New Student Offer - Use Code HELLO

Register Now

Banking and Financial Awareness Digest: February 2023

Published on Monday, March 13, 2023
Banking and Financial Awareness Digest: February 2023

“Pay as you drive” vehicle insurance policy by NIA

  • This type of insurance, also known as Usage-based insurance (UBI), pay how you drive (PHYD), and mile-based auto insurance, is determined by factors such as the type of vehicle, time, distance, behaviour, and location.
  • The PAYD policy offers discounts on renewals, coverage beyond distance limits, and additional protection features like zero depreciation, roadside assistance, engine protection, and return to invoice.
  • Insurance premiums are calculated based on driving, and distance traveled instead of a fixed amount in traditional car insurance.
  • This model benefits those who use their vehicles sparingly. The policy includes a third-party cover and own-damage cover.
  • Customers can save money on own-damage premiums through renewal discounts if the vehicle is driven within specified kilometres. Recently, the Insurance Regulatory and Development Authority of India has permitted insurance companies to launch telematics-based motor insurance covers such as PAYD and PHYD, allowing vehicle owners to pay for insurance   based on usage.

RBI reported an increase in micro ATMs in 2022

  • However, after June 2022, there hasn't been a significant increase in the value of money withdrawn through these devices. In India, there were 14.19 lakh micro ATMs in use as of December 2022.
  • Micro ATMs, as the name suggests, are small, portable, handheld ATMs or card-swipe devices that also offer cardless money transfers in rural areas using the Aadhaar-enabled payment system (AePS).
  • The customer's bank account is linked to an identity proof, often the Aadhaar, which is used by the micro-ATM to identify them.
  • The RBI claims that the micro-platform will allow low-cost devices (micro ATMs) connected to banks all over India to function.
  • This would enable instant money deposits and withdrawals, irrespective of the bank associated with a particular business correspondent (BC).
  • This device, which will function through a mobile phone connection, will be accessible to every BC.
  • In December 2020, the amount of cash withdrawals was Rs. 19.67 lakh crore, which rose to Rs. 25.2 lakh crore in December 2021 but only slightly increased to Rs. 25.5 lakh crore in November 2022 when there were 13.3 lakh micro ATMs.
  • This shows a declining value of transactions per micro ATM per month.
  • During the COVID-19 pandemic, the value of cash withdrawals from micro ATMs saw a significant increase, rising 92% from Rs. 1,17,086 crore in FY20 to Rs. 2,25,041 crore in FY21 and to Rs. 2,99,776 crore in FY22.
  • Fino Payments Bank operates the most micro ATMs in India, with 3.55 lakh, followed by SBM Bank India Ltd with 3.3 lahks and NSDL Payments Bank with 2.25 lakh.

RBI Digital Payment Index

  • The RBI-DPI has improved across all categories, with notable growth in payment infrastructure and payment performance, according to the index, which shows that digital payments nationwide have grown by 24.13% in a year.
  • The RBI-DPI index series measures the changes in the deposit growth of banks in India.
  • The index has a base period of March 2018, which has been set at 100. In March 2021, the index stood at 270.59, reflecting an increase of 170.59 points from the base period. By September 2021, the index further increased to 304.06. The following data point, in March 2022, saw a significant rise to 349.3. Finally, in September 2022, the index reached its highest point at 377.46.
  • The Reserve Bank of India (RBI) created the RBI-Digital Payments Index (DPI) on January 1, 2021, to track the expansion of digital or cashless transactions nationwide. For the index, the RBI has set the base year 2018, i.e. DPI score for March 2018 is set at 100. Since March 2021, RBI has published DPI semi-annually with a lag of four months.

Govt. does amendments to develop International financial service centre (GIFT city)

  • The Gujarat International Finance Tech City (GIFT) is under construction and is being developed into one of the leading international IT and finance hubs.
  • Some of the measures include the establishment of Data Embassies in the GIFT city for countries seeking digital continuity solutions, setting up a subsidiary of the EXIM bank in GIFT City to provide acquisition financing and aid in trade re-financing, and making amendments to the IFSCA Act to avoid dual regulation and provide provisions for arbitration and ancillary services.
  • Additionally, the IFSCA will be given powers to set up a single window system to facilitate registration and approval from various authorities such as the SEZ, GST, SEBI, RBI, and IRDAI.
  • Tax benefits will also be extended to funds involved in the relocation to the IFSC and GIFT City. These measures are expected to enhance GIFT city greatly.
  • The changes would give GIFT city a boost. It is all a part of Acquisition Financing, where money is given to a business by banks to buy other businesses. The size of a smaller company will grow thanks to acquisition finance. Additionally, it will support the GoI's disinvestment plans.

Change in Income Tax slab by Government

  • Under the new tax regime for the financial year 2023-24, the basic exemption limit has increased to Rs 3 lakh from Rs 2.5 lakh. The new tax regime will be the default option for taxpayers, but they have the option to choose the old tax regime.
  • The new tax regime also includes revised income tax slabs, a standard deduction of Rs 50,000 for salaried and pensioners, an increase in the rebate under Section 87A for taxable incomes not exceeding Rs 7 lakh, and a reduction in the highest surcharge rate to 25% from 37%.
  • The old tax regime remains unchanged for the financial year 2023-24, with no changes in the income tax slabs, deductions, and exemptions.
  • The old tax regime offers different basic income exemption limits based on the taxpayer's age, with a rebate under Section 87A available for taxable incomes not exceeding Rs 5 lakh.
  • The new, concessional tax regime was introduced in the financial year 2020-21 and has been revised in the financial year 2023-24.
  • It has lower tax rates than the old tax regime, but taxpayers who opt for it must forego approximately 70 commonly claimed tax deductions and exemptions. The new tax regime is the default option from the financial year 2023-24, and taxpayers must choose between the old and new tax regimes each year, if they don't have any business income.
  • The primary line is that both people in the highest and lowest tax bands gain from the new income tax slab.

This digest is not complete. Read the complete digest on the Financial Awareness Course.
ebook store

About us

ramandeep singh

Ramandeep Singh, your guide to banking and insurance exams. With 14 years of experience and 5000+ selections, Ramandeep understands the path to success, having transitioned himself from Dena Bank and SBI. He's passionate about helping you achieve your banking and insurance dreams.

  • Follow me:
Close Menu
Close Menu