Financial Awareness for RBI Grade B-5 July 2017

Financial Awareness for RBI Grade B-5 July 2017


  1. Jyoti Structures first to face bankruptcy proceedings under IBC (Source: MINT)

  • The National Company Law Tribunal (NCLT) has approved bankruptcy proceedings for power infrastructure company Jyoti Structures Ltd, making it the first among the 12 cases referred by the central bank under India’s new Insolvency and Bankruptcy Code (IBC).
  • The tribunal’s order came on an insolvency application filed last week by the company’s lead lender State Bank of India (SBI). According to NCLT filings, the company has total debt of Rs7,000 crore.
  • Jyoti Structures was one of the power sector firms hit by a lack of fuel linkages or trouble in completing the land acquisition. Lenders invoked RBI’s strategic debt restructuring (SDR) norms in 2015 and restructured its debt outside the provisions of SDR. Since then, banks have been trying to sell their 51% stake in the company with no success.

2. June quarter records highest ever FPI inflows into Indian debt (Source: BL)

The first quarter of this fiscal that ended last week has been robust in terms of the foreign money inflows into the country. Foreign portfolio investors (FPIs) poured a record $10.1 billion into the Indian debt segment in this quarter (April-June), the highest ever for any quarter on record since 2002. The year 2017 began on a weak note as FPIs were pulling out money since the US Presidential elections held in November 2016. The surprise victory of Donald Trump in the elections triggered the FPIs to pull out money from the Indian markets. The actual turnaround came in the month of March. The resounding victory of the ruling Bharatiya Janata Party (BJP) in the Uttar Pradesh Assembly elections came as a major trigger for this turnaround.

3. India scores well on FSB reform report card to G20 (Source: BL)

  • The Financial Stability Board (FSB), an international body for the global financial system, has placed India in the league of countries that are ‘compliant or largely compliant’ on the implementation of priority area reforms.
  • The report listed India as a ‘compliant’ jurisdiction with regard to Basel III reforms in the risk-based capital and as ’largely compliant’ on liquidity coverage ratio. Other countries that have been found to be ‘compliant or largely compliant’ on these metrics include Argentina, Australia, Brazil, Canada, China, Hong Kong, Indonesia, Japan, Mexico, South Korea, Russia, Singapore, South Africa, Switzerland, Turkey and the US.

4. Cash dealings limits: Centre tweaks norms, says dealings of over Rs 2 lakh will not apply to credit card payments(Source: FE)

  • Restrictions on cash dealings of Rs 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments, the revenue department has said.
  • The Finance Act, 2017, banned cash transaction of Rs 2 lakh or above with effect April 1, 2017. However, some exceptions were made. Through a notification, the income tax department has exempted five entities from the purview of this section. These include receipts by a business correspondent on behalf of a banking company or co-operative bank; and receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards.

5. Services PMI rises to eight-month high of 53.1 in June (Source: BL)

  • Led by a sharp upturn in new work, the Nikkei India Services PMI Business Activity Index rose to an eight-month high of 53.1 in June. It stood at 52.2 in May. The Nikkei India Composite PMI Output Index also rose to an eight-month high of 52.7 in June from 52.5 in May.
  • “Business conditions in India’s service sector continued to improve in June as a solid and accelerated upturn in new work resulted in a faster increase in activity,” Nikkei said.
  • Job creation was also maintained at May’s 47-month record pace. The best-performing sub-sector in June was financial intermediation, where growth rates surpassed those seen elsewhere. Activity and incoming new work rose in four out of the six broad categories covered by the survey, except for hotels and restaurants and renting and business activities.

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