Banking and Financial Awareness January 2019: Week I

Banking and Financial Awareness January 2019: Week I

RBI Proposes Loan Restructuring of MSMEs

  • In order to provide relief to the demonetization hit small business, the Reserve Bank of India proposed a one-time loan restructuring scheme for micro, small and medium enterprises (MSMEs).

 Features of the Restructuring scheme

  • Scheme for restructuring of stressed assets will be application to credit facilities not exceeding Rs 25 crore as on January 1, 2019 
  • The restructuring has to be implemented by March 31, 2020. 
  • A provision of 5 per cent of the total outstanding loan, in addition to the money already set aside to cover potential losses, will have to be made for such borrowers. 
  • Each bank or NBFC must formulate a policy including a framework for viability assessment of the stressed accounts and regular monitoring of the restructured accounts. 
  • The scheme is applicable for the borrowers who are GST-registered on the date of implementation of restructuring. 
  • The restructuring would aid provide a stimulus to the economy since the MSME sector contributes significantly to job creation and employs around 12 crore people, the second largest after the agriculture sector. 

RBI forms expert committee to rejuvenate MSMEs

  • The Reserve Bank of India (RBI) has formed an expert committee to look into the various challenges being faced by MSMEs and suggest ways and measures to rejuvenate them. 
  • The eight-member committee will be headed by former Securities and Exchange Board of India Chairman UK Sinha and the other members of the committee are Ram Mohan Mishra, Pankaj Jain, PK Gupta, Anup Bagchi, Abhiman Das, Sharad Sharma, and Bindu Ananth. 
  • The committee will review the current institutional framework in place to support the MSME along with examining the factors affecting the timely and adequate availability of finance to the sector 
  • It will also study the impact of the recent economic reforms on the sector and identify the structural problems. 
  • The existing MSME focused policies and its impact on the sector and to propose measures for leveraging technology will also be reviewed. 

RBI launches SRPHi

  • The Reserve Bank of India (RBI) has launched Survey on Retail Payment Habits of Individuals (SRPHi) to capture payment habits of individuals in cities of Delhi, Mumbai, Kolkata, Chennai, Bengaluru and Guwahati. 
  • Sigma Research & Consulting Pvt Ltd will conduct the fieldwork of the survey. 
  • Around 6000 individuals from various socio-economic backgrounds across six cities would be covered under the survey. 
  • The survey seeks qualitative responses from individuals on their payment habits. 
  • The findings of the survey will provide insights into awareness and usage habits of digital payment products. 

Bimal Jalan Panel on Economic Capital Framework

  • The Reserve Bank of India (RBI) has set up an expert committee, headed by its Former Governor Bimal Jalan. 
  • The panel will suggest how the Central Bank should handle its reserves and whether it can transfer its surplus to the Government 
  • RBI's contingency fund core reserve is only around 7% of its total assets and the rest of it is largely in revaluation reserves. 
  • Revaluation reserves fluctuate with corresponding changes in currency and gold valuations. 
  • In 2017-18, the central bank's contingency funds and revaluation reserves stood at Rs.2.32 trillion and Rs.6.92 trillion respectively. 
  • The data shows that the growth in revaluation reserves has far exceeded the growth in the contingency fund. 
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