Financial Awareness for RBI Grade B-10 July 2017

Financial Awareness for RBI Grade B-10 July 2017

  1. Legal heavyweights join Essar’s challenge to RBI’s bad loan plan (Source: MINT)

  • Some of the top legal brains in the country are facing off in the ongoing Essar Steel versus Reserve Bank of India (RBI) tussle in Gujarat high court.
  • The case was triggered after RBI moved the National Company Law Tribunal (NCLT) to initiate insolvency proceedings against Essar Steel. Eleven other companies are facing a similar fate, it is part of RBI’s new plan to resolve Indian banks’ accumulated bad debt problem of around Rs 8 trillion.

2. Fed says post-crisis rules may sap bond-market liquidity (Source: MINT)

  • The Federal Reserve acknowledged that post-crisis financial regulations may be crimping bond-dealers’ incentives to make markets, while also saying that the impact on liquidity appears to be limited.
  • “A series of changes, including regulatory reforms, since the global financial crisis has likely altered financial institutions’ incentives to provide liquidity,” the Federal Reserve Board said in its semi-annual Monetary Policy Report. “However, the available evidence does not point to any substantial impairment in liquidity in major financial markets.”

3. AU Small Finance Bank to make market debut today (Source: MINT)

  • AU Small Finance Bank will make its stock market debut on 10 July’17 after successfully concluding its initial public offer (IPO) in June.
  • AU Small Finance Bank received licence from the Reserve Bank of India (RBI) to set up a small finance bank in December 2016 and commenced operations from April 2017.

4. SBI launches digital village initiative in Nepal (Source: MINT)

  • The State Bank of India (SBI) has launched a digital village initiative in Nepal by installing a cash recycling centre. The digital village initiative has been launched in Jarisingpouwa village, 25km east of Kathmandu.
  • The cash counter enables the villagers to deposit and withdraw money through the automatic machine.
  • The SBI also celebrated 25 years of its establishment in Nepal on 7 July’17.

5. Demonetisation no ground for banking ombudsman to handle complaints: RBI (Source: ET)

  • Customers’ complaints about problems like cash withdrawal and exchange of old notes faced post demonetisation cannot be entertained under the Banking Ombudsman (BO) scheme, the Reserve Bank has said.
  • The central bank said that demonetisation is not one of the 27 grounds under which a customer can lodge a complaint with the Banking Ombudsman.

6. Enforcing zero liability norms will be challenging: Banks (Source: ET)

  • With the RBI’s new norms, the onus of proving that the customer is negligent rests with the banks. Banks agree that the new norms will provide greater comfort to customers and encourage digital transactions. However, they are worried about dealing with fraudsters who might try to misuse regulations. While in the past banks simply avoided compensating customers for suspect transaction, the new rules require that banks prove the complicity of the customer.
  • Banks will have to develop tracking software which can “fingerprint” parties in a transaction to prevent some customers from trying to game the system.

7. P-Note unwinding to weigh on equity market (Source: BL)

  • SEBI has banned foreign portfolio investors (FPIs) from issuing P-Notes where the underlying assets are equity derivatives, and ordered unwinding of existing contracts.
  • The move could put severe pressure on the stock market as equity derivative positions of over Rs 40,000 crore are held via PNotes, most of which would be unwound, leading to a domino effect on cash equities.

8. Remove barriers, reduce subsidies to open up trade: Lagarde (Source: BL)

  • Warning against complacency in the current phase of global economic recovery, IMF chief Christine Lagarde has asked the members of G20 group, which includes India, to step up reforms by reducing trade barriers and subsidies to promote a level playing field.
  • Lagarde said that the world needs to continue to collaborate to address risks and ensure strong, sustained, balanced and inclusive growth. She called for an urgent action to strengthen global growth and build inclusive economies while keeping away from complacency.

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