WEEKLY FINANCIAL SNIPPETS- 01/07/2017

1. RBI STARTS THE PROCESS OF PRINTING Rs. 200 CURRENCY NOTES: Reserve Bank of India has started the process of printing new Rs.200 currency notes. This appears to be the last exercise under the re-monetization steps taken by the government and this step is taken to help ease consumer transactions. For day-to-day transaction purposes, the introduction of Rs.200 notes will add to the comfort of the public at large.

2. RBI SAYS- BANKS NOT RESPONSIBLE FOR THEFT FROM BANK LOCKERS:Banks are not liable to compensate its customers in case of theft or burglary in safe deposit lockers. This is revealed in an RTI response by RBI and 19 PSU banks. Some banks, in their locker hiring agreements, have made it clear that any item stored in the locker is at the customer’s own risk and he/she may insure the same in his/her own interest.

3. BANKS FACE 60% “HAIRCUT” ON TOP 12 BAD LOANS: Dragging defaulters to the National Company Law Tribunal ( NCLT) and initiating insolvency proceedings will take heavy toll on bank finances. According to CRISIL, banks will have to sacrifice nearly 60% of the value of the loans extended to 12 indebted companies which the banks have referred to the NCLT at the instance of RBI.

4. RBI PROVISIONING “DIKTAT” SHOCKS THE BANKS: The Reserve Bank of India shocked the banks this week by demanding a steep hike in provisioning requirements for loans being referred to the bankruptcy courts, a move likely to take a Rs. 50,000 crore toll on their earnings this fiscal. RBI has instructed banks to set aside 50% of the loan amount as likely losses for all cases referred to the insolvency process. RBI also said that provisioning should be 100% in those cases that do not get resolved in the initial mandatory period for restructuring and instead are forced into liquidation. But banks have been given time of three quarters to spread the provisioning requirements from June 2017 till March 2018.

5. RBI ASKS BANKS TO RESOLVE 55 DEFAULT CASES IN 6 MONTHS OR FACE IBC: The Reserve Bank of India has asked banks to resolve 55 high value cases of bad loans within 6 months or face the prospect of being directed to go in for the new insolvency resolution mechanism as a part of the strategy to tackle the bad loans scenario on a war footing basis.

6. FINANCIAL YEAR LIKELY TO BE CHANGED FROM 2018: The financial year in India could commence from January instead of April from the year 2018. The government appears set to make the historic transition to end the 150 year old tradition. Accordingly, the next budget could be presented by the centre in November this year.

7. AADHAAR-PAN LINKING MANDATORY FROM JULY 1st: Finance Ministry has made itmandatory to link Aadhaar with PAN Number. Individuals having PAN No. will have to link it to their existing Aadhaar Number from July 1st Every person who has been allotted PAN shall intimate his Aadhaar number to the tax department.

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WEEKLY FINANCIAL SNIPPETS- 24/06/2017

1. PASS ON THE GST BENEFITS TO CONSUMERS OR GET LICENSE SCRAPPED: Any business entity that fails to pass on the benefit it derives from lower taxes under GST regime to its consumers, faces penalties and cancellation of  license under the new antiprofiteering rules. The new National Antiprofiteering Authority would be empowered to force reduction in the prices to the extent of lowering of taxes, and impose penalty or even cancel the registration under the Central GST Act in case the benefit is not passed on to the consumers.

2. SUPREME COURT RULING ON AADHAAR-PAN LINKING AND CBDT CLARIFICATION: Further to the ruling by Supreme Court ruling on the constitutional validity of Aadhaar-PAN linking provision, the Central Board of Direct Taxes (CBDT) has clarified that every tax payer has to quote his Aadhaar number /Aadhaar enrolment ID while applying for obtaining PAN card number and also while filing his/her tax returns from July 1st

3. RBI INSTRUCTS BANK TO PROVIDE ADEQUATE TRANSACTION DETAILS IN PASSBOOKS: The Reserve Bank of India has instructed all banks to provide “adequate details” in the passbooks and account statements so that the customers can cross check the entries easily. RBI has advised banks to avoid inscrutable entries in the passbooks /statement of accounts and ensure that brief and intelligible particulars are entered with a view to avoid inconvenience to the customers.

4. SEBI RELAXES NORMS FOR LENDERS BUYING STAKE IN DISTRESSED COMPANIES: Securities & Exchange Board of India (SEBI) has relaxed the norms for lenders to purchase stakes in distressed companies, exempting them from making open offers for shareholders. The relaxation would be subject to certain conditions, including shareholders’ approval of the stake acquisition by way of special resolution. SEBI said this is aimed at facilitating “turnaround” of listed companies which are in distress which will benefit the shareholders and the lenders.

5. NO TIMELINE ON IDENTIFYING ADDITIONAL LOAN DEFAULETERS: The RBI Deputy Governor has said that there is no specific timeline set for banks to identify additional defaulters on which bankers would need to start bankruptcy proceedings. Earlier this week the RBI had identified 12 largest loan defaulters to pursue bankruptcy proceedings against them.

6. GOVERNMENT IN TALKS WITH RBI TO DEFER BASEL-III NORMS FOR BANKS: The RBI has laid down norms for implementation of international capital norms or “BASEL-III” norms for Indian Banks by March 2019. According to these norms the banks have to maintain a minimum common equity ratio of 8.5% and total capital ratio of 11.5% by March 2019. However banks are struggling to maintain these ratios as they are saddled with huge bad loans scenario. Considering the current bad loan scenario, the government is in discussion with RBI to explore the possibility to defer the full implementation of “BASEL-III” norms.

7. RECORD INCOME TAX COLLECTIONS THIS YEAR: Net Income Tax collection till June 15th 2017 grew at a healthy 26.2% to Rs. 1,01,024crore from across the country. Last year up to June 2016 the tax collection was Rs. 80,075 crore.

WEEKLY FINANCIAL SNIPPETS- 17/06/2017

1. FARM LOAN WAIVERS DISRUPT CREDIT DISCIPLINE: Farm loan waivers are the populist actions and lead to disruption of credit discipline among borrowers. Frequent farm loan waiver schemes will have a negative impact as farmers expect future loan waivers from time to time and thus delay or stop repaying the loans. Frequent occurrence of such populist actions (loan waivers) may lead to impaired credit repayments and thus reduced credit availability to farmers.

2. RBI TO DIRECT BANKS TO START BANKRUPTCY PROCEEDINGS AGAINST 12 BIG DEFAULTERS: The Reserve Bank of India has identified 12 of the largest loan defaulters and has instructed the bankers to initiate bankruptcy proceedings against them. The move comes about amonth after the government gave RBI greater power to deal with bad loans, including banks to initiate an insolvency resolution process in case  of a default. These 12 accounts constituted about 25% of the overall gross Non-Performing Assets (NPAs), and have been identified, as the committee focussed on those accounts owing more than Rs.5,000 crores, out of which more than 60 % of the loan had been classified as NPA.

3. ONLINE BANKING TO KILL PHYSICAL BANKING IN 5-6 YEARS: As per NITI Aayog CEO Mr Amitabh Kant, low cost internet based banking transactions and business efficiency due to technology advancements are expected to kill the physical banking trend in 5-6 years. In 5-6 years it will be very difficult for physical banks to survive because the cost of physical banks will be enormous. This cost will be very huge to bear for the banks compared to the cost of an online fintech company and their ability to do data analysis and providing credit.

4. NPCI TO LAUNCH RUPAY CREDIT CARD BY JULY: The National Payments Corporation of India (NPCI) has said it will launch a RuPay credit card by July this year. As many as 56 different banks have shareholding in NPCI despite it being a non-listed entity with no dividend declarations. Presently there are 241 million RuPay debit cards in circulation in India comprising 35% of the card base in India.

5. RBI EXAMINING RELAXING BAD LOAN CLASSIFICATION LIMIT OF BEYOND 90 DAYS FOR SMEs: Currently an account turns into a Non-Performing Asset (NPA) or bad loan if it is not serviced for 90 days. In case of Small Businesses and SMEs, their receivables usually come late(absence of vibrant factoring or trade receivable market) and once this cycle is delayed, they miss the 90 day period of repayment, they fall into NPA category and coming out of NPA category is very difficult for these SMEs. Some people have made a true representation in this matter to the Ministry of Finance and hence RBI is looking into it, to extend the classification norm of 90 days period for Non-Performing Assets to help Small and Medium Enterprises ( SMEs).

6. BHARAT FINANCIAL TO ROLL OUT 2 LAKH “KIRANA POINTS” IN 16 STATES: Bharat Financial Inclusion(Earlier known as SKS Microfinance) is planning to launch 2 lakh “Kirana Points” across its networkin 16 states in partnership with leading banks. With introduction of Kirana Points, the company’s borrowers can walk into the nearest kirana point store and make basic financial transactions like repaying loan, deposits and withdrawals from savings account and make bill payments. For this the company will appoint agents to set up kirana points.

7. PE FIRMS, NBFCs FIND INVESTMENT OPPORTUNITY IN AFFORDABLE HOUSING: Private Equity and Non-Banking Financial Companies (NBFCs) are looking at affordable housing projects.  A few Institutions have already invested money in affordable housing projects, bringing in the much needed liquidity. This is the result of the government’s thrust on the segment and recently accorded infrastructure status.

WEEKLY FINANCIAL SNIPPETS- 10/06/2017

1. RBI DIRECTS BANK BRANCHES TO COMPLY WITH PPO ORDER: The Reserve Bank of India has directed all the bank branches to record Pension Payment Order number (PPO) in the passbooks of pensioners to avoid any hassle in case the PPO is lost. This is affected to nullify the difficulties reported by pensioners or their family pensioners to get duplicate PPO.

2. SBI SNAPS “LINE OF CREDIT” TO STRESSED TELECOM COMPANIES: State Bank of India has cancelled existing but unused credit lines to some financially weak telecom companies, following the banking regulator’s direction to make immediate provisions against the credit given to telecom sector including their standard assets. As per the line of credit, a borrower can draw from the credit as per his requirements. By scrapping the facility, bank will be able to bring down its requirement of capital that otherwise needs to be set aside as provisions. SBI is also waiving the commitment charges.

3. BANKS NEED Rs.95,000 CRORE ADDITIONAL CAPITAL OVER NEXT TWO YEARS: As per Moody’s Investors Service report, new stressed assets of Indian Banks will increase through 2019 and capitalisation will remain a key credit weakness for state owned banks. The asset quality outlook for banking sector will remain weak as Gross Non Performing Assets (NPAs) or bad loans will increase to around Rs. 8.5 lakh crores by the end of financial year 2017-18. Since Public Sector Banks (PSBs) have limited ability to raise external capital, infusion by the government remains the only viable source for shoring up capital base. Asper the plan, the PSBs need to raise Rs.1.10 lakh crores from markets to meet Basel III capital adequacy norms.

4. IDBI BANK TO SET UP SEPARATE DEPARTMENT TO MANAGE BAD LOANS: IDBI Bank has created a special department for managing bad loans and monitoring credit after taking a serious hit as RBI has put the bank under PCA (Prompt Corrective Action) and ICRA has downgraded the bank’s credit rating. This department will have experienced officials who will give focussed attention to each case. Besides this, the bank also aims to raisearound Rs. 5,000 crores by selling its non-core assets in the current fiscal.

5. EQUITY MUTUAL FUNDS INVESTMENTS ACHIEVE 2 YEAR HIGH: Equity Mutual Funds saw an inflow of Rs.10,790 crore in May 2017, making it the highest  in nearly two years. This is the 14th straight month of inflows into equity schemes. The strong inflows have pushed the asset base of equity mutual funds by 2.6 % in May 2017 from the preceding month.

6. BANK NPAs ARE ROADBLOCKS TO GROWTH: As per the trade body ASSOCHEM, Non-Performing Assets of Indian Banking sector are one of the biggest roadblocks for the growth of the economy. It has urged the RBI to make NPA norms more flexible and take pragmatic approach while resolving the complex issue of NPAs of banks so that the banks can be nursed back to health.

7. SBI OFFERS FREE CREDIT CARDS TO THOSE WITH NO CREDIT HISTORY: If you don’t have a credit history, banks are generally reluctant to offer you a credit card. But to help such customers and increase the card penetration in India, SBI has come out with a credit card    “ UNNATI”  which will be available to its customers even if they do not have a credit history provided they have a minimum deposit of Rs 25,000 with the bank. Any SBI customer with or without a credit history can apply for the card. The card will be available free of cost for the first four years.

WEEKLY FINANCIAL SNIPPETS – 03/06/2017

1. SBI WANTS DEPARTMENT OF TELECOM TO PROTECT BANKING SECTOR’S Rs.4 LAKH CRORE EXPOSURE TO TELECOM SECTOR: Indian Banking sector has a huge exposure of nearly Rs.4 lakh Crore to the telecom sector. This could come under stressdue to declining telecom revenues. Hence State Bank of India has written to the Department of Telecom to work out a bailout plan for the telecom operators, including deferred payment for spectrum and rationalising spectrum fees.

2. SOON YOU MAY SWITCH YOUR BANK ACCOUNT AND RETAIN YOUR ACCOUNT NUMBER: Every time you change your Bank, you will change your bank account number too as you will be allotted with a new number in the bank where you open an account. But very soon, like your mobile number portability you will be able to retain your old bank account number even if you change your bank. With the technological advancements in the payment system, account number portability will be a reality in near future.

3. SENSEX WILL TOUCH 32,200 MARK BY MARCH 2018: As per Citigroup Global Markets, Sensex will touch 32,200 by March 2018. The firm said that implementation of Goods and Service Tax (GST), strong flows from domestic mutual funds and foreign investors will push the share market index to 32,200 by March 2018. The firm believes that in this, the foreign investors are likely to impact the market’s direction considering their contribution of over 20%.

4. BANKS CAN CHECK 3 YEARS RECORD OF BORROWERS: Banks are now armed with more information than before on card holders. They can now tell which card holder is likely to default, and which defaulter’s case is worth to pursue and recover funds. A next generation algorithm enables banks to check customer transactions for the past three years across multiple banks and financial institutions and figure out which customer is undergoing a downturn as far as finances are concerned and who is improving.

5. BANKS WRITE OFF Rs.2.25 lakh CRORE IN FIVE YEARS:All scheduled commercial banks ( SCBs) wrote off Rs 2,25,180 crore of bad loans cumulatively in the last five years period till March 2016. SCBs represent all public and private sector banks, foreign banks, regional rural banks and some co-operative banks. These represent over 95% of total bank credit given.

6. RBI MAY HAVE A DEPUTY GOVERNOR FROM PRIVATE SECTOR FOR THE FIRST TIME: The government for the first time has advertised to choose a deputy governor for the country’s central bank. The government intends to include directors and consultants with significant experience in banking and financial markets. RBI has sought applications from candidates with over 15 years of experience in banking and financial market operations and they must also have been whole time directors or board members. This means potentially RBI may appoint a Deputy Governor from the private sector for the first time.

7. BANKS RECOVERED ONLY Rs.47,000 CRORE OF LOANS IN FY-2016-17: Gross NPAs of 37 listed banks were at a level of Rs 7.1 lakh crore as on March 2017. An analysis of the top banks of the country has revealed that these banks have managed to recover only Rs 47,240 crore in the financial year 2016-17 out of which Rs.16,000crore was recovered in the last quarter of FY 2016-17. Among the PSU banks only Punjab National Bank and Canara Bank managed to deliver by reaching their targets. PNB recovered Rs.10,677 crore and Canara Bank recovered Rs.10,017 crore.

WEEKLY FINANCIAL SNIPPETS- 27/05/2017

1. HDFC LTD, AMONG THE WORLD’S TOP 10 CONSUMER FINANCIAL SERVICES FIRM: Mortgage lender HDFC Ltd has been ranked 7th among the world’s top ten biggest and powerful companies in consumer financial services sector on Forbes list. American Express tops the list. In the regional banks category State Bank of India is ranked 20th.

2. RBI ALLOWS CO-OPERATIVE BANKS TO ISSUE MOBILE WALLETS: In a notification issued this week, the Reserve Bank of India has allowed co-operative banks to issue prepaid payment instruments like mobile wallets. Besides this, co-operative banks can also install ATMs and issue debit cards.

3. NOW BANKS FEAR LOAN DEFAULT BY COMMODITY COMPANIES: After infrastructure firms, now it may be commodity firms that may default on repayments of loans. Bankers estimate that at least a dozen companies in commodity sector that have got their debt restructured will fail to service their loans after being hit by sharp price movements.

4. IDBI BANK UNVEILS TURNAROUND PLAN: IDBI Bank has formulated a turnaround plan that includes raising of additional capital and selling non-core assets.The plan also includes curbing its rising corporate loan book and cutting costs. The bank is looking at all the avenues to improve its capital position and bring the bank on the recovery track.

5. RESERVE BANK OF INDIA CREATES POST OF “CFO”: The Reserve Bank of India is creating a post of a Chief Financial Officer ( CFO) and has sought applications for the said post. The CFO, who will be of the rank of Executive Director, will be responsible for accurate and timely presentation and reporting of financial information of the Central Bank and establish accounting policies and procedures and ensure compliance with regulations.

6. SMALL BUSINESSES SUFFER AS BRUISED BANKS RELUCTANT TO GRANT LOANS: Banks’ worsening asset quality has made them reluctant to grant new loans, especially to smaller businesses that are perceived as riskier. With the mountain of bad loans in Indian Banking system, the banks are reluctant to lend and this has badly affected the small and medium sized enterprises ( SMEs’). India has 45 million such small enterprises, accounting for 40% of gross domestic product. Smaller businesses also account bulk job creation.

7. INDIA’S MEGA REFORM –GST SET FOR JULY 1 ROLLOUT: The GST ( Goods and Service Tax) , set to be launched by the government from July 1 onwards will have tax rates of 5,12, 18 and 28% for various goods and services as announced by the government. Some tax experts feel that it could complicate compliance and leave businesses  and services at the mercy of an intrusive tax bureaucracy.

8. YOU WILL HAVE TO SHELL OUT MORE FOR BANKING TRANSACTIONS FROM JULY: Transaction Fees in financial services are likely to become expensive after the implementation of GST. The government has put these services under the 18% tax bracket. These services were so far taxed at 15%, this means all the transaction fees will be costlier by additional 3%.

WEEKLY FINANCIAL SNIPPETS- 20/05/2017

1. Rs 2.6 TRILLION OF BANK CREDIT MAY TURN BAD IN NEXT 12-18 MONTHS: Domestic rating agency India Ratings & Research has said that around 2.6 trillion (Rs 2.6 lakh Crores) of corporate and SME loans in the banking system may turn bad in the next 12 to 18 months. The report says that Indian banks are sitting on unrecognised stressed loans worth 7.7 trillion, out of which a potentially Rs 2.6 trillion of corporate and SME loans will be recognised as bad loans by fiscal 2019. If this happens, then banks are in for a tough time which will affect their bottom line very badly.

2. RBI EASES NORMS TO SET UP BANK BRANCHES: The Reserve Bank of India has eased the norms of setting up bank branches. Any bank outlets manned by either their staff or its business correspondents where services are provided for a minimum of 4 hours per day for at least 5 days a week will be called a bank outlet. And any branch opened in any tier III, tier IV centre of North-Eastern States, Sikkim and Left wing Extremism ( LWE) affected districts, then it will be considered as equivalent to opening a branch in unbanked rural centre( URC).

3. NBFCs’ CASH IN ON INDIAN BANKS’ BAD LOAN PAIN: With Indian Banks struggling with bad loans for the past two years, Non-Banking Financial Companies (NBFCs) have started lending rigorously as they are not as strictly regulated as banks. With this their share of total lending is rising year on year. With the stressed loans scenario, Indian Banks have become extremely cautiousin extending new credit. The process of approving loans has become lengthier and requires lots of paperwork. NBFCs’ SME loans though a bit costlier than those offered by banks, are processed more quickly and require less paperwork. The share of NBFC in overall loans will rise by 3% to nearly 18% over the next two years.

4. INDIA NOW WORLD’S MOST EXPENSIVE STOCK MARKET: With the markets soaring to record highs, India now is the world’s most expensive market. At a lifetime high of 30,658.77, the benchmark Sensex trades at a price-earnings multiple of nearly 18 times estimated one year forward earnings. India’s market capitalization hit $2 trillion for the first time ever.

5. SBI TO ALLOW ATM WITHDRAWALS VIA e-WALLET: State Bank of India will introduce new facility that would enable withdrawal of cash through ATMs using the bank’s mobile wallet. However, the bank will charge Rs 25 for each cash withdrawal from mobile wallet via ATM.

6. BANKING SCENARIO CHANGING RAPIDLY, THEY SHOULD HAVE “CFOs,” AND “CTOs”: With rapid changes in banking sector, the RBI has urged banks to appoint qualified chiefs to head critical finance and technology functions. The RBI has urged the banks to appoint Chief Financial Officers ( CFOs) and Chief Technology Officers ( CTOs) and has come out with  minimum qualifications for these posts. It said a CTO should be an engineering graduate or hold Masters in Computer Applications, and the CFO should be a chartered accountant with an experience of 15 years in both the cases. It says a CFO and CTO in banks’ management structure would play a crucial role in strengthening and sustaining the banks’ risk governance framework.

7. LIC BOOKS 72% PROFIT AT Rs.19,000CRORES IN FY’17:Life Insurance Corporation of India has booked a whopping 72% more profit at Rs 19,000 crores in FY’17. LIC’s market share in terms of number of policies stood at 76.09%, nearly 2% increase compared to last year. It has increased its market share to 71.07% from 70.61%.

WEEKLY FINANCIAL SNIPPETS-13/05/2017

1. BANK UNIONS URGE THE GOVDERNMENT AND RBI TO REVEAL NAMES OF TOP CORPORATE WILFUL DEFAULTERS: All major Bank Unions have urged RBI and the government to reveal the names of top corporates who are “wilful-defaulters”. According to the Union,the position of non-performing assets ( NPAs) of public sector banks will worsen if names of top corporate wilful defaulters is not revealed. It said that the RBI and government should act fast in this aspect and along with naming them, they should be treated as criminal offenders. The large corporate NPAs account for more than 60% of public sector banks’ NPAs.

2. MINISTRY OF FINANCE SHOULD BE ABLE TO INFUSE $27 BILLION INTO PUBLIC SECTOR BANNKS BY 2019: As per a report by Bank of America Merril Lynch ( BOfMAL), a global financial services, the Ministry of Finance should be able to infuse $27 billion of capital into PSU banksby 2019. According to the report the PSU banks capital risks are  overdone and the government is ready to address their asset quality to support recovery.

3. RBI GETS GOVERNMENT’S NOD TO PROCEED AHEAD ON INDIA’S BIGGEST BANKING CLEAN-UP: The Reserve Bank of India will begin the course of action on its biggest banking clean-up exercise as President ShriPranab Mukherjee promulgated an ordinance, authorising RBI to issue directions to banks to initiate insolvency resolution processin the cases of loan defaults.This will help the banks in a big way to tackle toxic loans.

4. NEW FACILITY LAUNCHED TO LINK AADHAAR WITH PAN : The Income Tax Departmenthas launched a new e-facility to link a person’s Aadhaar with PAN. This is a mandatory procedure for filing income tax returns. For this the department’s e-filing website ( incometaxindiaefiling.gov.in) has created a new link on its home page making it easy to link the two unique identities of individuals. The link requires  a person to punch in his/her PAN no , Aadhaar No and the exact name as given in the Aadhaar card. After verification from UIDAI, the linking will be done and if here is any mismatch then Aadhaar OTP will be required.

5. RBI DECLINES TO PROVIDE DETAILS OF NOTE BAN PROCESS: Six months after the demonetization, the Reserve Bank of India has declined to share details of the note ban process, saying it would be detrimental to the country’s economic interest. The Central Bank said that disclosing such details may impede future economic or fiscal policiesof Government of India.

6. IDBI BANK PUT UNDER WATCH BY RESERVE BANK: Reserve Bank of India has initiated “prompt Corrective action” (PCA) on state owned IDBI Bank in view of its high non-performing assets (NPA) and negative return on assets. According to IDBI Bank officials this will not have any material impact on the performance of the bank and will contribute to improving internal controls of the bank and improvement in its activity.

WEEKLY FINANCIAL SNIPPETS-06/05/2017

1. ACCOUNTS WITHOUT “FATCA“CERTIFICATION TO BE BLOCKED FROM MAY 1st ONWARDS: Bank accounts of individuals and entities who have not submitted self-certification in order to comply with the provisions of the Foreign Account Tax Compliance Act ( FATCA), by April 30th will be blocked  as per the directions of CBDT( Central Board of Direct taxes). This means those who have not complied with the said self-certification will not be allowed to transact any business in his/her account.

2.RBI, COMMERCIAL BANKS SPEND Rs. 21,000 CRORE ON CURRENCY MANAGEMENT: NITI AayogCEO has said that the Reserve Bank of India and other commercial banks spend Rs. 21,000 crore every year on currency management operations. This roughly works out to 1.7% of GDP. But since India is moving towards cashless society, as the digital transactions rise in volumes, this cost will come down due to less printing, storing, transporting, verifying and replacing of currency.

3. RBI DEPUTY GOVERNOR Mr.VIRAL ACHARYA CALLS FOR “ALL-OUT” SALE OF SOME WEAK PUBLIC SECTOR BANKS: Reserve Bank Deputy Governor Mr.Viral Acharya has said that the time may have come to “Re-privatise” some of the weak public sector banks, as the government is taking steps to arrange funds to capitalise bad banks. According to Mr.Acharya, this would reduce the overall burdenof  the government to inject the capital and will help the government to preserve its hard earned fiscal discipline. This remark has raised a storm in the banking industry as most of the Bank Unions have strongly condemned the statement.

4. INCOME TAX NET WIDENS, NUMBER OF TAX PAYERS INCREASE BY NEARLY A CRORE:As the government turns the heat on black money, the number of people who filed tax returns increased by around 95 lakhs. The government has been looking to widen the tax net as barely a little over 3 % of the population is said to pay income tax. But this time around, as the government tightened the noose through demonetization and other measures, as many as 5.28 crore returns were e-filed in FY 16’, a rise of 22% over the preceding year.

5. FINALLY GOVDERNMENT PROPOSES ORDINANCE TO HELP BANKS DRIVE OUT OF NPA NET: Finally the cabinet has cleared the non-performing asset (NPA) resolution package that includes proposing an ordinance to empower the Reserve Bank of India to more effectively deal with bad loans. This move will pave the way for a long awaited initiative aimed at cleaning up the balance sheets of banks burdened with bad loans. This resolution has been sent to the Presidentfor approval and once this is approved the details of the resolution will be shared. Changes will be affected in Section 35A of Banking regulation Act and these changes will empower RBI to give directions to banks to effectively resolve NPA issues.

6. GOVERNMENT KEEN TO MOVE AHEAD WITH MORE PSB CONSOLIDATION: With the recent success of the merger of associate banks with SBI, the government is keen on further consolidation of some of the public sector banks with an aim to create only a few banks of global size and scale. The government will soon undertake the study on further consolidation of Indian Banks and look at various options for merger among the remaining 21 public sector banks.

WEEKLY FINANCIAL SNIPPETS- 29/04/2017

1. SBI MERGER: CUSTOMERS BANK ON ONLINE SERVICES AND EXPECT CROWDED BRANCHES: Most of the customers of former associate banks are finding the merger of their bank with SBI beneficial and feel more secure. Over the past two weeks since the merger, customers have not been through many hassles as there has been no change in account number and IFSC code as of now. SBI will start the data –merging of the six banks soon. Once this is done then the bank will decide on which branch to keep and which branch to close down. There will be reduction of staff as some will get transferred and shifted. Because of this, most customers feel that the branches will be over crowded.

2. RBI GOVERNOR Mr URJIT PATEL SAYS PUBLIC SECTOR BANKS MERGER COULD HELP INDIAN BANKING SYSTEM: RBI Governor Mr Urjit Patel has said that the Indian banking system could be better off if some public sector banks are consolidated to have fewer but healthier entities as it would help in dealing with the problem of stressed assets. He said merging of weak banks with strong banks will not pose much problem since there are cooperative banks and micro-financial institutions to provide community level banking. He also said that the public sector banks need to raise private capital from the market than relying on government help.

3. INDIA POST PAYMENT BANK TO OPEN 650 BRANCHES THIS YEAR: India Post Payment Bank (IPPB) is planning mega expansion to open 650 branches this year. The first two branches have been opened in Ranchi and Raipur in January 2017. They intend to open at least one branch per district across the country and each branch will be networked with about 1200 to 1500 post offices in a district.

4. PROVIDENT FUND RULES CHANGED. NOW PAY HOME LOAN EMIs AND BUY HOUSE FROM DEPOSITS: The government has amended rules of the Employees’ Provident Fund Scheme which will be helpful to over four crore subscribers. Some of the finer points are: A) Subscribers will be able to withdraw up to 90% of their accumulations for purchase/construction of houses or purchase of land. B) To avail this facility the subscriber needs to be a member of a cooperative society or a society registered for housing purpose and the payment will be made directly to the housing agency and not to the provident fund subscriber. C) The new rule also provides that monthly loan instalments towards house purchase can be paid from provident fund deposits.

5. PRIME MINISTER LAUNCHES NEW BHIM-AADHAAR PLATFORM TO BOOST DIGITAL PAYMENTS: The BHIM app,  already launched in December 2106 has created world record by registering 1.9 crore downloads. In a further push towards digital economy, Prime Minister has launched a new platform called BHIM-Aadhaar, for merchants to facilitate digital payments. BHIM-Aadhaar, the merchant interface of BHIM app will enable every Indian citizen ( whose Aadhaar card is linked to his bank account) to pay digitally  by using their biometric data like their thumb imprint on a merchant biometric  enabled device which could be a smartphone having biometric reader. This will be a huge boost for Indian Economy moving towards digital payments.

6. HDFC BANK TRIMS 6,000 JOBS IN THREE MONTHS: HDFC Bank’s head count has come down by 6,000 owing to digitisation. This is the result of “Natural Attrition” which has driven down the head count as newer hands are not hired for those who have resigned. This has improved the bank’s cost-to-income ratio to 42.4% from 44.9%.