Recent Developments in Banking Industry


1. The Jammu and Kashmir Bank has been brought under the purview of the Right to Information (RTI) act of 2009

  • The Jammu and Kashmir Bank has been brought under the purview of the Right to Information (RTI) act of 2009, the Chief Vigilance Commissioner (CVC) and the guidelines of State Legislature. Established in 1938, The Jammu and Kashmir Bank is the only state promoted bank in the country, with government currently holding 58.3% of share. 

2. Govt To Infuse INR 42,000 Crore In PSU Banks By March

  • The government will infuse Rs 42,000 crore in the state-owned banks by March-end and the next tranche would be released by mid-December. State-owned banks will need less capital to meet their capital adequacy norms, as the Reserve Bank of India recently decided to defer the deadline for them to meet the global norms or Basel-III requirement by a year till March 2020. 

3. RBI Cuts Mandatory Hedging To 70% For Foreign Loans

  • Further easing the External Commercial Borrowing (ECB) norms, the Reserve Bank of India (RBI) reduced the mandatory hedging provision to 70 per cent from 100 per cent.The relaxation in hedging is for Indian companies raising foreign currency-denominated ECBs under Track I, which refers to medium-term borrowings with average maturity between three and five years. Further, it is also clarified that ECBs falling within the aforesaid scope but raised prior to the date of this circular will be required to mandatorily roll over their existing hedge(s) only to the extent of 70 per cent of outstanding ECB exposure. 

4. SEBI permits IDBI Bank for issuance of preference shares to LIC

  • State-owned IDBI Bank has received approval from market regulator SEBI for issuance of preference shares to Life Insurance Corporation (LIC) in order to comply with Minimum Public Shareholding (MPS) requirements. The shareholding of LIC in IDBI Bank will increase to up to 51 per cent after the preference share issue. The Insurance Regulatory and Development Authority of India in June had permitted LIC to increase its stake from 10.82 per cent to 51 per cent in the IDBI Bank. 
  • It is important to note that as per current regulations, an insurance company cannot own more than 15 per cent in any listed financial firm. 

5. Federal Bank: Reserve Bank approved proposal to sell up to 45 per cent stake in NBFC arm

  • Federal Bank gets RBI nod to sell 45% stake in NBFC arm to True North. The operations of the company are in Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, West Bengal, Rajasthan, Delhi, Gujarat and Maharashtra.Fedfina is a 100 per cent fully owned subsidiary of the bank.

6. 77,000 payments bank accounts opened in Maharashtra, Goa postal circle

  • The Maharashtra and Goa Circle of India Post has got over 77,000 customers for its payments bank since the facility was launched across 650 districts by Prime Minister Narendra Modi on September 1. Maharashtra and Goa Postal Circle had 42 branches of the IPPB along with 210 access points. The main of these IPPBs is to build the most accessible, affordable and trusted bank for the common man by removing barriers for the unbanked and underbanked segments of society. 
  • It is important to note that the Post department serves 40 crore customers and operates around 1.5 lakh branches across the country with a workforce of 3 lakh postmen. 

7. SEBI exempts Bandhan Bank from post-listing lock-in norms

  • Kolkata-based private lender Bandhan Bank has been exempted from SEBI's rules governing the post-listing lock-in period for promoter shareholdings in companies. The Bank has received an exemption from the Securities and Exchange Board of India with respect to 
    1. lock-in of one year on the equity shares held by the promoter 
    2. eligibility condition of one year from listing, as required under regulations 36(b) and 82(b) of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations 2009. Also, last month, the Reserve Bank of India (RBI) had asked Bandhan Bank to stop opening new branches while also freezing the chief executive Chandra Shekhar Ghosh’s salary as penalty for not complying with the relevant shareholding norms. 
  • According to RBI’s guidelines for licensing of new banks in the private sector, when an NBFC launches a private bank through an NOFHC, it shall initially hold a minimum of 40% of the paid-up voting equity capital of the bank, which shall be locked in for a period of five years and which shall be brought down to 15% within 12 years.

8. SBI launches its first “Wealth Hub” in Mangaluru

  • The nation’s largest bank, State Bank of India launched its wealth business services by opening “SBI Wealth Hub”, inaugurated by SBI Chairman Rajnish Kumar. SBI is the first PSU bank in the country to introduce comprehensive wealth business services for its clients. The bank has re-branded its wealth business as “SBI Wealth” offering best-in-class personalised banking and investment services to its elite High Net worth Individual (HNI) clients through a dedicated team of relationship managers. 
  • SBI Wealth has presence in 20 major centres with a network of 90 Wealth Hubs in the country. Also, SBI is targeting to take its wealth business service to 50 centres by 2020. 

9. Fino Payments Bank gets RBI's Nod to resume opening new accounts

  • The Reserve Bank of India (RBI) has allowed Fino Payments Bank to resume opening savings accounts, nearly three months of imposing a ban on new accounts at the bank for breaching regulatory norms. It had been found that balances in some accounts with Fino had exceeded the regulatory limit of Rs 1 lakh. The payments bank is reworking its target of opening two million accounts by the end of March 2019. 

10. Paytm Payments Bank appoints Satish Kumar Gupta as MD, CEO

  • Paytm Payments Bank appointed Satish Kumar Gupta as its new managing director and CEO. Satish Gupta who comes with 35 years of experience in the banking and payments space earlier served in the leadership roles at SBI and NPCI. 
  • Also, Paytm has launched PayPay, a QR based smartphone payment service in collaboration with SoftBank Corp and Yahoo Japan and had raised $1.4 billion from SoftBank last year in exchange for a 20 percent stake.

11. NSDL starts payments bank operations

  • RBI had granted approval to 11 applicants, including National Securities Depository Ltd (NSDL) to set up payments banks. Of these, Airtel Payments Bank, India Post Payments Bank, FINO Payments Bank, Paytm Payments Bank, Aditya Birla Idea Payments Bank and Jio Payments Bank, are already in operation. These niche banks can accept demand deposits, and issue ATM/debit cards, however, they cannot issue credit cards, and undertake lending activities. 
  • NSDL was established in August 1996 and is the first and the largest depository in India. 

12. Paytm UPI transactions grow 600% in 6 months; becomes largest UPI player in October

  • Digital payments company Paytm has recorded a growth of 600% in the Unified Payments Interface (UPI) transactions in the last six months, claiming it was the largest contributor to the volume of UPI payments in India. The Chinese e-commerce giant Alibaba-backed Paytm had recorded more than 137 million UPI transactions in the month of September, with about 33% of the overall market share and recorded an increase of 18.8% in October, 2018 when the total number of UPI transactions were reported at 405.87 million. 
  • According to Paytm, in the last six months, the major portion of the payments via its platform was done with Paytm BHIM UPI for electricity bills, water bill, mobile recharges, DTH recharges. According to the company, about 50 % of all utility payments are being done through Paytm UPI. 

13. China’s biggest bank to invest $200 million in Indian SMEs

  • ICBC India has established a USD 200 million fund for investing in the promising Indian micro, small and medium enterprises (MSMEs) and ventures. The ICBC is a top state-run Chinese bank which is the country’s largest lender by market value that has opened its branch in Mumbai in 2011. 

14. RBI to inject Rs 8,000 crore into the system through purchase of government securities

  • The Reserve Bank will inject Rs 8,000 crore into the system through purchase of government securities under Open Market Operations for an aggregate amount of Rs 80 billion. The OMO operation will help to ease the liquidity crisis faced by NBFCs as a result of default by group companies of IL&FS. 

15. Faircent.com receives the award for the most innovative fintech start-up in the P2P lending sector at The Economic Times BFSI Innovation Tribe Awards and Summit 2018

  • Faircent.com is India’s leading NBFC-P2P and largest P2P lending platform. Recently, it was recognised as one of the most innovative fintech start-ups in the country, winning the award in the start-up category for its entry ‘P2P Lending: Delivering Banking to the Unbanked. Established in 2013, Faircent.com introduced the concept of P2P lending in India, connects retail and institutional lenders to Individual borrowers through a unique crowdfunding model called peer-to-peer lending. Faircent.com was the first platform in India to be certified as an NBFC-P2P by the regulatory body and is the largest in the country so far in terms of loan disbursals and borrower registrations. Also, it was the first P2P lending platform in India to launch Android and iOS-based mobile apps for both borrowers and lenders, in addition to a highly user-friendly website. 

16. Rakesh Sharma: MD and CEO of IDBI Bank for a period of six months

  • Government has appointed Rakesh Sharma as MD and CEO of IDBI Bank for a period of six months. Rakesh Sharma succeeded B Sriram who was appointed as the chief executive of IDBI for three months ended in September 2018. Earlier, Rakesh Sharma was the head of Lakshmi Vilas Bank. 
  • Earlier this week, The board of Directors of IDBI approved increasing authorised capital of the bank from Rs 8,000 crore to Rs 15,000 crore. 

17. RBI approves 3-year term for Sandeep Bakhshi as ICICI Bank chief

  • The Reserve Bank of India (RBI) appointed Sandeep Bakhshi as the Managing Director and CEO of ICICI Bank for three years. Earlier, RBI has also approved the appointment of Axis Bank’s next CEO Amitabh Choudhry for a period of three years starting January 1 and ending on December 31, 2021. 

18. Reserve Bank of India set norms for Joint Priority Sector Lending

  • RBI has allowed joint lending to the priority sector. RBI told banks to share a maximum 80% credit risk when they originate priority sector loans jointly with non-banking finance companies (NBFCs). As a result, minimum 20% of the credit risk by way of direct exposure shall be on NBFC’s books till maturity. According to set norms, the lenders will charge a single interest rate to borrowers. A single blended interest rate (for fixed rate loans) to the ultimate borrower based on the respective interest rates and proportion of risk sharing. For floating rate customers, the lending rate will be arrived at by taking weighted average of the benchmark interest rates in proportion to the respective loan contribution. 
  • It is important to note that Banks are mandated to lend 40% of their net bank credit in the previous fiscal to priority areas such as agriculture, affordable housing and others. Total priority sector loans stood at Rs 24.97 lakh crore, up 6.3% year-on-year, according to latest RBI data. 

19. RBI cancels registration of 31 NBFCs

  • The Reserve Bank of India cancelled the registrations of as many as 31 non-banking finance companies (NBFCs) for unspecified reasons. A majority 27 of the 31 companies which lost their licences are from Bengal. It can be noted that there are more than 12,000 registered NBFCs in the country under the regulation of the RBI, with a handful of them being deposit-taking ones which are regulated tightly. 
  • The NBFC sector is facing liquidity crisis as a result of non-payment of dues by the infra lender IL&FS since late August. 

20. Syndicate Bank gets Rs 728-cr capital infusion from government

  • Public sector Syndicate Bank has received capital infusion of Rs 728 crore from the government in lieu of preferential allotment of shares during 2018-19 under plan as government's investment.As part of PSBs' recapitalisation, the government in October 2017 had announced a massive Rs 2.1 lakh crore infusion in the course of 2017-18 and 2018-19 with the objective of strengthening them in the face of mounting non-performing assets (NPAs).

21. Banks to get a capital infusion of Rs 65,000 crore in 2018-19 

  • Recently, Government has decided a give a capital infusion of Rs 65,000 crore to PSBs in 2018-19. In July 2018, five PSBs including Punjab National Bank, Corporation Bank andAndhra Bank had received a total of Rs 11,336 crore out of the capital infusion plan for this fiscal. In this, PNB was hit by Nirav Modi scam and got the highest amount of Rs 2,816 crore, Allahabad Bank Rs 1,790 crore, Andhra Bank Rs 2,019 crore, Indian Overseas Bank Rs 2,157 crore and Corporation Bank Rs 2,555 crore. 

22. Prime Minister Modi launches APIX technology in Singapore

  • Prime Minister Narendra Modi has launched the APIX (Application Programming Interface Exchange), a banking technology platform designed to reach nearly two billion people worldwide who are still without bank accounts. The APIX will support banks to reach out people without bank accounts in 23 countries including the 10 ASEAN members. 

23. Maharashtra State Co-operative Bank to enter retail banking through merger of UCB branches

  • The Maharashtra State Co-operative (MSC) Bank, the apex lender in the state has decided to enter the retail banking sector and compete with the private sector. So far, only district cooperative banks (DCBs) could be merged with the MSC Bank. It is important to note that Maharashtra has the country’s largest cooperative banking sector. 

24. IDFC Bank to be renamed as IDFC First Bank

  • IDFC Bank has proposed to rename it as the 'IDFC First Bank Ltd' in amid of its amalgamation with non-banking financial company Capital First. 

25. State Bank of India to revamp credit policy for jewellery sector

  • State Bank of India (SBI) has recasted its credit policy for jewellery and now will lend in the form of gold loans, instead of the customary cash credit against stocks. 

26. SBI reduces daily cash withdrawal limit for debit cards

  • State Bank of India (SBI) has reduced the daily cash withdrawal limit for account holders carrying Maestro and Classic debit cards. Now, Customers would be able to withdraw just Rs 20,000 per day, as compared to earlier limit of Rs 40,000 per day. SBI has taken this decision to reduce frauds at ATMs and promote digitisation through cashless transactions. 

27. Ashok Chawla resigns as non-executive chairman of Yes Bank

  • Shri Ashok Chawla, Non-Executive Independent Part-Time Chairman of Yes bank, has tendered his resignation from the Bank's Board. 
  • Moreover, The bank's board has also approved appointment of Uttam Prakash Agarwal as an additional director (Independent) for a period of five years.

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