Top Five Banking News in the First Week of August
Questions related to banking news or with special reference to banking industry are frequently asked in bank examinations. In order to help in your preparation, here the banking team of jagranjosh is providing top five banking news of last ten days.
Questions related to banking news are frequently asked in bank examination. In order to help in your preparation, here the banking team of jagranjosh is providing top five banking news of last ten days.
1. RBI releases Third Bi-monthly Monetary Policy Statement 2016-17
The Reserve Bank of India (RBI) on 9 August 2016 released the Third Bi-Monthly Monetary Policy Statement 2016-17.
One of the key announcements under the policy was that the RBI Governor Raghuram G Rajan kept the Repo Rate under the Liquidity Adjustment Facility (LAF) unchanged at 6.5 percent.
Based on the assessment of the current and evolving macroeconomic situation, the following changes were announced in key policy rates:
- Repo Rate: The policy Repo Rate under the Liquidity Adjustment Facility (LAF) was kept unchanged at 6.5 percent.
- Reverse Repo Rate: The reverse repo rate under the LAF will remain unchanged at 6.0 percent.
- Cash Reserve Ratio (CRR): The Cash Reserve Ratio (CRR) of scheduled banks was also kept unchanged at 4.0 percent of Net Demand and Time Liabilities (NDTL).
- Marginal standing facility (MSF) Rate: The MSF rate was fixed at 7.0 percent.
- Bank Rate: The Bank Rate also stands at 7.0 percent.
Assessment of Economy
- Among emerging market economies, activity remains varied. GDP growth stabilised in China in Q2 and manufacturing activity was weak in July due to adverse weather and subdued export demand.
- Recessionary conditions are gradually diminishing in Brazil and Russia.
- World trade remains sluggish in the first half of 2016. International financial markets did not anticipate the Brexit vote and equities plunged worldwide and currency volatility increased.
- On the domestic front, more than 80 percent of the country is receiving normal to excess precipitation. Kharif sowing strengthened after a lacklustre start, particularly with respect to pulses.
- Barring cotton, jute and mesta, sowing of all crops is currently above the 2015 acreage.
- Industrial production rose at 3 percent in the current financial year. In fact, capital goods production excluding insulated rubber cables expanded by 8 percent.
- Retail inflation measured by the headline Consumer Price Index rose to a 22-month high in June 2016. The rise was mainly driven by food, with vegetable. Sugar prices also firmed up.
- Fuel inflation remained subdued due to sustained deflation in prices of LPG. Excluding food and fuel, inflation eased across major sub-groups.
- In the external sector, merchandise export growth moved into positive territory in June. This upturn was reasonably widespread covering chemicals, marine products, handicraft, plastic, rice, electronic and engineering goods.
2. RBI constitutes Tarun Ramadorai Committee on Household Finance
Reserve Bank of India (RBI) on 4 August 2016 constituted a committee to look at various facets of household finance in India. The Committee will be chaired by Tarun Ramadorai, Professor of Financial Economics, University of Oxford.
It will have representation from financial sector regulators namely, Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDAI), Pension Fund Regulatory and Development Authority (PFRDA) apart from Reserve Bank of India (RBI).
Terms of reference of the Tarun Ramadorai Committee
- To benchmark the current depth of household financial markets in India among those in other major world markets and to identify areas of priority for growth and change.
- To characterize and evaluate Indian households' demands in formal financial markets (for assets such as pensions as well as liabilities such as home loans) over the coming decade.
- To consider whether, how and why the financial allocations of Indian households deviate from desirable financial allocation and behaviour like the large household allocation to gold.
- To evaluate the design of new systems and the redesign of existing systems of incentives and regulations to encourage better participation by Indian households in formal financial markets.
- To assess the role of new financial technologies and products in the cost-effective provision of high-quality financial products to Indian households while containing risks.
- The Committee is expected to submit its report by end of July 2017.
The demand for formal financial market investment product like pension as well as liability product like home loan from the Indian household was discussed during the meeting of the Sub Committee of Financial Stability and Development Council (FSDC-SC) held on 26 April 2016.
It was decided during the meeting that a Committee should be set up to look at various facets of household finance in India and submit a report.
3. RBI launches Sachet portal to check illegal money collection
The Reserve Bank of India (RBI) Governor, Raghuram Rajan, on 4 August 2016 launched Sachet portal, sachet.rbi.org.in, to check illegal money collection.
The portal will help anyone can obtain information regarding entities that are allowed to accept deposits, lodge complaints and share information regarding illegal acceptance of deposits by unscrupulous entities.
Key highlights of Sachet
- The website is available in vernacular languages for the benefit of the people of different regions of the country.
- It will be helpful for the regulators in quick follow up of the unlawful money collection activities.
- It will also enable people get information regarding the financial entities that are allowed to accept the deposits.
- People will get the space to lodge complaints and share information regarding illegal collection of deposits by unscrupulous entities in their areas.
- The website also incorporates regulations prescribed by all financial regulators that different entities have to follow.
4. Dinesh Kumar Khara appointed Managing Director of State Bank of India
Dinesh Kumar Khara on 9 August 2016 was appointed Managing Director (MD) of State Bank of India (SBI). The Appointments Committee of Cabinet (ACC) has appointed Khara for a period of three years, extendable by two years after review of his performance.
At present, Khara is working as MD and Chief Executive Officer of SBI Funds Management Pvt Ltd
About State Bank of India
- State Bank of India is an Indian multinational, public sector banking and financial services company.
- Its headquarters is located in Mumbai, Maharashtra.
- It is ranked 232nd on the Fortune Global 500 list of the world's biggest corporations as of 2016.
- It is one of the Big Four banks of India, along with ICICI Bank, Bank of Baroda and Punjab National Bank.
5. Former RBI Deputy Governor Anand Sinha appointed to the IDFC Bank board
Former RBI Deputy Governor Anand Sinha was on 6 August 2016 appointed to the Board of IDFC Bank. Sinha will join Bank as an Additional Director in the category of Independent Director on the board with effect from 1 August 2016.
His appointment came after Vinod Rai resigned after serving on the board for a year. Rai is a former Comptroller and Auditor General of India who served as a Nominee Director representing IDFC Limited on the board of IDFC Bank.
About Anand Sinha
- Sinha, in his earlier appointment with the Central Bank, was overseeing the final licence to new universal banks that included IDFC Bank and Bandhan Bank.
- In his role as the Deputy Governor of RBI, he was in-charge of regulation of commercial banks, Non-Banking Financial Companies, Urban Cooperative Banks and Information Technology, among others.
He was also the RBI's Nominee Director on the boards of Dena Bank, Allahabad Bank, Bank of Baroda, Indian Overseas Bank, Deposit Insurance and Credit Guarantee Corporation etc.