Weekly Economic Round-up by Maggu Bhai

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1. Reserve Bank working group recommends extension of market hours

Key points

 An internal working group at the Reserve Bank of India (RBI) has

recommended extending trading hours for both currencies and short-term loan
products.
 The special central bank committee has suggested extending the Over-the-
Counter forex exchange-traded currency derivatives markets to 9 PM instead
of 5 PM now.
 In the money markets, trading is proposed to be stretched by an hour
 The inter-bank call money market, which now operates between 9AM and
5PM, is proposed to be closed at 6PM.
 The repo market, which now closes at 2.30 PM, may extend by another hour.
The repo is the rate at which banks borrow from the central bank.
 The group has also recommended that the settlement time of primary auction
or Open Market Operation be shifted to around 4 PM from around noon

Source

2. Jan Dhan account balances cross Rs 1 Lakh crore

Pradhan Mantri Jan Dhan Yojana

 The National Mission of Financial Inclusion named as the Pradhan Mantri Jan
Dhan Yojana seeks to integrate the poorest of the poor with bank accounts.
 All households across the country - both rural and urban are to be covered
under the scheme. Bank accounts will be opened for 15 crore poor persons.
 The scheme provides life cover of Rs. 30,000/- payable on death of the
beneficiary, subject to fulfilment of the eligibility condition.
 PMJDY account holders are also eligible for loans under the Pradhan Mantri
Mudra Yojana (PMMY) and other loan products offered by different banks

Key points

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  The value of balances in bank accounts opened under the Pradhan Mantri Jan
Dhan Yojana (PMJDY) has crossed the Rs 1 lakh crore mark.
 A total of 36.06 crore beneficiaries held balances worth Rs 1,00,496 crore as
on July 3, 2019.
 This puts the average account balance of a Jan Dhan account at Rs 2,787.
 Public-sector banks (PSBs) held a 79% share of Jan Dhan accounts in both
volume and value terms.
 They were followed by regional rural banks (RRBs), who held 17% of the
beneficiaries and 18% of the value of deposits.
 Private banks brought in a meagre 3.5% of Jan Dhan beneficiaries and 3% of
account balances.
 As on 3 July 2019, 53% of Jan Dhan account holders were women, while 59%
accounts were in rural and semi-urban areas.
 Banks have further apprised that the percentage of zero balance accounts
under PMJDY has declined from 58% as on 25.03.2015 to 15% as on January
23, 2019.

Source

3. Residential Asset Price Monitoring Survey : RBI

Key points

 Mumbai retaining the top slot as the least affordable city for home buyers.
 The RBI’s quarterly Residential Asset Price Monitoring Survey showed the
house price-to-income ratio in India increased in the last four years from 56.1
in the 2015 March quarter to 61.5 in the corresponding period of 2019.
 Bhubaneswar was the most affordable city for home buying.

Source

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4. Public or private: Law ministry may help government on classifying IDBI
bank

Key points

 The government may seek the opinion of the law ministry on whether the now
privatised IDBI Bank should be considered a state-run financial institution, or
be treated on a par with private banks as classified by the Reserve Bank of
India.
 The development comes after the Central Vigilance Commission, in response
to a finance ministry query, said IDBI Bank will continue to come under the
government’s vigilance oversight. Private banks do not fall under the ambit of
the Vigilance Commission.
 The Reserve Bank reclassified IDBI Bank as a private sector lender for
regulatory purposes in January, after LIC acquired a 51% stake in the bank by
infusing around Rs 20,800 crore.
 The government now holds a 46.46% stake in the bank.

Source

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5. Govt outstanding loans from RBI jumped from Rs 6,000 crore to nearly Rs
66,000 crore in a week

Key points

 The Indian government had Rs 66,793 crore ($9.73 billion) outstanding loans
with the central bank under ways and means advances in the week ended July
5.
 The central government had Rs 6,596 crore outstanding loans in the week
earlier.

Source

6. Banks in big loss or under PCA to be barred from buying NBFC assets

Background

 In the Budget 2019-20, the Centre has allowed a one-time, partial credit
guarantee of six months to public sector banks (PSBs) on their first loss of up
to 10 per cent for purchase of high-rated pooled NBFC assets of Rs 1 lakh
crore.

Key points

 State-run lenders currently under the RBI's Prompt Corrective Action (PCA)
framework on account of bad loans and heavily loss making banks may not be
allowed to buy the pooled retail assets of non-banking finance companies
(NBFCs).
 This is likely to provide the better-run NBFCs access to liquidity.
 The partial credit guarantee from the government would help NBFCs raise
funds from PSBs, providing them urgently needed funding support.
 They PSBs will be allowed to buy only 'AAA' rated retail assets and those a
notch below.

Source

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7. SBI's Anshula Kant appointed MD and CFO of World Bank

Key points

 Anshula Kant, managing director of the State Bank Of India, has been
appointed as managing director and chief financial officer of the World Bank.
 Among other key management duties, her work will include oversight of
financial reporting, risk management, and working closely with the World Bank
CEO on mobilization of IDA and other financial resources

Source

8. Nabard plans to raise Rs 55,000 crore from market this fiscal

Key points

 National Bank for Agriculture and Rural Development (NABARD) has

reportedly said it is planning to raise about Rs 55,000 crore from the domestic
market in the current financial year
 This is to fund its organisation's growth and also support various agricultural
and rural development schemes of the government.
 The development bank raises funds through long term bonds, generally of 10-
15 years tenures.

Source

9. Govt plans to raise $47 bn through disinvestment in next 5 years: Report

Key points

 The government has plans to raise as much as Rs 3.25 trillion in the next five
years by reducing its stakes in some large state-owned firms to 40 per cent.
 The plan will open up a steady stream of state companies to greater private
investment, and target the kind of annual divestment revenue that will be
crucial to meet fiscal deficit targets.

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  The government has identified a number of state-owned firms, including
explorer Oil and Natural Gas Corp, oil refiner Indian Oil Corp, gas transmitter
GAIL (India) Ltd, power producers NHPC Ltd and NTPC, miners NMDC Ltd
and Coal India, and Bharat Heavy Electricals Ltd.

Source

10. Australia steps up sugar trade fight with India, seeks WTO probe

Key points

 Australia has intensified its sugar related dispute with India by formally asking
World Trade Organisation (WTO) to set up a panel to probe if the world’s
second-largest sugar producer was breaching its obligations.
 Australia along with Brazil and Guatemala joined hands to ask the WTO to set
up the dispute panel to probe if India was breaching its obligations.


Source

11. Jalan Panel may recommend ₹50,000 crore transfer from contingency fund

Key points

 The Bimal Jalan panel, which is looking into the size of capital reserve that the
Reserve Bank of India (RBI) should hold, may recommend transfer of ₹50,000
crore to the Centre from the contingency fund.
 As per the 2017-18 RBI annual report, the various types of reserves are
Contingency Fund ₹2.32 trillion, Asset Development Fund ₹22,811 crore,
Currency and Gold Revaluation Account is ₹6.91 trillion and Investment
revaluation Account Re-Securities is 13,285 crore and this all totalled ₹9.59
trillion.

Source

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12. RBI plans app for identification of currency notes by visually-challenged

Key points

 The Reserve Bank of India (RBI) will come out with a mobile application to
help visually-challenged in identifying currency notes as cash still remains a
dominant mode of transaction.
 The RBI said identification of banknote denomination is key to successful
completion of cash-based transactions by visually impaired persons.
 Intaglio printing-based identification marks for helping the visually challenged
in identification of banknotes denomination are present in notes of ₹100 and
above.
 The proposed mobile app would be able to identify the denomination of notes
of Mahatma Gandhi Series and Mahatma Gandhi (New) series by capturing
the image of the notes placed in front of mobile camera.

Source

13. MDR waiver to boost UPI payments, may hit earnings of banks, PoS
providers

Key points

 Finance Secretary Subhash Chandra Garg Friday said the government

expects Rs 90,000 crore as dividend from the RBI in the current fiscal.
 This is 32 per cent jump from the previous fiscal, when the central bank paid
Rs 68,000 crore to the government including Rs 28,000 crore as interim
dividend.
 The Reserve Bank follows July-June financial year and usually distributes the
dividend in August after annual accounts are finalised.
 The six-member panel, under former RBI Governor Bimal Jalan, was
appointed on December 26, 2018, to review the economic capital framework
(ECF) for the Reserve Bank after the Finance Ministry wanted it to follow the
global best practices and transfer more surplus to the government.

Source

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14. Compliance of FDI norms: RBI to unveil report submission mechanism
soon

Key points

 According to the FDI norms announced in the Press Note 2 of 2018 by the
DPIIT, e-commerce marketplace entities are required to furnish a certificate
along with a report of statutory auditor to the RBI, confirming compliance of the
guidelines by September 30 every year for the preceding financial year.
 The new rules prohibited group companies of a particular platform or
controlled sellers from selling on that platform.
 “An entity having equity participation by e-commerce marketplace entity or its
group companies, or having control on its inventory by e-commerce
marketplace entity or its group companies, will not be permitted to sell its
products on the platform run by such marketplace entity”.
 Currently, India allows 100 per cent foreign direct investment (FDI) in e-
commerce but has disallowed inventory model for the same.

Source

15. RBI slaps Rs 7-crore penalty on SBI for violating various regulatory norms

Key points

 The Reserve Bank of India (RBI) has imposed a penalty of Rs 7 crore on State
Bank of India (SBI).
 SBI has been penalized for non-compliance with regulatory norms such as
income recognition and asset classification (IRAC) and sharing information.
 SBI, the country’s biggest bank, also failed to comply with directions on
opening and operating current accounts, reporting of data to the Central
Repository of Information on Large Credits (CRILC), and reporting of frauds.

Source

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16. Rs 15,310.73 billion returned from circulation post-demonetisation - Minister
of State for Finance

Key points

 The total value of specified bank notes returned from circulation during 2016-
'17 was Rs 15,310.73 billion.
 Gross NPA of scheduled commercial banks to gross advances, as per the RBI
data on global operations, was 9.20 per cent as on 31.12.2016 and 9.08 per
cent as on 31.3.2019

Source

17. Sebi provides new format for compliance report on corporate governance

Key points

 Sebi came out with a new format for compliance report on corporate
governance to be submitted by listed companies to stock exchanges.
 In a circular, the regulator prescribed new format for disclosures to be made
on quarterly basis, annual basis for the whole of financial year and within six
months from end of financial year that can be submitted along with second
quarter report.
 However, requisite amendments were made in Sebi (Listing Obligations and
Disclosure Requirements) Regulations, 2015 to implement the
recommendations of committee on corporate governance.

Source

18. More than 1.64 crore farmers have registered on e-NAM platform till 30th
June 2019

Key points

 National Agriculture Market (e-NAM) an online trading portal was launched by

Govt. of India on 14th April, 2016.

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  85 wholesale regulated markets of 16 States and 02 Union Territories (UTs)
have been integrated with e-NAM platform.
 As on 30.06.2019, more than 1.64 crore farmers & more than 1.24 Lakhs
traders have been registered on e-NAM platform.
 Further trade transactions having total volume of 2,58,76,016 MT with total
value of Rs.71,069 crore, have been recorded on e-NAM platform till
30.06.2019.

Source

19. Cabinet approves extension of the term of the Fifteenth Finance

Commission up to 30th November, 2019

Key points

 The Union Cabinet has approvedthe extension of the term of Fifteenth Finance
Commission up to 30th November, 2019.
 It will enable the Commission to examine various comparable estimates for
financial projections in view of reforms and the new realities to finalise its
recommendations for the period 2020-2025.
 The Fifteenth Finance Commission has been constituted by the President on
27tn November, 2017 in ' pursuance of clause (1) of article 280 of the
Constitution and Finance Commission (Miscellaneous Provisions) Act, 1951.
 The Commission was to submit its Report on the basis of its Terms of
Reference (ToR) by 30th October, 2019 covering a period of five years
commencing from 1st April, 2020.

Source

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20. The steps taken by the Government to strengthen the RRBs

Key points

 Government had initiated the process of structural consolidation of RRBs in

2004-05 by amalgamating RRBs of the same Sponsor Bank within a State.
The amalgamation process brought down the number of RRBs from 196 to 82.
 In the year 2018-19, amalgamation of RRBs has been carried out based on a
roadmap proposed by NABARD and consultation with respective Sponsor
Banks and State Governments. Accordingly, the number of RRBs has been
brought down to 45 from 56, as on 01.04.2019.
 Regular Capacity building efforts are undertaken by NABARD like training at
Bankers Institute of Rural Development (BIRD), conduct of Organizational
Development Initiative (ODI), exposure visits, etc.
 NABARD provides regular policy support to RRBs in matters relating to human
resources and an arrangement has been made for redressal of grievances
through Joint Consultative Committee (JCC).

Source

21. Scheme to Provide Loans Under Short Term Agriculture Loan

Key points

 In order to provide short term crop loans upto `3.00 lakh to farmers at a
concessional interest rate of 7 per cent per annum, the DAC&FW implements
an interest subvention scheme which provides interest subvention of 2% per
annum to lending institutions.
 Besides, additional 3% incentive is given to the farmers for prompt repayment
of the loan, thereby reducing the effective rate of interest to 4%.
 As reported by the National Bank for Agriculture and Rural Development
(NABARD) the number of farmers who have availed crop loans under this for
the fiscal year 2017-18 is 790724.

Source

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