Will a bad bank fix India’s broken banking system?

Synopsis: Last month, the Union government set up the National Asset Reconstruction Company Limited (NARCL) under the Companies Act. Two experts, Ajit Ranade  and C.P. Chandrasekhar, discuss the bad bank proposal. We list out the key points. Must Read: NARCL: Need and Challenges – Explained, pointwise What is the need to bail out banks?  There… Continue reading Will a bad bank fix India’s broken banking system?

Srei’s fall and the sorrysaga of shadow lenders

What is the news? After the 2018 collapse of IL&FS and 2019 collapse of DHFL, the Reserve Bank of India (RBI) has added the Kolkata-based Srei Group to the country’s list of failed non-bank lenders. The regulator superseded the boards of two non-banking financial companies (NBFCs), Srei Infrastructure Finance Ltd and Srei Equipment Finance Ltd.… Continue reading Srei’s fall and the sorrysaga of shadow lenders

Recurring pain: On RBI’s decision on auto-debit transactions

Synopsis: RBI must re-examine its auto-debit restrictions Introduction Recently, the Reserve Bank of India’s (RBI’s) new rules controlling recurring payments on credit or debit cards came into force. The new rules mandate advanced notification by banks to customers for executing recurring payments which are of value of ₹ 5,000 and above. It is meant for… Continue reading Recurring pain: On RBI’s decision on auto-debit transactions

How loopholes in Aadhaar-enabled payments are putting poor people at risk of being swindled

Synopsis: Given the need for financial inclusion, resolving the issue in the AePS model is vital. Introduction The government of India launched Aadhaar enabled Payment System which is coupled with the Business correspondent model. It was supposed to revitalize financial inclusion in India. However, it faces many challenges. What is the Aadhaar enabled Payment System… Continue reading How loopholes in Aadhaar-enabled payments are putting poor people at risk of being swindled

El Salvador’s crypto foray offers a cautionary tale for other countries

Synopsis: The tiny Central American nation of El Salvador has embarked on an interesting experiment by recognizing bitcoin as legal tender. This is proving painful for many of its citizens, but it’s a useful “pilot” project for larger economies that are contemplating about this new asset class. Introduction El Salvador has a population of 6.5 million and… Continue reading El Salvador’s crypto foray offers a cautionary tale for other countries

PM highlights importance of fintech, warns against covid

What is the News? The Prime Minister has addressed the 81st edition of his monthly radio programme Mann ki Baat. What are the issues he has talked about? On Digital Inclusion Initiatives Around 355 crore Unified Payments Interface (UPI) transactions took place in August 2021. On average, digital payments of more than ₹2 trillion are… Continue reading PM highlights importance of fintech, warns against covid

RBI permits lenders to sell fraud loans to ARCs, paves way for resolution

What is the News? The Reserve Bank of India(RBI) has permitted lenders to transfer the loans that have been classified as fraud to asset reconstruction companies(ARCs). What is the current procedure? Currently, RBI norms require banks to make 100% provisions for the entire amount classified as fraud.  Note: As per RBI’s annual report, lenders have… Continue reading RBI permits lenders to sell fraud loans to ARCs, paves way for resolution

China says all crypto-related transactions are illegal

What is the News? China has said that all crypto currency transactions in China, including transactions using Bitcoin, will be deemed illegal.  China and Cryptocurrency China has been one of the world’s largest crypto-currency markets.This is despite the fact that trading in crypto-currency has officially been banned in China since 2019. However, the recent announcement… Continue reading China says all crypto-related transactions are illegal

An existential crisis for the banking sector?

Synopsis: The business model of banks is under threat. Hence, both banking and market regulators must take a close look at the evolving landscape. Introduction Corporate India has cut its debt burden. They are replacing high-cost debt with cheap money, raised from the market, and sale of assets. Since 2016, RBI has been insisting on… Continue reading An existential crisis for the banking sector?

Bad bank will help clean up balance sheets, but credit culture must change for healthier financial system

Synopsis: Issues and challenges that may impact the performance of the National Asset Reconstruction Company Ltd. Introduction The balance sheets of banks show stressed loans worth Rs 2 lakh crore. To address this problem the government had envisaged the formation of National Asset Reconstruction Company Ltd (NARCL) referred to as the bad bank within a… Continue reading Bad bank will help clean up balance sheets, but credit culture must change for healthier financial system