Financial Awareness-February(21-28) 2017

  1. BharatQR code launched (Source: MINT)
  • Retail electronic payments will become more seamless with the launch of BharatQR code—a quick response (QR) code mandated by the government to enable digital payments without card swiping machines.
  • Currently, the QR code-based acceptance systems in the country are largely closed systems. Right now only 15 banks have come on board and are in the process of deploying Bharat QR code. The 15 banks are Axis Bank, Bank of Baroda, Bank of India, Citi Union Bank, DCB Bank Ltd, Karur Vysya Bank, HDFC Bank Ltd, ICICI Bank Ltd, IDBI Bank Ltd, Punjab National Bank, RBL Bank Ltd, State Bank of India, Union Bank of India, Vijaya Bank and Yes Bank Ltd.
  • BharatQR is a common QR code jointly developed by all the four major card payment companies—National Payments Corp. of India that runs RuPay cards, MasterCard, Visa and American Express—under instructions from the Reserve Bank of India (RBI).
  • It is a major revolutionary step because of interoperability. The merchants will be identified by one QR code whether the payment is through MasterCard, Visa or RuPay and this will result in deepening of acceptance infrastructure. Besides working as a common interface for the Visa/MasterCard/RuPay platform, BharatQR will also facilitate acceptance using Aadhaarenabled payments and Unified Payments Interface (UPI).

2. TransferWise launches international money transfers via Facebook (Source: MINT)

  • Money transfer company TransferWise has launched a new service that allows users to send money internationally through Facebook Inc.’s chat application, as competition in the digital payments landscape intensifies.
  • TransferWise’s “Facebook Messenger” chatbot enables customers to send money to friends and family to and from the United States, Britain, Canada, Australia and Europe from Facebook Messenger. It can also be used to set up exchange rate alerts.
  • Facebook already allows its users to send money domestically in the United States via its Messenger app, but has not yet launched similar services internationally. TransferWise said its service will be the first to enable international money transfers entirely within Messenger

3. With liquidity worry, banks return to CD market (Source: BS)

  • After a demonetisation-induced dip in issuance, banks are returning to the certificates of deposit (CD) market, even as liquidity seems more than adequate. In the fortnight ended January 20, banks issued Rs 8,310 crore of CDs.
  • In the fortnight before demonetisation, banks had issued Rs 5,154 crore of CDs, as of the end of October 28, Reserve Bank (RBI) data shows. In the midst of demonetisation, when banks were inundated with heavy deposit flow, CD issuance had dipped to multi-year lows, as banks did not need outside liquidity support.
  • In the fortnight ended December 23, banks issued only Rs 1,671 crore of CDs. The rates being offered now have also inched up. CDs issued in the fortnight ended January 20 were for 6.40-6.62 per cent.
  • According to bond dealers, the spike in CD issuance could indicate that liquidity won’t remain as comfortable by the end of the financial year (March 31) as it now is. Most of the CD issuances are happening at the three-month maturity.
  • This could be because some banks are keeping their liquidity situation comfortable before the financial year ends, when system liquidity generally becomes tight.

4. Finance Ministry to finalise capital infusion of Rs 8K-cr within 15 days (Source: ET)

  • The Finance Ministry is giving final touches to infusing around Rs 8,000 crore in public sector banks (PSBs) as part of its second and final tranche for the current fiscal, 2015-16. The second round of capital infusion is almost ready and in the next few days it should go to Finance Minister Arun Jaitley for approval.
  • The second round of funding would be based on the strict parameters, sources said, adding that few banks would be eligible, and include those whose common equity Tier 1 (CET1) capital is lower than 8 per cent. Some of the banks eligible for fund infusion include IDBI Bank, Indian Overseas Bank and UCO Bank where CET1 has been less than 8 per cent at the end of the third quarter of the current fiscal.

5. MPC minutes show four members sought change in policy stance (Source: MINT)

  • Four out of six members of the monetary policy committee (MPC) were in favour of changing the monetary policy stance to neutral from accommodative on 7 February, according to minutes of the meeting released.
  • The main argument for a change in stance was stubborn inflation, mainly core inflation. This, coupled with the impact of remonetization of the economy could result in hardening of the headline inflation number, according to the MPC minutes.
  • While announcing the monetary policy, governor Patel said all six members had agreed to hold the repo rate at 6.25%.

6. All banks told to move to Aadhaar Pay by March end (Source: MINT)

  • In a massive push to Aadhaar pay, the IT ministry and the Unique Identification Authority of India (UIDAI) have asked all banks to move to the Aadhaar Pay platform by end March.
  • Further, to address security concerns related to biometric data, only those merchants registered with UIDAI will be able to provide Aadhaar Pay services.
  • Aadhaar Pay is a service for merchants which will enable them to receive payments from customers without any physical payment instrument.

7. RBI to frame standard procedure for FDI approvals post FIPB (Source: Mint)

  • The Reserve Bank of India (RBI) is expected to formulate standard operating procedure (SOP) for approval of foreign direct investment (FDI) proposals by ministries following the government decision to phase out Foreign Investment Promotion Board (FIPB).
  • The proposal for setting up norms for FDI approvals in sensitive sectors, which are currently under government approval of the FDI policy, was discussed at a recent inter-ministerial meeting. According to people aware of the development , several options came up for discussions at the meeting. In order to further improve ease of doing business, the government has decided to abolish FIPB and form a new mechanism for expeditious clearance of foreign investment proposals.

8. NPCI begins pilot project to digitize transactions in microfinance sector (Source: MINT)

  • The National Payments Corporation of India (NPCI) Wednesday said it has begun a pilot project to digitize transactions in microfinance institutions (MFIs).
  • Under the program, RBL Bank will be disbursing loans and HDFC Bank will be receiving the loan repayments for the transactions of Svatantra Microfinance using Aadhaar payment bridge system and unstructured supplementary service data (USSD) based *99#. MFIs will ensure that Aadhaar number is properly noted and share the same with the lending bank for validation.
  • Once the microfinance borrower’s Aadhaar number is validated by the lending bank, loan amount will be directly credited into the Aadhaar-seeded accountOn repayment front, there is an option of push and pull transaction. Under push transactions, repayment will be initiated by the customers whereas under pull transactions, MFI has to send a bulk pull request to the customer in coordination with sponsor bank, which is HDFC Bank in this case.

9. Creation of bad bank may quicken resolution of stressed assets’ issue: Report (Source: Mint)

  • Creation of bad bank might accelerate the resolution of stressed assets in the banking sector, said international rating agency Fitch Ratings in a report on Friday.
  • “A larger-scale bad bank with government backing might have more success. However, it is unlikely to function effectively without a well-designed mechanism for pricing bad loans, particularly if the intention is for the bad bank to be run along commercial lines and involve private investors,” the report noted.
  • According to the rating agency, banks would need capital to cover haircuts taken during the sale of stressed assets, and the bad bank would most likely require capital to cover any losses incurred during the resolution process.

10. India Post Bank is likely to tap World War-era tech to garner business (Source: ET)

  • It is back to basics for India Post Payments Bank (IPPB). It is tapping into World War-era phone-based technology and its vast network of postman to target a customer base of around 850 million, which either have no access to telephony or still depend on feature phones.
  • “Banks and payments banks are two different things. Over 90% households have access to bank accounts. So, we are targeting remittances and bill payments,“ said an officer at the bank, which launched operations a month .

11. Steel firms lower prices as demand stagnates (Source: BS)

  • Steel companies have lowered prices for the first time since the government introduced trade measures like the minimum import price (MIP) on the back of lower demand. Steel producers said selling prices were lower than list prices by Rs 2,000- 3,000 a tonne.
  • The problem is with domestic demand, which is not growing to the extent it should. Auto demand alone cannot drive domestic demand. In 2015-16, consumption of Indian steel stood at 81.5 million tonnes, which was up by 4.8 per cent. · According to a CARE Ratings report, steel consumption, after demonetisation, is expected to remain under pressure in the coming few months to a certain extent.


12. IMF sees growth cooling to 6% in second half of FY17 (Source: BS)

  • India’s economic growth would slow to about six per cent in the second half of this financial year (October-March) due to demonetisation, against 7.2 per cent in the first half, the International Monetary Fund (IMF) said.
  • The Fund said the cost of recapitalising public sector banks would be affordable even under a negative scenario. In a report on India, the IMF said growth would gradually rebound in 2017-18.
  • In January, it had cut India’s growth estimate to 6.6 per cent for 2016-17 due to the note ban, against 7.6 per cent estimated earlier. Growth was estimated to be 6.2 per cent in the fourth quarter of the financial year. Taking both the estimates into consideration, the IMF said, third quarter growth might fall below six per cent.

13. Government underestimated twin-balancesheet problem faced by banks, corporates: CEA Arvind Subramanian (Source: FE)

  • The government and its advisers may have initially underestimated the so-called twin balance sheet (TBS) problem faced by the banks and Corporate India, chief economic adviser Arvind Subramanian said.
  • He also said even though the TBS problem found mention in the December 2014 mid-year economic review, even it did not fully gauge the seriousness of the issue or call for its urgent tackling.
  • Referring to the RBI-initiated debt-resolution schemes like 5/25 and SDR, he said these also lulled everyone to think that the twin balance sheet problem would get resolved on its own. The latest Economic Survey has advocated the creation of a public sector asset reconstruction agency, given that private-sector ARCs haven’t been very successful. The government is, however, treading cautiously on this advice

14.  FRBM panel wants revenue deficit down to 30% of fiscal deficit by 2023 (Source: BS)

  • The Fiscal Responsibility and Budget Management (FRBM) Committee has recommended that the Centre’s revenue deficit should just be 30 per cent of fiscal deficit by the completion of its six-year roadmap ending 2023, Business Standard has learnt. This is markedly different from the existing fiscal roadmap which envisages completely eliminating revenue deficit, something which successive finance ministers have failed to do

15. Foreign Portfolio Investors net inflow at Rs 14,600 cr in February (Source: FE)

  • Overseas investors have pumped in over Rs 14,600 crore into the Indian capital markets this month so far, enthused by clarity on FPI taxation.
  • The latest inflow followed a net pullout of Rs 80,310 crore from equity and debt together in the past four months (OctoberJanuary). Prior to that, FPIs had invested over Rs 20,000 crore in the capital market in September 2016.
  • According to depository data, foreign portfolio investors (FPIs) infused a net sum of Rs 9,359 crore in equities during February 1-23 and another Rs 5,279 crore in the debt segment, translating into a total inflow of Rs 14,638 crore.
  • The net inflow may increase further as two trading sessions are still left in this month, experts believe.



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