Financial Awareness for RBI Grade B-13 July 2017

Financial Awareness for RBI Grade B-13 July 2017

  1. Bank of Baroda moves NCLT to recover Rs 97 crore from Binani Cement (Source: MINT)

  • Bank of Baroda has filed a petition against Binani Cement Ltd with the National Company Law Tribunal’s (NCLT) Kolkata bench, seeking to recover Rs97 crore in an outstanding loan under the new Insolvency and Bankruptcy Code after the firm failed to come up with a restructuring plan to clear its dues.
  • Lawyers for Binani Cement claimed Bank of Baroda’s application had several technical flaws, and that its claim was minuscule compared with the total value of the group’s assets, which, according to its lawyers, is Rs 14,000 crore.

2. Essar Steel not singled out on bad loans, RBI tells Gujarat HC (Source: MINT)

  • Essar Steel is not being singled out and all big defaulters are being taken through a structured process for speedy resolution of the bad loan problem plaguing the Indian banking system, Reserve Bank of India (RBI) counsel argued at the Gujarat high court yesterday.
  • RBI counsel told Gujarat HC that Essar Steel’s bad loans rose in FY17, and that Insolvency and Bankruptcy Code is ‘not draconian’, but ‘protects interests’ of a firm.

 3. SEBI may let AIFs, QIBs buy security receipts (Source: MINT)

  • The Securities and Exchange Board of India (SEBI) is considering allowing alternative investment funds (AIFs) and qualified institutional buyers (QIBs) to buy security receipts issued by asset reconstruction companies (ARCs).
  • SEBI is working with RBI to sort out issues around the budget proposal to make security receipts tradable on stock exchanges to increase capital flows and solve bad loan issues.

4. Lack of machines delayed counting of banned notes: RBI chief tells panel (Source: BS)

  • Lack of adequate machines and related infrastructure has delayed the counting of demonetized currency that has come back into the system, Reserve Bank of India (RBI) Governor Urjit Patel has said.
  • The parliamentary standing committee on finance, that will table the report on demonetisation in the monsoon session starting July 17, gave the RBI chief 15 days time to submit data on deposits of invalidated Rs 500 and Rs 1,000 notes, besides counterfeit currency in circulation.

5. Haircut needed to resolve NPAs, says Rangarajan (Source: BS)

  • Former Reserve Bank of India governor C Rangarajan says ‘some haircut’ is inevitable in the process of resolving the big load of bad loans at government-owned banks.
  • A haircut is the term for the writeoff a lender accepts on a debt payment when a borrower can’t repay what is due at a point in time. Needed here, said Rangarajan, since the size of non-perofrming accounts (NPAs) had become so big.

6. RuPay to tap premium customers as banks renew deals with Visa, Mastercard (Source: BS)

  • The National Payments Corporation of India (NPCI) is looking at increased uptake of its RuPay debit cards among premium customers, as deals signed between banks and its global competitors Visa and Mastercard expire over the next few years.
  • Though RuPay controls 42 per cent of the Indian debit card market, the share of its cards is only 16 per cent of total Point of Sale (PoS) and e-commerce transactions. This is largely due to the fact that the majority of RuPay cards —around 220 million—are held by benefactors of the Jan Dhan Yojana scheme.

7. RBI keeping a close watch on transactions involving cryptocurrencies: Patel (Source: BS)

  • The Reserve Bank is keeping a close watch on transactions involving cryptocurrencies, Governor Urjit Patel is understood to have told the members of the Parliamentary panel on finance.
  • He also told the panel that an inter-disciplinary committee has been formed to discuss the legality of cryptocurrencies.

8. Record low CPI a paradigm shift in inflationary process that has been missed by all, says Arvind Subramanian, Chief Economic Advisor (Source: FE)

  • Subramaniam said the shift has been missed by all and that the latest IIP and CPI data will surely be taken note by policy makers.
  • India’s consumer price inflation fell to 1.54% in June, the lowest in five and half years. Inflation in May stood at 2.18% whereas the industrial output rose 1.7% in May from a year earlier.
  • This unusually and hearteningly low number is consistent with our analysis for some time now. The number of 1.54% is historically low and reflects the firm and ongoing consolidation of macroeconomic stability, said Subramaniam.

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