The good and not so good of new bank ownership norms

News: RBI’s internal working group, set up in June 2020, had made 33 recommendations on the ownership and corporate structure of private sector banks. The RBI has accepted 21 of them, with minor modifications in some cases. The rest, are under examination. What are the key recommendations made by the RBI’s IWG? Entry of corporate… Continue reading The good and not so good of new bank ownership norms

What is RBI’s stand on the use of cryptocurrency

News: RBI governor has raised his concern over the cryptocurrency investment in India. How the RBI has responded to the crypto business so far? Read here: Cryptocurrency in India – Lessons from other Countries The RBI has raised its concerns over the usage of a cryptocurrency over macroeconomic and financial stability points. It wants to explore… Continue reading What is RBI’s stand on the use of cryptocurrency

An RBI public interface that can recast banking

News: RBI has opened a retail window for bonds. Along with this, the launch of its digital rupee next could enable RBI to take over the bank depository function. Recently, RBI launched the Retail Direct scheme. Under this scheme, people can invest directly in government bonds. As these are virtually risk-free, people would be attracted… Continue reading An RBI public interface that can recast banking

The monetary policy of RBI has failed to walk its talk

Synopsis: A disconnect between the commentary and policy action of RBI’s repo rate-setting panel could cost us dear in time to come. Introduction According to RBI Governor, the Indian Economy is recovering from the impact of Covid. But still, there is a need to work on inflation, so that it will remain within the targets defined.… Continue reading The monetary policy of RBI has failed to walk its talk

Let central banks stay focused on their goals

Synopsis: Urjit Patel has suggested adding climate aims to the monetary agenda, however it has multiple risks associated to it. Hence, other tools should be used for our carbon crisis. Introduction Recently, former Reserve Bank of India (RBI) governor Urjit Patel laid out a strong argument in favour of the proposition of adding climate goals… Continue reading Let central banks stay focused on their goals

RBI permits card-tokenization services in a bid to make card transactions more safe

Source: This post is based on the article “RBI permits card tokenization services” published in AIR on 26th August, 2021. What is the News? The Reserve Bank of India has permitted authorised card networks to offer card tokenization services to any token requestor in a bid to make card transactions more safe, secure and convenient… Continue reading RBI permits card-tokenization services in a bid to make card transactions more safe

No taper tantrum (On US Fed reserve policies)

Source: Business Standard What is the news? The US Fed Reserve is considering reducing the pace of its asset purchase. As per Fed’s Chairman, the economy had evolved as expected, and it could be appropriate to start reducing asset purchase this year. But, it’s not clear at this stage as to when the Fed will… Continue reading No taper tantrum (On US Fed reserve policies)

E-tailers can’t store your card data, says RBI

Source: TOI What is the News? Reserve Bank of India is all set to implement its revised set of guidelines on the card data storage policy from January 2022. RBI’s Guidelines on Card Data Storage Policy: As per the guidelines, Payment Aggregators(PAs), Payment Gateways and online merchants shall not store card credentials of customers in… Continue reading E-tailers can’t store your card data, says RBI

Spreading disinflation over 2-3 years to reduce output loss, says RBI

Source: Business Standard Relevance: Addressing various issues ailing the financial sector of the Indian economy. Synopsis: RBI Governor Shaktikanta Das, other deputy governors took questions from the media and addressed the raging topics in the financial sector. Here is what he had to say regarding RBI’s view on various issues. On inflation Between 2016 and… Continue reading Spreading disinflation over 2-3 years to reduce output loss, says RBI

Private partners could help RBI run a digital currency

Source: Livemint Relevance: Issues in the implementation of a retail CBDC Synopsis: A two-tiered model for retail issuance of CBDC should be implemented by India. Issues involved and the way forward. Background Recently, a deputy governor of the Reserve Bank of India (RBI) announced that RBI is working on a “phased implementation strategy” for the… Continue reading Private partners could help RBI run a digital currency

‘GNPA ratio may rise up to 11.2% in FY22’

Sources: The Hindu, The Business Standard (Article 1, Article 2) Syllabus: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment. Relevance: The problem of NPA is still impacting the Indian economy and the recent Financial Stability Report also highlights it. About the news: The Reserve Bank of India (RBI) recently… Continue reading ‘GNPA ratio may rise up to 11.2% in FY22’

Kamath committee picks 26 sectors for loan restructuring, says RBI

News: Reserve Bank of India has released the K V Kamath-led Committee report and has broadly accepted its recommendations. Facts: Background: RBI had formed a five-member committee under the chairmanship of KV Kamath to make recommendations on the financial parameters and the sectors to be considered for the one-time restructuring of loans impacted by the… Continue reading Kamath committee picks 26 sectors for loan restructuring, says RBI

RBI releases revised Priority Sector Lending(PSL) guidelines

News: Reserve Bank of India(RBI) has released revised priority sector lending (PSL) guidelines to augment funding for COVID-19 impacted companies. Facts: Aim: To align Priority Sector lending with emerging national priorities and bring sharper focus on inclusive development. Key Revised PSL Guidelines: Bank finance for start-ups (up to ₹50 crore), loans to farmers for installation… Continue reading RBI releases revised Priority Sector Lending(PSL) guidelines

RBI unveils framework for retail payments entity

News: Reserve Bank of India(RBI) has released a ‘Framework for Authorisation of Pan-India Umbrella Entity for Retail Payments’. Facts: In February 2020, RBI had proposed to create an alternative umbrella organisation for retail payments to prevent the monopoly of National Payment Corporation of India(NPCI). About the Framework: New umbrella entity(NUE): It shall be a company… Continue reading RBI unveils framework for retail payments entity

Reserve Bank of India introduces Positive Pay mechanism

News: Reserve Bank of India(RBI) has introduced a Positive Pay mechanism to make cheque payments safer and reduce instances of frauds. Facts: What is Positive Pay Mechanism? It is a fraud detection tool adopted by banks to protect customers against forged, altered or counterfeit cheques. How does it work? It cross verifies all details of… Continue reading Reserve Bank of India introduces Positive Pay mechanism

Reserve Bank of India’s(RBI) monetary policy review

News: The Reserve Bank of India has released its monetary policy committee (MPC) report. Facts: Key Highlights: Repo Rate:It is the rate at which the RBI lends money to the banks for a short term.It remains unchanged at 4%. Reverse Repo Rate:It is the short term borrowing rate at which RBI borrows money from banks.It… Continue reading Reserve Bank of India’s(RBI) monetary policy review

Urban, multi-State cooperative banks to come under RBI supervision

News: The Central government has approved an Ordinance to bring all urban and multi-state co-operative banks under the direct supervision of the Reserve Bank of India(RBI). Facts: Aim: To empower more security to depositors and to prevent instances of fraud and serious financial irregularities such as the major scam at Punjab and Maharashtra Co-operative(PMC) Bank… Continue reading Urban, multi-State cooperative banks to come under RBI supervision

RBI proposes new rules for housing finance companies

News: Reserve Bank of India(RBI) has proposed new guidelines for Housing Finance Companies(HFCs). Facts: What are Housing Finance Companies(HFC)? It means financing for purchase, construction or repair of residential dwelling units and some other activities including giving loans to corporates and government agencies for employee housing projects. All other loans including those given for furnishing… Continue reading RBI proposes new rules for housing finance companies

Reserve Bank proposes to shore up bank boards

News: The Reserve Bank of India(RBI) has issued a discussion paper on ‘Governance in Commercial Banks’.The discussion paper aims to create a clearly definable separation between the board and the management of a bank. Facts: Guidelines Coverage: The guidelines are applicable to private, foreign and public sector banks. It will come into effect within six… Continue reading Reserve Bank proposes to shore up bank boards

RBI creates Payment Infrastructure Development Fund

News: Reserve Bank of India(RBI) has created a Payment Infrastructure Development Fund of Rs 500 crores. Facts: Aim: To encourage the deployment of Points of Sale(PoS) infrastructure both physical and digital modes in smaller cities, towns and north eastern states. Contribution: RBI will make an initial contribution of Rs 250 crore to the fund. The… Continue reading RBI creates Payment Infrastructure Development Fund

Explained: What RBI discontinuing 7.75% saving bonds means to investors

News: Government of India has discontinued the 7.75% savings (taxable) bonds,2018 for subscription. Facts: The 7.75% Savings(Taxable) Bonds,2018 were issued with effect from January,2018. Eligibility: The bonds were available for subscription to resident citizens/Hindu Undivided Family (HUF) to invest in a taxable bond. Investment: The minimum investment in this bond starts at Rs 1,000 with… Continue reading Explained: What RBI discontinuing 7.75% saving bonds means to investors

RBI announces nine additional measures for strengthening the Economy

News:Reserve Bank of India(RBI) has announced several measures for strengthening the Economy in the uncertain times ushered in by the COVID-19 pandemic. Facts: Key measures: Repo Rate: It is the rate at which the RBI lends money to the banks for a short term.It has been reduced by 40 basis points from 4.4% to 4.0%.… Continue reading RBI announces nine additional measures for strengthening the Economy

RBI announces special liquidity facility for mutual funds

News: Reserve Bank of India(RBI) has announced a special window of ₹50,000 crore for Mutual Funds in view of the pressure that the fund houses are facing in the wake of the Coronavirus pandemic. Facts: Mutual Funds: It is a type of financial vehicle made up of a pool of money collected from many investors… Continue reading RBI announces special liquidity facility for mutual funds

RBI announces second set of measures to preserve financial stability

News:The Reserve Bank of India has come out with the second set of monetary policy measures to preserve financial stability after the government has extended the lockdown. Facts: Reverse Repo Rate:It is the short term borrowing rate at which RBI borrows money from banks.It has been cut to 3.75% from 4%. Liquidity Coverage Ratio(LCR): It… Continue reading RBI announces second set of measures to preserve financial stability

RBI announces Rs 10,000 crore Open Market Operations(OMO)

News:The Reserve Bank of India(RBI) has announced Rs 10,000 crore open market operations in a bid to increase liquidity and enhance confidence in the market amid the coronavirus crisis. Facts: About Open Market Operations(OMO): Open market operations is the sale and purchase of government securities and treasury bills by RBI or the central bank of… Continue reading RBI announces Rs 10,000 crore Open Market Operations(OMO)

RBI releases new guidelines for payment aggregators

News:The Reserve Bank of India (RBI) has released guidelines for regulating activities of Payment Aggregators(PAs) and Payment Gateways(PGs) in the country. Facts: About:Reserve Bank of India(RBI) has defined Payment Gateways and Payment Aggregators as those entities who: provide technology infrastructure to route and / or facilitate processing of an online payment transaction and perform other… Continue reading RBI releases new guidelines for payment aggregators

Maharashtra loses top slot as attractive investment destination to Andhra in FY’19: RBI study

News: Reserve Bank of India has released the data on the top attractive investment destination states. Facts: Key Highlights from the study: In 2018-19,Andhra Pradesh accounted for the highest share in total cost of projects sanctioned by banks and financial institutions. It was followed by Tamil Nadu, Maharashtra, Gujarat, Telangana , Rajasthan and Uttar Pradesh.… Continue reading Maharashtra loses top slot as attractive investment destination to Andhra in FY’19: RBI study

New Umbrella entity for retail payment systems

News:The Reserve Bank of India(RBI) has released a draft framework for authorisation of a pan-India New Umbrella Entity(NUE) for Retail Payment Systems. Facts: About New Umbrella Entity(NUE): The new pan-India new umbrella entity(NUE) or entities will focus on retail payment systems with a minimum paid-up capital of Rs 500 crore. They may be a ‘for-profit’… Continue reading New Umbrella entity for retail payment systems

RBI issues notification on CRR leeway for new retail, MSME loans

News:RBI has exempted banks from maintaining cash reserve ratio(CRR) for loans to retail and micro, small and medium enterprises for five years if these loans are extended between January 31 and July 31,2020. Facts: About CRR: The Cash Reserve Ratio refers to a certain percentage of total deposits the commercial banks are required to maintain… Continue reading RBI issues notification on CRR leeway for new retail, MSME loans

RBI to release Digital Payment Index by July 2020

News:The Reserve Bank of India announced that it will create a Digital Payment Index by July 2020. Facts: About the Index: Aim:To capture the extent of digitization of monetary payments in the country. The index will have a classification of urban, semi-urban and rural geographies to analyze the kind of digital payments that are gaining… Continue reading RBI to release Digital Payment Index by July 2020

RBI releases bi-monthly policy

News:The Reserve Bank of India released its bi-monthly monetary policy committee(MPC) report. Facts: Key Highlights from the report: Repo Rate:It is the rate at which the RBI lends money to the banks for a short term.It remains unchanged at 5.15%. Reverse Repo Rate:It is the short term borrowing rate at which RBI borrows money from… Continue reading RBI releases bi-monthly policy

Cabinet Clears Amendments To Ensure Greater RBI Control Over Cooperative Banks

News:The Union Cabinet has approved amendments to the Banking Regulation Act to give the Reserve Bank of India greater control over cooperative banks. Facts: Key provisions of the amendments: Cooperative banks will be brought under the regulation of the RBI.  The RBI will have the power to supersede and take control of the cooperative banks… Continue reading Cabinet Clears Amendments To Ensure Greater RBI Control Over Cooperative Banks

RBI chalks out financial inclusion strategy for 2024

News:The Reserve Bank of India has released the national strategy for financial inclusion. Facts: About the strategy: The national strategy for financial inclusion sets forth the vision and key objectives of financial inclusion policies in India. It also aims to provide access to formal and affordable financial services; broaden and deepen financial inclusion and promote… Continue reading RBI chalks out financial inclusion strategy for 2024

Stressed urban cooperative banks to face PCA-like curbs

News:The Reserve Bank of India has revised its supervisory framework for urban co-operative banks(UCBs) to expedite resolution of UCBs experiencing financial stress. Facts: About the revised framework: The framework imposes restrictions on urban cooperative banks(UCBs) for deterioration of financial position in line with the prompt corrective action(PCA) framework that is imposed on commercial banks. The… Continue reading Stressed urban cooperative banks to face PCA-like curbs

RBI directs large co-op banks to report all exposures above Rs.5 crore

News:The Reserve Bank of India(RBI) has directed large cooperative banks to report all aggregate exposures of Rs.5 crores and more to Central Repository of Information on Large Credits(CRILC). Facts: About CRILC: The Reserve Bank of India has created a CRILC of commercial banks, certain Non-Banking Financial Companies (NBFCs) and All India Financial Institutions(AIFIs). CRILC collects,… Continue reading RBI directs large co-op banks to report all exposures above Rs.5 crore

Financial system stable despite slowdown:RBI report

News:The Reserve Bank of India has released its biannual Financial Stability Report,2019. Facts: About Financial Stability Report: The Financial Stability Report are bi-annual reports published by the Reserve Bank of India(RBI). The report is the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability. It reviews… Continue reading Financial system stable despite slowdown:RBI report

Economic revival key to banks’ health

News:The Reserve Bank of India has released a report titled Trend and Progress of Banking in India 2018-19. Facts: Key Highlights from the report: What are the positives in the Banking sector? The Indian banking sector’s financial parameters such as bad loans and capital adequacy have shown an improvement in recent times. In 2018-19, the… Continue reading Economic revival key to banks’ health

RBI launches Prepaid Payment Instrument for your daily digital payments

News:The Reserve Bank has introduced a new type of prepaid payment instrument (PPI) for daily digital payments. Facts: Features of PPI introduced by RBI: The prepaid payment instrument(PPI) could be used only for purchase of goods and services up to a limit of ₹10,000 per month. PPIs shall be issued by bank and non-bank PPI… Continue reading RBI launches Prepaid Payment Instrument for your daily digital payments

RBI plans its own ‘Operation Twist’; to buy, sell bonds simultaneously

News:The Reserve Bank of India has announced that it will carry out US-style ‘Operation Twist’ to bring down interest rates. Facts: About Operation Twist: Operation Twist is when the central bank uses the proceeds from the sale of short-term securities to buy long-term government debt papers, leading to easing of interest rates on the long… Continue reading RBI plans its own ‘Operation Twist’; to buy, sell bonds simultaneously

Explained: Why the RBI refused to cut interest rates

News:The Monetary Policy Committee(MPC) of the Reserve Bank of India has decided to keep the repo rate unchanged at 5.15% in its fifth bi-monthly monetary policy statement. Facts: Issues before RBI: The RBI’s most important mandate is to maintain price stability which means RBI is required by law to maintain retail inflation based on Consumer… Continue reading Explained: Why the RBI refused to cut interest rates

Reserve Bank flags rising bad assets from Mudra loans

News:The Reserve Bank of India (RBI) has expressed concern over rising bad loans from Pradhan Mantri MUDRA Yo­jana(PMMY). Facts: About Rising Bad loans in MUDRA Yojana: The RBI Deputy Governor said that MUDRA was launched with the objective of lifting many beneficiaries out of poverty. However,there have been concerns at the growing level of non-performing… Continue reading Reserve Bank flags rising bad assets from Mudra loans

Monetary policy committee sees further slowdown in growth

News:The Reserve Bank of India(RBI) has released the minutes of the monetary policy committee (MPC) meeting. Facts: In its fourth Bi-monthly policy review,the Reserve Bank of India’s(RBI) Monetary Policy Committee(MPC) has reduced the interest rates by 25 basis points to 5.15 % from 5.40 %. Key takeaways from the MPC meeting: All the six members… Continue reading Monetary policy committee sees further slowdown in growth

Fourth Bi-monthly monetary policy review

News:The Monetary Policy Committee of the Reserve Bank of India(RBI) has cut the key policy rate by 25 basis points to 5.15 %. Facts: Highlights of the Monetary policy: The Reserve Bank of India’s(RBI) Monetary Policy Committee(MPC) has decided to reduce the policy repo rate under the liquidity adjustment facility(LAF) by 25 basis points to… Continue reading Fourth Bi-monthly monetary policy review

Explained: Why RBI may cut interest rates tomorrow and why it may not be enough

News:The Reserve Bank of India’s Monetary Policy Committee is set to announce its bi-monthly policy review on October 4,2019. Facts: What is likely to happen in the policy review? The RBI is likely to cut the repo rate by anywhere between 35 to 40 basis points due to following reasons- Inflation is under control.Hence,there is… Continue reading Explained: Why RBI may cut interest rates tomorrow and why it may not be enough

Prompt Corrective Action (PCA)

What is Prompt corrective action(PCA)? PCA is a framework under which banks with weak financial metrics are put under watch by the RBI. The RBI introduced the PCA framework in 2002 as a structured early-intervention mechanism for banks that become undercapitalised due to poor asset quality, or vulnerable due to loss of profitability. These regulations… Continue reading Prompt Corrective Action (PCA)

Teaser loans

News:The Reserve Bank of India(RBI) may not allow State Bank of India(SBI) plan to offer teaser loans. Facts: About Teaser loans: Teaser loans are those which charge comparatively lower rates of interest in the first few years after which the rates are increased. Why RBI is against teaser loans? The RBI feels that some borrowers… Continue reading Teaser loans