Current Affairs - Banking & Finance
RBI opens Govt. Bond Market to Individual Investors
On 12th November 2021, Prime Minister Narendra Modi virtually launched two innovative customer centric initiatives of RBI: ‘Retail Direct Scheme’ and ‘Reserve Bank - Integrated Ombudsman Scheme, 2021’.
Retail Direct Scheme
- RBI’s Retail Direct scheme will enable small investors to participate in the government’s bond market for their financial security.
- Easy Access for Small Investors: The Retail Direct Scheme will ensure easier and safer access for smaller investors in government securities. The provision of guaranteed settlement for government securities gives assurance of safety to citizens to invest their small savings.
- Direct Access: Small investors will now have direct access to government securities and will no longer be reliant on indirect investment agencies like banks, insurance companies or mutual funds. Investors just need to open a Retail Direct Gilt Account by logging on to the RBI Retail Direct’s official website.
- Relief from Fund Managers: One does not need any fund manager to handle the account and investors can operate it on their own from their smartphones.
- Link to Investor Account: The account can also be linked to the investor’s savings bank account.
- No Charges: It may be noted that there will be no charges for opening the Retail Direct Gilt Account.
About Reserve Bank - Integrated Ombudsman Scheme, 2021
- To make the alternate dispute redress mechanism simpler and more responsive to the customers of entities regulated by it, it has integrated three Ombudsman schemes – (i) the Banking Ombudsman Scheme, 2006, as amended up to July 01, 2017; (ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018; and (iii) the Ombudsman Scheme for Digital Transactions, 2019 into the Reserve Bank - Integrated Ombudsman Scheme, 2021 (the Scheme).
Entities that will be regulated under this Scheme:
- All Commercial Banks, Regional Rural Banks, Scheduled Primary (Urban) Co-operative Banks and Non-Scheduled Primary (Urban) Co-operative Banks with deposits size of Rupees 50 crore and above as on the date of the audited balance sheet of the previous financial year;
- All Non-Banking Financial Companies (excluding Housing Finance Companies) which (a) are authorised to accept deposits; or (b) have customer interface, with an assets size of Rupees 100 crore and above as on the date of the audited balance sheet of the previous financial year;
- All System Participants as defined under the Scheme.
- These schemes will expand the scope of investment in the country and make access to capital markets easier and more secure for investors.
- Given low rates on bank fixed deposits and perception of low risk on government bonds, retail investors may be inclined to venture into direct investing in gilts.
What are government securities?
RBI grants a Banking Licence to Unity Small Finance Bank
The Reserve Bank of India (RBI) has issued a Small Finance Bank (SFB) licence to ‘Unity Small Finance Bank’ - a consortium of Centrum Financial Services Limited (CFSL), the small business lending arm of the Centrum Group, and Resilient Innovations Private Limited (BharatPe), a fintech company.
- This new bank license has been issued by the RBI after a gap of nearly 6 years.
- RBI had accorded “in-principle” approval to CFSL, a wholly owned subsidiary of Centrum Capital, on June 18 to set up a small finance bank (SFB).
- The grant of banking licence to USFBL sets the stage for RBI to place in the public domain a draft scheme of amalgamation of PMC Bank with the SFB.
- With the establishment of USFBL, the number of SFBs in the country goes up to 12.
- Rajnish Kumar, former Chairman of State Bank of India, has been appointed on its Board. He will also be the Chairman of the Board.
Other Small Finance Banks
- Au Small Finance Bank Ltd.
- Capital Small Finance Bank Ltd
- Fincare Small Finance Bank Ltd.
- Equitas Small Finance Bank Ltd
- ESAF Small Finance Bank Ltd.
- Suryoday Small Finance Bank Ltd.
- Ujjivan Small Finance Bank Ltd.
- Utkarsh Small Finance Bank Ltd.
- North East Small finance Bank Ltd
- Jana Small Finance Bank Ltd
- Shivalik Small Finance Bank Ltd
e-RUPI: A Digital Payment Solution
e-RUPI, a person and purpose specific digital payment solution was launched on 2nd August 2021.
- It has been developed by National Payments Corporation of India on its UPI platform, in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority.
- e-RUPI is a cashless and contactless instrument for digital payment.
- It is a QR code or SMS string-based e-Voucher, which is delivered to the mobile of the beneficiaries.
- The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the service provider.
- e-RUPI connects the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface. It also ensures that the payment to the service provider is made only after the transaction is completed. Being pre-paid in nature, it assures timely payment to the service provider without involvement of any intermediary.
- It is expected to be a revolutionary initiative in the direction of ensuring a leak-proof delivery of welfare services.
- It can also be used for delivering services under schemes meant for providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, drugs & diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, fertilizer subsidies etc.
- Even the private sector can leverage these digital vouchers as part of their employee welfare and corporate social responsibility programmes.
Lic to have MD and CEO, Chairman Post Abolished
- Life Insurance Corporation of India (LIC), which is gearing up to launch a mega initial public offering (IPO), will now have a Managing Director and Chief Executive Officer instead of an Executive Chairman on the pattern of public sector banking industry.
- The changes have been made by the Department of Financial Services under the Finance Ministry by amending Life Insurance Corporation of India (Employees) Pension (Amendment) Rules. Various rules have been amended in the LIC Act to replace the post of chairman and create the position of CEO.
- Both CEO and MD will be appointed by the central government.
- Presently, MR Kumar is the LIC chairman, whose tenure was extended by another two years recently. Currently, LIC has four MDs.
Development Council for Cement Industry (DCCI)
The Department for Promotion of Industry and Internal Trade has established a 25 member Development Council for Cement Industry (DCCI) headed by Dalmia Bharat Group CMD Puneet Dalmia.
Mandate of the Council
- It will suggest ways to eliminate waste, obtain maximum production, improve quality, reduce costs and promote standardization of products.
- It will recommending measures for securing the full utilization of the installed capacity and for improving the working of the industry, particularly of the less efficient units; promote training of persons; and promoting or undertaking scientific and industrial research.
- It would also work for standardization of accounting and costing methods and practice; and promoting the adoption of measures for increasing the productivity of labour, including measures for securing safer and better working conditions.
- The council's functions also include promoting or undertaking inquiry as to materials and equipment and as to methods of production, management and labour utilization, including the discovery and development of new materials, equipment and methods.
Post Devolution Revenue Deficit Grant released to States
The Department of Expenditure, Ministry of Finance, has released the 4th monthly installment of Post Devolution Revenue Deficit (PDRD) Grant of Rs. 9,871.00 crore to the States on 7th July 2021.
About Post Devolution Revenue Deficit Grant
- The Post Devolution Revenue Deficit Grant is provided to the States under Article 275 of the Constitution.
- The grants are released as per the recommendations of the Fifteenth Finance Commission in monthly installments to meet the gap in Revenue Accounts of the States post devolution.
- The Commission has recommended PDRD grants to 17 States during 2021-22.
Eligibility Criteria for States
- The eligibility of States to receive this grant and the quantum of grant was decided by the Commission based on the gap between assessment of revenue and expenditure of the State after taking into account the assessed devolution for the financial year 2021-22.
States recommended for PDRD Grant
- The states recommended for the PDRP Grant by the Fifteenth Finance Commission are - Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttarakhand and West Bengal.
Exports of GI Certified Bhalia Wheat from Gujarat
- The first shipment of Geographical Indication (GI) certified Bhalia variety of wheat was exported on 7th July to Kenya and Sri Lanka from Gujarat.
- The GI certified wheat has high protein content and is sweet in taste.
- The crop is grown mostly across Bhal region of Gujarat which includes Ahmadabad, Anand, Kheda, Bhavanagar, Surendranagar, Bharuch districts.
- The unique characteristic of the wheat variety is that grown in the rainfed condition without irrigation and cultivated in around two lakh hectares of agricultural land in Gujarat.
Department of Public Enterprises comes under Finance Ministry
- The government has brought Department of Public Enterprises (DPE) under the Finance Ministry in a bid facilitate its ambitious disinvestment programme.
- As per the gazette notification, these rules may be called the Government of India (Allocation of Business) Three Hundred and Sixty First Amendment Rules, 2021.
- Earlier, DPE was part of Ministry of Heavy Industries and Public Enterprises.
- With the addition, this will be the sixth department under the Finance Ministry. Others being
- Department of Economic Affairs
- Department of Expenditure
- Department of Revenue
- Department of Financial Services
- Department of Investment and Public Asset Management
Retail and Wholesale Trades come under MSMEs
On 2nd July 2021, the Minister of MSME and Road Transport and Highways Shri Nitin Gadkari has announced revised guidelines for MSMEs with inclusion of Retail and Wholesale trades as MSMEs.
- This will strengthen MSMEs and make them engines for economic growth.
Benefits for the Retail and Wholesale Traders
- Currently, 95 per cent of the retail industry in the country is MSMEs, and this move is set to benefit 13-14 million retailers in India.
- Retail and wholesale trade will get benefit of priority sector lending under RBI guidelines.
- They will be now allowed to register on Udyam Registration Portal.
Action Plan to make India Aatmanirbhar in Rock Phosphate
- The Department of Fertilisers is expediating an action plan to make India Aatmanirbhar in Rock Phosphate.
- Rock Phosphate is the key raw material for DAP and NPK fertilisers and India is 90 per cent dependent on imports. Volatility in international prices affects domestic prices of fertilisers and hinders the progress and development of agriculture sector in the country.
- In view of this, the Department of Fertilisers has asked stakeholders to expedite the exploration and mining of available rock phosphate reserves in India.
- Phosphorite deposits are available in Rajasthan, central part of peninsular India, Hirapur, Lalitpur, Mussoorie syncline and Cuddapah basin.
- Further, discussion and planning with Department of Mining and Geological Survey of India is going on to expedite the exploration in the potential potassic ore resources in different parts of the country.