bank’s govt stake _______________________________ 27
This issue consists of total name ____________________________________ 18 Voluntary use of Aadhaar as ID proof for
92 pages including cover. RBI asks NCLAT to alter IL&FS loan order ___ 18 bank a/c, SIM get Prez nod _________________ 27
ensuing exams and interviews. Ordinance on cards to tweak IBC for cross
Banking and other banks border cases _____________________________ 28
Solvency issue resolved but PSB turnaround IDBI bank get nod to handle import, exports
Editor to take time ______________________________ 18 with Iran _________________________________ 28
RBI creates new category of NBFCs by Need land, labour reforms to aid manufacturing,
G. Subramanian – Editor merging existing 3 ________________________ 19 says Chief Economic Advisor CEA __________ 28
CBI issues lookout notice against Chanda LICHFL to offer home loans up to 75
Kochhar _________________________________ 19 years of age ______________________________ 29
JS Digest of Banking and Finance March 2019 3 4 Contents

NBFCs face new governance, exposure Norms for liquid MFs, open offer waiver China again blocks bid at UN to list Masood KYC for the non-resident __________________ 58
code _____________________________________ 29 tightened ________________________________ 40 Azhar as global terrorist __________________ 47
Banking Regulator proposes tighter norms Terror Attack At New Zealand Mosques RECENT BANKING DEVELOPMENTS:
for HFCs _________________________________ 30 Economy Kills 49 __________________________________ 47 Passing Powers for users in CBS capped ____ 59
NHB proposes higher capital need for HFCs _ 30 CEA bats for Nayak panel suggestions Pan amendment/deletion in CBS ____________ 59
World Bank to give $250-mn loan to boost RBI ______________________________________ 40 Legal Revised collateral security norms for
rural income ______________________________ 30 Cheer for homebuyers ____________________ 41 IBCs reigns Supreme over other civil laws: finance to Trade & Service Sector __________ 59
BOB merger likely to Create outsourcing 12mn jobs a year created in formal sector: Delhi HC _________________________________ 47 Reward & Recognition for Security Staff _____ 60
opportunity of Rs.1000 cr __________________ 31 Modi _____________________________________ 41 IL&FS loans won’t be NPA for now: NCLAT ____ 48 Divya Shakti Gold Power Tiller ______________ 60
MSME Created 1.5 Cr jobs a year Since Fiscal deficit already 21.5% over yearly Insolvency & Bankruptcy code: Govt looking RBI has instructed banks to provide Key
2014: Survey _____________________________ 31 tar get ___________________________________ 41 at ways to avoid frivolous bids _____________ 49 Fact Statements __________________________ 60
Citi set to name top APAC executive as India Q3 GDP growth moderates to 6- quarter Yono Maxfund V Campaign _________________ 60
CEO _____________________________________ 31 low ______________________________________ 41 Appointments New VVQ System __________________________ 60
Raters play critical role in giving stability to Non-food credit grew 13.1% in January: Subhash Chandra Garg named new finance RINN SAMADHAN 18-19 ___________________ 60
financial sector: das ______________________ 31 RBI ______________________________________ 42 secretary ________________________________ 50 Operations of NRE/NRO by POA _____________ 60
e-KYC charges to make services costly: Agri growth seen slipping to 2.7% versus M R Kumar takes charge as LIC’s chairman _ 50 Launch of Swarnadhara Agri Gold Loan
Industry _________________________________ 31 5% in FY18 _______________________________ 42 T C Suseel Kumar and Vipin Anand __________ 50 Campaign during March’19 ________________ 60
Retail payments via BHIM declining _________ 32 GST mop-up slows to Rs.97,247 Cr in Feb ____ 42 Justice PC Ghose appointed India’s Poochke To Dekho 2.00 ____________________ 60
Detailed liquidation rules in the works to save India to grow at 7.3 percent in 2019, 2020: 1st Lokpal ________________________________ 50 Universal Passbook Modified ______________ 60
viable firms: IBBI __________________________ 32 Moody’s _________________________________ 42 Modifications in CRE Home Loans ___________ 61
Deepak Kochhar may be probed for benami Forex reserves up by $944 mn to Personalities YONO CASH ______________________________ 61
assets ___________________________________ 33 $399.21 bn _______________________________ 43 Parrikar _________________________________ 50 SBI Asset Backed Loan Revised ____________ 62
IRDAI seeks proposal from LIC to cut its Centre to Compress Spending by
equity stake in IDBI ________________________ 33 $60 k cr __________________________________ 43 Awards Concept Brief - I
IDBI Bank categorised as private sector A M Naik, Manoj Bajpayee among Padma Making Digital Payments Safer –
lender ___________________________________ 33 National Awardees ________________________________ 50 RBI Measures ____________________________ 63
PSBs, private banks divided over linking PM Modi transfers Rs.2,021 crore to over 10
rates to external benchmark _______________ 34 million farmers ___________________________ 43 RECENT RBI INSTRUCTIONS Concept Brief - II
Nirav Modi diverted Rs 934 crore to 90 crore registered to cast their votes for Storage of Notes and Coins ________________ 51 National Pension Scheme for Unorganised
personal a/cs _____________________________ 35 LS elections ______________________________ 43 Interest Subvention Scheme for Short Term Sector Pradhan Mantri Shram Yogi
Bank of India raises Rs 660 crore by selling Goods and Services exports to cross Crop Loans during the years 2018-19 and Maan-dhan (PM-SYM) ______________________ 67
shares to employees ______________________ 35 $500 bn __________________________________ 43 2019-20 __________________________________ 51
Deposit crunch to halt pvt banks’ market SC makes effort to work out compromise White Label ATMs (WLAs) in India – Review JAIIB – Accounting Finance For
grab _____________________________________ 36 in Ayodhya case __________________________ 43 of Guidelines _____________________________ 52 Banker
Interchange rate for ATM to be hiked by by Air Strike Deep Inside Pak, First Since Trade Credit Policy – Revised framework ___ 53 Extract from objective questions digest
Rs 1.5 to Rs 2 _____________________________ 36 71 war ___________________________________ 43 Trade Credit Framework ___________________ 53 MODEL TEST 1 ____________________________ 70
HDFC Bank m-cap crosses Rs 6L cr ________ 37 IRCTC launches its own payments Exchange rate ____________________________ 54 MODEL TEST 2 ____________________________ 72
Allahabad Bank looks to raise Rs 500 crore aggregator iPay __________________________ 44 Hedging provision ________________________ 54
via non-core asset sale ____________________ 37 Ujjwala boost: in Fy19, LPG connections Reserve Bank of India (Prevention of JAIIB – Legal And Regulatory Aspects
Bandhan Bank gets RBI nod for acquiring jump 45 __________________________________ 44 Market Abuse) Directions, 2019 ____________ 54 Of Banking
Gruh Finance _____________________________ 37 E-commerce to play major role in India Export and Import of Indian Currency _______ 56 EXTRACT FROM OBJECTIVE QUESTIONS DIGEST
Reduced NPA to drive solvency of public growth story _____________________________ 44 Compilation of R-Returns: Reporting MODEL TEST- 1 ___________________________ 75
sector banks, says Icra ___________________ 37 Real estate firms move top court against under FETERS ____________________________ 56 MODEL TEST- 2 ___________________________ 78
CVC finds many flaws in sale of bad debt by ‘financial creditor’ tag for homebuyers ______ 45 Investment by Foreign Portfolio Investors
banks Review Points to several lapses in Loan waiver effect: Karnataka fiscal (FPI) in Government Securities Medium JAIIB- Principles And Practices Of
deals, Govt orders scrutiny ________________ 38 deficit up 60% in 2 years ___________________ 45 Term Framework: Revision of investment Banking
Mastercard concerned India data rules may Indore hits hat-trick by grabbing the Limits for 2019-20 ________________________ 56 EXTRACT FROM OBJECTIVE QUESTIONS DIGEST
hinder fraud detection _____________________ 38 ‘cleanest city _____________________________ 45 Transactions for the purpose of hedging MODEL TEST- 1 ___________________________ 81
2nd generation reform were introduced by Govt. doubles income tax ememption interest rate risk _________________________ 57 MODEL TEST- 2 ___________________________ 83
Modi govt: FM ____________________________ 39 for gratuity _______________________________ 46 Transactions for purposes other than
Bank of America bets big on India’s bad SC sends Ayodhya Case for mediation ______ 46 hedging interest rate risk _________________ 57 Model Test based on Banking Digest–
debt pile, buys its biggest distressed asset Election Commission announces 7-phase March 2019 Information ______________ 86
in India ___________________________________ 39 election from April 11; results on May 23 ____ 46
Elections won’t stop economic reforms,
Corporates says CEA ________________________________ 46
OYO forms JV with Yahoo to enter Japan ____ 39
MCA tightens compliance regulations for International
companies _______________________________ 39 FATF to keep working with Pakistan to curb
Indra Nooyi joins Amazon board of terrorism financing _______________________ 46
directors _________________________________ 40 Trump scraps preferential trade treatment
CSR spend tops Rs.50K cr; need better for India __________________________________ 46
framework _______________________________ 40
JS Digest of Banking and Finance March 2019 5 6 Contents

BANKING & FINANCE - MARCH, 2019 the debt-equity restructuring process. Simultaneously, the size of the
rights issue is likely to be increased from the proposed Rs 2,500 crore to
SBI around Rs 4,000 crore. As part of the final steps to stitch together a
Sale of electoral bonds in 3 tranches from March: Fin Min resolution plan, the stake to be held by the National Investment and
With the general elections round the corner, the government has Infrastructure Fund (NIIF) would possibly be higher than the proposed
authorised State Bank of India to launch the sale of electoral bonds in 19.5 per cent. The sovereign fund is yet to firm up a decision on the
the months of March, April and May. The government had brought in matter. The resolution process, to bridge a funding gap of around Rs.8500
electoral bond scheme as an alternative to cash donations made to crore, has been delayed as multiple stakeholders have failed to arrive at
political parties as part of its efforts to bring transparency in political a consensus so far.
funding. “State Bank of India (SBI) has been authorized to issue and SBI and PNB together have more than 65 percent exposure to Jet Airways
encash Electoral Bonds through its 29 Authorised Branches in the months and hence have the right to invoke the ICA to hasten the process. The
of March, April and May 2019,” the Finance Ministry said in a statement. other banks in the consortium include IDBI Bank, Indian Overseas bank,
The bonds will be sold in three tranches from March 1-15, April 1-20 and Syndicate Bank and foreign lenders such as Citibank, Mashreq Ban and
May 6-15. Standard chartered. According to the plan proposed by the SBI, the
lenders will convert a part of the company’s debt into Cumulative
Carlyle buys 9% in SBI Life for Rs.4635 Cr via block deal Redeemable Preference Share (CRPS), that would give the lenders the
Global investment firm The Carlyle Group on Friday acquired a 9% stake right to dividend on these shares whenever the company returns to profit.
in private life insurer SBI Life Insurance for Rs 4,635 crore through a Other banks are not comfortable with the idea of converting a part of
block deal on the BSE. After this transaction, BNP Paribas Cardif, banking their debt into CRPS that pay dividends. They fear that Jet Airways is a
major SBI’s foreign partner in the life insurer, will have a 12.8% stake. In loss making company and will be unable to pay the dividends on the
addition to the 9 crore shares that were bought by CA Emerald instrument in coming years.
Investments, a Carlyle arm, BNP Paribas also sold about 22.5 lakh shares
for about Rs 116 crore in the open market, BSE data showed. SBI links large savings a/cs and overdrafts to repo rate
SBI will continue to hold 62.1% stake in its life insurance subsidiary State Bank of India has become the first lender to link interest rates on its
while the balance 16.1% is held by other investors and the general public. saving accounts-with deposits of over Rs-1 lakh-to the RBI repo rate.
The investment in SBI Life is Carlyle’s largest investment in the financial Also, borrowers with an overdraft account of over-1 lakh will pay interest
services space in India, which include stakes in PNB Housing Finance linked to the repo rate. The move will result in any change by the RBI
and SBI Card. According to SBI global banking & subsidiaries MD Dinesh being instantly passed on to depositors and borrowers. With effect from
Kumar Khara, Carlyle, with whom it has an existing relationship through May 1 saving bank deposits with balances of above Rs 1 lakh, will earn
SBI Card, is expected to bolster SBI Life’s franchise in the country. SBI a return equivalent to 2.75% below the prevailing repo rate. Since the
Life MD & CEO Sanjeev Nautiyal said that Carlyle’s trust in the life current repo rate is 6.25% the interest on these accounts will continue to
insurer will further strengthen the company’s resolve to enhance its be 3.5%. However, should the RBI again cut rates in its next policy in
leadership position in India’s life insurance industry through a single- April 2019, the return will come down. In addition to deposits, all cash
minded focus on quality customer experience. For Carlyle, the investment credit accounts and overdrafts with limits of above Rs 1 lakh will be at
in SBI Life was because of the life insurance industry’s strong growth the repo rate plus a spread of 2.25%—or 8.5%. In addition to this the
potential in India. According to Sunil Kaul, managing director of Carlyle bank will add a spread based on the risk profile of the borrower. “In
Asia Buyout advisory team, “SBI is the most trusted brand in financial order to insulate the small deposite holders and small borrowers from
services. the movement of external benchmarks, SBI has decided to exempt savings
bank account holders with balances of up to Rs 1 lakh and borrowers
SBI, PNB may buy other banks’ exposure to Jet with cash credit or overdraft limits up to Rs 1 lakh from linkage to the
Lead bankers of Naresh Goyal-led Jet Airways are likely to buy out the repo rate,’’ the bank said.
exposure of other smaller lenders, which are hesitant to participate in
JS Digest of Banking and Finance March 2019 7 8 Banking & Finance

The move is significant as, barring a few outliers, the interest on saving SBI to auction Rs 2,338 crore of NPAs on March 26
bank accounts has been rock steady at 3.5-4% over the year. Although State Bank of India has put on sale six non-performing accounts worth
the RBI had stopped dictating the interest rate on savings accounts in Rs 2,337.88 crore, which will be auctioned on March 26. The bank is
October 2011, none of the leading banks entered into a rate war. It were looking to sell all the accounts on a 100 percent cash basis to banks,
banks that had a small distribution network like Kotak bank , DBS Bank ARCs, NBFCs and other financial institutions, according to the auction
and Yes Bank –that offered higher returns. notice on the lender’s website.
Pricing the deposits in relation to the repo rate will also enable SBI to link The accounts are Indian Steel Corporation (outstanding debt Rs 928.88
some of its loans to an external benchmark. In the October policy crore), Jai Balaji Industries (Rs 859.33 crore), Kohinoor Planet Construction
announced by Urjit Patel, the then RBI governor, the central bank had (Rs 207.77 crore), Mittal Corp (Rs 116.34 crore), MCL Global Steel (Rs
said that lenders would have to shift to an external benchmark for their 100.18 crore), Shree Vaishnav Ispat (Rs 82.52 crore) and Gati
retail loans with effect from April 1, 2019.The RBI wanted banks to use Infrastructure (Rs 42.86 crore). The lender said except Mittal Corp and
an external benchmark instead of setting the rates themselves, as it felt Shree Vaishnav, the auctions are under the Swiss Challenge method and
that lenders were slow to pass on rate cuts. will be conducted on March 26.
In a meeting with Shaktikanta Das, Governor RBI, bankers expressed
challenges faced in pricing their loans to an external benchmark. SBI NCLAT RCom’s plea to release tax Refund
Chairman Rajnish Kumar had earlier said that it was difficult to peg In further Trouble for Anil Ambani and Reliance Communcation, the
loans to an external benchmark without having more flexibility in NCLAT refused to pass interim orders, asking SBI to give the Telecom
repricing deposits. company $260-crore tax refunds lying with it and other lenders in a
“In order to address the concern of rigidities in the balance sheet structure trust and retention account.
and address the issue of quick transmission of changes in RBI’s policy
rates, SBI has taken the lead in linking its key pricing decision for savings SBI Yono App to allow cashless withdrawals
bank deposits and short-term loans to the repo rate of the RBI,’’ said the In a bid to ultimately do away with the need for plastic cards in payments
bank in a statement issued . and withdrawals, State Bank of India (SBI) has enabled cardless ATM
withdrawals through its mobile application Yono. The bank is also
SBI offers doorstep services for seniors facilitating payments at point of sale (PoS) terminals using the application.
State Bank of India has launched priced ‘doorstep banking’ for senior Launching the Yono Cash service in Mumbai, SBI chairman Rajnish
citizens over 70 years of age, as also for differently abled and infirm Kumar said that the cardless withdrawal will currently be available at
customers, including those who are visually impaired. The facility will 16,500 SBI ATMs and would eventually be extended to all 60,000 ATMs
be available for those living within a 5-kilometre radius of select bank of the bank. The service enables the user to generate a dynamic code
branches. These services are available against payment of a fee of Rs 100 using the Yono app, which can be used within 30 minutes to withdraw
for financial transactions and Rs 60 for non-financial transactions. money from any SBI ATM.
Customers will have to register at their home branch and, additionally, “This facility can be used by customers to send money. Usually, customers
differently abled and infirm customers will have to submit a medical are asked not to share their PIN number. But in this case, the PIN has
certificate to that effect to register for this service. The RBI has directed only one-time use,” said Kumar. Customers can start the cash withdrawal
banks to offer doorstep banking to those who cannot make it to bank process on the Yono app and set a six-digit cash pin for the transaction.
branches. In a circular issued in 2017, it said, “In view of the difficulties They will also get a six-digit reference number via SMS. The cash
faced by senior citizens of more than 70 years of age and differently abled withdrawal must be completed within half an hour using both PINs and
or infirm persons (having medically certified chronic illness or disability), the reference number received. “The initiative will also address the
banks are advised to make a concerted effort to provide basic banking concern of using debit card at ATMs for cash withdrawals by eliminating
facilities.” Many banks, however, are yet to draw up a policy for providing possible risks associated with it. Our ultimate objective is to do away
doorstep-banking service for customers. with plastic,” said Kumar.As of February 2019.YONO had over 1.8 crore

downloads, which is a small fraction of the 30.58 crore debit cards already RBI proposes to rein in pay of pvt bank CEOs
issued by the bank. The Reserve Bank of India (RBI) has proposed inserting a clause in
compensation packages of private bank chief executive officers (CEO)
SBI inks pact with Bank of China for business opportunities that would allow for a penalty if the bank concerned underreports bad
The SBI said it has signed a pact with the Bank of China to boost business debt or provision beyond the central bank’s tolerance. “Wherever the
opportunities. SBI has signed a memorandum of understanding (MoU) assessed divergence in the bank’s asset classification or provisioning
with Bank of China (BoC), third-largest bank in the world by capital size from the RBI norms exceeds the prescribed threshold for public disclosure,
and one of the major players in the Chinese banking sector, to enhance the bank shall not pay the unvested portion of the variable compensation
business synergies between both the banks, State Bank of India said in a for the assessment year… Further, in such situations, no proposal for
release. Through this pact, both SBI and BoC will gain direct access to increase in variable pay (for the assessment year) shall be entertained,”
their respective markets of operation, it said. the RBI said in a discussion paper released. The central bank also said
there should be no concept of “guaranteed bonuses” in the compensation
Fraud worth Rs.7951 cr detected in Apr-Dec, says SBI in RTI reply plan.
The State Bank Group has said as much as Rs 7,951.29 crore involving
1,885 cases of fraudulent activities have come to light during the first 3 more banks exit RBI’s framework of PCA:
nine months of the current fiscal year. The RBI lifted lending curbs on two more public sector banks (PSBs)
In an RTI reply, SBI said, the first quarter reported 669 cases of fraudulent Allahabad Bank and Corporation Bank by removing them from its prompt
activities amounting to Rs 723.06 crore, the second quarter saw 660 cases corrective action (PCA) watch list. Another private lender, Dhanlaxmi
involving an Rs 4,832.42 crore and the third quarter reported 556 cases Bank, has also been taken out of the PCA. The PCA framework is designed
amounting to Rs 2,395.81-crore. According to RTI activist to keep a check on the asset quality of weak banks by preventing them
Chandrashekhar Gaud, the bank shared the data on February 25. Though from lending until they improve financial parameters like capital
he had also sought information about the financial losses to its customers adequacy and the ratio of bad loans to total loans.
due to these fraudulent activities, SBI refused to share the same saying The latest move follows a meeting of the RBI’s board for financial
such information is exempted from disclosure under Section 7 (9) of the supervision (BFS) to review the position of the banks after the government
RTI Act of 2005 announced Rs 48,239-crore capital infusion into 12 public sector banks.
Noting that Allahabad Bank and Corporation Bank had received Rs 6,896
RBI crore and Rs 9,086 crore respectively, the RBI said that the infusion has
RBI extends KYC deadline by 6 months shored up their capital funds and also increased their loan loss provision
In a major relief to consumers as well as mobile wallet companies, the to ensure that the PCA parameters were complied with. Last month, Bank
RBI has extended the deadline for full know-your-customer (KYC) of India, Bank of Maharashtra and Oriental Bank of Commerce got out of
compliance by six months. The deadline was supposed to end on February RBI’s lending restrictions. Of the 11 banks that were placed under PCA
28. As much as 70-80%of the user base of most e-wallet companies were last year, six continue to be in RBI’s watch list. They are Central Bank of
yet to comply with full KYC norms. Such users would have been invalid India, Dena Bank, IDBI Bank, Indian Overseas Bank, UCO Bank and
starting next month, according to top industry executives. After the RBI United Bank of India. Of these, Dena Bank will be merged with Bank of
mandated full KYC via its circular in 2017, mobile wallets were largely Baroda, and IDBI Bank is expected to bounce back following the capital
relying on Aadhaar for e-KYC. The supreme Court ruling that barred infusion by its new promoter Life Insurance Corporation. The RBI said
private entities from using Aadhaar made it tougher for companies to do the two PSBs have made the necessary disclosures to the stock exchange
KYC and also increased costs. While an e-KYC costs on average about that after infusion of capital the capital to risk-weighted assets ratio
Rs.15 per person, the physical route required Rs.80-100. This (extension) (CRAR), tier-1 capital equity, net non-performing asset and leverage ratios
would certainly help as hardly anyone was prepared to tackle so many are no longer in breach of the PCA thresholds.
e-wallets becoming invalid.

New Rs.100 bank notes to be circulated soon most NBFCs, barring specific categories such as asset finance companies
The RBI said it would shortly put into circulation the new series Rs.100 (AFCs), infrastructure finance companies (IFCs) – including infrastructure
denomination bank notes, bearing the signature of Governor Shaktikanta debt funds structured as NBFCs (IDF-NBFCs) – and housing finance
Das. The design of these notes is similar in all respects to the Rs.100 bank companies. This is set to be altered in the revised rating-based paradigm.
notes in circulation currently.
Banks want RBI to defer IndAS roll-out
Foreign entities need RBI nod for having India office Banks are seeking an extension for the roll-out of the Indian Accounting
The Reserve Bank of India said that applications received from a non Standards (IndAS), set to come into effect from April 1. They have cited
government organisation, non-profit organisation, body/agency/ higher capital for bad-loan provisioning, pending legislative
department of a foreign government for opening of a branch office or a amendments, and delay in finalising rules by the Reserve Bank of India
liaison office or a project office or any other place of business in India are (RBI) as some of the reasons. The government has given capital to banks
to be forwarded to the RBI for prior approval and be considered in with great difficulty and banks are under pressure to improve their
consultation with the Centre. financials. IndAS will further add to banks’ compliance burden, especially
for loan-loss provisions. Hence, banks are requesting the central bank to
RBI slaps fine on four banks give them breathing space.
The Reserve Bank has imposed a monetary penalty of Rs 3 crore on Union Only then banks will be in a position to come back and shift to the new
Bank, Rs 2 crore on Dena Bank, and Rs 1 crore each on IDBI and the SBI accounting standard. This could be the second time the RBI would defer
for non-compliance with various directions, regulatory filings said. the roll-out .According to the RBI’s original plan laid out in 2016 banks
Union Bank said that the apex bank has imposed a penalty of Rs 30 were to implement IndAS from April 2018.But, the RBI deferred it by a
million (Rs 3 crore) on it for delay in adherence to its directives on ‘Time year to April 2019 as necessary legislative amendments to make the format
bound implementation and strengthening of SWIFT related controls’ of financial statements compatible with account under IndAS were
contained in the RBI circular of February 20, 2018. In a filing to the BSE, pending.
Dena Bank said the Reserve Bank has imposed a penalty of Rs 20 million
on it for non-compliance with the directions issued on February 20, 2018. RBI circular has one-size-fits-all approach, power firms tell SC
In an another filing, IDBI said the Reserve Bank of India (RBI) has imposed The Reserve Bank of India’s (RBI’s) February 12, 2018 circular asking
a monetary penalty of Rs 10 million on the Bank for contravention of its banks to move insolvency petitions against large non-performing assets
regulatory directions on time-bound implementation and strengthening (NPAs) that have not been resolved, is based on a ‘one-size-fits-all’
of SWIFT related operational controls. approach without taking into consideration factors such as the reasons
”The Bank has put in place necessary corrective actions to strengthen its for non-payment, power companies told. There is no distinction between
internal control mechanisms so as to ensure that such incidents do not the kinds of debtors, the reasons for non-payment of the debt or
recur,” IDBI said. The SBI said the RBI has levied an aggregate penalty of consideration for external factors influencing the sector. The discretionary
Rs 10 million on the bank for delayed implementation of the daily power of banks to decide whether an account would turn non-performing
reconciliation of Swift transaction logs with effect from February 20, 2018 asset (NPA) or not had also been taken away by the RBI owing to the
at 226 “low intensity branches” of the bank. circular.
RBI norms to carve Rs.1.4 trillion headroom for bank credit: CRISIL In meet on DeMo, RBI had raised doubts about it curbing black money
The Reserve Bank of India’s (RBI’s) move to align risk weights1 of banks’ Some directors on the Reserve Bank of India board were not fully
exposure to non-banking finance companies (NBFCs) 2 with their convinced with a majority of reasons cited by the government for
respective credit ratings is beneficial for both banks and NBFCs. Firstly, demonetization in 2016, but supported the proposal-which had been
the release of capital for banks should increase deployment opportunities under discussion with the centre for six months in “larger public interest’’,
for banks. Secondly it enhances funding access for NBFCs. So far banks as it provided an opportunity to promote financial inclusion and digital
have had to set aside capital assuming 100% risk weight uniformly for payments.

Minutes of the RBI board meeting at 05.30 pm on November 8, 2016, given to them. In its submissions before the Supreme Court, the regulator
barely three hours before PM Modi announced demonetization, show said that if the companies were ready with a plan, they should place it
that “the directors made the following significant observations”. before the court. The banking sector regulator was responding to the
 Most of the black money is held not in the form of cash but in the power and sugar companies’ allegations that the February 12 circular
form of real assets such as gold or real estate and that this move was based on a ‘one-size-fits-all’ approach without considering the
would not have a material impact on assets”. specific problems of the sector.
Some RBI Directors had countered the government’s argument on
the growth in high denomination notes being much faster than the RBI puts auditors of banks on notice
pace of economic expansion arguing that “adjusted for inflation, In a first-of-its-kind move, the Reserve Bank of India (RBI) is set to hold
the difference may not be so stark”. formal meetings with banks’ auditors on a quarterly basis from April 1,
 “while any incidence of counterfeiting is a concern, Rs 400 crore as making sharper the regulatory spotlight on them. Now these auditors
a percentage of the total quantum of currency in circulation is not won’t be able to claim they only get to have a post –facto and static view
very significant.’’ on banks’ financials.
 On the plus side, it said, ‘ proposed step presents a big opportunity A classified communique from the RBI’s Department of Banking
to take the process of financial inclusion and incentivizing electronic supervision’s audit cell—marked to banks’ chief executives, compliance
payment…’’ departments, and auditors—said the quarterly interaction would cover
areas pertaining to income recognition, asset classification, system to
RBI set to become 10th largest holder in gold track borrowers, dud loans governance and exceptions, suspicious
The Reserve Bank of India, which added 6.5 tonnes of gold to its reserves transaction, technology, cyber security, and frauds. The banking regulator
in January, taking its total holding forming part of its foreign exchange will also seek the detail of specific accounts from auditors. The meeting
reserves to 607 tonnes, is set to become the tenth largest holder of the will be chaired by the RBI’s senior supervisory authority in change of
metal worldwide, displacing the Nerherlands. According to data individual banks though officials of the banks concerned will not be
provided by the World Gold Council, India’s share of gold held globally present, though.
has been rising steadily to stand at 6.2 per cent at the end of 2018 and has Currently, Mint Road holds an annual meeting with auditors— as and
gone up further in January. In fact, most central banks were seen raising when required –but there is no structured format for such interactions
their gold holdings as the dollar was strengthening, as they felt the need through the year. The new format will help the central bank get a real-
to diversify their reserves. Gold is seen as a better hedge against the time sense from auditors on what’s going on in banks. It will also aid the
dollar than any other currency. RBI’s central office to give a heads up to its on-site inspectors, and spruce
up the inspection mechanism, including risk-based supervision-the off-
RBI to infuse Rs.12,500 crore via OMOs site surveillance system.
The RBI said it would infuse Rs 12,500 crore into the system through
open market operations (OMOs). Based on an assessment of prevailing RBI issues guidelines to prevent market abuse
liquidity conditions and also of the durable liquidity needs going forward, The Reserve Bank of India (RBI) came out with guidelines to prevent
the RBI has decided to conduct purchase of the government securities misuse of price –sensitive information by participants in markets for
under OMOs for Rs 12,500 crore on March 14, the banking regulator financial instruments. “Market participants either acting independently
said. OMOs are money market tools to infuse or suck out liquidity from or in collusion, shall not undertake any action with the intention to
the system. manipulate the calculation of a benchmark rate or a reference rate,’’ the
RBI said in a notification. Also, no market participant would carry out a
RBI defends Feb 12 circular, says Firms didn’t submit plan transition, or initiate any action with the sole or dominate intenion of
Reiterating its stand on the February 12 circular, the Reserve Bank of influencing a benchmark rate or a reference rate. About regulatory action
India (RBI) said that the stressed accounts which were affected had not to market abuse, the RBI said market participants indulging in any such
yet come up with a resolution plan, despite ample time having been a activity are liable to be denied access to markets in one or more

instruments for a period that may not exceed one month a time. The phase general elections beginning April 11. The Governor has also called
guidelines have become effective immediately. These directions, the RBI representatives of the All India Bank Depositor’ association. Das has
added, would exclude transactions executed through the recognised stock been meeting industry chambers, non-banking financial companies,
exchanges. Further, the directions would not apply to banks and the bankers, government representatives and rating agencies to elicit their
central government in furtherance of monetary policy, fiscal policy or views on different aspects of the economy and the measures they expect
other public policy objectives. from the central bank.
RBI refuses to relax power biz NPA norms for banks RBI not in favour of changing IDBI Bank’s name
Banks may have to make higher provisions on loans to the power sector The IDBI Bank’s proposal for changing its name has not found any favour
for the quarter ending March 2019 with the RBI saying that its February with the Reserve Bank of India, sources said. The board of IDBI Bank last
12 circular continues to remain in force despite being challenged in the month proposed change in the name of the lender to either LIC IDBI Bank
Supreme Court. Power companies had moved the apex court against the or LIC Bank, following its takeover by Life Insurance Corporation.
RBI circular, which required lenders to proceed against all defaulters According to the sources, the RBI is not in favour of changing the name of
owing more than Rs 2,000 crore if no solution to their default was in IDBI Bank. The board had proposed LIC IDBI Bank Ltd as the first
sight for six months. The matter had moved to the Supreme Court from preference followed by LIC Bank Ltd.
the Allahabad high court where the RBI had stood by its stand and said
that the government had the powers to issue directions to the RBI if it did RBI asks NCLAT to alter IL&FS loan order
not agree. Besides requiring banks to initiate recovery proceedings against The RBI has asked the National Company Law Appellate Tribunal
large defaulters in six months, the February 12 circular did away with all (NCLAT) to clarify or modify its order asking banks not to classify loans
old restructuring schemes. This means that banks will have to make to IL&FS group entities as nonperforming assets (NPAs) without its
provisions. According to RBI rules, an asset would be classified as permission. In the petition, which is expected to be heard by the Tribunal,
‘doubtful’ if it has remained in the ‘sub-standard’ category for a period the regulator has sought to be a respondent in the case and argued that
of 12 months. Any loan that is non-performing for a year is considered as the regulator for banks and financial institutions it has issued
sub-standard.In the case of doubtful assets, banks have to make 100% guidelines for declaring a loan as a NPA and “as part of its duty” is also
provisions to the extent that the loan is not covered by the realisable “bound to monitor” its implementation.
value of the security. In several of the power projects, there is neither fuel
supply nor a power purchase agreement, which leaves the assets with Banking and other banks
little realisable value. According to lawyers, a decision by the Supreme Solvency issue resolved but PSB turnaround to take time
Court on the February 12 circular is expected only next month. However, The recapitalisation of 12 state-owned banks will improve their core
if banks do not make provisions in line with RBI norms as on March 31, capital, crucial for meeting regulatory norms. But, it will take four-five
they will be considered to be in divergence and penalised by the central quarters for them to show stable performance, leading to profitability,
bank. according to bankers. Senior public sector bank (PSB) executives said
banks will look at expanding their loan books, albeit cautiously. The
RBI Governor to hold pre-policy meet with traders on March 26 focus will be on the retail, agriculture and micro, small and medium
Reserve Bank of India (RBI) Governor Shaktikanta Das will hold enterprises (collectively termed RAM) segment where the demand is
discussions on March 26 with representatives of trade bodies and credit robust and risks are spread over a large number of borrowers. The
rating agencies on interest rate and steps to boost economic activities. government announced a Rs 48,239-crore capital infusion into 12 public
The meeting, which comes ahead of the next financial year’s first MPC sector banks in this fiscal year to help them maintain regulatory capital
meet scheduled for April 4, is aimed at broadening the consultation requirements and finance growth plans.
process, they added. The bi-monthly policy, to be finalised by the six-
member Monetary Policy Committee (MPC), assumes significance as it RBI creates new category of NBFCs by merging existing 3
would be announced just a week before the commencement of the seven The Reserve Bank of India (RBI) has merged three categories of NBFCs —

asset finance, loan companies and investment companies — into one question of taking any favour in lieu of the bank loan. CBI has alleged
new category called NBFC-investment and credit company (NBFC-ICC) this Rs 64 crore loan was a bride to the Kochhars.
to ease operational flexibility of these institutions. In its endeavor to replace
entity-based regulations with activity-based ones, the RBI in its last bi- ING sells 3% in Kotak Bank for over $1 billion and exits as lender
monthly monetary policy had decided to harmonise major categories of Dutch financial services major ING Group sold its entire 3.1% stake in
non-banking financial companies (NBFCs) engaged in credit domestic banking major Kotak Mahindra Bank, consisting about 5.8 crore
intermediation into a single category. Also, the central bank has capped shares, through two block deals on the NSE for a total consideration of
the investment limit of deposit-taking NBFC–ICC in any other company nearly Rs 7.2 crore, or a little over $1 billion. Soon after ING Group’s exit
to 20 per cent of its owned fund. However, no limit has been assigned as from the Indian lender, the bourses were informed that Mark Newman,
to how much this category of NBFC can invest in its own subsidiary. the Dutch firm’s director on Kotak Bank’s board, resigned from his post.
“A deposit-taking NBFC-ICC shall invest in unquoted shares of another Since November 2014, after ING sold its Indian arm ING Vysya Bank to
company which is not a subsidiary company or a company in the same Kotak Bank through a share-swap deal, the European financial services
group of the NBFC, an amount not exceeding twenty per cent of its owned group was holding a 6.5% stake in the Indian lender through its arm,
fund,” the RBI said in a statement. Moreover, this new category will attract ING Mauritius Investments. In the last four years ING Group had pared
risk weight from the banks according to the ratings assigned to it by the its holding in Kotak Bank to 3.1%. Average price that ING Group realised
rating agencies registered with Securities and Exchange Board of India from the sale was about Rs 1,227.
and accredited by RBI. At present, all NBFCs attract a uniform risk weight
of 100 per cent on their bank exposures. Only, Asset Finance Companies 13 Indian banks seek disclosure of details on Mallya’s UK properties
(AFCs), The 13 state-owned Indian banks which are trying to claw back the Rs
Infrastructure Finance Companies (NBFCs-IFC), and Infrastructure 10,000 crore that Vijay Mallya owes them by legally seizing assets he
Development Funds (NBFCs-IDF) had the privilege of attracting risk owns in England are facing delays as many of the assets they were hoping
weight in accordance with the ratings assigned by rating agencies. to get their hands on are not in his name. The banks have now made an
application in London’s high court for entities in possession of documents
CBI issues lookout notice against Chanda Kochhar relating to the ownership structures of assets they believe are ultimately
The CBI issued lookout notices against former ICICI Bank CEO Chanda his—which include two superyachts and a string of racing cars—to
Kochhar, her husband Deepak and MD of the Videocon Group Venugopal disclose them. The UK high court had given permission on May 8, 2018
Dhoot, officials said. The move was taken immediately after a case was for the Bengaluru DRT judgment to be registered in English courts,
registered against Chanda Kocchar, Deepak and Dhoot, they said. The allowing HC enforcement officers to seize up to £1.14 billion (Rs 10,499
move is to ensure that none of the accused in the case related to alleged crore) of Mallya’s assets held in England and Wales. The banks have
corruption in clearing loans worth Rs.1875 crore to the Videocon Group moved the high court in London seeking disclosure of the ownership
were able to leave the country the official said. structure of assets, including two super-yachts and a string of racing
cars, they believe ulitmately belong to Mallya
Didn’t Know of husband’s biz dealings, says Chanda to ED
Former ICICI Bank CEO Chanda Kochhar has told investigators she Lenders realise Rs.44,500 crore from Insolvency Resolution of Steel
“wasn’t aware of her husband s business dealings’ with Videocon group Assets: ICRA
MD Venugoapl Dhoot when six high value loans to the group were Of the 11 steel making entities named in the Reserve Bank of India’s list
approved by the bank. According to sources when asked about a Rs-64 of large corporate defaulters, four have completed their corporate
crore loan given by Videocon group to Deepak Kochhar’s company insolvency resolution process (CIRP), with the lenders realising claims
Nurenewables a day after Rs-300 crore loan was disbursed to a Videocon to the tune of Rs 44, 500 crore with an average haircut of 47 per cent.
group company by the banks. Kochhar said she “didn’t discuss her bank Rating agency Icra says that with Essar Steel and Bhushan Power and
related work with her husband or vice-versa and hence there was no Steel attracting interest from domestic and foreign investors, the financial

creditors could realise at least Rs 60,000 crore more as the resolution Fund infusion for PSBs not sufficient for lending growth: Fitch
process of these entities is done. Fitch Ratings said government’s $7 billion (around Rs 48,000 crore) funds
infusion into public sector banks (PSBs) would not be sufficient to support
Microfinance loans grow by 43% YoY in FY19, says Mof Fin: significantly stronger lending growth.
The microfinance loan book of Indian lenders, including Microfinance Fitch estimates that banks will need an additional USD 23 billion (around
institutions, rose by 43 per cent to Rs 1.66 trillion in 12 months to December Rs 1.6 lakh crore) in 2019, after these latest injections, to sufficiently meet
2018. The finance companies (NBFCs-MFI) carrying on micro loans minimum capital standards. Stating that the Indian authorities’ approach
expanded their asset growth by 43.9 per cent to Rs 60,631 crore at end of to the banking sector has clearly shifted towards spurring lending in
December 2018, from Rs 42,137 crore at end of December 2017. These recent months, Fitch said these steps, along with capital injections, have
companies were able to shed the effect of a liquidity crunch in the third eased but not removed capital constraints on state banks’ growth.
quarter, according to Micro Finance Institution Network (MFIN). Harsh
Shrivastava, CEO, MFIN said the microfinance industry continued to Off PCA hook, banks betting on SME loans
show healthy portfolio quality in the third quarter ended December 2018 Exiting the Reserve Bank of India’s (RBI’s) prompt corrective action (PCA)
(Q3FY19). framework may pave way for them to scale up their loan book, especially
to retail, micro, small & medium enterprises (MSME) and the agriculture
ED attaches NiMo’s assets worth Rs.148 Crore sector. Senior executives of banks that have come out of the PCA said
The ED has attached Nirav modi’s Rolls Royce that he had left with a car lenders were engaged in improving credit underwriting standards under
servicing centre before fleeing the country, seven other cars, a big office the framework. The Reserve Bank of India (RBI) has taken out six of the
premise at Kurla and several other assets collectively worth Rs.148 crore 12 banks from PCA. Bank of India (BoI), Bank of Mahar-ashtra and
in the latest action in the money laundering case. Oriental Bank of Commerce (OBC) exited the restrictive regime early this
month. Allahabad Bank, Corporation bank and Dhanalaxmi Bank
Will adopt a different strategy for PCA Banks: Govt followed the suit. The restrictions on recruitment and opening new
We will keep monitoring these banks to keep the system robust and ensure branches are gone. Banks have done a lot of work on rationalization of
that there is no room for deviation from clean banking. We will make branches. Now, they can look at taking fresh talent and expanding
sure these banks continue with better performance and improved network to support business growth.
prudential controls. With Dena Bank being merged with two others, five Rating agency Fitch said exit from the PCA framework frees these banks
PSBs will be left (in PCA) now. There is no target in mind but we will from stringent restrictions of growth. However, leaving the PCA
work with a different strategy to help them move out of PCA. It has to be framework will not remove the constraints on growth imposed by weak
a mixed strategy. Banks like UCO Bank and United Bank have a strong capitalisation.
current account saving account or CASA base. But all the PCA banks
must show improvement. We are looking at them with a different strategy IL&FS lenders to continue making provisions
in a way that their strong areas can become their business models for With limited prospects for recovery of loans to Infrastructure Leasing
prosperity. and Financial Services (IL&FS) and its subsidiaries in the near term,
lenders will continue to make provisions for loans to the group. In
Bank of Baroda to sell NPAs worth Rs.6000 cr February, the National Company Law Appellate Tribunal (NCLAT) had
State-owned Bank of Baroda (BoB) has floated an expression (EoI) of ruled that lenders can’t treat loan exposures as non-performing assets
interest to sell its non performing assets worth over Rs 5,928 crore, (NPAs) without the appellate body’s permission. A two-member bench,
including its Rs 1,838 crore loan to cash-strapped Reliance headed by NCLAT chairman Justice (Retd) SJ Mukhopadhyay, had ruled
Communications. The bank has identified loans to 49 companies, on an application moved by some of its lenders.
including two power firms run by GVK (totalling Rs 357 crore), GMR The order came after the NCLAT on February 11 and said subsidiaries
Chhattisgarh Energy Ltd (Rs 218 crore), and Monnet Power Company (Rs of IL&FS would be divided into three categories — Green (companies that
199 crore), for sale. can meet all debt obligations), Amber (firms that can meet some debt

obligations) and Red (companies that can’t meet any debt obligation). filed against them. The apex court also directed attachment of personal
Senior public sector executives said some exposures were already properties of Sharma and other directors. It said the Economic Offence
declared as NPAs for the third quarter ended December 31, 2018, before Wing (EoW) of Delhi Police can also arrest Amrapali directors — Shiv
the tribunal ruling. That status will continue. Priya and Ajay Kumar in the case.
IL&FS sees management collusion, fraud in IFINs bad loans PNB best among govt banks in implementing reforms agenda
The government-appointed board of IL&FS is planning to initiate criminal Punjab National Bank has topped the list of public sector banks that
proceedings against several defaulters of IL&FS Financial Services (IFIN), have displayed a better implementation of the government’s ‘reforms
charging them of colluding with the erstwhile management. This is after agenda’. It was followed by Bank of Baroda and State Bank of India. The
discovering large-scale irregularities, which includes ever-greening of BCG-IBA report — EASE (Enhanced Access & Service Excellence Index)
loans and funds being routed to entities that are ineligible to borrow. Reforms for Public Sector Banks — was released by Finance Minister
“We have initiated legal action against companies that have defaulted Arun Jaitley. It measures the performance of each state-owned bank on
on due payment to IFIN, after giving them adequate notice to make 140 objective metrics across six themes, including customer
payment. We also propose to take legal action in cases where loans have responsiveness, credit off-take and digitisation. Based on these
been sanctioned in collusion — by concerned committee of office bearers parameters, PNB came in with a score of 78.4 out of 100, followed by BoB
— with the borrowers,” said an IL&FS spokesperson. (77.8), SBI (74.6), Oriental Bank of Commerce (69), Canara Bank (67.5)
and Syndicate Bank (67.1). The report stated that PNB showed a “strong
Grant Thornton report points to IL&FS irregularities in Rs.13k-cr deals performance” in the parameters like customer responsiveness, responsible
Grant Thornton in its report on debt ridden IL&FS Group has identified banking, credit off-take and financial inclusion. Releasing the report,
various financial irregularities in deals with financial implications of Jaitley said such rankings brought about competitiveness and encouraged
over Rs 13,000 crore during special audit conducted by the firm. banks to perform better than their peers.
IL&FS Group, which operates at least 24 direct subsidiaries, 135 indirect At the event, the finance minister said the Narendra Modi government
subsidiaries, six joint ventures and four associate companies, is sitting will continue following a policy of amalgamating public sector banks to
on debt of Rs 94,000 crore. The report has identified 29 instances where create only a few but giant state-owned lenders which are globally
it appears that the loans disbursed to borrowers were in turn utilised by competitive. The government has taken a number of steps to make banks
their group companies to repay the existing debt obligations financially sound and healthy, whether they are legislative steps or
with IL&FS Financial Services Limited (IFIN). important measures like “creating healthy large banks, which can be
These together has a financial implications of Rs 2,502 crore, said the globally competitive”, said Jaitley at an Indian Banks’ Association (IBA)
draft report prepared for all high-value transactions undertaken by IL&FS event. “The government will continue to gradually follow a policy of
Limited and few of its group companies for the period commencing from amalgamation.” In January, the Cabinet had approved of the merger of
April 1, 2013 to September 30, 2018. The report said there are 18 instances Vijaya Bank and Dena Bank into BoB. This will make BoB the third largest
where the Commercial Operations Date (COD) ultimately approved loans PSU bank after SBI and PNB.
to those borrowers who appeared to be in potential stress on the basis
of media reports in the public domain. Loans over Rs 2,400 crore were ED searches Kochhar’s premises
given inspite of a negative assessment by the Risk team, it said. The The Enforcement Directorate (ED) carried out an extensive search
report has indicated 10 major anomalies, grouping together various types operation at the residence of Chanda Kochhar, former managing director
of potentially irregular transactions and the sums involved in each deal and chief executive officer at ICICI Bank, in the Rs 3,250-crore Videocon
type. The aggregate sum of these comes to Rs 13,290 crore. group loan case. Business premises of her husband Deepak Kochhar and
others were also searched in Mumbai and Aurangabad. Confirming the
SC allows arrest of Amrapali CMD, 2 other Directors development, an ED official said the searches were conducted in at least
The Supreme Court allowed Delhi Police to arrest Amrapali group in five locations, including some premises of Videocon
CMD Anil Sharma and two directors forthwith in a criminal complaint group companies. The search would continue over the weekend against

the prime accused for their involvement in disbursing loans to the tune Ravneet Gill takes charge as Yes Bank MD & CEO
of Rs 3,250 crore to Videocon group companies, it is learnt. Ravneet Gill took charge as managing director (MD) and chief executive
The Enforcement sleuths are probing the proceeds of crime which are officer (CEO) of YES Bank for a three-year term, subject to shareholder
suspected to have been used for creating assets. A special team from approval. A career banker with a long innings at Deutsche Bank, Gill
Delhi, assisted by Mumbai and Aurangabad police, has collected certain comes in place of Rana Kapoor, the bank’s co-promoter and former MD
crucial evidences from the location. “So far, we have seized several and CEO. For the near term, Gill will have to improve relations with the
documents — both soft and digital copies and also hard disk and laptops Reserve Bank of India (RBI), which have been strained in recent times.
—from the premises which were being searched today. We are also in He will also need to strengthen the bank’s asset quality and improve
possession of some of the email trails exchanged between the prime governance standards and internal processes.
accused in the case,’’ the official added.
Adhia named BoB non exec chairman
When will you return and face the law? HC asks Mallya The government appointed former finance secretary Hasmukh Adhia as
The Bombay High Court asked fugitive businessman Vijay Mallya when the non-executive chairman on Bank of Baroda, which is merging two
would he return to India and face the ongoing legal proceedings against other state-run lenders — Vijaya Bank and Dena Bank — with itself.
him. A division bench of Justices Indrajit Mahanty and Sarang Adhia, who has been given a three-year term at BoB, is seen to have
Kotwal was hearing a petition filed by Mallya against a city court’s played a crucial role in reworking the strategy of public sector banks
January 5 order declaring him as ‘fugitive’ under the newly-enacted during his stint as financial services secretary. The retired IAS officer
Fugitive Economic Offenders Act (FEOA). Mallya’s lawyer Amit Desai was involved with the setting up of the Banks Board Bureau, which is
said declaring him a fugitive and thereby permitting his assets to be now responsible for HR issues, and had overseen the implementation of
confiscated would only harm the interests of his lenders. the Jan-Dhan Yojana as well as insurance schemes. The government also
renominated three independent directors for one year, including Archana
PMLA court allows banks to liquidate Vijay Mallya’s equity holdings Dholakia (Bank of Maharashtra), Radha Sharma (Allahabad Bank) and
A special court hearing the Prevention and Money Laundering Act Amit Chatterjee (Uco Bank).
(PMLA) cases has permitted the consortium of banks led by State Bank
of India (SBI) to liquidate the fugitive offender Vijay Mallya’s equity Ready to take over BPSL operations by month- end: Jindal
holdings attached by the Enforcement Directorate (ED) with riders.The JSW Steel, which has successfully bid for the stressed assets of Bhushan
move comes after the banks moved the special court in January seeking Power and Steel (BPSL), hopes to take over the operations of the company
release of assets of Mallya and United Breweries (UB), including the by the end of this month. “Committee of Creditors (CoC) has cleared our
pledged and unpledged shares seized by the enforcement agency to bid for acquisition of BPSL. We are waiting for the National Company
realise their best value. The SBI-led consortium expects to make over Rs Law Tribunal (NCLT) to approve the resolution plan. Our team is ready.
13,000 crore from the sale of the fugitive offender’s shares. Hopefully, we will take over the operations of the company by the end of
this month,” said Sajjan Jindal, chairman, JSW Steel.
Over Rs.2 trillion bad loans settled says MCA secretary
Over Rs 2 lakh crore worth of loan defaults have been settled and fresh Banks need to lend Rs.1 trn to meet FY19 MUDRA target
addition of non-performing assets of financial institutions has also come With less than one month left in the current financial, banks will have to
down after the Insolvency and Bankruptcy Code (IBC) came into being in work overtime to meet the Mudra loan lending target of Rs 3 trillion, as
2016, said a top government official. “I do not want IBC to be the first only about Rs 2 trillion have been disbursed till February 22. As on
resort, we wanted it to be the last resort. What is the situation today is February 22, the total loan disbursed under the Micro Units Development
exactly that (last resort),” secretary to Ministry of Corporate Affairs Injeti and Refinance Agency Ltd (Mudra) scheme stood at Rs 2,02,668.9 crore
Srinivas said. as against sanctioned amount of Rs 2,10,759.51 crore, said a government
data. The latest data of the finance ministry said over 3.89
crore Mudra loans have been sanctioned this fiscal so far. According to

the Budget 2018-19, the government intends to disburse loans of up to Rs Act such as giving a child an option to exit from the biometric ID
3 trillion in the current financial year ending March 31. programme on attaining 18 years of age. The amendments make it clear
In 2017-18, the lending at Rs 2,46,437.40 crore had exceeded the target. In that anyone not offering Aadhaar cannot be denied any service, be it
fact, lending under the scheme has exceeded the targets in all previous opening of a bank account or obtaining a mobile phone SIM card. The
fiscal. The scheme was launched on April 8, 2015, for providing loans changes also lay down the procedure for offline verification of an
up to 10 lakh to the non-corporate, non-farm small/micro enterprises. Aadhaar number holder, and confers enhanced regulator-like power on
while presenting the Union Budget 2019-20, the Finance Minister said the Unique Identification Authority of India (UIDAI) to give directions
the government has sanctioned 15.56 crore loans amounting Rs 7.23 as it may consider necessary to any entity in the Aadhaar ecosystem.
trillion under the Mudra scheme, of which an overwhelming majority Every requesting entity to whom an authentication request is made will
were woman beneficiaries. have to inform the Aadhaar number holder of alternate and viable means
of identification and will not deny any service to them for refusing to, or
PSBs may go on fundraising spree to reduce govt stake being unable to undergo authentication.
Public sector banks (PSBs), especially the ones that have come out of
prompt corrective action (PCA) framework, are likely to go on a Ordinance on cards to tweak IBC for cross border cases
fundraising spree, with the twin purpose of raising growth capital and The government is planning to promulgate an Ordinance amending the
bringing down government shareholding in the banks to 75 per cent. The Insolvency and Bankruptcy Code (IBC) and adding a chapter on cross-
dilution of government stake is essential to meet the 25 per cent public border insolvency. This would give comfort to foreign investors in India
float norms mandated by Securities and Exchange Board of India (Sebi). and vice-versa. A cross-border insolvency law empowers foreign creditors
According to a senior official in a PSB, the Sebi had been giving get money lent to Indian corporate entities. Indian companies can also
dispensation to banks to extend the timeline to meet the free float norm claim their dues from foreign companies.Currently cross-border
on a case by case basis. However, for most PSBs a series of capital infusion insolvency provisions are in sections 234 and 235 of the IBC. Since they
has the government stake to more than 90 percent. Most of such banks are not notified yet, they are not enforced.
have sought two years to meet the SEBI norms, said a banker. The options
to reduce government equity include through instruments such as QIP IDBI bank get nod to handle import, exports with Iran
(Qualified Institutional Placement), FPO (Follow on Public Offer) or rights The IDBI Bank has received government nod to handle import and export
issue, among others. But with market sentiments remaining muted, transactions with Iran, a move which would help in promoting two-way
fundraising might not be an easy task, especially for banks that are still trade amid US sanctions on the Persian Gulf nation.
under PCA.
Need land, labour reforms to aid manufacturing, says Chief Economic
Voluntary use of Aadhaar as ID proof for bank a/c, SIM get Prez nod Advisor
President Ram Nath Kovind has given his assent to an ordinance that India’s next government will have to bring in land, labour and financial
allows voluntary use of Aadhaar as ID proof for obtaining mobile SIM sector reforms to improve the productivity of the manufacturing sector
cards and opening bank accounts. The ordinance necessitated because and boost economic growth, India’s chief economic adviser said. “These
the Rajya Sabha could not approve a Bill after its passage by the Lok are the critical areas, we need to work on,” Krishnamurthy
Sabha was promulgated. Subramanian told Reuters in an interview. Several business leaders said
The Cabinet approved the promulgation of an ordinance to give effect to a delay in land acquisition for private factories, decades-old
changes proposed in Aadhaar and two others legislations. The restrictive labour laws and higher borrowing costs discourage many
amendments provide for stiff penalties for violation of norms set for the investors who therefore prefer to build new plants in countries like
use of Aadhaar and violation of privacy. It bans storing of core biometric Vietnam, Thailand, and Bangladesh. The share of manufacturing in the
information as well as Aadhaar number by service providers in cases of economy has grown just 1.5 percentage points in the last three years to
individuals who have voluntarily offered the national ID as a means of 18 per cent, and good exports have shown little sign of a pick up in the
authentication. The ordinance gives effect to the changes in the Aadhaar last five years. India’s economic growth rate has decelerated to a five-

quarter low of 6.6 per cent in the last quarter of 2018, dragged down by licensing and businesses of bank-led units, parity in CEO remuneration
lower growth in consumer demand and government spending, raising package with that of private banks, and a gradual shift to the risk-based
concerns among policymakers and politicians. But brushing aside supervision (RBS) system.A raft of measures will be rolled out once RBI
concerns about an economic slowdown, Subramanian said the present Governor Shaktikanta Das is through with the departmental
government’s economic reforms have contributed to an average annual presentations, which are in their final lap. Multiple high-level financial
growth rate of 7.3 per cent over the past five years. Subramanian, who sources said these guidelines would dovetail into, and form a sub-set of,
was a student of former Reserve Bank of India governor Raghuram the larger regulatory framework for banks and their subsidiaries. This
Rajan at the University of Chicago Booth School of Business. will see the birth of the holding company model once the tax and stamp
duty issues are ironed out by north block because of revenue implications.
LICHFL to offer home loans up to 75 years of age
LIC Housing Finance said it has partnered with India Mortgage Banking Regulator proposes tighter norms for HFCs
Guarantee Corporation ( IMGC) to offer a special loan scheme, under The National Housing Bank has proposed to raise the Capital adequacy
which borrowers can repay the amount till the age of 75 years. Under the ratio (CAR) for housing finance companies (HFCs) and cap their
new partnership, IMGC will provide LICHFL with mortgage guarantee, borrowing to 12 times their net worth, after the IL&FS flasco exposed
which is a kind of financial product that compensates financial weaknesses in the profile of some HFCs. This is to be done in a phased
institutions for losses that may arise from a default on a mortgage loan, manner by March 31, 2022. At present, HFCs have to maintain a minimum
LICHFL said. This strategic tie- up will help LICHFL to accommodate CAR, consisting of Tier-I and Tier-II capital, or not less than 12 percent
more home loan borrowers, increase market penetration besides while their borrowings are capped at 16 times their net worth.
combating NPAs, it said. “It will also help LICHFL accommodate more
home loan buyers, improve eligibility criteria, extend repayment period NHB proposes higher capital need for HFCs
and ease restrictions on profile of applicants, who face rejection related The National Housing Bank (NHB) has proposed to increase the capital
to work profile, work place, credit history amongst other reasons which adequacy ratio for housing finance companies (HFCS) to 15% in a phased
may be unspecified by lending institutions,” it said. Speaking about the manner by March 2022. The current ratio for HFCS stands at 12%, which
tie- up, Vinay Sah, MD & CEO, LICHFL, said the partnership with IMGC will be increased by 1 percentage point over the next three years.
will help add more home loan borrowers and mitigate risk across lending “Being financial entities, HFCS are exposed to risks arising out of counter-
categories. % Tie- up with IMGC will help LICHFL to accommodate more party failures, funding risks and risks pertaining to liquidity and
home loan borrowers, increase market penetration, besides combating solvency, as any other financial sector player. There is thus a felt need for
NPAs a review of the regulatory framework of HFCS,” NHB said in a statement.
IMGC will provide LICHFL with mortgage guarantee to compensate The housing finance regulator has also reduced the borrowing limit of
financial institutions for losses HFCS from 16 times of net owned funds to 12 times by March 2022. NHB
“We will also be able to tap into the large segment of employees working has sought comments on the regulatory changes by 31 March, 2019.
in SMEs, MSMEs, small entities and self- employed individuals who
have so far been out of the ambit of prospective home loan borrowers. World Bank to give $250-mn loan to boost rural income
Through this LIC HFL would support the vision of Housing for All by The World Bank will provide a $250-million loan for the National Rural
2022 of the GoI,” Sah said. Mahesh Misra, CEO, IMGC, said: “IMGC and Economic Transformation Project (NRETP) to help women in rural
LICHFL teams have worked closely to design customised products that households develop viable enterprises for farm and non-farm products.
are aligned to LICHFL’s end user segment and calibrated expansion An agreement in this regard was signed between the World Bank and
strategy.” the Government of India. “A key focus of the project will be to promote
women-owned and women-led farm and non-farm enterprises across
NBFCs face new governance, exposure code value chains; enable them to build businesses that help them access
The Reserve Bank of India (RBI) is drawing up a new code for non- finance, markets and networks; and generate employment,” Wold Bank
banking financial companies (NBFCs) which envisages curbs on the said in a statement. NRETP is an additional financing to the $500-

million National Rural Livelihoods Project (NRLP) approved by electronic know your customer(e-KYC) transaction .Each authentication
the World Bank in July 2011. The $250 million loan has a 5-year grace will cost Rs 20 and a yes/no transaction will bear a charge of 50 paise.
period, and a final maturity of 20 years.
Retail payments via BHIM declining
BOB merger likely to Create outsourcing opportunity of Rs. 1000 cr Retail payments through the Aadhaar linked Bharat Interface for Money
The merger of Bank of Baroda, Vijaya Bank and Dena Bank will create IT app are declining more than two years after the Centre announced it.
outsourcing opportunity of Rs.1000 crore, in terms of integrating the According to the data from National Payments Corporation of India
different technology stacks used by these banks. according to several (NPCI), retail payments on the NPCI platform using BHIM, based on the
places in the know, while existing vendors Infosys and Hewlett-Packard Unified Payment Interface, declined from a peak of 18.27 million
have a fair change of clinching this deal, global major IBM and Accenture transactions, valued at Rs.82.06 billion in October 2018, to nearly 12.83
are also seen as strong contenders to execute the projects. million transactions, valued at $56.24 billion in February.
MSME Created 1.5 Cr jobs a year Since 2014: Survey Detailed liquidation rules in the works to save viable firms: IBBI
A survey conducted on 105,347 micro, small and medium enterprises chairman
firms (MSME) has a shown a growth of 13.9% in net jobs created over the A detailed framework for sale of a corporate debtor as going concern is
last four years, at 3.3% per annum. being worked out. Going concern principle is the assumption that an
The survey conducted by the Confederation of Indian Industry (CII) said entity will remain in business for the foreseeable future after a resolution.
the overall job creation works out to 13.5 to 14.9 million per annum given “We will make all efforts to save a viable company. For instance, if a
that the total workforce size according to the Labour Bureau is 450 million company is actually viable but a wrong decision has been made, it will
annum. be given another opportunity to rectify the mistake,” said M S Sahoo,
chairperson of the Insolvency and Bankruptcy Board of India. “It will be
Citi set to name top APAC executive as India CEO an addition to the existing regulation”.
Citigroup is set to name Ashu Khullar as the next CEO of its India unit. He was speaking on the sidelines of an event on the Insolvency and
Khullar is currently the Asia Pacific head of the Wall Street bank’s capital Bankruptcy code (IBC) organized by the Indian chamber of commerce
markets origination team, based in Hong Kong. Khullar will succeed and the Society of Insolvency Professional of India. There have been a
Pramit Jhaveri as the head of the largest and the most profitable foreign number of cases where courts have ruled in favour of liquidation as a
bank in the country. Jhaveri is moving on as vice chairman of banking, going concern, to protect jobs. Sahoo said the regulations provide the
capital markets and advisory businesses in the region. He has been the option for sale of a corporate debtor as a going concern and sale of business
India CEO since 2010. of the corporate debtor as a going concern. “Today, companies are going
into liquidation for other considerations. But the objective of the law is
Raters play critical role in giving stability to financial sector: das resolution,” he said.
Reserve Bank Governor Shaktikanta Das said credit rating agencies play The recent supreme court order upholding the IBC also mentions that the
a critical role in the stability and efficient functioning of the financial preamble of the law does not refer to liquidation, which is only availed of
sector. Das held a meeting with top officials of credit rating agencies as as last resort. Even in liquidation, the liquidator can sell the business of
part of stakeholder consultation exercise. the corporate debtor a going concern, it mentioned. During the October-
December quarter of 2018,78 corporate Insolvency Resolution Processes
e-KYC charges to make services costly :Industry (CIRPs) ended in liquidation, taking the total number to 302. Also ,51.5
The government’s decision to charge private companies for Aadhaar per cent of CIRPs which were closed in liquidation, as compared to
authentication has not gone down well with the industry, which argues 13.5per cent ending with resolution plan. ‘We are working to ensure
that the move will make services more expensive for end-users. that we stick to the timelines, ’’said Sahoo.
The Unique Identification Authority of India (UIDAI), the agency that He said the issues being litigated on were getting sorted. When can one
administers Aadhaar, said it will begin charging private firms for go under (section)12 A whether a promoter can submit a resolution plan

–these issues are getting out, and mostly from the SC, which means there Bank has been under the prompt corrective action framework of RBI that
is a finality. Once all those issues are sorted, most transactions will bans it from corporate lending and branch expansions, salary hikes and
happen on time.’’ other regular activities. However, the lender has charted out a revival
The Board was also conducting programmes for resolution professionals strategy to bring banking and insurance under one roof, along with its
and impressing on them to use technology to expedite the process. When new owner Life Insurance Corporation (LIC). Last week, IDBI Bank
you start something new, there are hiccups but, going forward, all cases informed about the appointment of LIC as a corporate agent under the
will happen on time. There can be rarest of rare cases (as exception).’’ As bancassurance channel. In the long term, the bank and LIC will have a
of December end, the 898 ongoing CIRPs, around 31 per cent had breached common investment strategy, use each other’s resources like real estate,
the 270-day timeline for completion of the resolution process. Rudra commercial and residential space, bank branches, among others, the bank
Chatterjee, President of the ICC, said the IBC had shifted the balance of had said. Both entities will also undertake rationlisation of the common
power from borrowers to the financial creditors. And, that the code had subsidiaries in mutual funds and life insurance arms ,as per the strategic
helped in unlocking of funds from non-performing assets. plan.
Deepak Kochhar may be probed for benami assets PSBs, private banks divided over linking rates to external benchmark
The income-tax department’s preliminary probe into the ICICI-Videocon Even as public sector banks (PSBs) gear up to follow the State Bank of
loan case has not yielded anything concrete to establish allegations of India’s (SBI’s) move to link rates to an external benchmark, private banks
tax evasion against Deepak Kochhar’ NuPower Renewables. However, seem wary of the transition. While the Reserve Bank of India (RBI) wants
taxmen are thinking of investigating some of Kochhar’s properties under banks to link their asset side (loans) to the external benchmark, banks
the Benami Transactions (prohibition) Act. will need to link the liability (deposits) side to the benchmark as well in
order to stabilise their interest margins,” said Karthik Srinivasan, group
IRDAI seeks proposal from LIC to cut its equity stake in IDBI head, Icra. While the RBI has not mandated banks to switch to external
Insurance regulator IRDAI said it has sought proposal from Life Insurance benchmarking it had proposed that they link all new floating retail loans
Corporation of India (LIC) for paring its shareholding in the recently acquired to an eternal benchmark from April 1. Transmission is a double-edged
controlling stake in IDBI Bank. Insurance Regulatory and Development sword lending rates to go down, the deposit costs will also have to
Authority of India (IRDAI) stipulates that insurers are allowed to hold only comedown. Many customers depend on the interest received from fixed
up to 15 per cent stake in any listed entity. But LIC, with a special dispensation deposits. So, the net advantage for customers won’t be much Linking to
from IRDAI, holds more than the limit in some state-run banks. Besides, the external benchmark does not necessarily mean a lower cost to borrowers.
Reserve Bank permits a ceiling of 15 per cent for promoter stake in a private In February, the RBI said it plans to Introduce a regulatory frame work
sector bank. “We will decide on the timeline (for stake reduction by LIC in for financial benchmarks to improve the governance of the financial
IDBI Bank). We are not leaving it to them. I have asked them (LIC) to give a products and markets regulates by the Reserve Bank.
proposal and after that we will take a decision,” IRDAI Chairman Subhash While the RBI has been vocal about the lack of transmission of rate cuts
Chandra Khuntia said. by banks and believes linking lending rates to external benchmarks would
bring greater transparency, the banking industry body does not agree.
IDBI Bank categorised as private sector lender Last month, an Indian Banks’ Assciation-Ficci survey of bankers flagged
IDBI Bank has been categorised as a private sector lender following the concerns on pricing loans and deposits using an external benchmark. It
acquisition of majority stake by Life Insurance Corporation, RBI said. In would bring volatility in interest rates because there could be frequent
January, LIC completed the process of picking up a controlling 51% stake changes in customers’ monthly instalments, it said. The survey also stated
in the nearly crippled IDBI Bank. “IDBI Bank has been categorised as a that banks could keep spreads higher in the case of high volatility in
‘private sector bank’ for regulatory purposes by Reserve Bank of India benchmarks.
(RBI) with effect from January 21, 2019, consequent upon LIC acquiring The RBI data shown that the country‘s system credit growth has
51% of the total paid-up equity share capital of the bank,” RBI said. IDBI continued to out pace deposit growth. This has resulted in banks offering

higher deposit rates in order to compete with each other. This also issuing shares to employees under Employee Share Purchase Scheme
restricted the ability of banks to transfer rate cuts to borrowers, without (ESPS). The bank issued 6,25,52,188 shares of Rs 10 each to eligible
impacting their interest margins. employees. It offered a discount of 24.28 per cent on the applicable price
India ratings and research expects deposit competition to intensify in to the employees and about 94.70 per cent of total employees participated
the coming years, “if credit growth continues to out pace deposit growth, in the scheme, it said.
then scheduled commercial banks reliance on bulk deposits is likely to These shares are issued with a lock-in period of one year, it added.
increase. This could lead to a higher cost of funds along with increasing
volatility in the asset-liability structure of banks,” it said. With banks Deposit crunch to halt pvt banks’ market grab
using deposits as a means to gain market share, it seems unlikely that Private sector banks have run out of steam in their bid to grab market
they will shift to an external benchmark unless mandated. share from their state-owned peers because of a deposit crunch. The last
quarter saw private lenders increase their market share in loans grow by
Nirav Modi diverted Rs 934 crore to personal a/cs just 0.2% as their credit deposit ratio soared to well over 90%, putting
Diamond service provider Nirav Modi diverted Rs 934 crore into his constraints on growth.
personal account and two other accounts in the names of his spouse and “Over the last eight quarters, private banks have improved their market
father, says the supplementary chargesheet filed by the Enforcement share from 26% to 31%. But in the quarter ended December 2018, their
Directorate within the Mumbai special court. Of this, Rs 560 crore ($80 share has increased by only 0.2%. While they will continue to grow at a
million) has been credited into his account, Rs 200 crore ($30 million) high rate, with public sector banks (PSBs) coming back into the arena the
into spouse Ami’s account and Rs 174 crore ($25 million) into his father market share gain will be limited,” said Anil Gupta of financial sector
Deepak Modi’s non-public checking account maintained abroad, officials ratings ICRA. The tide is expected to turn in favour of PSBs next year
stated. Modi is the important person accused with the Rs 6,500 crore rip- when their bad loan provisions are expected to be lesser than operating
off through which Punjab National Bank (PNB) used to be duped via profits.
fraudulent letters of undertaking (LoU). According to the rating agency, PSBs have lost out in the last three years
because capital constraints have forced them to shrink their loan books,
Niravs assets sale Proceeds to be deposited in FD a/c with SBI while their private rivals grew. However, since private banks have not
With the Enforcement Directorate submitting a no objection certificate, the been able to grab a commensurate share in deposits, their credit deposit
assets of Nirav Modi, the Punjab National Bank (PNB)scam accused who ratio has soared to over 90% as against below 70% for public sector banks.
was arrested in London, will be disposed of by income –tax department In FY20, PSBs are expected to come back strong thanks to the capital
soon beginning with the sale of 68 of the 171 painting and 11 luxury vehicles infusion by the government and lifting of lending restrictions on five
seized by the agency earlier . banks placed by the RBI under its prompt corrective action (PCA)
The proceeds from sale of assets Will be deposited in fixed deposit account framework. Ideally, banks need to have a Credit Deposit Ratio of around
to be opened in the State Bank Of India with a copy of the receipt to be 71%, considering that 29% of deposits have to be locked in government
submitted before a special PMLA (prevention of Monday laundering Act) bonds and cash reserves with the RBI. PSBs have reported losses in excess
Court. of Rs 42,900 crore in the first nine months of FY19 which are expected to
cross Rs 65,000 crore for the whole year.
Nirav Modi held in London, bail denied
Fugitive billionaire jeweller Nirav Modi, wanted by authorities over a Interchange rate for ATM to be hiked by by Rs 1.5 to Rs 2
$2-billion loan fraud at state-run Punjab National Bank (PNB) was The interchange rate, which has been held firm for six years, is set to be
remanded in custody after appearing before a British court, after his raised by Rs 1.5 to Rs 2 from the current rate of Rs 15
application for bail was rejected. with banks and ATM players having arrived at a consensus. The
development is expected to boost ATM deployment in the country, which
Bank of India raises Rs 660 crore by selling shares to employees has been low since demonetisation. Inter-change, the rate charged
State-owned Bank of India (BoI) said it has raised Rs 660.80 crore by by ATM operators for every transaction, is decided by a National

Payments Corporation of India (NPCI) steering committee, which agency said. Some banks can finance much of their capital needs through
primarily comprises banks. sale of non-core assets, whereas lower growth in credit in banks under
prompt corrective action can reduce capital requirement for FY20.
HDFC Bank m-cap crosses Rs 6L cr
HDFC Bank has become the third lised entity to achieve a marketcap of
Rs 6 Lakh crore after Reliance Industries and TCS. Shares of the country’s
largest private bank gained 2.6% to hit an all-time high of Rs 2226. This
resulted in the bank reaching nearly Rs 6.1 lakh crore for the first time
,which makes it more valuable than all the listed public sector banks put
together .
Allahabad Bank looks to raise Rs 500 crore via non-core asset sale
Allahabad Bank expects to raise about Rs 500 crore from the sale of its
non-core assets. These assets include the bank’s 28.52 per cent stake in
Universal Sompo General Insurance, and about 12 properties across
India. The bank has recently come out of the Prompt Corrective
Action (PCA) framework. According to S S Mallikarjuna Rao, Managing
Director & Chief Executive Officer of Allahabad Bank, the lender expects
*Estimates
to raise about Rs 200 crore from the sale of its property at Pedder Road in
Mumbai. CVC finds many flaws in sale of bad debt by banks Review Points to
The bank had recently invited bids for the property, but did not receive several lapses in deals, Govt orders scrutiny
any as the reserve price was on a higher side at around Rs 220 crore. It In high season for sale of bad loans to asset reconstruction companies
will again invite bids, said Rao. It expects to raise about Rs 250-300 crore (ARCs), the Central Vigilance Commission (CVC) has pointed to several
through the sale of its properties. irregularities in transactions involving non-performing loan accounts,
prompting the government to initiate action against errant executives.
Bandhan Bank gets RBI nod for acquiring Gruh Finance “Instances have come to the notice of the commission, wherein prudence
The Reserve Bank has by its letter dated March 14, 2019, conveyed its no has not been observed, while taking decision on sale of stressed asset to
objection for the voluntary amalgamation of Gruh Finance Ltd into and ARCs. Irregularities have been noticed in estimating the value of
with Bandhan Bank, subject to compliance with the terms and conditions underlying securities (which) is much higher that the value at which the
therein, the bank said in a regulatory filing. Gruh Finance, the affordable assets were sold to ARCs, post-sale realisation from assets, management
housing finance arm of HDFC Ltd, was taken over in January’ 19 by fees and expenses charged by ARCs, etc,” the CVC said after an analysis
Kolkata-based Bandhan Bank in a share-swap deal. of 302 cases of over Rs 50 crore from 2014-15 to 2017-18.

Reduced NPA to drive solvency of public sector banks, says Icra Mastercard concerned India data rules may hinder fraud detection
Credit rating agency Icra says reduced net non-performing assets will Mastercard is concerned that India’s strict data localization rules could
drive “considerable improvement” in solvency of public compromise its ability to detect frauds and money laundering in the
sector banks (PSBs). Slippages will reduce during FY20 and reach levels domestic payments system .Storing customer data exclusively in India
of 1.9-2.4%, which is acceptable. The government’s capital infusion of Rs without creating mirror sites overseas is risky because “it takes away the
1.91 trillion into the PSBs during 2018 and 2019 augurs well with their capability to see the broader world,” said Mastercard’s Chief Product
growth, while the total capital requirement to support growth rate of 7- Officer Michael Miebach. However, he said the U.S. firm intends to comply
9% by these banks for FY20 would be Rs 54,000-77,000 crore, the rating with the new rules despite missing last year’s deadline to localize all its
Indian data. ”As an industry, we need to respect the reality, and the

reality is that’s where the country is going,” Miebach said in a recent inside portions, and also show at least one director. All these would help
interview. authorities identify cases of multiple shell companies using one building.
2nd generation reform were introduced by Modi govt: FM Indra Nooyi joins Amazon board of directors
The Narendra Modi government” systematically and consistently’’ PepsiCo’s India- born former CEO Indra Nooyi has joined Amazon’s
introduced the much-needed second generation reforms, finance minister board of directors, the online retail giant has announced. Nooyi, who
Arun Jaitely said as he highlighted several game-changing decisions. stepped down as CEO of Pepsico in October last year, is the second women
He highlighted taxation reforms, measures to curb black money, to be added on the Amazon’s Board of Directors.
enactment of insolvency and Bankruptcy code, demonetization steps to
check inflation, promoting cooperative federalism, rollout of Ayushman CSR spend tops Rs.50K cr; need better framework:
Bharat schme, social sector investment and infrastructure development Corporate social responsibility (CSR) spends by companies have touched
as the governmant’s game changing decisions. Rs 50,000 crore in the four financial fiscals to 2018, but but there is a need
to improve the framework, a report said. The Companies Act, 2013 makes
Bank of America bets big on India’s bad debt pile, buys its biggest distressed it mandatory for businesses with Rs 500 crore in annual revenues to set
asset in India aside 2 percent of their profit for social good or affirmative action. The
Bank of America Corp. has bought its biggest distressed asset in India, adding cumulative spending from FY15-FY18 has topped Rs 53,000 crore, and
to a growing trend of foreign investors diving deeper into the country’s includes Rs 34,000 crore by listed entities, according to a Crisil report
massive pile of bad debt. A group of investors led by the U.S. bank have paid
33 billion rupees ($479 million) for soured loans of a beleaguered Indian Norms for liquid MFs, open offer waiver tightened
maker of cast iron pipes, according to people familiar with the matter. The The Securities and Exchange Board of India (Sebi) tightened the valuation
group, which includes local bad debt buyer Assets Care & Reconstruction methodology for liquid mutual funds (MFs) and did away with the open
Enterprise, bought distressed loans of Jayaswal Neco Industries Ltd., with a offer exemption given to those seeking to acquire assets undergoing
face value of 47 billion rupees. Lenders led by State Bank of India sold the insolvency resolution. To make sure liquid schemes reflect the underlying
debt, taking a haircut of 30 per cent on the all-cash deal. As India battles with portfolio risks, Sebi has said all debt papers with maturity of 30 days or
the worst non-performing loan ratio among the world’s major economies, more to be marked to market. Earlier, fund houses didn’t have to do so for
foreign investors are vying for a piece of the $190 billion pile of soured and securities that had less than 60-day maturity. The move comes in light of
stressed debt. the redemption risks faced by liquid schemes after the Infrastructure
Leasing & Financial Services (IL&FS) crisis rattled markets. Restricted
Finance, SE open offer exemptions to only scheduled commercial banks and financial
Corporates institutions in debt restructuring cases. The exemptions will not be
OYO forms JV with Yahoo to enter Japan available for acquisitions of shares by “persons” other than lenders in
Country’s largest hotel chain OYO said it had entered into a joint venture case of allotment by the target Company or purchase from lenders. The
(JV) with Yahoo Japan Corporation to foray into the housing rental market move would impact those corporates who are undergoing resolution
in Japan, targeting the young population. through the asset reconstruction companies (ARCs).
MCA tightens compliance regulations for companies
Every company incorporated till December 31, 2017, has to disclose its Economy
particulars and registered office in a new return, a move aimed at CEA bats for Nayak panel suggestions RBI
tightening the noose around shell firms. Experts say the move would Chief Economic Advisor (CEA) Krishnamurthy Subramanian advocated
increase the compliance burden on companies and be good for the taking forward the P J Nayak committee’s recommendations on
economy in the long run. Companies will have to give details of their governance reforms in public sector banks (PSBs), saying until these
location, photographs of their registered office, displaying external and reforms were institutionalised, the risk in the sector would persist.

Cheer for homebuyers Non-food credit grew 13.1% in January: RBI
The Goods and Service Tax (GST) Council at its meeting reduced the GST Non-food credit demand rose by 13.1 per cent in January, as against a 9.5
rate on under-construction houses. For flats priced more than Rs.45 lakh, per cent increase during the same period last year. Non-food credit for
the new GST rate applicable form April 1, 2019, stands at 5 percent, January stood at Rs. 82 trillion, according to data released by the Reserve
against 12 percent currently. Bank of India (RBI). Credit to non-financial banking companies (NBFCs)
remains the fastest growing sector for deployment of bank credit, despite
12mn jobs a year created in formal sector: Modi the liquidity crisis. Credit to NBFCs saw a 48.3 per cent rise in January,
Prime Minister Narendra Modi said that formal sector alone has against a growth of 16.1 per cent in the same month in 2018.
generated 12 million jobs in a year in the past four years. Rolling out Credit growth for the industry increased by 5.1 per cent in January 2019.
statistics, he said 5,00,000 people joined the Employees’ Provident Fund Credit to medium enterprises grew the most by 10.9 per cent over the
(EPF) a month during September 2017- November 2018. Similarly, previous year. Credit growth for services remained strong at 23.9 per
Employees’ State Insurance Corporation (ESIC) saw 10,000-11,000 cent in January 2019. Personal loans grew at 16.9 per cent in January
subscribers a month during this period. “Even if one assumes there is 50 2019, with housing loans and credit cards showing the strongest growth.
percent overlap between EPFO and ESIC data, 1 million people joined Credit to agriculture and allied activities increased by 7.6 per cent in
the formal sector in a month. This means 12 million jobs were created in January.
the formal sector in a year in these four years,” he said.
Agri growth seen slipping to 2.7% versus 5% in FY18
Fiscal deficit already 21.5% over yearly target India’s wheat production in the 2018-19 rabi season is expected to be
With indirect tax collections remaining sluggish in the first 10 months of 99.12 million tonnes, marginally less than 99.7 million tonnes last year,
the current financial year, the Centre’s fiscal deficit at the end of January according to the fourth advanced estimates. Overall foodgrain
stood at Rs 7.7 trillion, or 21.5 per cent more than the revised target of Rs production too is projected to fall slightly to 281.37 million tonne, as less
6.34 trillion, showed the data released by the Controller General of rains brought down output.
Accounts (CGA). To contain the deficit, the axe has fallen on capital
expenditure, which contracted by 35 per cent in January alone. Capital GST mop-up slows to Rs.97,247 Cr in Feb
expenditure has been contracting since September 2018. The government The Goods and Services Tax (GST) collections fell to Rs.97,247 crore in
had earlier pegged the deficit at Rs 6.24 trillion for 2018-19 or 3.3 per cent February from Rs.1.02 trillion in January due to rate cuts announced for
of GDP. In the interim Budget for 2019-20, the deficit was revised upwards over 20 items. This was the eight month when the GST collections could
to Rs 6.34 trillion or 3.4 per cent of GDP. not hit the Rs.1 trillion mark. Experts said the reduction of rates for 23
items that took effect from January 1,2019 could have affected revenue
Q3 GDP growth moderates to 6- quarter low mop-up to some extent. The February collection represents the revenue
Growth in gross domestic product (GDP) slowed to a six-quarter low of collected for business activities in January 2019.
6.6 per cent in the third quarter (Q3) of 2018-19 (FY19) due to subdued
expansion in agriculture, manufacturing, and government expenditure, India to grow at 7.3 percent in 2019,2020: Moody’s
the data released by the Central Statistics Office (CSO) shows. Investment Indian economy is expected to grow at 7.3 per cent in the calendar year
activity, however, continued to grow at a healthy pace. The CSO lowered 2019 and 2020, and the government spending announced ahead of
estimate of economic growth for Q1 and Q2 of FY19 to 8 per cent and 7 elections this year which will support near-term growth, Moody’s said.
per cent, respectively. As a result, the forecast for the full-year growth has The US-based rating agency said that the country is less exposed to a
been revised downwards to the lowest at 7 per cent in FY19. Because of slowdown in global manufacturing trade growth than other major Asian
high growth in Q1, manufacturing is projected to show higher growth economies and emerging markets and is poised to grow at a relatively
this year compared to the previous year. stable pace in the two years. “We expect India’s economy to grow around
7.3 per cent in both years (2019, 2020),” Moody’s said

Forex reserves up by $944 mn to $399.21 bn came 12 days after the Pulwama attack claimed 40 CRPF troopers. Twelve
The country’s foreign exchange reserves increased by USD 944.7 million Mirage-2000 fighters, backed by four Sukhoi-30MKI jets for ‘air defence’
to USD 399.217 billion in the week to February 22, due to increase in and two AWACS (airborne warning and control systems) aircraft as ‘eyes
foreign currency assets, according to the RBI data. and ears of the strike package’, fired a mix of long-range Spice-2000
precision-guided bombs and AGM-142 (Popeye-2) missiles to destroy
Centre to Compress Spending by $60 k cr the Balakot facility, which housed over 300 terrorists, trainers and
The government is compressing around $60K crore worth of expenditure, handlers.
as it looks to meet a challenging fiscal deficit target of 3.4 per cent of gross This was the first time after the 1971 Indo-Pak war that IAF fighters
domestic product for 2018-19(FY 19) deliberately crossed the LoC to pound targets. “The initial plan was not
to cross the LoC because the JeM facility is just about 65km away from
National there as the crow flies, and our weapons had significant stand-off ranges
PM Modi transfers Rs.2,021 crore to over 10 million farmers of 60-80km,” a top defence source said. But five to six Mirage-2000s did
Prime Minister Narendra Modi handed over Kisan Credit Cards to a few cross the LoC by over 10km to let loose weapons from 3.27am onwards
farmers in Gorakhpur at the launch of arguably the world’s largest farm for a few minutes before turning back. All aircraft touched down at home
sector scheme, titled the Pradhan Mantri Kisan Samman Nidhi Yojana bases soon after 4 am.
(PM-Kisan). With a click of the button, he transferred Rs.2021 crore to the
bank accounts of more than 10 million beneficiaries in the first instalment IRCTC launches its own payments aggregator iPay
under PM-kisan. The Indian Railway Catering and Tourism Corporation (IRCTC) has
launched its own payment aggregator system, IRCTC iPay, a step which
90 crore registered to cast their votes for LS elections will help promote government’s Digital India initiative.
As many as 89.9 crore electors including 1.6 crore new voters aged 18-19 A statement from the railways’ catering and ticketing arm said the
years, are registered to vote in the upcoming general election. exclusive digital payment gateway will provide an improved online
digital payment convenience and ease of doing business to passengers
Goods and Services exports to cross $500 bn: availing online travel related services through the IRCTC website.
The country’s goods and services exports during the current financial
year would cross USD 500 billion despite challenges being faced on the Ujjwala boost: in Fy19, LPG connections jump 45%
global trade front, Commerce and Industry Minister Suresh Prabhu said. The push for clean energy through the Pradhan Mantri Ujjwala Yojana
Prabhu said that exports are recording healthy growth so far and this (PMUY) has led to a record 40.7 million new liquefied petroleum gas
financial year, “we will record the highest-ever growth rate”. The (LPG) connections being added in the current fiscal year (2018-19 or
country’s exports for goods and services will “cross USD 500 billion” FY19). This is a jump of 45 percent over 2017-18 (FY-18).
this fiscal, he said.
E-commerce to play major role in India growth story
SC makes effort to work out compromise in Ayodhya case E-commerce has revolutionised the retail sector in India and will play a
Nearly 25 years after it first voiced “negotiated settlement” as the best major role in the country’s growth story going forward, Niti Aayog CEO
way for amicable resolution of the vexed Ayodhya land dispute, the Amitabh Kant said. He further noted that driven by the growth in India’s
Supreme Court decided to explore this possibility. retail market, the country’s GDP will also witness an increase and result
Air Strike Deep Inside Pak, First Since 71 war in more job opportunities. “E-commerce market has brought a revolution
India conducted pre-dawn aerial strikes on a major Jaish-e-Muhammed in India’s retail sector and nobody can stop it now,” he said at an event
terror training facility at Balakot in Pakistan’s Khyber Pakhtunkhwa here. According to Kant, India is currently growing at over 7 per cent and
region, breaking free of its self-imposed shackles in countering the cross- if the country has to grow at 9 per cent, then e-commerce market will have
border proxy war fuelled by its hostile neighbour for decades. The strikes to play a major role.

Real estate firms move top court against ‘financial creditor’ tag for 9 Rajkot
homebuyers 10 Dewas
Real estate companies are said to have approached the Supreme
Court challenging the government’s decision to grant homebuyers the Government doubles income tax exemption for gratuity
status of financial creditors. In their petition before the top court, these real The government said that it has doubled the income tax exemption limit
estate companies have claimed that granting financial creditor status to for gratuity to Rs 20 lakh a move that will benefit lakhs of salaried
all homebuyers and real estate allottees will complicate the situation as employees, who are now retired over the last 12 months.
they will now have to accommodate all such people to the committee of
creditors. “These companies have been fighting battles on many fronts. SC sends Ayodhya Case for mediation
Adding homebuyers to the mix has only added confusion. In fact, if they The dispute for ownership of the 2.77-acre land in Ayodhya has defied
are not part of the legal process, the chances of them getting at least their previous efforts for a negotiated settlement, but a five-judge bench headed
money back is much more”. The Parliament had, on August 11 last year, by Chief Juctice Ranjan Gogai said a panel led by former SC Judge F M I
passed a Bill to amend the Insolvency and Bankruptcy Code 2016, Kalifulla and comprising spiritual guru Sri Sri Ravi Shankar and well-
allowing homebuyers to be treated as financial creditors. known mediator Sriram Panchu could conduct a dialogue with the
contending parties.
Loan waiver effect: Karnataka fiscal deficit up 60% in 2 years
Karnataka has the fourth largest fiscal deficit among all states in 2018- Election Commission announces 7-phase election from April 11; results
19, as per RBI estimates. In just two years, the deficit has increased by on May 23
about 60% and the state has moved up the deficit ranking from 8th to 4th Voting to elect the 17th Lok sabha (LS) will be held over seven phases
due to the farm loan waiver. from April 11 to May 19 and the counting of votes will take place on May
However, as a proportion of the gross state domestic products (GSDP), 23, the Election Commission (EC) said.
the deficit is 2.7% well within the accepted norm of 3%. So, while the
deficit will make the government borrow more, the borrowing is seen to Elections won’t stop economic reforms, says CEA
be at prudent levels. India will continue to implement economic reforms irrespective of who
wins the Lok Sabha Elections 2019 beginning next month, chief economic
Indore hits hat-trick by grabbing the ‘cleanest city’ adviser Krishnamurthy Subramanian said, seeking to reassure investors
Bhopal bags the cleanest capital award while Indore, Ujjain and Dewas about policy continuity in one of the world’s fastest-growing economies.
from Madhya Pradesh besides Ahmedabad and Rajkot from Gujarat and As reforms in the past few years—from tax to inflation targeting—start to
Mysuru from Karnataka make it to the list of top 10 Swatch urban areas manifest, the Indian economy’s potential growth rate will rise by 50 basis
under more than one lakh population category according to the latest points to 7.5% to 8%, Subramanian said in an interview in New Delhi.
nationwide survey.
International
Top 10 Municipal Areas FATF to keep working with Pakistan to curb terrorism financing
Rank Areas Pakistan has made only “limited progress” on curbing money laundering
1 Indore and terrorism financing, failing to show a proper understanding of the
2 Ambikapur risks posed by Islamic State, Al Qaeda and others, the Paris-based
3 Mysuru Financial Action Task Force said. The FATF said that it would continue
4 Ujjain to work with Pakistan, which had been hoping to get off a “grey list” of
5 NDMC nations with inadequate controls over such activities.
6 Ahmedabad
7 Navi Mumbai Trump scraps preferential trade treatment for India
8 Tirupati Ending months of speculation, the Donald Trump administration cut

off India from duty-free access to the US market under its largest resolution process despite having been declared the successful bidder in
preferential trade scheme, but New Delhi played down the impact of the both the cases, following which SBI invoked the bank guarantee. The
move and is unlikely to contest it. Scrapping the benefits under bank guarantees, the high court said, was a measure to induce some fear
the Generalized System of Preferences (GSP) will take at least 60 days, in “such unscrupulous elements”, which chose to delay the corporate
officials said. insolvency resolution process without any fear of consequences. “Now
if this court were to have jurisdiction and to hold either that the terms of
China again blocks bid at UN to list Masood Azhar as global terrorist the Process Memorandum or of the Bid Bond Guarantee (BBG) were not
In yet another setback to India’s bid to designate Pakistan-based terror binding on the plaintiff and/or that the plaintiff is not in default thereof,
group Jaish-e-Mohammed’s chief Masood Azhar as a global the same would clearly amount to rendering findings inconsistent with
terrorist, China put a technical hold on a proposal in the UN Security the NCLT” Justice Endlaw said in his judgement. The entire transaction
Council to ban him following the Pulwama terror attack. of giving of bank guarantee by Liberty House and invocation of the same
by SBI was in the ambit of IBC. A decision on the same by any other court
Terror Attack At New Zealand Mosques Kills 49 would “amount to rendering findings inconsistent with NCLT,” the judge
New Zealand suffered its worst mass shooting of modern times, with 49 said. Earlier, the Chandigarh bench of NCLT had slammed Liberty House
people dead and over 20 seriously injured after a terrorist attack at two group for failing to go ahead with the approved resolution plans for
mosques in Christchuch. Castex Technologies and Amtek Auto. The NCLT had, in an order, said
that “the somersault taken by the Liberty House put the whole CIR Process
Legal and the machinery to quandary”. “Such an unsavoury stance of the Liberty
IBCs reigns Supreme over other civil laws: Delhi HC House would only attract adverse comments from any fair minded person
The Delhi High Court upheld the supremacy of Insolvency and particularly when there is no justifiable reason for Liberty House to drag
Bankruptcy Code (IBC) over other civil laws such as those of contracts its feet,” the NCLT had said in its order. While rejecting Liberty House’s
and guarantees and said that only the National Company Law Tribunal plea, the court imposed a cost of Rs 50 lakh on the company and asked it
(NCLT) or similar adjudicating authorities should deal with the cases to pay the same to SBI within four weeks.
falling under the code. If civil courts were to pass any orders in matters
pertaining to IBC, the entire corporate insolvency resolution process IL&FS loans won’t be NPA for now: NCLAT
pending before NCLT would be “put at naught” as “non-serious In a breather to the IL&FS Group and its lenders, the National Company
applicants” would submit resolution plans for consideration before the Law Appellate Tribunal (NCLAT) said any loan to the troubled
Resolution Professional (RP) and Committee of Creditors (CoC), and then conglomerate will not be classified as a non-performing asset (NPA) until
not abide with it once it is approved, said a single judge bench of Justice further orders. Earlier, the RBI had insisted that banks set aside money
Rajiv Sahai Endlaw. This in turn, would lead to wastage of time, which as provisions toward these loans. Lenders had already started doing
could make resolution of corporate debtors unfeasible. In such cases, this while drawing up their results for the quarter ended December 2018.
liquidation of the company would be the only alternative left owing to It is not known whether any lenders will write back provisions already
the time lapse, the court said. The observations by the court came while made, but the court order does give them room to avoid additional ageing
delivering a judgement in a plea moved by Liberty House Group against provisions on IL&FS bad loans.
State Bank of India (SBI) and others. Liberty House Group had moved the The dispensation from the appellate tribunal will help improve the
high court seeking to stop SBI, Barclays Bank and the Resolution financials of banks by reducing their ratio of NPAs to total assets. It will
Professional (RP) for Castex Technologies as well as Amtek Auto, Dinkar also allow them to book any interest they receive as income. In the case of
T. Venkatasubramanian, from invoking the bank guarantees worth close NPAs, any payment received goes towards recovery.
of Rs 100 crore it had submitted for the two companies. Last month, the Indian Banks’ Association, on behalf of its members,
The bank guarantees were submitted by Liberty House as a pre-condition had unsuccessfully petitioned the RBI, seeking a special dispensation
for bidding for both the companies under the corporate insolvency allowing them to avoid classifying loans to the infrastructure group as
resolution process. The company, however, failed to proceed with the NPAs. Lenders with significant exposure to IL&FS at parent level: Central

Bank Of India | BoI | SBI | PNB | Yes Bank The appellate tribunal’s has been recovered. 4,500 companies had seen resolution under the code,
order categorised subsidiaries of IL&FS into three groups — green and that banks and corporates both were appraising the loan by checking
(companies that can meet all debt obligations), amber (firms that can its viability.
meet some debt obligations), and red (companies that can’t meet any
debt obligations). The court had lifted an earlier moratorium allowing Appointments
the companies in the green category to repay their loans. Subhash Chandra Garg named new finance secretary
Last year, after the government appointed a board headed by Uday Kotak Economic affairs secretary Subhash Chandra Garg was named as the
to manage the beleaguered group, the NCLAT placed a moratorium on finance secretary, according to a personnel ministry order.
payouts by it to enable the new board to come up with a resolution plan. M R Kumar takes charge as LIC’s chairman
Lenders said that since the moratorium is court imposed, and they cannot Life Insurance Corporation of India (LIC) said M R Kumar has taken over
initiate any recovery proceedings, they should be given a dispensation charge as its chairman.
on classifying loans to IL&FS Group as NPA.
T C Suseel Kumar and Vipin Anand have also taken charge as Managing
Insolvency & Bankruptcy code: Govt looking at ways to avoid frivolous Directors of the Life insurance major.
bids
The government is looking at ways to ensure ‘frivolous bids’ are not Justice PC Ghose appointed India’s 1st Lokpal
placed under the insolvency and bankruptcy code (IBC), according to Former supreme court judge juctice pinki Chandra Ghose was appointed as
Corporate Affairs Secretary Injeti Srinivas. The government was mulling India’s first lokpal, the anticorruption ombudsman,according to statement.
whether criminal proceedings should be initiated against those not Former Sashastra Seema bal Chief Archana Ramasundaram, ex-
implementing resolution plans or they should be barred from bidding Maharashtra Chief Secretary Dinesh kumar jain, Mahender singh and
for any other company undergoing resolution under the IBC, Srinivas Indrajeet Prasad Gautam have been appointed as non-judical members of
said. Another thought within the government for stopping frivolous bids Lokpal, it said.
is to get a defaulting applicant to pay for the costs incurred during
resolution. The government was planning to find a way to bar those not Personalities
honouring the order of the National Company Law Tribunal (NCLT) Parrikar: 4-time Goa CM and ex-defense minister, no more
on resolution plans. In the recent past, there have been cases
where resolution applicants have refused to pay up after the plan being Awards
approved by NCLT. A M Naik, Manoj Bajpayee among Padma Awardees
Also, Srinivas said pre-packaged resolution would be in place in two Folk Singer Teejan Bai, Larsen and Toubro chairman Anil Kumar Naik,
years’ time. It had been reported that the government was considering a scientist S Nambi Narayanan, actor Manoj Bajpayee and 106-year-old
pre-packaged insolvency regime. Srinivas also said that Section 12(A) environmentalist Saalumarada Thimmakka were among the 54 noted
allowed out-of-court settlement if 90 per cent lenders allowed the citizens conferred the Padma award by President Ram Nath Kovind.
withdrawal of the insolvency application against a borrower in the pre- Teejan Bai and Naik received the second highest civilian award Padma
pack insolvency arrangement, but the UK insolvency law on this kind of Vibhushan. RSS leader Darshan Lal Jain who is trying to find the mythical
arrangements needed NCLT’s approval. It will take time to reach the UK river Saraswati, MDH founder CEO Mahashay Dharam Pal Gulati,
model but that is being worked out. medical professional Ashok Laxmanrao Kukade, Nambi Narayanan,
The government is looking at group insolvency, as the actual borrowing mountaineer Bachendri Pal and former CAG V K Shunglu were among
in many companies is found at the subsidiaries and not the parent those awarded Padma Bhushan.
company. Since the inception of the IBC, borrowers were becoming
conscious of loans they had taken. At the time of insolvency proceedings (Source: Business Standard, Times of India, RBI Website,
GOI Ministry of Finance and other Departments of GOI and other websites)
being triggered against a company, Rs 2 trillion worth of loans had been
settled out of court. Under the insolvency regime, around Rs 3 trillion

RECENT RBI INSTRUCTIONS disbursement of the crop loan upto the actual date of repayment by
farmers or upto the due date fixed by the banks for repayment of
Storage of Notes and Coins crop loan, whichever is earlier, subject to a maximum period of one
Reserve Bank had constituted a Committee on Currency Movement (CCM) year from the date of disbursement. This also implies that the farmers
[Chair: Shri D.K. Mohanty, Executive Director] to review the entire gamut repaying promptly as above would get short term crop loans @ 4%
of security of treasure in transit. The recommendations of the Committee per annum during the years 2018-19 and 2019-20. This benefit
have been examined and the following are implemented would not accrue to those farmers who repay their crop loans after
 The CCs having large vault space shall consider segregation of one year of availing such loans.
storage of coins inside the vault duly segregated by mesh structure  The benefit of interest subvention will be available to small and
/ barricades without obstructing clear view and CCTV coverage. marginal farmers having Kisan Credit Card for a further period of
 Such of the CCs which do not have sufficient storage space inside upto six months post the harvest of the crop at the same rate as
the vault to segregate storage of coins may continue to store the available to crop loan against negotiable warehouse receipts issued
coins under CCTV coverage, in a manner operationally convenient on the produce stored in warehouses accredited with Warehousing
to them keeping in view the spirit of the circular, so that notes and Development Regulatory Authority (WDRA).
coin spaces are clearly identifiable.  To provide relief to farmers affected by natural calamities, an interest
 Banks shall devise suitable processes to clearly colour code their subvention of 2% per annum will be made available to banks for the
bins for identification of denomination details and clear segregation first year on the restructured loan amount. Such restructured loans
of fresh, re-issuable and soiled notes, which shall be uniformly will attract normal rate of interest from the second year onwards.
applied across their Currency Chests. The bins containing notes  However, to provide relief to the farmers affected due to severe natural
that are yet to be processed on NSMs shall also be colour coded calamities, an interest subvention of 2 percent per annum will be
separately. made available to banks for the first three years/entire period
(subject to a maximum of five years) on the restructured loan amount.
Interest Subvention Scheme for Short Term Crop Loans during the Further, in all such cases, the benefit of prompt repayment incentive
years 2018-19 and 2019-20 @ 3% per annum shall also be provided to the affected farmers.
Government of India has approved the implementation of the Interest  To avoid multiple loaning and to ensure that only genuine farmers
Subvention Scheme with modifications for the years 2018-19 and 2019- avail concessional crop loan through the mechanism of gold loans,
20 for short term crop loans up to Rs. 3 lakh with the following the lending institutions may conduct due diligence and ensure
stipulations: proper documentation including recording of land details even
 In order to provide short-term crop loans upto Rs. 3 lakh to farmers when the farmer avails gold loans for such purposes.
at an interest rate of 7% p.a. during the years 2018-19 and 2019-20,  Banks may give adequate publicity to the above scheme so that the
it has been decided to offer interest subvention of 2% per annum to farmers can avail the benefits
lending institutions viz. Public Sector Banks (PSBs) and Private
Sector Commercial Banks (in respect of loans given by their rural White Label ATMs (WLAs) in India – Review of Guidelines
and semi-urban branches only). This interest subvention of 2% will On a review of operations of WLAs and representations received from
be calculated on the crop loan amount from the date of its stakeholders, as also to enhance the viability of WLAs, it has been decided
disbursement/drawal up to the date of actual repayment of the to allow the WLA Operators to : -
crop loan by the farmer or up to the due date of the loan fixed by the  buy wholesale cash, above a threshold of 1 lakh pieces (and in
banks whichever is earlier, subject to a maximum period of one multiples thereof) of any denomination, directly from the Reserve
year. Bank (Issue Offices) and Currency Chests against full payment.
 To provide an additional interest subvention of 3% per annum to  source cash from any scheduled bank, including Cooperative Banks
such of those farmers repaying in time i.e. from the date of and Regional Rural Banks.
JS Digest of Banking and Finance March 2019 51 52 Recent RBI Instructions

 offer bill payment and Interoperable Cash Deposit services, subject All-in-cost ceiling per annum
to technical feasibility and certification by National Payments Benchmark rate plus 250 bps spread.
Corporation of India (NPCI).
 display advertisements pertaining to non-financial products / Exchange rate
services anywhere within the WLA premises, including the WLA FCY - TC
screen, except the main signboard. It shall be ensured that the Change of currency of FCY TC into INR TC can be at the exchange rate
advertisements running on the screen disappear once the customer prevailing on the date of the agreement between the parties concerned
commences a transaction. for such change or at an exchange rate, which is less than the rate
 The permission to WLA Operators to source cash from retail outlets prevailing on the date of agreement, if consented to by the TC lender.
 Further, banks may issue co-branded ATM cards in partnership INR - TC
with the authorised WLA Operators and may extend the benefit of For conversion to Rupee, exchange rate shall be the rate prevailing on the
‘on-us’ transactions to their WLAs as well. 5. All guidelines, date of settlement.
safeguards, standards and control measures applicable to banks
relating to (a) currency handling, and (b) cyber-security framework Hedging provision
for ATMs, shall also be applicable to the WLA Operators. FCY - TC
The entities raising TC are required to follow the guidelines for hedging,
Trade Credit Policy – Revised framework if any.
Trade Credits (TC) refer to the credits extended by the overseas supplier, INR - TC
bank, financial institution and other permitted recognised lenders for The overseas investors are eligible to hedge their exposure in Rupee
maturity. through permitted derivative products with AD Category I banks in India
Trade Credit Framework: Reporting requirements: TC transactions are subject to the reporting
TC can be raised in any freely convertible foreign currency (FCY requirements of RBI (monthly & quarterly reporting).
denominated TC) or Indian Rupee (INR denominated TC), as per the
framework given below: Role of ADs: While the primarily responsibility of ensuring adherence
Forms of TC: Buyers’ Credit and Suppliers’ Credit to the TC policy lies with the importer, the ADs are also expected to
Eligible borrower: Person resident in India acting as an importer ensure compliance with applicable parameters of the TC policy /
Amount under automatic route: Up to USD 150 million or equivalent per provisions of Foreign Exchange Management Act, 1999 by their
import transaction for oil/gas refining & marketing, airline and shipping constituents. ADs should ensure that there is no double financing on
companies. For others, up to USD 50 million or equivalent per import account of these transactions between a unit or a developer in a SEZ
transaction. including FTWZ for purchase of non-capital and capital goods within
an SEZ including FTWZ or from a different SEZ including FTWZ. ADs
Recognised lenders: should also ensure that for import of non-capital goods, the period of TC,
 For suppliers’ credit: Supplier of goods located outside India. as applicable, is lower of operating cycle or one year (three years for
 For buyers’ credit: Banks, financial institutions, foreign equity shipyards / shipbuilders).
holder(s) located outside India and financial institutions in
International Financial Services Centres located in India. Reserve Bank of India (Prevention of Market Abuse) Directions, 2019
The Reserve Bank of India (herein after called the ‘Bank’) had issued the
Period of TC following Directions to all persons dealing in securities, money market
The period of TC, reckoned from the date of shipment, shall be up to three instruments, foreign exchange instruments, derivatives or other
years for import of capital goods. For non-capital goods, this period shall instruments.
be up to one year or the operating cycle whichever is less

Market manipulation: reasonable opportunity to the market participant to defend its
 Market participants shall not engage in, or attempt to engage in, actions. All instances of such action shall be made public by the
market manipulation. Bank.
 Market participants shall not undertake transactions on an ETP
that may disrupt or delay its functioning. Export and Import of Indian Currency
It has now been decided that an individual travelling from India to Nepal
Benchmark manipulation: or Bhutan may carry Reserve Bank of India currency notes in Mahatma
 Market participants, either acting independently or in collusion, Gandhi (New) Series of denominations Rs. 200/- and/or Rs. 500/-
shall not undertake any action, with the intention to manipulate subject to a total limit of Rs. 25,000/- Instructions regarding currency
the calculation of a benchmark rate or a reference rate. notes of Government of India and Reserve Bank of India for any amount
 No market participant shall carry out a transaction or initiate any in denominations up to Rs. 100/- shall continue as hitherto. i.e they can
action with the sole or dominant intention of influencing a take any amount in denomination up to Rs.100/-.
benchmark rate or a reference rate.
Compilation of R-Returns: Reporting under FETERS
Misuse of information: In order to facilitate compilation of estimates of bilateral trade in services,
 A market participant that is in possession of ‘Non-public price- it has been decided to incorporate an additional field for capturing the
sensitive information’ shall not use it for any material benefit to country code of ultimate exporter/importer in the BoP file-format under
itself or to others. FETERS. In case of export of services, bank may use the transaction
 Market participants shall not use ‘Price-sensitive customer information available with them to report country-code of the ultimate
information’ for transacting on their own account in a manner that exporting country.
adversely affects the outcome for the customer in that (those)
transaction(s). They shall maintain confidentiality of price-sensitive Investment by Foreign Portfolio Investors (FPI) in Government
customer information. Securities Medium Term Framework: Revision of investment Limits
 Market participants shall not intentionally create or transmit false for 2019-20
or inaccurate information, or, withhold timely information that is  The limit for FPI investment in Central Government securities (G-
required to be reported or made public, that influences or is likely to secs), State Development Loans (SDLs) and corporate bonds shall
influence the price of any financial instrument. Transmission of be 6%, 2%, and 9% of outstanding stocks of securities, respectively,
false or inaccurate information shall be deemed to have been done in FY 2019-20.
intentionally by a market participant if it had not exercised due  The allocation of increase in G-sec limit over the two sub-categories
diligence as to the veracity of the information before transmitting. – ‘General’ and ‘Long-term’ – has been set at 50:50 for the year
2019-20. The entire increase in limits for SDLs has been added to
Monitoring, compliance and reports: the ‘General’ sub-category of SDLs
 Market participants shall report any instance of market abuse or
attempted market abuse detected by them to the Bank promptly. Non-resident Participation in Rupee Interest Rate Derivatives Markets
 Market participants shall provide any data and/or information as (Reserve Bank) Directions, 2019
required by the Bank in the format and within the time frame The following Directions to all entities including the non-residents,
prescribed. eligible to participate or transact in interest rate derivatives in India.
 Regulatory action for market abuse: Market participants committing A non-resident can undertake transactions in the Rupee interest rate
market abuse are liable to be denied access to markets in one or derivatives markets for the following purposes:
more instruments for a period that may not exceed one month at a  To hedge an exposure to Rupee interest rate risk as stipulated below
time. No such action shall be taken by the Bank without providing and,

 For purposes other than hedging, to the extent stipulated as below. KYC for the non-resident
Market-maker shall ensure that non-resident clients are from an FATF
Transactions for the purpose of hedging interest rate risk compliant country. Market-makers shall also ensure that non-resident
 A non-resident may undertake Rupee interest rate derivatives in clients comply with the KYC requirements as prescribed under Master
India to hedge its interest rate risk using any permitted interest rate Direction – Know your Customer Direction, 2016
derivative product transacted on recognized stock exchanges, ETPs
or OTC markets.
 A non-resident shall ensure that its interest rate derivative
transactions conform to the provisions of Section 45(V) of the RBI
Act, 1934, as well as applicable provisions of Foreign Exchange
Management Act, 1999 and the rules, regulations and directions
issued thereunder.
 Market-makers shall ensure that transactions by a non-resident are
being carried out for the purpose of hedging. For this purpose,
market-makers may call for any relevant information from the non-
resident, who, in turn, is obliged to provide such information.
Transactions for purposes other than hedging interest rate risk

Non-residents, other than individuals, may undertake Overnight Indexed
Swaps (OIS) transactions for purposes other than hedging interest rate
risk in terms of the following arrangements:-
 These transactions may be undertaken directly with a market-maker
in India, or by way of a ‘back-to-back’ arrangement through a foreign
branch/parent/group entity (foreign counterpart) of the market-
maker.
 A market-maker shall enter into a ‘back-to-back’ arrangement
referred to in (a) above provided that: i. All rupee interest rate
derivatives transactions, globally, of related entities of the market-
maker are accounted for in the books of the marketmaker. In other
words, no related entity of the market-maker shall undertake
transactions in Rupee interest rate derivatives other than under the
‘back-to-back’ arrangement. ii. Rupee interest rate derivatives
transactions of FPIs related to the market-maker covered under para
4 above shall be exempted from the requirement in para 5(i)(b)(i)
above.
 OIS transactions by non-residents for purposes other than hedging
interest rate risk shall be subject to an overall limit, as specified in
circular.
 The Price Value of a Basis Point (PVBP) of all outstanding OIS
positions undertaken by all non-residents shall not exceed the
amount of INR 3.50 billion (PVBP cap)

RECENT BANKING DEVELOPMENTS branches, Module, LHO and corporate centre establishments. Cash
reward of Rs.2,100/- for best guards.
Passing Powers for users in CBS capped:
Divya Shakti Gold Power Tiller: Approved by bank. Dealer’s Margin
Capability Passing Powers in Rs.20,000 to Rs.25,000/- Price Rs.1,69,120/-.
Designation
Level crores
6 RM (PB) etc 5 Single Rupee deposit of Rs.2 crore & above will now qualify as Bulk
Sr Mgr & Scale II and Deposits instead of Rs.1 crore and above. Less than Rs.2 crores are
7 10 called Retail Deposits
above
8 Mgr and above 50
RBI has instructed banks to provide Key Fact Statements to Personal,
9 BM 100
Education & Auto Loan Borrowers.
10 CM 1000
11 AGM 10000 Yono Maxfund V Campaign from 02/03/2019 to 15/03/2019 for
12 DGM 100000 marketing SBIMF through Yono.
Consequent upon implementation of Incident Management Module
Pan amendment/deletion in CBS can now be undertaken by officials (IMM) for reporting of losses and Near Miss Events (NME) and
having capability level 9 and above. occurrences of delayed reporting of certain high value NME, timelines
have now been included for reporting of NMEs.
RBI permitted AD 1 banks to extend the period of realization of export Bank has decided to restrict usage of withdrawal forms to Rs.50,000 at
proceeds beyond the stipulated period of 9 months from the date of export, Home Branch in Cheque operated SB accounts from 01/04/19.
up to a period of 6 months irrespective of the invoice value of export
subject to conditions. New VVQ System will cover all BGL transations and transactions
performed by teller with capability 7 and above. New VVQ should be
Revised collateral security norms for finance to Trade & Service Sector: checked on the same day.
Norms now linked to internal CRA/CUE rating instead of ECR. For
loans up to Rs.10 lakhs it will be NIL and accounts to be mandatorily RINN SAMADHAN 18-19 reopened from 1/3/19 to 31/3/19. Payment
covered under CGTFMU/CGTMSE. Collateral loans above Rs.10 lakhs upfront 20%. Last date of payment 30 days from receipt of acceptance.
and up to Rs.1 crore, which are covered under CGTMSE there is no
collateral requirement but for other accounts covered under CGTMSE Operations of NRE/NRO by POA: (i) POA holders of NRIs will not be
they should have 50% collateral security. For loans above Rs.1 crore for allowed to apply any of the Alternate Channels like ATM, INB etc. and
SB7 / CUE7 and better, it is 25%, for SB 8,9 / CUE 8,9 it is 50% and for SB (ii) adopting of uniform methodology for inputting name/s of account
10/CUE 10 or worse, collateral security should be 100%. Authority for holder & POA holders in CBS cheque personalization menu.
relaxation can be read from the circular.
Application form and Restructuring Appraisal, formats have been Launch of Swarnadhara Agri Gold Loan Campaign during March’19 –
approved as a part of simplified approach for Restructuring MSME overall growth in multipurpose AGL and interest subvention AGL over
advances above Rs.10 lakhs and up to Rs.50 lakhs. and above the outstanding in Feb 19
RBI has now withdrawn the restriction that “No portfolio investor” shall
have an exposure more than 20% of its Corporate Bond to a single Poochke To Dekho 2.00: Takeover of Home Loans and Home Top-up
borrower. Loans extended upto 10/3/19.
Reward & Recognition for Security Staff: Best adjudged security staff at Universal Passbook Modified: 28 pages, MICR Code, Business Hours,
JS Digest of Banking and Finance March 2019 59 60 Recent Banking Developments

Date of opening, PPO, details of nominee incorporated. has not clarified that the eligibility for restructuring without GST
registration should be determined on the basis of exemption limit on
Controllers should make surprise verification of 30% or maximum 100 01.01.2010.
gold loan accounts at random under Agri Gold Loan Scheme.
SBI Asset Backed Loan Revised: (1) LTV% will now be 60% of the
Fresh tie up with SBI Cards for issuance of credit cards to SME units – realizable value of immovable property. (2) Repayment period will now
Units enjoying FBWC Rs.50 lakhs and above . range from 12 months to 240 months.
Salient features of “Interest Subvention Scheme for MSME, 2018”:

- All MSME (both service and mfg) who have valid Udyog Aadhar
Number and GSTN are eligible.
- Incremental TL or fresh TL or incremental WC extended from
02.11.2018 to 31.03.2020 would be covered.
- Scheme will be in operation for two FYs 2019 & 2020.
All participants, other than individuals, undertaking transactions in

markets regulated by RBI like Govt Security markets, money markets
should obtain Legal Entity Identifier Code having net worth
above Rs.10000 mio – before 31/03/2019
Between Rs.2000 and Rs.10000 mio – before 31/07/2019
Upto Rs.2000 mio – before Feb 2020
Opening of deposit accounts with back dating (value dating) restricted
to 30 days. Beyond the above period, SB interest may be paid.
Modifications in CRE Home Loans: While considering eligibility if an

individual owns 2 or more houses, the exposure for the 3rd house/plot
will be treated as CRE. Max number of houses/flats/residential plots
will be restricted to ONE (1) under CRE over and above the two houses/
flats under HL. (2) Concession in pricing on Card rate will not be available
for CRE loans etc.
While opening/renewing FCNR (B) & RFC accounts, back value dating
will now be permitted only for a max period of 14 days.
YONO CASH, a card lessSBI cash withdrawal facility through YONO

launched where Cash is collected at select ATMs (YONO Cash Points-
YCP) within 30 minutes after invoking the transaction through YONO
app/portal. Minimum Cash withdrawal should be Rs.500 and a
maximum of Rs.10000 per transaction, Rs.20000 per account per day.
No partial withdrawal permitted. Maximum Withdrawal Limit and
number of withdrawals will be over and above the existing limits
permitted for cash withdrawals using debit cards.
With regard to Restructuring of MSME advances up to Rs.25 crore, RBI
JS Digest of Banking and Finance March 2019 61 62 Recent Banking Developments

CONCEPT BRIEF – I Grounds of Complaint:
Making Digital Payments Safer – RBI Measures Prepaid Payment Instruments (PPI):
Failure in crediting merchant’s account, failure to load funds,
unauthorised electronic fund transfer, non-transfer/refusal/failure to
The Reserve Bank of India has, over the years, encouraged greater use of
transfer the balance in the PPI, failure to refund, and others,
electronic payments so as to achieve a “less-cash” society. The objective
has been to provide a payment system that combines the attributes of
Mobile/Electronic Fund Transfers:
safety, security, enhanced convenience and accessibility while leveraging
- Failure to effect online payment, unauthorised electronic fund trans-
technological solutions that enable faster processing.
fer, failure to act upon stop payment instructions, failure to reverse
The total volume of retail electronic payments witnessed about nine-fold the amount, failure/delay in refund, etc.
increase over the last five years. The NEFT system handled 195 crore - Non-adherence to instructions of RBI on payment transactions
transactions valued at around Rs.172 lakh crore in 2017-18 growing through UPI, Bharat Bill Payment System, Bharat QR Code, UPI QR
nearly 5 times in volume and 6 times in value over the previous 5 years. Code on the grounds: failure/delay in crediting funds, Failure/
The number of transactions carried out through credit and debit cards in delay in refund of money, etc.
2017-18 was 141 crore and 334 crore respectively. Pre-paid payment
instruments recorded a volume of 346 crore transactions valued at 1.4 Procedure for filing complaint:
lakh crore. Thus, the total card payment in volume terms stood at 52% of - Any person who has a grievance on any of the grounds mentioned
the total retail payments during 2017-18. above may make a complaint to the Ombudsman for Digital Trans-
“Cybersecurity and lack of consumer awareness are threats to growth of actions in the specified format with copies of documents, if any.
digital payments in India,” said Dilip Asbe, Managing Director and Chief - Before making a complaint to the Ombudsman,
Executive Officer of the National Payments Corporation of India (NPCI). o (i) the System Participant should have rejected a written repre-
India’s digital payment system would see phenomenal growth as chal- sentation by the complainant, or
lenges to greater adoption of such payments are addressed gradually, o (ii) the System Participant ought to have failed to reply within a
Asbe said. The RBI in the recent months have taken steps to make digital one month of the receipt of the representation of the complain-
payments safer for users. Some of them are stated below: ant, or
i. Introduction of Ombudsman. o (iii) the System Participant’s reply to the complainant must have
ii. Tokenisation of transactions. been found unsatisfactory.
iii. Data localisation to ensure data security.
iv. Bringing payment gateways within its ambit. Settlement:
v. Appointing a Committee under the Chairmanship of Nandan The Ombudsman calls for information from the parties concerned, and
Nilekani to work towards deepening digital payments. endeavours to promote a settlement of the complaint by agreement be-
tween the complainant and the System Participant through conciliation
OMBUDSMAN: or mediation.
RBI has recently introduced an “Ombudsman Scheme for Digital Trans- If the complaint is not settled within a period of one month the Ombuds-
actions, 2019” to facilitate the settlement of complaints regarding digital man may pass an award after affording the parties a reasonable oppor-
transactions undertaken by customers. tunity to present their case.
The Ombudsman will receive and consider complaints relating to defi-
ciency in services on various grounds as mentioned below irrespective TOKENISATION OF TRANSACTIONS:
of the pecuniary value. He shall dispose of the complaints through (i) Tokenisation of card payments is expected to make transactions more
Settlement, (ii) Conciliation, or (iii) Passing an award. secure by adding an extra layer of security.
When an individual makes a purchase on an e-commerce website, he
may be required to provide his credit card number and other details. OTP
JS Digest of Banking and Finance March 2019 63 64 Concept Brief

to a registered mobile phone is an additional precaution. However, these RBI APPOINTS PANEL FOR DEEPENING OF DIGITAL PAYMENTS:
details could be compromised, either at the consumer end or at the e- The Reserve Bank of India (RBI) has appointed Nandan Nilekani as the
tailer end. chairman of a high-level committee tasked with the job of drawing a
Once payments are tokenised, the buyer will not have to enter his credit medium-term strategy for deepening of digital payments in the country.
card details at an e-commerce site. Instead, the system will generate a The aim of the panel is to study ways to encourage digitisation of
random number – a token – using an algorithm. It will be complex, payments and enhance financial inclusion in the largely unbanked
unique, and almost impossible for anyone other than the payment pro- nation. The above moves will help promote faster adoption of digital
cessor to decipher payments across the country.
DATA LOCALISATION:
Data Localisation is a concept that the personal data of a country’s resi-
dents should be processed and stored in that country. At present, most of
these data are stored in the cloud, outside India.
RBI had issued a circular mandating that, by October 15th, 2018, pay-
ments-related data collected by payments providers must be stored only
in India . This covered not only card payment services by Visa and
MasterCard but also of companies such as Paytm, WhatsApp and Google
which offer electronic payment services.
The main intent behind data localisation is to protect the personal and
financial information of the country’s citizens and residents from for-
eign surveillance and to give local governments and regulators the juris-
diction to call for the data when required. This aspect gained impor-
tance after a spate of lynchings across states was linked to WhatsApp
rumour, and Facebook sharing user data which influenced the voting
outcomes.
Many sought extensions to comply and gave the RBI a plan on how they
would meet the requirement. Moreover, while the policy had ample
domestic support, both foreign and domestic business entities and foreign
governments argued that this was an unnecessarily protectionist
measure that would be detrimental for the economy. In late October 2018,
Visa and Mastercard started storing Indian transaction data at technology
centres in India, while still seeking relaxations of the rule from RBI on
past data.
BRINGING PAYMENT GATEWAYS WITHIN THE AMBIT OF RBI:

Within the ambit of RBI, the payment gateway service providers must
follow standard policies and procedures. Consumers can expect faster
refunds and settlements. Control on frauds can be tightened. Guidelines
and policies can be framed to act against a fraudster immediately and
block the money in the receiver’s account.

CONCEPT BRIEF – II 7. Fund Management: PM-SYM will be a Central Sector Scheme
National Pension Scheme for Unorganised Sector administered by the Ministry of Labour and Employment and
Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM) implemented through Life Insurance Corporation of India and CSC
eGovernance Services India Limited (CSC SPV). LIC will be the
Government of India has introduced a pension scheme called the Pension Fund Manager and responsible for pension pay-out. The
“Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)” for those in the amount collected under PM-SYM pension scheme shall be invested
unorganised sectors to ensure financial support in old age. as per the investment pattern specified by Government of India.
Home-based workers, street vendors, mid-day meal workers, head loaders, 8. Exit and Withdrawal: Considering the hardships and erratic nature
cobblers, rag pickers, and those engaged in similar activities whose of employability of these workers, the exit provisions of scheme
monthly income is Rs 15,000/ per month or less and belonging to the have been kept flexible. Exit provisions are as under:
entry age group of 18-40 years are the intended beneficiaries of the scheme. (i) In case subscriber exits the scheme within a period of less than
Those who pay income tax and those who are covered by the New Pension 10 years, the beneficiary’s share of contribution only will be
Scheme (NPS), Employees’ State Insurance Corporation (ESIC) scheme returned to him with savings bank interest rate.
or Employees’ Provident Fund Organisation (EPFO) are not eligible. (ii) If subscriber exits after a period of 10 years or more but before
2. Features of PM-SYM: It is a voluntary, contributory pension scheme superannuation age i.e. 60 years of age, the beneficiary’s share
with the following benefits: of contribution along with accumulated interest as actually
(i) Minimum Assured Pension: Minimum assured pension of earned by fund or at the savings bank interest rate whichever
Rs 3000/- per month after attaining the age of 60 years. is higher.
(ii) Family Pension: The spouse of the beneficiary shall be entitled (iii) If a beneficiary has given regular contributions and died due
to receive 50% of the pension received. to any cause, his/ her spouse will be entitled to continue the
(iii) If a beneficiary has paid regular contribution but died due to scheme subsequently by payment of regular contribution or
any cause before age of 60 years, his/her spouse will be exit by receiving the beneficiary’s contribution along with
entitled to join and continue the scheme. accumulated interest as actually earned by fund or at the
3. Contribution by the Subscriber: Through ‘auto-debit’ facility from savings bank interest rate whichever is higher.
his/her savings bank account/Jan Dhan account. The subscriber (iv) If a beneficiary has given regular contributions and become
is required to contribute the prescribed contribution amount from permanently disabled due to any cause before the
the age of joining PM-SYM till the age of 60 years. superannuation age, i.e. 60 years, and unable to continue to
4. Matching contribution by the Central Government: It is a contribute under the scheme, his/ her spouse will be entitled
contributory pension scheme on a 50:50 basis. Matching contribution to continue the scheme subsequently by payment of regular
by the Central Government. contribution or exit the scheme by receiving the beneficiary’s
5. Enrolment Process under PM-SYM: The subscriber will be required contribution with interest as actually earned by fund or at the
to have a mobile phone, savings bank account and Aadhaar savings bank interest rate whichever is higher.
number. The eligible subscriber may visit the nearest Common (v) After the death of subscriber as well as his/her spouse, the
Services Centres (CSC eGovernance Services India Limited (CSC entire corpus will be credited back to the fund.
SPV)) and enroll for PM-SYM using Aadhaar number and savings (vi) Any other exit provision, as may be decided by the Government
bank account/Jan Dhan account number on self-certification basis. on advice of NSSB.
Contribution amount for the first month shall be paid in cash for 9. Default of Contributions: If a subscriber has not paid the
which they will be provided with a receipt. contribution continuously he/she will be allowed to regularize his
6. Facilitation Centres: All the branch offices of LIC, the offices of ESIC/ contribution by paying entire outstanding dues, along with penalty
EPFO and all Labour Offices of Central and State Governments will charges, if any, decided by the Government.
facilitate the implementation of the Scheme. 10. Pension Pay out: Once the beneficiary joins the scheme at the entry
age of 18-40 years, the beneficiary has to contribute till 60 years of

age. On attaining the age of 60 years, the subscriber will get the JAIIB – ACCOUNTING FINANCE FOR BANKER
assured monthly pension of Rs.3000/- with benefit of family EXTRACT FROM OBJECTIVE QUESTIONS DIGEST
pension.
MODEL TEST 1
1. Real Accounts relate to

a) Expenses b) Income c) Assets d) None of these
2. Cash discount allowed to a debtor should be credited to
a) Sales A/c b) Discount A/c
c) Debtor’s A/c d) None of these
3. Unfavourable bank balance means
a) debit balance in pass book b) credit balance in cash book
c) both a and b d) None of these
4. All recurring expenditure are _______
a) Revenue Expenditure b) Capital Expenditure
c) Deferred Revenue Expenditure d) None of these
5. Goods bought from Mr. R Raman for Rs.10000/- entered in sales
book. The error will result in
a) Increase in gross profit b) Decrease in gross profit
c) Decrease in net profit d) None of these
6. Goodwill is an example of
a) fixed asset b) Misc asset
c) intangible asset d) current asset
7. A partnership firm engaged in banking business can have maximum
a) 50 partners b) 10 partners c) 20 partners d) unlimited
8. Wages paid to Krishna should be debited to
a) Krishna’s account
b) Cash account
c) Wages account
d) None of these
9. A non performing asset of a bank is
a) cash balance b) cash balance with RBI
c) an asset which ceases to generate income d) None of these
10. A bill of exchange is drawn by
a) debtor on creditor b) creditor on debtor
c) Partner on firm d) none of these
11. The amount bought in by the proprietor in his business should be
credited to _______
a) Loan account of the proprietor
b) Drawings account of the proprietor
c) Capital account of the proprietor
d) None of these
JS Digest of Banking and Finance March 2019 69 70 JAIIB-Accounting Finance for Banker
12. The Fundamental rule for recording transactions in nominal/ JAIIB – ACCOUNTING FINANCE FOR BANKER
fictitious account is EXTRACT FROM OBJECTIVE QUESTIONS DIGEST
a) Debit the receiver and Credit the giver
MODEL TEST 2
b) Debit what comes in and credit what goes out
c) Debit expenses and losses and credit incomes and gains
d) None of these
13. An amount of Rs.40,000/- lent for 3 years at simple interest rate of 1. The due date for payment of a bill dated 1st Feb 1997 payable after
11% will fetch interest of 45 days after sight and accepted on 06.02.97 is ______
a) Rs.13200 b) Rs.8800 a) 19.03.97 b) 26.03.97
c) Rs.14400 d) None of these c) 21.03.97 d) None of these
14. Subscription received in advance during the current year 2. Share holders are entitled to get________.
is________. a) fees b) commission
a) an expense b) an income c) a liability d) none of these c) dividend on profits d) none of these
15. Net profit is ascertained by preparing 3. Premium received on issue of shares is shown in________.
a) Trial balance b) Trading and Profit & Loss a/c a) assets side of balance sheet
c) Balance sheet d) None of these b) liabilities side of balance sheet
16. Outstanding salaries to be paid are shown as________in the balance c) debit side of P & L A/c
sheet. d) none of these
a) expenditure b) income c) liability d) None of these 4. A non banking asset acquired by a bank must be disposed of
17. An asset will always show within________.
a) debit balance b) credit balance a) two years b) five years c) seven years d) 12 years
c) none of the above b) any of the above 5. Debugging of a programme is done by_______
18. Time Value of money is relevant in a) programme coding b) programme design
a) Payback period method c) programme verification d) none of these
b) Accounting period of return method 6. Claims against the company not acknowledged as debts is a______.
c) Internal rate of return method a) current liability b) term liability
d) None of these c) contingent liability d) none of these
19. The profit on forfeiture of shares is transferred to________. 7. When shares are forfeited the share capital is debited by______.
a) Capital A/c b) Forfeiture A/c a) called up amount b) paid up amount
c) capital Reserve A/c d) None c) calls in arrears d) none of these
20. Accounting Standards are prescribed by 8. Which one of the following statement is true?
a) Govt of India b) Reserve Bank of India a) partnership is a relationship between 2 persons
c) Securities Exchange Board of India b) liability of partner is limited
d) Institute of Chartered Accountants of India c) the common seal of the company is affixed on all important
documents and contracts of the company and the liability of
Answers to Model Test 1 the shareholders is limited
d) none of these
1. c 2. c 3. c 4. a
9. In the purchase book, the record is in respect of:
5. a 6. c 7. a 8. c
a) Cash purchase of goods b) Credit purchase of goods
9. c 10. b 11. c 12. c b) All purchase of goods d) None of these
13.a 14. c 15. b 16. c 10. End of the Day (EOD) is _______
17.a 18. c 19. c 20. d a) Done on completion of Day’s transactions by the branch
b) Once EOD is done at the branch the users at the branch will not Answers to Model Test 2
get access to any of the modules for doing transactions 1. b 2. c
c) But they will have access to certain limited modules such as 3. b 4. c
account enquiry. 5. c 6. c
d) All of these 7. a 8. c
11. Profit and Loss Account is a_______. 9. b 10. d
a) Real Account b) Nominal Account 11. b 12. a
c) Personal Account d) None of these 13. a 14. c
12. Debtors will be shown in the balance sheet as_______. 15. Total subscription received during 2009-10 Rs.7000/-
a) Asset b) Liability c) Expense d) Income Less: Subscriptions relating to 2008-09 Rs.1000/-
13. Receipts and payments account is virtually a cash book______. Rs.6000/-
a) True b) False Add: Outstanding subscriptions for 2009-10 Rs.500/-
14. The amount given to a non-trading concern as per the Will of a Amount of subscription for 2009-10 Rs.6500/-
deceased person is called
a) Donation b) Life membership fees 16. Bills Receivable A/c Dr Rs.1000/-
c) Legacy d) None of these To Mr.B’s A/c Rs.1000/-
15. Calculate the amount of subscription to be credited to the Income (Being bill drawn on B accepted by him).
and Expenditure Account for the year 2009-10. 17. Depreciation A/c Dr Rs.10,000/-
Subscriptions received relating to 2008-09 – Rs.1000/- To Plant & Machinery A/c Rs.10,000/-
Subscriptions received relating to 2009-10 – Rs.6000/- (Being the depreciation charged on Plant and Machinery).
Total subscription received during 2009-10 – Rs.7000/- 18. b
Outstanding subscriptions at the end of the year 2009-10 is 19. b
Rs.500/-. 20. c
16. Pass journal entry in the books of Mr.A. Mr.A draws a bill of exchange
for Rs.1000/- on Mr.B. Mr.B accepts it and returns it to Mr.A.
17. What is the entry for charging depreciation of Rs.10,000/- on Plant
and Machinery?
18. A fixed Percentage is charged as depreciation on the Diminishing
Value of the asset each year during the useful life span of the asset
under ______
a) Straight Line Method b) Written Down Value Method
c) Sinking Fund Method d) None of these
19. A company issued 10,000 equity shares @ Rs.12/- each with face
value of Rs.10/-. The issue is at a_______.
a) Discount b) Premium c) None d) Par
20. When a bill discounted by the drawer is dishonoured on the due
date, the drawer gives credit to_______account.
a) Bills Receivable b) Discount
c) Bank d) None of these
JAIIB – LEGAL AND REGULATORY 10. Additional directors in a banking company is appointed by :
ASPECTS OF BANKING a) Central Government b) State Government
EXTRACT FROM OBJECTIVE QUESTIONS DIGEST c) RBI d) None of these
11. Authorised capital of a banking company is :
MODEL TEST- 1
a) The capital which is authorized to be raised by a banking company
b) The maximum limit of share capital which a banking company
1. One of the main functions of a bank is_________ is authorized to raise as per their MOA
a) Making investments c) None of the above
b) Accepting deposits from the public 12. What do you understand by paid-up capital of a banking company?
c) Lending to companies d) None of these a) It is the capital of the banking company authorized to raise from
2. Accepting of deposits by Non-Banking Finance Companies (NBFCs) the public
is regulated by: b) It is the amount of share capital of a banking company which is
a) RBI b) ROC c) SEBI subscribed and paid-up
d) None of these c) None of the above
3. According to Section 5(b) of BR Act, Banking is defined as : 13. What is a subsidiary company?
a) Accepting deposits from the public for the purpose of investment a) It is a company where the composition of its board of directors
only is controlled by the parent company
b) Accepting deposits from the public for the purpose of lending or b) It is a company where more than half of its equity shares is held
investment by the parent company
c) Either a or b d) None of these c) It is the subsidiary of any company which is a parent (holding)
4. Which of the following is true in respect of Banking company ? company as provided in S.4 of the Companies Act
a) It is a company which transacts the business of trading d) All of these e) None of these
b) It is a company which transacts the business of manufacturing 14. What is the percentage of certain amount of assets to be maintained
c) It is a company which transacts the business of banking in India by banks as per S.25 of BR Act ?
d) None of the above a) 50% of the demand and time liabilities as at the close of business
5. The Co-operative bank is defined as : on the last Friday of every quarter
a) A Co-operative society engaged in business of banking b) 75% of the demand and time liabilities as at the close of business
b) A Co-operative bank engaged in the business of lending on the last Friday of every quarter
c) A Co-operative society engaged in business of accepting deposits c) 25% of the demand and time liabilities as at the close of business
only d) None of the above on the last Friday of every quarter
6. When did the first nationalization of commercial banks take place? d) None of the above
a) 1980 b) 1970 c) 1990 d) None of these 15. What is the period within which the statement of assets maintained
7. Under which of the following Acts, the Regional Rural Banks were by banks in India as per S.25(1) of BR Act has to be submitted to
constituted ? RBI?
a) RBI Act b) BR Act c) Co-operative Societies Act a) Within 1 month from the end of the quarter
d) Regional Rural Banks Act e) None of these b) Within 2 months from the end of the quarter
8. Does the Central Government have powers to give directions to c) Within 15 days from the end of the quarter
RBI? d) None of these
a) Yes b) No c) None of these 16. What do you understand by Approved Securities?
9. Does RBI have powers to regulate all kinds of business of banks? a) They are securities in which a trustee may invest money under
a) No b) Yes c) None of these S.20 read with sub-section of the Indian Trust Act
b) They are securities authorized by the Central Government under
JS Digest of Banking and Finance March 2019 75 76 JAIIB-Legal and Regulator y Aspects of Banking
S.20(f) of Indian Trust Act JAIIB – LEGAL AND REGULATORY
c) Either a or b d) None of the above
17. What is Bank Rate?
ASPECTS OF BANKING
a) It is the standard rate published by RBI under S.49 of RBI Act EXTRACT FROM OBJECTIVE QUESTIONS DIGEST
b) It is rate at which RBI is prepared to buy or rediscount bills of MODEL TEST- 2
exchange or commercial paper eligible for purchase under the Act
c) Both a and b d) None of the above 1. Is RBI empowered to conduct inspection of a bank ?
18. What are demand and time liabilities? a) Yes under section 35(1) of BR Act
a) Demand liabilities are payable on demand and time liabilities b) Yes with the permission of Central Government u/s 35(1) of BR
are payable by taking some time for payment Act c) None of these
b) Demand liabilities are payable on demand and time liabilities 2. The Board for Financial Supervision is constituted by :
are payable after expiry of certain period a) Central Govt. b) RBI c) State Govt. d) None of these
c) None of the above 3. Reserve Bank of India is empowered to conduct special audit of a
19. What do you understand by Selective Credit Control? bank with the permission of :
a) It is a credit extended by banks to select borrowers a) Central Govt. b) State Govt.
b) It is a credit extended by banks to borrowers selected by RBI c) No permission required d) None of these
c) It is regulating the distribution and direction of bank credit to 4. What do you understand by Amalgamation?
particular sectors of the economy according to national priorities a) It is a process of merging one or more companies with another
d) None of the above company
20. What are Usurious Loans? b) It is a process of merging two or more existing companies into a
a) These are loans which are sanctioned at a very low interest new company
b) These are loans which are sanctioned at a very competitive rates c) Both a and b d) None of the above
c) These are loans which are sanctioned at very exhorbitant rates of 5. Who is an Official Liquidator?
interest d) None of the above a) He is a person appointed by the Board of Directors of a company
for winding up of the company
Answers: b) He is a person appointed by the Court for winding up of the
1) b 2) a 3) b 4) c company
5) a 6) b 7) d 8) a c) None of the above
9) b 10) c 11) b 12) b 6. What do you understand by Moratorium in respect to an advance?
13) d 14) b 15) a 16) c a) It is an authorization under the law for a borrower to postpone
17) c 18) b 19) c 20) c payment of dues for a specified time
b) It is an authorization under the law for a borrower to prepone
payment of dues by a specified time
c) None of the above
7. Which of the following refers to winding up of a company ?
a) It is a procedure for closing the books of accounts of a company
for certain period
b) It is a procedure for reopening the books of accounts of a company
after the closure of the period
c) It is closing up a company’s activities and settling accounts and
liquidating assets for the purpose of distribution and dissolving
the company d) None of the above
8. What is the punishment for making any false statement in a return cheque favouring the liquidator. The liquidator presented the cheque
or other document submitted under the provisions of BR Act? over the counter and obtained payment in cash which he
a) The punishment is the fine to be levied as decided by RBI misappropriated. Later he was removed by the court and another
b) The punishment is imprisonment and fine to be levied as decided person was appointed as liquidator who demanded refund of the
by RBI amount of the cheque paid by the bank to the pervious liquidator.
c) None of the above What is the position of the bank?
9. What is the main thrust of business of RRBs? a) The payment to the liquidator against the cheque presented across
a) The main thrust of the business would be granting of loans and the counter is not a payment in due course and the bank is liable
advances to small and marginal farmers, agricultural labourers, and will not get protection
agricultural marketing societies etc. b) The payment to the liquidator against the cheque presented across
b) The main thrust of the business would be granting of loans and the counter is a payment in due course as the cheque was in the
advances to all sectors including industrial and commercial sectors name of the liquidator and the bank is not liable and will get
c) None of the above protection
10. What is the primary objective of a State Co-operative bank ? c) None of the above
a) It is a principal co-operative society in a State with the primary 17. What do you understand by the word ‘Apparent tenor of the
objective of lending to all sectors in the state instrument’?
b) It is a principal co-operative society in a State with the primary a) It means ‘According to what it appears on the face of the
objective of financing other co-operative societies in the State instrument to be the intention of the parties’
c) None of the above b) It means ‘As per the period of the instrument the amount will fall
11. What should be the minimum paid-up capital of a Co-operative due for payment
bank as per the Act ? c) None of the above
a) Rs.10 lacs b) Rs.1 lac c) Rs.100 lacs 18. Material alteration is defined in Section________ of NI Act.
d) None of these a) S.85 b) S.87 c) S.89 d) None of
12. What is the primary objective of a Central Co-operative Bank ? these
a) To finance other co-operative societies in the entire country 19. Which of the following is a material alteration as per NI Act?
b) To finance other co-operative societies in the entire state a) Alteration of a bearer cheque into order cheque
c) To finance other co-operative societies in the district b) Alteration of an order cheque into bearer cheque
d) None of the above c) Alteration of the date of the cheque
13. What is the primary role of a Co-operative credit society? d) Alteration of amount of the cheque
a) To finance its members and includes a co-operative land e) b, c ,d f) None of these
development bank 20. What is the effect of a material alteration of a negotiable instrument?
b) To finance its members and excludes a co-operative land a) The instrument is void as against all persons who were the parties
development bank to the instrument at the time of the alteration
c) None of the above b) The instrument will be void if the parties did not give their consent
14. A Regional Rural Bank is sponsored by: to such alteration
a) Central Govt. b) State Govt. c) Commercial Bank c) Both a and b d) None of the above
d) None of these
15. Payment in due course is defined in: Answers:
a) S.10 of NI Act b) S.85 of NI Act 1) a 2) b 3) c 4) c 5) b
c) S.87 of NI Act d) None of these 6) a 7) c 8) b 9) a 10) b
16. An Official Liquidator had sold certain properties of the company 11) b 12) c 13) a 14) c 15) a
which was under liquidation, and the payment was received by 16) a 17) a 18) b 19) e 20) c
JAIIB - PRINCIPLES AND PRACTICES 11. State Co-operative banks will function at:
OF BANKING a) State level b) District level c) Rural areas
EXTRACT FROM OBJECTIVE QUESTIONS DIGEST d) None of these
12. State Co-operative bank is:
MODEL TEST- 1
a) A federation of Central Co-operative banks
b) A federation of Co-operative Societies c) None of these
1. Deposits of banks can be classified into: 13. What should be the authorized capital of a Regional Rural Bank?
a) Demand deposits b) Time deposits a) Rs.1000 cr b) Rs.500 cr
c) a and b d) None of these c) Rs.2000 cr d) None of these
2. Can banks undertake the administration of estates as executor, 14. What is the share holding of the Central Government in an RRB?
trustee? [Yes / No] a) 15% b) 50% c) 35%
3. Which section of B.R.Act prohibits banks from engaging in any d) None of these
trading activity? 15. Who will be the inspecting authority apart from RBI in the case of
a) S.6 of B R Act b) S.8 of B R Act RRBs?
c) S.5 of B R Act d) None of these a) Central Government b) NABARD
4. In respect of their constitution private sector banks are governed by c) State Government d) None of these
the provisions of: 16. Who is the sole authority for the issue of currency in the country?
a) Companies Act b) B R Act a) RBI b) Central Govt. c) None of these
c) RBI Act d) None of these 17. Who manages public debt of the Government?
5. With regard to the business of banking, Private sector banks are a) SBI b) RBI
governed by the provisions of: c) All commercial banks d) None of these
a) B R Act b) RBI Act c) a and b 18. RBI exercises control over the volume of credit created by the
d) None of these commercial banks in order to ensure price stability. [True / False]
6. Primary Urban Co-operative Banks are registered under: 19. RBI has powers to inspect the commercial banks under:
a) State Co-operative Societies Act a) S.22 of BR Act b) S.35 of BR Act c) S.42 BR Act
b) Multi-State Co-operative Societies Act d) None of these
c) Central Co-operative Societies Act d) None of these 20. RBI approval is necessary under S.35 (b) of BR Act for:
7. Primary Urban Co-operative banks operate in: a) Approval of appointment of Chairman of a commercial bank
a) Metropolitan Centres b) Urban Centres b) Re-appointment of Chairman of a commercial bank
c) Semi-urban Centres d) All of these c) Termination of appointment of Chairman of a commercial bank
8. Primary Urban Co-operative banks have to obtain license from: d) All the above e) None of the above
a) Registrar of Co-operative Societies
b) Reserve Bank of India Answers:
c) State Government d) None of these 1. c 2. Yes 3. b 4. a 5. c
9. Urban Co-operative banks will be included in the Second Schedule 6. a 7. d 8. b 9. c 10. a
of the RBI Act 1934 only if their Net Demand and Time Liabilities 11. a 12. a 13. c 14. b 15. b
are at least: 16. a 17. b 18. True 19. b 20. d
a) Rs.10 crore b) Rs.50 crore
c) Rs.100 crore d) None of these
10. Central Co-operative banks generally function in:
a) Districts b) Metro Centres c) State Capital
d) None of these
JS Digest of Banking and Finance March 2019 81 82 JAIIB-Principles and Practices of Banking
JAIIB- PRINCIPLES AND PRACTICES a) No b) Yes c) None of these
10. Is RBI approval required for amalgamation of banking companies?
OF BANKING a) Yes b) No c) None of these
EXTRACT FROM OBJECTIVE QUESTIONS DIGEST 11. Which Committee recommended setting up of a separate Board for
MODEL TEST- 2 Financial Supervision?
a) Goiporia Committee b) Talwar Committee
c) Narasimham Committee d) None of these
1. Quantitative credit control of RBI refers to: 12. Does a Banking company deal in goods either directly or indirectly?
a) Control of the volume of bank credit a) Yes b) No c) None of these
b) Influence the total credit of banks 13. According to Banking Companies (Acquisition and Transfer of
c) None of these Undertaking) Act, what should be the minimum authorized capital
2. Quantitative credit control is effected by RBI through the use of: of each Public Sector Bank?
a) Bank Rate b) Repo Rate a) Rs.300 crore b) Rs.500 crore
c) Open Market Operations d) Variable Cash Reserve requirements c) Rs.1500 crore d) None of these
e) All the above f) None of the above 14. Banks have to close their books of account every year as on 31st
3. Bank Rate refers to: March as per the provisions of:
a) The rate of interest at which RBI re-discounts the first class bills a) S.29 of BR Act b) S.23 of BR Act
of exchange from commercial banks c) S.42 of RBI Act d) None of these
b) The rate of interest at which RBI re-purchases Government 15. A voluntary amalgamation of banks could be brought about only in
securities from commercial banks terms of:
c) The rate of interest at which RBI lends to commercial banks a) S.24 of BR Act b) S.44 A of BR Act
d) None of the above c) S.17 of BR Act d) None of these
4. Present Bank Rate is: 16. Which section of BR Act provides for a bank to be reconstructed or
a) 6.50% b) 7.75% c) 7.5% d) None of these amalgamated compulsorily:
5. Open Market Operations of RBI refers to: a) S.44 b) S.45 c) S.35A
a) Buying or selling of Government securities in open market d) None of these
b) Increase or decrease of cash reserve ratio c) None of these 17. The SLR to be maintained by banks include:
6. CRR refers to: a) Cash b) Gold
a) The cash reserves to be maintained by banks in their currency c) Un-encumbered approved securities
chests d) a or b or c e) a, b and c f) None of these
b) Percentage of banks’ NDTL as cash reserves with RBI 18. The entire investment portfolio of banks (including SLR securities)
c) Ratio of cash to total advances of the bank d) None of these will be classified under:
7. RBI has removed the minimum and maximum CRR to be a) Held to maturity b) Available for sale
maintained by commercial banks. [True/False] c) Held for trading
8. What is the advantage of a bank becoming a Scheduled Bank under d) a, b and c e) None of these
Second Schedule of RBI? 19. In the case of deposits accepted by the bank, it is repayable only:
a) Its operations will be regulated by RBI a) When a demand is made by the customer
b) It becomes entitled to the facilities of re-finance from RBI b) When the customer closes the account
c) Its image in the eyes of the public will go up c) a & b d) None of these
d) None of these 20. In the case of the bank becoming an agent of the customer, the
9. Does the High Court appoint RBI as the Official Liquidator in relationship of agency terminates:
winding up of a banking Company? a) On the death of the customer
JS Digest of Banking and Finance March 2019 83 84 JAIIB-Principles and Practices of Banking
b) On the insolvency of the customer MODEL TEST BASED ON BANKING DIGEST –
c) On the insanity of the customer
d) All of these e) None of these
MARCH 2019 INFORMATION
Answers: 1. Who headed the Committee on governance reforms in public sector

1. a 2. e 3. a 4. a 5. a banks?
6. b 7. True 8. b 9. b 10. a 2. What is FATF?
11. c 12. b 13. c 14. a 15. b 3. What is the GST rate applicable for flats under construction?
16. b 17. d 18. d 19. c 20. d
4. Expand PMKSNY.
5. What is the deadline for mobile wallet companies on KYC
compliance?
6. What is the estimated fiscal deficit for 2019-20?
7. What is the name of the payment aggregator of IRCTC?
8. Expand EASE
9. MD & CEO of Yes Bank.
10. Who bought stakes in SBI Life recently?
11. Who is the non-Executive Chairman of Bank of Baroda?
12. What is PMUY?
13. Which is the cleanest capital in India?
14. Who are the mediators in the Ayodya Case nominated by Supreme
Court?
15. SBI has linked interest rates payable on accounts with balance
above Rs.1 lakh, to which rate?
16. Who is the Citi Group India CEO?
17. Who is the Chairman of IBBI?
18. Expand CIRP.
19. Who is the largest shareholder of IDBI Bank?
20. Doorstep banking for seniors is offered to elderly persons who are
over the age of?
21. Who is the Chairman of LIC?
22. Who has been appointed as the first Lokpal?
Answers:
1. P J Nayak
2. Financial Action Task Force, head quartered at Paris
3. 5% (Reduced from 12%)
JS Digest of Banking and Finance March 2019 85 86 Model Test

4. Pradhan Mantri Kisan Samman Nidhi Yojana Good News for FreshersGood News for Freshers
5. August 2019 HAVE YOU JOINED THE BANK
6. 3.4% of GDP
7. iPay
IN 2017 / 18 / 19
8. Enhanced Access & Service Excellence QUALIFY FOR JAIIB AND BECOME
9. Ravneet Gill ELIGIBLE FOR TO / INCREMENTS
10. Carlyle
11. Hashmukh Adhia
Objective Questions Digest
12. Pradhan Mantri Ujjwala Yojana – Supply of LPG gas to poor
13. Bhopal JAIIB / CAIIB
14. Former SC Judge FMI Kalifulla, Sri Sri Ravi Shankar and Sriram
Panchu
15. Repo Rate JAIIB :
16. Ashu Khullar
17. M S Sahoo Legal & Regulatory
18. Corporate Insolvency Resolution Process Aspects of Banking Rs. 250/-
19. LIC
20. 70 years Accounting & Finance for
21. Mr. M R Kumar
22. P C Ghose Bankers Rs. 250/-
Principles & Practices of

Banking Rs. 250/-
CAIIB :
Advanced Bank
Management Rs. 250/-
Bank Financial
Management Rs. 250/-
JS Digest of Banking and Finance March 2019 87 88

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Banking Digest (Monthly) b) Address J.S. Institute of Banking and
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4. Editor’s Name: Shri G. Subramanian
IC -M M II / M M II I
a) Nationality Indian
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I, G Subramanian, hereby declare that the particulars given above
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GOOD NEWS FOR ASPIRING The Institute

YOUNG BANKERS ESTABLISHED in 1991 as J.S.Institute of Banking and Careers. It was
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J S Institute launches Online Mock Test for through all the promotional exams and processes in the banking hierarchy.
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The Banking Guide, the premier publication of the Institute, authored by
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HIGHLIGHTS J S Institute’s Banking Guide (147000 copies with 29 editions in

JS Digest of Banking and Finance March 2019 3 4 Contents

JS Digest of Banking and Finance March 2019 5 6 Contents

JS Digest of Banking and Finance March 2019 7 8 Banking & Finance

JS Digest of Banking and Finance March 2019 9 10 Banking & Finance

JS Digest of Banking and Finance March 2019 11 12 Banking & Finance

JS Digest of Banking and Finance March 2019 13 14 Banking & Finance

JS Digest of Banking and Finance March 2019 15 16 Banking & Finance

JS Digest of Banking and Finance March 2019 17 18 Banking & Finance

JS Digest of Banking and Finance March 2019 19 20 Banking & Finance

JS Digest of Banking and Finance March 2019 21 22 Banking & Finance

JS Digest of Banking and Finance March 2019 23 24 Banking & Finance

JS Digest of Banking and Finance March 2019 25 26 Banking & Finance

JS Digest of Banking and Finance March 2019 27 28 Banking & Finance

JS Digest of Banking and Finance March 2019 29 30 Banking & Finance

JS Digest of Banking and Finance March 2019 31 32 Banking & Finance

JS Digest of Banking and Finance March 2019 33 34 Banking & Finance

JS Digest of Banking and Finance March 2019 35 36 Banking & Finance

JS Digest of Banking and Finance March 2019 37 38 Banking & Finance

JS Digest of Banking and Finance March 2019 39 40 Banking & Finance

JS Digest of Banking and Finance March 2019 41 42 Banking & Finance

JS Digest of Banking and Finance March 2019 43 44 Banking & Finance

JS Digest of Banking and Finance March 2019 45 46 Banking & Finance

JS Digest of Banking and Finance March 2019 47 48 Banking & Finance

JS Digest of Banking and Finance March 2019 49 50 Banking & Finance

JS Digest of Banking and Finance March 2019 51 52 Recent RBI Instructions

JS Digest of Banking and Finance March 2019 53 54 Recent RBI Instructions

JS Digest of Banking and Finance March 2019 55 56 Recent RBI Instructions

Transactions for purposes other than hedging interest rate risk

JS Digest of Banking and Finance March 2019 57 58 Recent RBI Instructions

JS Digest of Banking and Finance March 2019 59 60 Recent Banking Developments

Salient features of “Interest Subvention Scheme for MSME, 2018”:

All participants, other than individuals, undertaking transactions in

Modifications in CRE Home Loans: While considering eligibility if an

YONO CASH, a card lessSBI cash withdrawal facility through YONO

JS Digest of Banking and Finance March 2019 61 62 Recent Banking Developments

JS Digest of Banking and Finance March 2019 63 64 Concept Brief

BRINGING PAYMENT GATEWAYS WITHIN THE AMBIT OF RBI:

JS Digest of Banking and Finance March 2019 65 66 Concept Brief

JS Digest of Banking and Finance March 2019 67 68 Concept Brief

1. Real Accounts relate to

Answers: 1. Who headed the Committee on governance reforms in public sector

JS Digest of Banking and Finance March 2019 85 86 Model Test

Principles & Practices of

JS Digest of Banking and Finance March 2019 87 88

JS Digest of Banking and Finance March 2019 89 90

GOOD NEWS FOR ASPIRING The Institute

JS Digest of Banking and Finance March 2019 91 92

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