Financial Awareness for RBI Grade B-24 July 2017

Financial Awareness for RBI Grade B-24 July 2017

  1. Bank deposit and credit growth recover from demonetisation shock (Source: MINT)

  • Bank deposit growth as on 7 July was 10.74% from a year ago, slower than the 11.21% growth as on 11 November.
  • The demonetisation decision was announced on 8 November and it led to a huge influx of deposits into banks as people rushed to deposit their old five-hundred and thousand-rupee notes.
  • The fact that the year-on-year (y-o-y) rate of growth in bank deposits is now slower than what it was at the beginning of demonetisation indicates that bank deposit growth is now back to normal.
  • That is also true for growth in bank credit. Growth in non-food credit as on 7 July was 6.87% year-on-year, faster than the rate of growth as on 25 November, although it’s still below non-food credit growth as on 11 November.

2. Launching Rs200 note will fill missing middle: SBI report (Source: MINT)

  • The introduction of Rs200 note will fill in the “missing middle” even as the new currency in circulation (CIC) has already reached 84% of the pre demonetisation level, says a report.
  • Cash with banks, a CIC component, has however witnessed a decline over November 2016 level, said the State Bank of India (SBI) Ecowrap report. The data for 23 June 2017 shows cash in hand with banks declining to 5.4% of the currency in circulation from a high of 23.19% for the fortnight ended 25 November 2016, it said. Going by historical trends, cash in hand with banks is roughly 3.8% of CIC and is currently at 5.4%. This means at least an additional amount of 1.6%/ Rs25,000 crore of excess currency may be currently lying in ATMs and herein lies the importance of new Rs200 notes which could serve as the “missing middle” it said.

3. Banks to meet expert panel on debt waiver on July 25 (Source: ET)

  • Amid majority of farmers stopping loan repayments, a Punjab government-appointed expert panel will meet bankers for the first time on July 25 to seek suggestions on debt waiver.
  • The expert panel will meet representatives of several banks in connection with the debt waiver issue.
  • In the meeting, the panel is expected to seek suggestions from banks regarding the implementation of debt waiver scheme of the state government.

4. IMF retains India’s growth projections at 7.2%, ups China’s (Source: BS/ FE)

  • The International Monetary Fund (IMF) has retained India’s economic growth projections at 7.2 per cent in 2017-18, up slightly from 7.1 per cent in the previous year. However, the growth would accelerate to 7.7 per cent in 2018-19, IMF said while also maintaining the growth rate level projected in April.
  • Despite China’s growth projections being raised by a couple of notches, India’s economy would still be the fastest growing among large economies. China’s economy is projected to grow by 6.7 per cent in 2017, up 0.1 percentage points from the April forecast, and 6.4 per cent in 2018, up by 0.2 percentage points from earlier forecasts by the IMF.
  • IMF has lowered its economic growth forecasts for the US to 2.1 per cent for this year and the next, down from the 2.3 per cent for 2017 and 2.5 per cent for 2018 that it had predicted in April.

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