Financial Awareness for RBI Grade B-29 July 2017

Financial Awareness for RBI Grade B-29 July 2017

  1. NPCI gets RBI nod to operate Bharat Bill Payment System (Source: MINT/ ET/ BL)

  • National Payments Corporation of India (NPCI), the umbrella organization for all retail payment systems in the country, has received the final nod from the Reserve Bank of India (RBI) to function as the Bharat Bill Payment Central Unit and operate the Bharat Bill Payment System (BBPS).
  • The final clearance from RBI comes almost a year after NPCI launched the BBPS pilot project to make payment of utility bills easier. The pilot started on 31 August with eight BBPS operating units that had received in-principle approval from RBI.
  • The total number of Bharat Bill Payment Operating Units certified by NPCI now stands at 24. The certified units include three public sector banks (Bank of Baroda, Union Bank of India and Indian Overseas Bank), 10 private sector banks, five cooperative banks and six non-bank biller aggregators.

2. Sebi allows banks, insurers to invest in arms of IFSC-based exchanges (Source: MINT)

  • India’s market regulator has allowed banks, insurers, commodity bourses and public financial institutions (FIs) to invest in subsidiaries of stock exchanges and clearing corporations at international financial services centres (IFSCs) such as the one at Gandhinagar in Gujarat.
  • Securities and Exchange Board of India (Sebi) said any domestic or foreign bourse can form a subsidiary to provide stock exchange services in an IFSC, provided it holds at least a 51% stake in such a unit.
  • The remaining stake can be held by any other stock exchange, depository, bank, insurer, commodity derivatives exchange or a public FI.

3. Once ‘fragile’ India gets thumbs up even as RBI rates are set to fall (Source: MINT)

  • When Federal Reserve taper fears jolted emerging markets in 2013, India was one of the worst hit and was forced to raise interest rates to underpin its tumbling markets.
  • Fast forward to 2017, and history has been turned on its head. Not only is the US central bank raising rates, but India is widely expected next week to be the first country in Asia to cut policy rates in 2017.
  • And rather than being concerned at India’s falling policy rate premium over the US, foreign investors are giving the country’s markets the thumbs up. The rupee is rallying and the country’s bonds are in demand, offering some of the best inflationadjusted returns in Asia. Inflation, long a thorn in the economy, is at its lowest in five years, economic growth is picking up and the current account deficit is a fraction of its old self.

4. CAG raps govt-owned banks for understating non-performing assets (Source: BS)

  • The Comptroller and Auditor General of India (CAG) has slammed the managements and statutory auditors of 12 public sector banks (PSBs) for overstating their net profit, by underestimating non-performing assets (NPAs) and under-providing for these bad assets during 2016-17.
  • Also, there were differences in the classification of and provisioning for assets between five banks and the Reserve Bank (RBI) but as the divergence did not fall within the criteria fixed by the latter, it had not been disclosed by these lenders, the audit watchdog said in its report.
  • The highest underestimation was made by Bank of Maharashtra, by Rs 3,034 crore, followed by Central Bank of India (Rs 2,097 crore), Corporation Bank (Rs 1,954 crore) and Oriental Bank of Commerce (Rs 1,350 crore).
  • CAG also observed that the criteria for infusing capital was changed by the government in between. It recommended that the criteria for fund infusion, once finalised, be consistently applied across all PSBs.

5. US economy expanded at stronger 2.6 per cent rate in Q2 (Source: FE)

  • The US economy revved up this spring after a weak start to the year, fueled by a surge in consumer spending. But the growth spurt still fell short of the optimistic goals President Donald Trump hopes to achieve through tax cuts and regulatory relief.
  • Growth in the gross domestic product, the economy’s total output of goods and services, expanded at a 2.6 per cent annual rate in the April-June quarter.
  • That’s more than double the revised 1.2 per cent pace in the first quarter. The improvement was powered in large part by robust consumer appetite for items such as clothing and furniture. The 2.6 per cent GDP gain came in close to economists’ expectations.

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