Banking and Finance for RBI Grade B

April 2024
Revision of Banking & Finance for April 2024
Banking and Financial Current Affairs
HDFC Bank:
• Selling Entire Stake in HDFC Education and Development Services
• The sale aims for transparency and compliance, using the Swiss challenge method to find a buyer.

March 2024 GST Collection:

• Second-highest collection Since GST Inception
• Totaled Rs 1.78 lakh crore, up 11.5% year-over-year.

UPI Transaction Milestone:

• Record-breaking March 2024
• Transactions worth ₹19.78 lakh crore were processed, surpassing January 2024's ₹18.41 lakh crore.

Credit Card Usage Growth:

• Surpasses 100 million Cards (December 2023)
• Steady increase due to strategic banking and changing consumer spending, per RBI data.

Karnataka Bank:
• Raises Rs 600 Crore via Qualified Institutional Placement (QIP)
➢ Definition: QIP is a financial tool utilized by listed companies to raise funds.
➢ Description: Introduced by the Securities and Exchange Board of India (SEBI), QIP allows listed
companies to issue securities directly to Qualified Institutional Buyers (QIBs) to secure financing.
• Complements the planned Rs 1,500 crore capital raise announced in September 2023.

AU Small Finance Bank and Fincare Merger:

• Merger Finalized (April 1, 2024)
• Consolidation strengthens AU SFB’s South Indian presence through an all-stock deal, expanding its
customer base and network.
SEBI's SCORES 2.0 Launch:
• Enhanced Complaint Redress System
• Features automated routing, oversight, and streamlined processes
for better investor complaint handling.
Axis Bank Stake in Max Life Insurance:
• CCI Approves Acquisition
• Strengthens Max Life's growth, capital base, and solvency
margins.
UPI Transactions Growth:
• Worldline Report Highlights 56% YoY Increase (Second Half of
2023)
• Transactions reached 65.77 billion, while value increased 44% to
Rs 99.68 trillion.
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SIDBI-KarmaLife Partnership:
• Collaboration Extends Micro Loans to Gig Workers
• Uses KarmaLife’s mobile app for simplified loan access and improved financial inclusion.

Canara Bank and SINE Collaboration:

• MoU Signed on April 3rd
• Partnership aims to provide startups with financial assistance, strengthening the startup ecosystem.

Credit Default Swap (CDS) Trade by SBI and Standard Chartered Bank:
• Valued at ₹25 crore
• Marks a notable development in credit risk management post-RBI's fresh guidelines.

HDFC Bank Branch in Lakshadweep:

• Kavaratti Island Branch Opened
• Offers personal and digital banking services, becoming the only private sector bank in the Union
Territory.
Provisional Net Direct Tax Collection (FY 2023-24):
• Exceeds Union Budget Estimates by Rs. 1.35 lakh crore
• Total collection stands at Rs. 19.58 lakh crore, up 17.7% from FY 2022-23.

HDFC Life Insurance Leadership Change:

• Deepak S Parekh Resigns
• Keki Mistry was appointed Chairman after serving since 2000, bringing substantial experience to the
role.
PayU Secures RBI Authorization:
• Approved as a Payments Aggregator
• PayU gains in-principle authorization under the Payment Settlements Act, 2007, marking a key
milestone.
India's Gems and Jewellery Export Decline:
• Drops 14.94% in FY 2023-24
• Provisional data shows exports fell to $32.02 billion, down from $37.6 billion.

Kotak Mahindra Bank Shares Drop:

• Fall by 10% After RBI Restrictions
• Restrictions on onboarding new customers and issuing credit cards due to IT system deficiencies.

NABARD-RBI Innovation Hub Collaboration:

• Digitalizing Agricultural Lending
• Joint effort to streamline loan processing and improve access for farmers.

SBI Card Introduces Travel-Centric Credit Cards:

• Three Variants of "SBI Card MILES"
• Variants cater to diverse travel needs: ELITE, PRIME, and standard, offering curated travel benefits.

IndusInd Bank and CIH CBDC Pilot Success:

• Implemented RBI's Programmable CBDC Pilot Program
• Focuses on agricultural finance by helping farmers generate carbon credits.

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Business Current Affairs
Savita Oil Technologies Equity Transaction:
• Gautam N. Mehra sold a 3% stake via a block deal to SBI Mutual Fund on March 26, 2024.
• This reduced the promoter group's stake to 59.78%.

BALCO Earns ASI Certification:

• Bharat Aluminium Company Limited (BALCO), a Vedanta Aluminium unit, became the first Indian
company to achieve ASI Performance Standard V3 Certification.
Paradip Port Authority's Cargo-Handling Success:
• Odisha's Paradip Port Authority handled 145.38 million metric tons of cargo in FY 2023-24, overtaking
Kandla's Deendayal Port Authority.
Tata Technologies and BMW Collaboration:
• Partnership to establish an automotive software and IT development center in Chennai, Pune, and
Bengaluru.
PepsiCo India Investment:
• Announces a ₹1,266 crore investment in a flavor manufacturing facility in Ujjain, Madhya Pradesh,
expected to start operations in early 2026.
Adani Green Energy Milestone:
• Reaches over 10,000 MW in renewable energy capacity, solidifying its industry leadership.

Star Health Insurance-PhonePe Collaboration:

• Offers Star Comprehensive Insurance Policy with various payment options through the PhonePe
platform.
ICICI Lombard and Policybazaar Partnership:
• Partnership aims to distribute insurance products to 10 million customers using Policybazaar's
platform.
Ashneer Grover's New Fintech Venture:
• BharatPe's former co-founder launched a new app, ZeroPe, after exiting BharatPe in 2022.

MUFG Acquiring Stake in HDB Financial Services:

• Japan's MUFG to buy a 20% stake in HDFC Bank's subsidiary, HDB Financial Services, valued between
$9-10 billion.
• IPO valuation is expected to be $9-12 billion, making this one of India's largest shadow banking
transactions.
Revolut India's RBI Approval:
• Receives in-principle approval to issue Prepaid Payment Instruments (PPI).
• Will expand into multi-currency forex cards and cross-border remittance services.

Adani Green Energy's Renewable Energy Park:

• Building the world's largest renewable energy park in Khavda, Gujarat, covering 538 sq. km, five times
the size of Paris.
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Razorpay and Airtel Payments Bank Collaboration:
• Launch UPI Switch to improve digital payment success rates by 4-5%.
• Handles 10,000 transactions per second for enhanced efficiency and scalability.

BharatPe's All-In-One Device:

• Introduces BharatPe One, integrating POS, QR, and speaker functionalities in one payment device.

Vizhinjam Port's Transshipment Approval:

• Adani Group's Vizhinjam Port in Kerala becomes India's first transshipment port.
• Helps reduce reliance on foreign ports like Colombo and Singapore.

India's Growing Dependence on Chinese Imports:

• China's share in India's imports has risen from 21% to 30% over the past 15 years.
• Urges strategic reassessment of import strategies for diversified, resilient supply chains.

Hitachi Payment Services' Upgradable ATMs:

• Launched new ATMs that can be upgraded to Cash Recycling Machines (CRMs).
• Part of the 'Make in India' initiative, offering flexibility and efficiency for banks.

IREDA Achieves Navratna Status:

• Indian Renewable Energy Development Agency (IREDA) gains prestigious 'Navratna' status.
• Brings the total number of Navratna Public Sector Enterprises (PSEs) in India to 17.

RBI in News
Reserve Bank of India (RBI) Anniversary:
• Celebrated 90th Year (April 1, 2024)
• PM Narendra Modi will attend the event at Mumbai's National Centre for the Performing Arts.

RBI’s Digital India Trust Agency (DIGITA):

• Considering Establishing a Regulatory Agency
• Intended to curb illegal lending apps and enhance cybersecurity in digital lending.

RBI Forex Derivatives Regulation:

• Implementation Deferred to May 3
• New rules require genuine foreign exchange exposure, causing brokerages to advise clients to close
contracts.
RBI Penalties:
• Fines Imposed on IDFC First Bank and LIC Housing Finance
• Result of non-compliance with various regulations.

RBI Consumer Confidence Survey (March 2024):

• Consumer Optimism Improves
• Future Expectations Index (FEI) rises to 125.2, driven by positive household sentiment on the economy,
employment, and spending.
RBI Regulatory Decisions for NBFCs:
• Registration Certificates Canceled
• Four NBFCs had registrations revoked, while 11 voluntarily surrendered licenses due to business exits,
amalgamations, or changing criteria.
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RBI's Asset Reconstruction Companies (ARC) Guidelines:
• Effective from April 24, 2024
• Master direction requires ARCs to maintain Rs 300 crore in capital, up from the previous Rs 100 crore.

RBI Foreign Exchange Regulations:

• Direct Listing for Indian Companies
• New regulations under FEMA streamline foreign exchange transactions for overseas stock exchange
listings.
RBI Guidelines for Small Finance Banks (SFBs):
• Path for Transition to Universal Banks
• New guidelines establish eligibility criteria and procedures to promote stability and effective
operations.

Master Direction on Currency Distribution & Exchange Scheme (CDES):

• The scheme aims to motivate bank branches and Currency Chests (CCs) to improve customer service.
• Aligns with the objectives of the Clean Note Policy.
• Offers financial incentives and service charges to banks for establishing infrastructure.
• Encourages efficient management of note and coin exchange/distribution.

Urban Co-operative Banks Outlook 2022-23:

• Urban Co-operative Banks (UCBs) saw a 27% increase in priority sector advances in FY 2023.
• RBI's report indicates UCB advances rose to Rs 2.2 trillion in FY 2023, up from Rs 1.73 trillion in FY
2022.

Rabi Sankar re-appointed RBI deputy governor:

• T Rabi Sankar has been re-appointed as the deputy governor of the Reserve Bank of India (RBI) for one
year, starting from May 3, 2024, or until further directives are issued.

Women Enterprise Acceleration Fund Overview

• Purpose of the Fund: Established to provide medium to long-term debt financing to women
entrepreneurs, facilitating investments in viable enterprises. It aims to encourage first-time women
entrepreneurs and assist existing women-owned businesses in expansion and scaling.
Overview of Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM):
• Launched as the National Rural Livelihood Mission (NRLM) by the Ministry of Rural Development
(MoRD) on April 1, 2013, through restructuring of the Swarnajayanti Gram Swarojgar Yojana (SGSY).
• Renamed to DAY-NRLM on March 29, 2016.
• Aims to alleviate poverty by creating strong community institutions, particularly for women, to improve
access to financial services and livelihood opportunities.

RBI Guidelines on Digital Lending:

• Issued by the Reserve Bank of India (RBI) on April 26, the guidelines are titled 'Digital Lending —
Transparency in Aggregation of Loan Products from Multiple Lenders.'
• Aim to promote transparency by ensuring Lending Service Providers (LSPs) offer a comprehensive
digital overview of loan options in collaboration with partners.
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RBI Fair Practices Code for Lenders - Charging of Interest:
• RBI instructed banks and non-bank financiers to review their
lending practices, particularly regarding interest and other
charges and loan disbursal methods.
• Intended to promote fairness and transparency in lending after
identifying unfair practices in the application of interest charges.
RBI Draft Master Direction - Electronic Trading Platforms (ETPs)
Directions, 2024:
• The Reserve Bank of India (RBI) published a draft Master
Direction on Monday to regulate Electronic Trading Platforms
(ETPs) that manage trading of financial instruments.
RBI Extends Key Fact Statement Rules to Retail and MSME Borrowers:
• RBI mandated the Key Fact Statement (KFS) for all retail and MSME term loans starting April 15 to
enhance lending transparency.
• Offers a clear, standardized overview of loan agreements for borrowers.

IMPORTANT ABBREVIATIONS RELATED TO RBI-

1. CCS- Consumer Confidence Survey
➢ The survey seeks qualitative responses from households, regarding their sentiments on the general
economic situation, employment scenario, price level, households’ income, and spending.)
2. D-SIBs- Domestic Systemically Important Banks
➢ The D-SIB framework requires the Reserve Bank to disclose the names of banks designated as D-
SIBs starting from 2015 and place these banks in appropriate buckets depending upon their
Systemic Importance Scores (SISs).
3. ECB- External Commercial Borrowings
➢ External commercial borrowing is loans in India made by non-resident lenders in foreign currency
to Indian borrowers. They are used widely in India to facilitate access to foreign money by Indian
corporations and PSUs.
4. FCCB- Foreign Currency Convertible Bonds
➢ A foreign currency convertible bond (FCCB) is a type of convertible bond issued in a currency
different than the issuer's domestic currency.
5. RDB- Rupee Denominated Bonds
➢ Masala Bonds are rupee-denominated bonds. It is a debt instrument issued by an Indian entity in
foreign markets to raise money, in Indian currency, instead of dollars or local denomination.
6. SIOS- Services and Infrastructure Outlook Survey
➢ The survey assesses the business situation for the current quarter (Q1:2022-23) from selected
companies in the services and infrastructure sectors in India and their expectations for the ensuing
quarter (Q2:2022-23) based on qualitative responses on a set of indicators about demand
conditions, financial conditions, employment conditions, and the price situation.
7. IOS- Industrial Outlook Survey
➢ The survey assesses business sentiment for the current quarter (Q1:2022-23) and expectations for
the ensuing quarter (Q2:2022-23), based on qualitative responses on a set of indicators about
demand conditions, financial conditions, employment conditions, and the price situation.
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8. OBICUS- Order Books, Inventories and Capacity Utilisation Survey
➢ The survey has been conducted every quarter since 2008. The information collected in the survey
includes- Quantitative data on new orders received during the reference quarter.
9. FSR- Financial Stability Report
➢ It reflects the collective assessment of the Sub-Committee of the Financial Stability and
Development Council (FSDC) on risks to financial stability and the resilience of the financial system.
10. MFIs- Microfinance Institutions
➢ Microfinance institutions (MFIs) are financial companies that provide small loans to people who do
not have any access to banking facilities.
11. GLP- Gross Loan Portfolio
➢ Gross Loan Portfolio means the outstanding principal balance of all outstanding client loans,
including current, delinquent, and restricted client loans, but not including client loans that have
been charged off, or any interest.
12. PLI- Production Linked Incentive (PLI) Scheme
➢ Production Linked Incentive or PLI scheme is a scheme that aims to give companies incentives on
incremental sales from products manufactured in domestic units.
➢ The scheme invites foreign companies to set up units in India, however, it also aims to encourage
local companies to set up or expand existing manufacturing units and also to generate more
employment and cut down the country’s reliance on imports from other countries.
➢ It was launched in April 2020, for the Large Scale Electronics Manufacturing sector, but later towards
the end of 2020 was introduced for 10 other sectors.
➢ This scheme was introduced in line with India’s Atmanirbhar Bharat campaign.
13. NBFI- Non-Banking Financial Institution
➢ A non-banking financial institution or non-bank financial company is a financial institution that does
not have a full banking license or is not supervised by a national or international banking regulatory
agency.
14. WLAO- White Label ATM Operators
➢ These entities who set up, own, and operate ATMs are termed White Label ATM Operators (WLAO).
Their role is to provide banking services to customers based on the cards (debit, credit, prepaid)
issued by their banks and also involves the acquisition of transactions of banks' customers.
15. MCIR- Monetary and Credit Information Review
➢ This monthly periodical of the RBI helps keep abreast with new developments and important policy
initiatives taken by the RBI during June in the world of money and credit.
16. CRAR- Capital to Risk-Weighted Assets Ratio
➢ The capital-to-risk weighted assets ratio, also known as the capital adequacy ratio, is one of the most
important financial ratios used by investors and analysts. The ratio measures a bank's financial
stability by measuring its available capital as a percentage of its risk-weighted credit exposure.
17. GNPA- Gross Non-Performing Assets Ratio
➢ Gross non-performing assets refer to the sum of all the loans that have been defaulted by the
borrowers within the provided period of ninety days.
➢ The gross NPA Ratio is the ratio of total gross NPA to total advances (loans) of the bank
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18. LRS- Liberalised Remittance Scheme
➢ Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to
freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or
capital account transaction or a combination of both.
➢ Further, resident individuals can avail of foreign exchange facilities for the purposes mentioned in
Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within the limit of
USD 2,50,000 only.
➢ The Scheme was introduced on February 4, 2004, with a limit of USD 25,000.
➢ In the case of the remitter being a minor, the LRS declaration form must be countersigned by the
minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts,
etc.
19. CIMS- Centralised Information Management System
➢ It is a comprehensive system that integrates data from diverse domains including financial, external,
fiscal, corporate, real sectors, and prices. It enables the RBI to efficiently connect and manage data
from these sectors, facilitating comprehensive analysis and reporting.
20. BOP- Balance of Payments (BoP)
➢ It is a systematic record of all economic transactions between residents of one country and the rest
of the world over a specified period, typically a year.
➢ It provides a comprehensive view of a country's economic interactions with other nations and
reflects the flow of goods, services, capital, and financial assets between the domestic economy and
the rest of the world.
21. FI-Index- Financial Inclusion Index
➢ The index records data on different aspects of financial inclusion in a single value ranging from 0 to
100, where 0 denotes total financial inclusion and 100 denotes complete financial inclusion.
➢ According to RBI, the FI-Index comprises three broad parameters (weights indicated in brackets)
viz., Access (35 percent), Usage (45 percent), and Quality (20 percent) with each of these consisting
of various dimensions, which are computed based on several indicators.
22. PSOs- Payment System Operators
➢ PSOs are institutions that have been granted authorization by RBI for the operation of a payment
system and thereby facilitate the movement of funds between payers and payees in electronic
payment systems.
23. CBDC- Central Bank Digital Currency
➢ The Reserve Bank of India (RBI) introduced its Central Bank Digital Currency (CBDC) in a phased
manner during the year. The pilots for the Digital Rupee (e-Rupee) were launched on November 1,
2022, and December 1, 2022, for the wholesale and retail segments respectively.
24. CIC- Core Investment Company
➢ It means a core investment company having total assets of not less than ₹100 crores either
individually or in aggregate along with other CICs in the Group and which raises or holds public
funds.
25. UCBs- Urban Co-operative Banks
➢ These are registered as cooperative societies under the provisions of, either the State Cooperative
Societies Act of the State concerned under the provisions of the or the Multi State Cooperative
Societies Act, 2002.
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26. LBS- Lead Bank Scheme
➢ The Scheme aims to coordinate the activities of banks and other developmental agencies through
various fora to achieve the objective of enhancing the flow of bank finance to the priority sector and
other sectors and to promote banks’ role in the overall development of the rural sector.
27. TLTRO- Targeted Long-term Repo Operations
➢ Under the TLTRO scheme, banks will have to invest the amount borrowed under TLTROs in fresh
acquisition of securities (i.e., over and above their outstanding statement in specified securities it
was holding as of March 26, 2020) from the primary/secondary market. However, participation in
the TLTRO scheme will not impinge on the existing investment of the bank and the bank may
continue to operate its AFS/HFT portfolio, as hitherto, in terms of extant regulatory/internal
guidelines.
28. DPI- Digital Payments Index
➢ RBI aims to measure the deepening and penetration of digital payments in the country over different
periods using the index which comprises 5 broad parameters.
29. PPIs- Prepaid Payment Instruments
➢ These are the Instruments that facilitate the purchase of goods and services, financial services,
remittance facilities, etc., against the value stored therein.
30. InvITs- Infrastructure Investment Trust
➢ It is like a mutual fund, which enables direct investment of small amounts of money from possible
individual/institutional investors in infrastructure to earn a small portion of the income as a return.
31. REITs- Real Estate Investment Trusts
➢ These are investment trusts (like mutual funds) that own and operate real estate properties
generating regular income and capital appreciation on their investments.
32. DR- Depository Receipt
➢ It is a negotiable financial instrument issued by a company in a foreign jurisdiction.
➢ They represent certain securities like bonds, shares, etc. SDRs are an important mechanism for
raising funds by tapping foreign investors who otherwise may not be able to participate in the
domestic market.
33. SARFAESI- Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act
➢ Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002, is a legislation that allows banks and other financial organizations to recover bad loans
effectively.
➢ The act can be utilized to tackle the problem of Non-Performing Assets (NPAs) through different
procedures.
34. CEPD- Consumer Education and Protection Department
➢ It was set up in 2006
➢ It frames policy guidelines for consumer protection and oversees the functioning of the 22 Offices
of RBI Ombudsman (ORBIOs) and 30 Consumer Education and Protection Cells (CEPCs).
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35. RS- Regulatory Sandbox
➢ It refers to the live testing of new products or services in a controlled/test regulatory environment.
➢ The Inter-Regulatory Working Group (WG) of RBI (Formed in July 2016) recommended (in 2018)
the introduction of a Regulatory Sandbox (RS) within a well-defined space and duration where the
financial sector regulator will provide the requisite regulatory guidance, to increase efficiency,
manage risks and create new opportunities for consumers.
➢ It was established to foster responsible innovation in financial services, promote efficiency, and
bring benefits to consumers.
36. BBPS- Bharat Bill Payment System
➢ The Bharat Bill payment system is a Reserve Bank of India (RBI) conceptualized system driven by
the National Payments Corporation of India (NPCI).
➢ It is a one-stop ecosystem for payment of all bills providing an interoperable and accessible “Anytime
Anywhere” Bill payment service to all customers across India with certainty, reliability, and safety
of transactions.
➢ Bharat BillPay - The One-stop destination for all recurring payments.
37. FSDC- Financial Stability and Development Council
➢ It is a non-statutory apex council under the M/o Finance by an Executive Order in 2010.
➢ It was 1st proposed by the Raghuram Rajan Committee in 2008.
➢ Chairman: Finance Minister
➢ Its sub-committee is headed by the Governor of RBI.
38. SDF- Standing Deposit Facility
➢ It is an additional tool for absorbing liquidity. Without any collateral.
➢ SDFR is the floor rate (minimum rate) for the absorption of overnight excess liquidity from the
banking system.
39. TReDS- Trade Receivables Discounting System
➢ TReDS is an electronic platform for facilitating the financing/discounting of trade receivables of
Micro, Small, and Medium Enterprises (MSMEs) through multiple financiers. These receivables can
be due from corporations and other buyers, including Government Departments and Public Sector
Undertakings (PSUs).
40. LIBOR- London Inter-Bank Offered Rate
➢ It is the benchmark interest rate at which banks lend to and borrow from one another in the
interbank market. Essentially, it is the rate for unsecured short-term borrowing in the interbank
market.
41. MIFOR- Mumbai Interbank Forward Offer Rate
➢ Indian banks use the Mumbai Interbank Forward Offer Rate as a standard for pricing forward-rate
contracts and securities.
➢ Rates for contracts and forward-rate arrangements are set using MIFOR. A forward charge earned
from Indian foreign exchange markets is combined with the London Interbank Offered Rate
(LIBOR).
➢ MIFOR combines a forward premium earned from Indian forex markets with the London Interbank
Offered Rates.
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42. NDDCs- non-deliverable derivative contracts
➢ NDDC means an OTC FOREX derivative contract in which there
is no delivery of the notional amount of the underlying
currencies of the contract and which is cash settled.

43. CDES- Currency Distribution & Exchange Scheme

➢ The Currency Distribution & Exchange Scheme (CDES) is
designed to motivate all bank branches, including Currency
Chests (CCs), to enhance customer service in alignment with
the Clean Note Policy objectives.

44. ARCs- Asset Reconstruction Companies

➢ An Asset Reconstruction Company (ARC) is a specialized financial institution that acquires non-
performing assets (NPAs) or bad loans from banks and other financial institutions. This allows these
entities to clear off their balance sheets, essentially cleaning up their financial statements.
➢ ARCs are required to have a minimum net owned fund (NOF) of Rs 300 crore to start business
activities related to securitization or asset reconstruction.

45. NBFCs- Non-Banking Financial Companies

➢ Refers to Non-Banking Financial Companies that are registered with the Reserve Bank of India,
including Housing Finance Companies registered under Section 29 A of the National Housing Bank
Act, 1987.

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