23rd Year of Publication

B anking
Registration RNI No.67802/98
Volume - XXIII No.03 : March 2020

Update
events

Contents of this Issue

BANKING POLICY : 2 & 3
• Bank Deposit Insurance Cover
• Exemptions from CRR
• Intt. subvention for MSMEs
• Merchant Acquiring business-RRBs

BANKING FEATURES : 4-6, 16

• Digital KYC
• Revised Liquidity Mgmt Framework
• Long term Repo Operations
• Practical problems based on
Ombudsman Decisions

DIARY OF EVENTS : Feb-2020: 7

• Policy, Economy

Those who win, are those, who think they can • Banking Developments
• Capital Markets & Insurance
Corporate & Distribution Office
General Awareness : 11-12
1008, Sector 45-B, Chandigarh
Phone 0172 2665 623 Multi-Option questions:13-15
eMail - bankingupdate123 @ gmail.com
Data Bank : 16
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Executive Editor - S. Chand Singh Editor in Chief - Sh. N S Toor

2 ♦ Banking events updatE ♦ March 2020

B ANKING Bank Deposit Insurance Cover

POLICY On 05.02.20, RBI informed banks that with a
view to providing a greater measure of protection to depositors
residential housing and loans to MSMEs
(hereafter called as the specified segments) as
on every reporting Friday beginning reporting
in banks, the Deposit Insurance and Credit Guarantee Corporation, February 14, 2020 and up to the reporting
a wholly owned subsidiary of the Reserve Bank of India, has Friday ending July 31, 2020, will be deducted
raised the limit of insurance cover for depositors in insured banks from the outstanding credit to the respective
from the present level of Rs.1 lakh to Rs.5 lakh per depositor segments as on January 31, 2020. If the
with effect from February 4, 2020 with the approval of difference between the outstanding credit is
Government of India. positive, the equivalent amount of difference
If DICGC has already incurred liability before 04.02.20, the cover be deducted from NDTL for the purpose of
will be limited to Rs.1 lac. CRR maintenance. If the difference in credit
to any of the specified segment is negative, it
On 05.02.20, DICGC intimated banks that, the rate of premium should be ignored. The incremental credit will
payable by insured banks will be raised from 10P/100/p.a. to 12P/ be calculated segment-wise.
100 of assessable deposits /p.a. w.e.f. the HY beginning
01.04.2020. 2. The factoring units of MSMEs discounted
under the ‘Trade Receivables Discounting
Incentivising Bank Credit to Specific Sectors – Exemption System (TReDs) are eligible for exemption/
from CRR Maintenance deduction.
On Feb 10, 2020, RBI permitted banks to deduct the equivalent 3. For how long such deductions/ exemptions
amount of incremental credit disbursed by them as retail loans to are allowed?
automobiles, residential housing, and loans to micro, small and
medium enterprises (MSMEs), over and above the outstanding Clarification = The amount of incremental
level of credit to these segments as at the end of the fortnight credit as on July 31, 2020 (over the
ended January 31, 2020 from their net demand and time liabilities outstanding credit as on January 31, 2020) will
(NDTL) for maintenance of the cash reserve ratio (CRR). be reduced to the extent of repayments and
NPAs and the net amount of incremental credit
Banks have been advised that they can claim the first such deduction will be eligible for the benefit of deduction from
from the NDTL of February 14, 2020 for the amount equivalent NDTL for a maximum period of 5 years, i.e.,
to the incremental credit extended to the sectors indicated above up to the fortnight ending January 24, 2025,
over the outstanding level of credit as at the end of the fortnight or the tenure of the loan, whichever is earlier.
ended January 31, 2020.
Interest Subvention Scheme for MSMEs
An amount equivalent to the incremental credit outstanding from
the fortnight beginning January 31, 2020 and up to the fortnight Operational guidelines were issued by RBI for
ending July 31, 2020 will be eligible for deduction from NDTL the scheme contained in circular on ‘Interest
for the purpose of computing the CRR for a period of 5 years Subvention Scheme for MSMEs’ dated
from the date of origination of the loan or the tenure of the loan, 21.02.19.
whichever is earlier. It has been decided by the Government of
Banks are required to report the exemption availed at the end of a India to bring, inter alia, following
fortnight under “exemptions/others” in the Section-42 return, modifications in the operational guidelines (RBI
prescribed in Annex A to Form A. Cir 05.02.20):
Further, proper fortnightly records of net incremental credit 1.Submission of statutory auditor certificate
extended to the select sectors/NDTL exemption claimed, duly by June 30, 2020 and in the meantime, settle
certified by the Chief Financial Officer (CFO) or an equivalent claims based on internal / concurrent auditor
level officer, are to be maintained by banks for supervisory review. certificate.
Clarification issued by RBI on CRR exemption (25.02.20) 2. Acceptance of claims in multiple lots for a
given half year by eligible institutions.
1. How to compute equivalent amount of incremental credit that
can be deducted/exempted from the NDTL for the purpose of 3. Requirement of Udyog Aadhar Number
CRR? (UAN) may be dispensed with for units eligible
for GST. Unit not required to obtain GST, may
Clarification = The outstanding retail loans to automobiles, either submit Income Tax Permanent Account

(COMPILATION- SAPANDEEP TOOR & MANJOT TOOR, - on the basis of information available on RBI Website)
 Banking events updatE ♦ March 2020 ♦ 3

Video Lessons
Number (PAN) or their loan account must be categorized as
MSME by the concerned bank.
4. Allow trading activities also without Udyog Aadhar Number CAIIB-JAIIB-Promotion Exam
(UAN)
Merchant Acquiring Business using Aadhhar Pay etc.
B-Sheet Analysis
by Regional Rural Banks Certified Credit Professionals
On 06.02.20, RBI decided to allow RRBs to act as merchant Foreign Exchange Operations
acquiring banks using Aadhaar Pay – BHIM app and POS • Use lap top / Smart Phone, as our class room
terminals. The features of the scheme, are as under: • No travelling - no boarding/lodging charges
1. All RRBs intending to act as merchant acquiring banks • Learn as per your time and place convenience
(Aadhaar pay – BHIM app), shall be permitted to deploy
• Watch any video any no. of times during validity
their own devices subject to fulfilling the conditions as under:
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a) The RRB should have the permission for mobile banking
from the Reserve Bank

CORRESPONDENCE
b) Additionally, the RRB shall be required to fulfil the
following conditions:
1. The bank’s IT systems & CBS should have been subjected
to an IS Audit not earlier than six months from the date of COURSE
application to confirm that the system is adequately secure.
2. The bank must ensure necessary infrastructure for PROMOTION EXAM
application development, safety and security of the Based on latest trends of IBPS exam. A large no. of bankers
already succeeded by using the course material. If unable to
transactions and handling of customer grievance. attend class room program, this is the best option.
3. A customer grievance redressal mechanism duly approved Course Kit : The course kit include:
by the bank’s board should be in place; (a) subject-wise basic study material,
(b) assignment to improve retention
4. The bank should have a board approved policy on merchant
(c) objective type practice exercise
acquisition for card transactions;
(d) recalled questions
5. There should not be any restrictions imposed on the bank (e) mock test papers.
for accepting deposits/ withdrawals by Reserve Bank of India. Fee : May differ from bank to bank. May be checked before
remittance). Fee to be paid in advance.
6. No penalty should have been imposed in last two financial
How to enrol : Call us at the numbers given below.
years.
All RRBs intending to act as merchant acquiring bank (POS
terminals), shall be permitted to deploy their own devices CAIIB/JAIIB
provided they meet the above conditions, as also the conditions
Course is based on exam pattern of IIB&F. A large no. of
given hereunder: candidate have succeeded in all 3 papers in first attempt with
c) In the preceding financial year, the RRB should have our study material.
Course Kit : The course kit include:
1. Net worth of Rs.100.00 crore or more as on March 31 of
(a) subject-wise basic study material,
the preceding financial year (c) objective type practice exercise
2. Minimum CRAR at 9% (d) mock test papers.
3. Net NPA below 5%. Fee : Fee differs for different papers. Fee payable in
advance, for which details may be obtained by calling
In addition, the RRBs may be required to comply with 01722665623 .
instructions and guidelines on Merchant Acquisition for card How to enrol : To enrol, advise name, address for
transactions and POS issued by Department of Payment and correspondence, eMail id, mobile phone, bank name, subjects
Settlement Systems, RBI from time to time. for enrolment.

Reporting : RRBs shall inform the respective Regional DS Institute of Banking

Offices of Reserve Bank, within a period of 15 days from
Office:SCO No.32, Sector 33-D, Chandigarh 160 020
•
the date of operationalising the merchant acquisition business. Phone: 0172-2665623, 09988221167
4 ♦ Banking events updatE ♦ March 2020 BANKING FEATURES
Digital KYC b) proof of possession of Aadhaar where offline
verification can be carried out, the RE shall carry out
On 19.08.19 and 13.11.19, Government of India, offline verification
notified amendment to Prevention of Money-laundering
c) an equivalent e-document of any OVD, the RE shall
(Maintenance of Records) Rules, 2005. Further, RBI
verify the digital signature;
decided (on 09.01.20) to permit Video based Customer
d) proof of possession of Aadhaar number where offline
Identification Process (V-CIP) as a consent based
verification cannot be carried out, the RE shall carry
alternate method of establishing the customer’s identity,
out verification through digital KYC as specified in
for customer onboarding. Accordingly, KYC directions
Master Directions.
(25.2.16) have been amended as under:
Provided, for a period not beyond such date as may be
A. Changes due to amendments to the PML Rules
notified by the Government for a class of REs, instead
a) As per Section 3, “Digital KYC” means capturing
of carrying out digital KYC, the RE pertaining to such
live photo of the customer and officially valid document
class may obtain a certified copy of the proof of
or the proof of possession of Aadhaar, where offline
possession of Aadhaar number or the OVD and a recent
verification cannot be carried out, along with the latitude
photograph where an equivalent e-document is not
and longitude of the location where such live photo is
submitted.
being taken by an authorised officer of the Reporting
III. Equivalent e-document has also been permitted for
Entity (RE).
accounts of non-individual customer.
b) As per Section 3, “Equivalent e-document” means
IV. Where a customer has provided his Aadhaar number
an electronic equivalent of a document, issued by the
for identification and wants to provide a current address,
issuing authority of such document, with valid digital
different from the address as per the identity information
signature, including documents issued to the digital
available in the Central Identities Data Repository, he
locker account of the customer as per Rule 9 of the
may give a self-declaration to that effect to the Regulated
Information Technology (Preservation and Retention of
Entity.
Information by Intermediaries Providing Digital Locker
Facilities) Rules, 2016. B. Changes due to introduction of Video based
Customer Identification Process (V-CIP)
Amendment to Section 16 :
The process of V-CIP has been specified in Section 18
I. Customer, for the purpose of Customer Due Diligence
in terms of which, REs may undertake live V-CIP, to be
CDD) process, shall submit:
carried out by an official of the RE, for establishment of
a) Aadhaar number if desirous of receiving any benefit
an account based relationship with an individual
or subsidy under any scheme ; or he decides to submit
customer, after obtaining his informed consent and shall
his Aadhaar number voluntarily or
adhere to the following stipulations:
b) the proof of possession of Aadhaar number where
i. The official of the RE performing the V-CIP shall
offline verification can be carried out; or
record video as well as capture photograph of the
c) the proof of possession of Aadhaar number where customer present for identification and obtain the
offline verification cannot be carried out or identification information as below:
d) any Officially Valid Document (OVD) or the Banks: can use either OTP based Aadhaar e-KYC
equivalent e-document thereof containing the details of authentication or Offline Verification of Aadhaar for
his identity and address; and identification. Further, services of Business
e) PAN or equivalent e-document thereof or Form No. Correspondents (BCs) may be used by banks for aiding
60; and the V-CIP.
f) such other documents including in respect of the Other REs: can only carry out Offline Verification of
nature of business and financial status of the client, or Aadhaar for identification.
the equivalent e-documents thereof as may be required ii. RE shall capture a clear image of PAN card to be
by the RE. displayed by the customer during the process, except in
II. Provided that where the customer has submitted cases where e-PAN is provided by the customer. The
a) Aadhaar number, such bank or RE shall carry out PAN details shall be verified from the database of the
authentication of the customer’s Aadhaar number using issuing authority.
e-KYC authentication facility provided by the Unique iii. Live location of the customer (Geotagging) shall be
Identification Authority of India.
Summary edited by : Arundeep Toor - Source RBI website.
BANKING FEATURES Banking events updatE ♦ March 2020 ♦ 5
captured to ensure that customer is physically present REVISED LIQUIDITY MANAGEMENT FRAMEWORK
in India On 06.02.20, RBI announced the details of this
iv. The official of the RE shall ensure that photograph framework. Accordingly, RBI liquidity facilities under
of the customer in the Aadhaar/PAN details matches with the revised Liquidity Management Framework w.e.f.
the customer undertaking the V-CIP and the identification 14.02.2020, would be as under:
details in Aadhaar/PAN shall match with the details
provided by the customer. A. Instruments under LAF framework to
manage short-term/transient liquidity
v. For offline verification of Aadhaar using XML file or
Aadhaar Secure QR Code, it shall be ensured that XML 1. 14-day variable-rate repo/reverse repo auction (Main
file or QR code generation date is not older than 3 days operation)
from the date of carrying out V-CIP. Process : Auction amount will be decided by the Reserve
vi. All accounts opened through V-CIP shall be made Bank and a single auction (either repo or reverse repo)
operational only after being subject to concurrent audit, will be conducted based on the assessment of liquidity
to ensure the integrity of process. conditions by the Reserve Bank.
vii. RE shall ensure that the process is a seamless, real- Time : On reporting Friday (2.30 PM – 3.00 PM)
time, secured, end-to-end encrypted audiovisual
(If reporting Friday is a holiday, the auction will be
interaction with the customer and the quality of the
conducted on preceding working day in Mumbai)
communication is adequate to allow identification of the
customer beyond doubt. RE shall carry out the liveliness 2. Variable Rate Term Repo/Reverse Repo auction
check in order to guard against spoofing and such other Tenor: overnight and up to 13 days. (Fine-tuning
fraudulent manipulations. operations).
viii. To ensure security, robustness and end to end Process : The auction amount will be decided by the
encryption, the REs shall carry out software and security Reserve Bank, based on an assessment of the liquidity
audit and validation of the V-CIP application before rolling conditions.
it out. Time : At RBI discretion
ix. The audiovisual interaction shall be triggered from
3. Fixed Rate Reverse Repo
the domain of the RE itself, and not from third party
service provider, if any. The V-CIP process shall be Amount : No restriction on amount
operated by officials specifically trained for this purpose. Periodicity : Daily (Including Saturdays, Sundays and
The activity log along with the credentials of the official holidays) between 5.30 PM and 11.59 PM
performing the V-CIP shall be preserved. 4. Marginal Standing Facility (MSF)
x. REs shall ensure that the video recording is stored in Individual banks can draw funds up to excess SLR + 2
a safe and secure manner and bears the date and time per cent below SLR.
stamp.
5. FX Swaps
BABY BONDS
Baby Bonds are fixed income debt security issued in smaller The amount will be decided by the Reserve Bank, based
denominations in USA, compared with normal standard size on the assessment of the liquidity conditions
bonds.
• Can be tax free and zero-coupon instrument. 6. Standing Deposit Facility (SDF)
• Maturity period up to 15 years. Generally rated A or above. The amount will be decided by the Reserve Bank, based
• Can be issued as ‘callable bonds’ and as unsecured instruments. on the assessment of the liquidity conditions
• Exposes the investors to extra risk. To compensate investors,
higher coupon rate is offered. B. Instruments to manage durable liquidity
Issuers:
1. Long Term Variable Rate Repo (LTR)Tenor: beyond
• Municipalities and Govt. entities in USA for funding capital
expenditure and expensive infrastructure projects. 14 days
• Small companies needing smaller amount of funds or 2. Long Term Variable Rate Reverse Repo (LTRR)Tenor:
investment banks, for on-lending to small and medium size
business entities.
beyond 14 days
Advantage 3. FX Swap Auctions
• These bonds provide investment opportunity to retail 4. Open Market Operations (OMOs)
investors, not having funds to buy large denomination bonds.
• Issuers get investments from retail investors while the large The auction amount will be decided by RBI, based on an
funds and investors do not find them attractive. assessment of the liquidity conditions.
6 ♦ Banking events updatE ♦ March 2020

Practical Problems based on Banking Ombudsman Decisions

1) The complainant alleged that her sister did not receive scholarship of
eLearning
Rs.30,000 granted by the Ministry of Minority Affairs, which had been
remitted by issuing bank. Bank informed that the funds could not be credited
Study Material
to beneficiary’s account as it was frozen due to non-compliance with KYC
norms. The amount was returned to the remitting bank. BO observed that MOCK TEST - CDs
the bank did not observe RBI guidelines which stipulate that banks can impose Features of CDs
partial freeze in a phased manner i.e. after giving due notice of 3 months to • Explanation for each question/answer.
the customer followed by a reminder giving another 3 months for compliance. • Improve understanding and retention.
The bank was advised to pay Rs.30,000 to the complainant. • Remove confusions. .
2)The complainant had transferred Rs.0.2 million to an account towards • Improve time management. Set your own
time during practice.
advance for franchisee license. He was informed that the amount was credited
• Test your preparation before Exam.
to a/c number given by complainant. BO observed that complainant was
• Practice on-line without use of internet.
lured by a fake advertisement. It seemed to be a case of fraud by a 3rd party.
• Questions are shuffled when used again.
KYC documents of beneficiary a/c holder indicated discrepancies. As such
• Large no. of questions based on latest
the beneficiary bank was advised to mark lien in beneficiary’s a/c and refund
guidelines and memory recalled questions.
the disputed amount to complainant. The bank reversed Rs.2,498 (funds
available in beneficiary’s a/c) and marked lien for balance amount until
availability of funds in the a/c. The complainant again requested to revisit the Bank Promotion Exam - Rs.300
case as similar instances of fraudulent transfers having same modus operandi Bank Promotion Interview - Rs.300
had come to his notice. A meeting was held with beneficiary bank and it was Banking Ready Recknor - Rs.300
observed that the said beneficiary’s a/c was opened only to pool proceeds of CAIIB (New Syllabus)
such fraudulent transfers. BO advised the bank to compensate the complainant • Bank Financial Mgmt - Rs.300
with the balance amount due to non-compliance with RBI’s KYC norms. • Advanced Bank Mgmt - Rs.300
3) The complainant alleged that he had approached the bank to withdraw • Retail Banking - Rs.300
money from his mother’s pension account as she was bed ridden and had • Risk Management - Rs.300
difficulty in speaking but the bank refused. Upon enquiry, the bank informed CAIIB (Case Studies)
that the complainant’s mother was above 90 years of age, bed ridden and • Advanced Bank Mgmt -Rs.300
unconscious for last 3 years. As the complainant was not an authorized • Bank Financial Mgmt -Rs.300
signatory or a legal heir, the bank could not allow withdrawal. It further JAIIB - All three papers Rs.300 (each)
informed that payment could be made to the legal heirs, provided the following Economics Mock Test - Rs.150
documents are submitted :(i) a consent letter verified by two outside parties Book-Keeping Mock Test - Rs.150
and the branch manager from legal heirs authorising one of them to withdraw
the balance in SB account of the complainant’s mother; and (ii) a medical Online Mock Tests
certificate from the doctor who has been treating complainant’s mother
Promotion,CAIIB/JAIIB, log in
certifying her inability to sign / execute documents. The bank, on receipt of
the same later transferred an amount of Rs.16,500 to the complainant’s a/c. nstoorBankingonline.com
4) The complainant, a pensioner on receipt of the revised pension order
dated October 28, 2016 requested the bank to release the pension arrears
w.e.f. Jan 1, 2006. He alleged that the bank had not credited the arrears and IBPS Bank PO / ClerK Exam
the papers were pending with Central Pension Processing Centre (CPPC) of
bank for last one year. The bank submitted that the pensioner had received Score High with Latest Study Kits
the arrears on August 31, 2016 as per 7th Central Pay Commission. Upon
enquiry regarding the PPO dated October 28, 2016 the bank informed that Anywhere Anytime Learning
the same pertained to 6th Central Pay Commission and the arrears had not
been paid as its CPPC had not received the revised order from Central Pension
E-Books CDs, Videos
Accounting Office (CPAO). The bank on advice of the BO took up with Contact
CPAO and credited the arrears on November 27, 2017. BO further advised 09814 331 661
the bank to pay interest for the delayed period as per extant instructions. 01722665623
 Banking events updatE ♦ March 2020 ♦ 7
• CBDT NOD TO SEVEN ELECTRONIC MODES: The Central Financial
Board of Direct Taxes (CBDT) has included 7 new electronic Events
modes that will be accepted for making non-cash payments. These
modes include payments using- Debit Card, Credit Card, Net and fee are not connected with the
Banking, IMPS, UPI, RTGS and BHIM. These modes can be disputed tax, one is required to pay only
utilised for making payments and availing various benefits and 25% of this total for settling the dispute.
relief under the Income Tax Act 1962. Till now, the accepted If repaying after March 31, one shall be
payment channels for payment were Account Payee Cheque, required to pay 110% of the disputed tax.
Demand Draft and ECS which could be used under various • GOVT. TO DIVEST ITS ENTIRE
Income Tax Provisions instead of cash. This is an enabling Rule OWNERSHIP IN IDBI BANK: IDBI
introduced in the Income Tax Law which will significantly was itself classified as a development
encourage businesses to accept payments through contemporary financial institution (DFI) and converted
electronic modes of payments and promote the Government’s into a bank only in 2004. With LIC buying
initiative of “Digital India”. the majority stake, it was reclassified as a
• GOVT. TO DILUTE ITS STAKE IN LIC OF INDIA: Union private sector bank last year. Loss-making
Budget proposed an IPO for LIC of India through which the IDBI Bank has been picked as the first
Govt. will dilute its stake in it. Finance Minister assured 30 Crore public sector bank in which the
policyholders of LIC that their interests would be protected when Government will divest its entire
the Government dilutes its stake. They are bringing an Initial Public ownership. Last year LIC acquired a 51%
Offering (IPO) of LIC and not selling it completely. There will be stake in IDBI Bank following which the
no change in the ownership. It has also been assured that the LIC Government now owns 47% stake. The
policies will not lose their “Sovereign Guarantee”. Government now plans to sell its remaining
equity in the secondary market.
• CAPITAL INFUSION BY GOVT. FOR PSU GENERAL
INSURERS: While State-run Banks did not get any allocation for • RBI TO BANKS TO SET UP CELLS TO
capital infusion, the budget set aside Rs.6950 Crore for MONITOR LVC EXPOSURES: RBI is
recapitalisation of the three Public Sector General Insurance likely to ask banks to set up dedicated cells
Companies- National Insurance, Oriental Insurance and United for market intelligence and monitoring
India Insurance which are to be merged. The Centre had previously Large Value Credit (LVC) exposures. This
infused Rs.2500 Crore in the three insurers through the first is expected to address issues relating to
supplementary demand for grants for 2019-20 in December last large divergences observed in asset
year. According to the Rating Agency ICRA, “The recapitalisation classification and provisioning in bank’s
capital outlay for the public sector insurance companies would credit portfolios vis-a-vis RBI’s
be credit positive for the 3 companies (All are undercapitalised). supervisory assessment and the rising
incidence of frauds. RBI may also direct
• IMMUNITY SCHEME FOR DIRECT TAX DISPUTES: The
banks to leverage data analytics more to
Government has introduced an Immunity Scheme –”Vivvad se
monitor credit exposures.
Vishwas” for 5 months till June 30, 2020 for citizens to settle
disputes on income tax, offering relief from a “Vexatious litigation • GOVT. TO USE E-BIDDING
process”. Under the proposed scheme, one is required to pay PLATFORM FOR DISINVESTMENT:
only the amount of the disputed tax. By doing so, the person will The Government is ready with an
get complete waiver of interest and penalty provided the payment Electronic Bidding System to make public
is made by March 31, 2020. For a disputed penalty, where interest sector strategic sale process more

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8 ♦ Banking events updatE ♦ March 2020 2019 Financial Events
transparent and will do away with paper bids that have been purpose of grant of extension in service or
the norm. The Platform which has been developed by state- otherwise will be reviewed in two stages
run MSTC will allow suitors for state-run companies to not under the evaluation metrics: First Stage on
just submit bids online but will encrypt them so that even the completion of 30 years of service/
transaction advisors and government officials dealing with the pensionable service or on attaining 55 years
sale can not access them. The latest platform has already been of age, whichever occurs first. (For grant
tested and is based on the recommendations of the independent of extension in service up to 58 years of
external monitoring group comprising former Chief Justice RC age). Second stage will be on attaining 58
Lahoti, former CAG VK Shunglu and former Chief Vigilance years of age for grant of extension/
Commissioner. continuation in service up to 60 years of
• MERGED BANKS TO GAIN FROM TAX: The Union Budget age, being the age of retirement.
has allowed carry forward of losses and depreciation for state- • CABINET NOD TO AMEND BR ACT ON
run banks and general insurance companies that are being CO-OP BANKS: The Cabinet has given its
merged, a move that would substantially reduce tax outgo of nod to amend the Banking Regulation (BR)
recently merged state-run banks. Banks are allowed to carry Act so as to put certain co-operative banks
forward depreciation and net loss in their books for up to 8 under the regulatory ambit of RBI. Under
years and use them to offset their future profits and pay lower the proposed amendments, co-operative
tax. However, as per the current regulations, in the event of a banks will need to take the RBI approval
merger they can not take either depreciation or loss on the for the appointment of CEO. Besides, such
books of the merged entity. co-operatives banks will also come under
• MCA NOTIFICATION ON MAJORITY SHAREHOLDERS the RBI’s supervision in terms of audit. The
TO BUY MINORITY STAKE: According to a February 3 Regulator will also have power to supersede
notification by the Ministry of Corporate Affairs (MCA) majority the board of multi-state Co-operative Banks.
shareholders planning to buy minority investors from an unlisted Currently, there are 1540 Co-operative
public or private company will now have to deposit 50% of the Banks.
acquisition price in a separate bank account. The notification • RBI TO LAUNCH DIGITAL PAYMENTS
also stipulated that shareholders with a 75% stake can now INDEX: RBI would launch in July a Digital
make an offer to buy out the remaining shareholders holding Payments Index (DPI) to capture the extent
25%. Prior to the February 3 notification, rules provided that of digitisation of payments in the country.
shareholders with a 90% stake could buy out the remaining The DPI would be based on multiple
10% stake. Majority shareholders through special resolution parameters and shall reflect accurately the
always had an ability to cause reduction of capital and achieve penetration and deepening of various digital
squeeze-out of minority shareholders. payment modes. The Index will help the
• COs TO PAY STIFF PENALTY FOR FAKING EXPENSES: regulator to understand the impact and
The Government has said that the fake bills to lower profits spread of digital payments in rural, urban
and evade tax through artificial expenses will attract a stiff and semi-urban areas as well as
penalty from the next financial year. Companies caught with understanding the impact of policy decisions
false entries in their account books will have to cough up a made by it.
penalty as high as the total value of the invoice –over and above • SEBI ISSUES NORMS FOR AIF
the amount of tax it will have to pay. The penalty will now be BENCHMARKING: SEBI has issued the
100% of the aggregate of the amount of such false or omitted guidelines for benchmarking the
entry and not the tax evaded, as per old provisions. Now the performance of Alternative Investment
law has a new provision primarily targeted at bogus purchases, Funds (AIFs) with a view to streamlining
capital gains or expenses. disclosure standards and helping investors
• SBI PLANS EVALUATION METRICS FOR OFFICERS: SBI in assessing scheme performance.
has decided to link grant of extension for officers to evaluation Benchmarking will apply to all schemes that
metrics comprising parameters such as performance, attitude have completed at least one year from the
and credentials, compliance and integrity, conduct and date of “First Close”. Funds incorporated
benchmark-qualifying score. The cases of officers for the overseas with India track record shall also
 Banking events updatE ♦ March 2020 ♦ 9

provide the data to agencies when they seek registration as AIFs. Consumer Forum and the National
Performance benchmarking shall be done on a half-yearly basis Consumer Commission also rejected the
based on data as on September 30 and March 31 of each year. case on the same ground. The Party then
• WhatsApp PAY GETS APPROVAL FROM NPCI: Facebook- appealed the Supreme Court which held
owned messaging service WhatsApp has secured regulatory and ruled as follows- “When the party
approval for launching its digital payment platform- “WhatsApp had lodged the FIR immediately after the
Pay” –in a phased manner, around two years after a small-scale theft and when the police after
pilot run. The National Payments Corporation of India (NPCI) investigation have lodged a final report
granted permission to the company to operate the platform that that the vehicle was not traced and when
would cater to 10 million users in India in the first phase. The the surveyors/ investigators appointed by
NPCI’s approval followed the RBI’s go-ahead. WhatsApp assured the company have found the claim of the
RBI and NPCI that it would comply with data localisation norms. theft to be genuine, mere delay in
intimating the insurance company can
• SBI’s NEW ATMs TO HOLD/DISPENSE NOTES OF ANY
not be a ground to deny the claim”.
DIMENSION: SBI wants to ensure that its new ATMs, which
will be installed under the fully outsourced model, are equipped • IRDAI REVISES NORMS FOR
with adjustable cassettes that can hold and dispense currency notes INSURERS TO MONITOR INVESTEE
of any dimension. To minimise disputes between customers and FIRMS: IRDAI has issued revised set
the bank, the new ATMs will have a camera at the cash slot to of stewardship guidelines for insurance
capture the movement of cash from the presenter belt and final companies to closely monitor the
withdrawal by the customer. Besides enabling the usual companies they invest in, intervene if
transactions, such as cash withdrawal, balance enquiry, mini- required and also compulsorily vote if
statement, PIN change and cheque book request, SBI wants its they own more than a specified amount
ATMs to provide value-added services. of equity in the firm. Insurers have been
asked to have a clear policy on voting
• INDIAN MNCs TO PAY TAX ON PRE-NEGOTIATED
and disclosure of voting activity every
INCOME: The Government has allowed the Multi National
quarter. Revised guidelines focus more
Companies (MNCs) having a permanent establishment (PE) in India
on voting activities.
to enter into Advance Pricing Agreements (APA) with the Income
Tax Authorities and they can negotiate how much of the margin • NPCI’S MONOPOLY IN PAYMNETS
on profits accrued in India would be taxed for having PE in India. AND SETTLEMENT TO END:
Until now, such an arrangement was possible only in transfer- Currently, National Payments
pricing matters. The new provision will allow about 3500 foreign Corporation of India (NPCI) is the sole
firms and 1400 PEs to access APAs or a safe harbour regime in organisation operating retail payments
which they can pre-decide the income for at least nine years and settlement systems in India. As many
(Including the rollback of four years) and accordingly pay tax. At as 56 member banks are shareholders in
present, the rate of tax on PEs is 43% including cess and surcharge, NPCI. Now NPCI’s reign as the sole
while subsidiaries of MNCs come under the corporate tax structure. umbrella organisation could come to an
end with RBI allowing private entities to
• SUPREME COURT RULING ON INCIDENT INFORMATION:
apply for a licence to set up rival umbrella
(Gurshinder Singh VS. Shriram General Insurance) In this case
entities. RBI said that entities keen on
the person whose tractor was stolen had lodged a complaint with
setting up a pan-India New Umbrella
police but the vehicle could not be traced. He filed a claim but the
Entity (NUE) for retail payments system
insurer rejected the claim due to delay of 52 days. The District
Bank Fin Mgmt Accounting & Legal Aspects of Principles of
Adv Bank Mgmt Banking/General
Finance 8th Edn Banking 8th Edn Banking 8th Edn
4th Edn Rs.200 4th Edn Rs.175 Awareness
JAIIB BOOKS
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10 ♦ Banking events updatE ♦ March 2020

can incorporate a company in India under the are there on a single platform- Insurer, Insured and
Companies Act, 2013. The NUE should have a Hospital- and the claims will be processed on this
minimum paid-up capital of Rs.500 Crore. platform. This will give a rich wealth of data apart from
• CBDT FOR SHARING INFORMATION TO standardising settlement and ensuring that settlements
SEBI FOR FRAUD PROBE: CBDT, which are done within a specified period in time. The Regulator
frames policy for the tax department, has issued has already formed a committee for this purpose and
an order in this context on Feb 10, 2020. The the platform will be developed by the Insurance
Income Tax Department will share all taxpayers’ Information Bureau.
data, such as PAN information with SEBI in order • NHAI TO ADOPT PROJECT-BASED FUNDING
to help the Market Regulator in its probe against MODEL FOR FUTURE PROJECTS: National Highway
various entities including those involved in stock Authority of India plans to adopt a project based funding
market manipulation. The sharing of information model for future projects to reduce debt. They will
will be under three broad heads- Request-based convert each project into a Special Purpose Vehicle
Exchange of Data, Suo Moto and lastly Automatic. (SPV). The funds will be arranged by that company.
• SUPREME COURT DIRECTION TO They have a list of 22 expressways and access-controlled
POLITICAL PARTIES ON “CRIMINALS”: highways where they plan to implement this model.
The Supreme Court has directed the political According to the proposal, every project would have
parties to upload on their respective websites and an SPV seed funded by NHAI to the tune of 30% equity
social media platforms the details of pending and remaining 70% would be sourced through debt
criminal cases against candidates contesting on which would be serviced by SPV from the toll revenue.
their party symbols, the reasons for selecting them • SEBI ISSUES TIGHTER NORMS FOR INVESTMENT
and for not giving a ticket to those without criminal ADVISORS: SEBI has issued the tighter norms for
antecedents. The Apex Court further said that Investment Advisors. SEBI has barred use of titles like
these details should be published within 48 hours independent “financial advisors” by those dealing in
of the selection of the candidate or at least two distribution of securities unless they are registered as
weeks before the first date for filing of investment advisors also. The Regulator requires
nominations whichever is earlier. investment advisors and distributers of financial products
• PMO TO BANKS ON NPA CASES TO BE to segregate their services. Distributers of financial
REFERRED TO NCLT: Banks find it safer option products will no longer be able to act as investment
to refer all bad loan cases to NCLT as they fear advisors to the same clients.
that resolutions through one time settlement or • SUPREME COURT RULING ON PERMANENT
sale to an Asset Reconstruction Company could COMMISSION FOR WOMEN IN ARMY: The
invite scrutiny from investigative agencies. As a Supreme Court ruled and ordered the Government to
result, most banks especially public sector banks, grant permanent service to women officers in the Army’s
are using NCLT as an escape route rather than a non-combat support units on par with their male
tool to empower and keep companies running. In counterparts, should they wish to continue with it after
view of such type of situation, the Prime completing their short service commission. Denial of
Minister’s Office (PMO) has suggested to banks such an opportunity combined with the Army Policy of
that they should refer cases to a Tribunal where not giving them command posts of (Colonel and beyond
the loan amount is at least Rs.200 Crore. This is based on performance index) lowered their status to that
aimed at declogging the overburdened NCLT of a jawan/JCO.
ecosystem. Where the loan amount is less than • GOVT. REVAMPS CROP COVER SCHEME PMFBY:
Rs.200 Crore, the PMO wants banks to work with The Government has announced that it would reduce
the current promoters to find long term solution its share in premium subsidy for the flagship crop
to prevent closure of companies and job losses. insurance scheme –PM Fasal Bima Yojana (PMFBY)-to
• IRDAI TO SET UP COMMON ELECTRONIC 30% and 25% respectively for un-irrigated and irrigated
PLATFORM: IRDAI plans to set up a Common crops from the existing 50% for major states, even as it
Electronic Platform for settling health insurance made the crop protection cover voluntary for farmers.
claims. The idea to form this platform is that all Further the central share in the premium subsidy would
be increased to 90% for the north-eastern states.
 Banking events updatE ♦ March 2020 ♦11

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12 ♦ Banking events updatE ♦ March 2020 DIARY OF EVENTS
the country- Ease of Living Index and Municipality • The International Audit Firm which has
Performance Index. decided to stop non-audit services to Public
• Bank, for the First Time in India, which was held by the Govt, Interest Entities that they audit under the
would become Private not by disinvestment but Govt. exiting laws and regulations in India- Deloitte
it- IDBI Bank. Haskins & Sells.
• According to the Business Standard Annual Awards 2019, • Indian Companies now have the option to
“Larsen & Toubro” has been adjudged as- Company of the list their Global Depository Receipts (GDRs)
Year. at the International Financial Services Centre
• As per BS Annual Awards 2019, “Bhaskar Bhatt, Former MD (IFSC) Gujarat.
of Titan Company” has been adjudged as- CEO of the Year. • IT Service Provider which is shutting its
• Azim Premji, Founder Chairman of Wipro, has got- Lifetime “Free Wi-Fi Programme in India” which was
Achievement BS Annual Award 2019. available across 400 Railway Stations-
Google.
• At about 7.5% of GDP, the Revenue-to-Expenditure Gap in India
is- Highest among Major Emerging Markets. • Report as per which India has emerged as
the World’s Fifth Largest Economy by
• Business Standard Journalist Somesh Jha has won- Best
overtaking the UK and France in 2019- US-
Business and Economic Reporter Award 2020.
based Think Tank World Population
• Commission for which the Govt. has clarified that it “would Review.
not give any Permanent Status” to it but it will be formed for
• Inflows which has dipped to 11 year Low
fixed period as per past practice- Finance Commission.
of Rs.64, 537 Crore till December 2019-
• Top Three Profitable PSUs in 2018-19- ONGC, IOC and NTPC. Participatory Notes.
• Top Three Highest Loss-making PSUs in 2018-19- BSNL, Air • London-headquartered Bank which is to
India and MTNL. shed 35000 jobs with aim to cut costs from
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as- Arun Jaitly National Institute of Financial Management. to increase interest subvention from 2% to
• Capital infusion of Rs.2500 Crore by the Govt. in three General 2.5%-Dairy Farmers.
Insurers ahead of their proposed merger by the end of March is • Three States in the Country accounted for
to meet- Regulatory Solvency Ratio. almost 70% of Solar Installations in 2019
• Chitetsu Watanabe, Japanese Man of 112-years old has entered and Karnataka tops followed by- Rajasthan
in Guinness Record as- World’s Oldest Living Man. and Tamilnadu.
• Indian-origin Politician Rishi Sunak, Son-in-law of Infosys Co- • Supretim Bandyopadhyay has been
founder Narayana Murthy, has been appointed as- UK’s New appointed as- Chairman of Pension Fund
Finance Minister. Regulatory and Development Authority
• Rating Agency S&P has retained India’s Ratings due to of India (PFRDA).
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Grade “BBB-” with Stable Outlook. got- EY’s Entrepreneur of the Year
• Senior Bureaucrat Rajiv Bansal, presently Additional Secretary Award.
in the Ministry of Petroleum and Natural Gas, has been appointed • Cayman Islands has overtaken Switzerland
as- CMD of Air India. and got Top position in the newly released
• Mobile Operator which has been emerged as the Second-Most -Financial Secrecy Index FSI2020.
Valuable Telco in Emerging Asia behind China- Bharti Airtel. • Scheme under which the Govt. has decided
• Newspaper which has bagged the “Association of National to make it “Voluntary” for Loanee farmers
Exchanges Members of India Award” for the “Most Diversified from Kharif 2020 onwards- Pradhan
Coverage-Newspaper”- Business Line. Mantri Fasal Bima Yojana (PMFBY)
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can not charge upfront fee from clients- SEBI. launched by – Chinese Smartphone
Maker-Realme.
Compilation : SP Sharma & Sapandeep Toor Source : Financial Newspapers, Financial News-Magazines & Financial and Institutional Web-sites
 Banking events updatE ♦ March 2020 ♦13
MOCK-TEST residential housing, and loans to c 3 years, 24.01.2023
PAPER micro, MSMEs d 1 year, 24.01.2021
Questions on RBI Policy b retail loans to consumer goods, 08 Under bank deposit insurance
residential housing, and loans to scheme of DICGC, the deposit
01 RRBs can act as merchant
micro, MSMEs insurance cover has been
acquiring banks using Aadhaar Pay
– BHIM app and POS terminals, c retail loans to personal loans, increased from __ to ___ wef
if their net worth as on March 31 residential housing, and loans to 4.2.2020.
of previous financial year was: micro, MSMEs a Rs.1 lac to Rs.3 lac
a Rs.100 cr d retail loans to residential b Rs.1 lac to Rs.4 lac
housing, and loans to micro, c Rs.1 lac to Rs.5 lac
b Rs.200 cr
MSMEs only
c Rs.500 cr d Rs.1 lac to Rs.10 lac
05 One time restructuring facility is
d Rs.1000 cr available for MSME sector, 09 Under bank deposit insurance
02 RRBs can act as merchant where the loan amount is up to scheme of DICGC, the premium
acquiring banks using Aadhaar Pay __ as on 01.01.20: payable on deposit insurance
– BHIM app and POS terminals, a Rs.10 lac cover has been increased from
if their capital adequacy ratio, as 10 paise per Rs.100 per annum
b Rs.100 lac to ___ wef 1.4.2020.
on March 31 of previous financial
year was: c Rs.1000 lac a 11 paise
a min 8% d Rs.2500 lac b 12 paise
b min 8.5% 06 One time restructuring facility is c 12.5 paise
available for MSME sector, d 15 paise
c min 9%
where the loan amount was
d min 9.5% within prescribed limit, as on 10 Which of the following is not an
03 RRBs can act as merchant 01.01.20 and : instrument used by RBI under
acquiring banks using Aadhaar Pay a standard account as on 01.01.20 Liquidity Adjustment Framework
– BHIM app and POS terminals, to manage short-term / transient
b restructuring is implemented liquidity, as part of new Liquidity
if their net NPAs as on March 31
before 31.12.20 Management Framework w.e.f.
of previous financial year was:
c borrower is GST registered 14.02.20?
a below 2%
d all a 14 days variable rate repo /
b below 3% reverse repo auctions
07 Banks can deduct the equivalent
c below 4% b up to 13 days, variable rate term
amount of incremental credit
d below 5% disbursed by them as retail loans repo / reverse repo auction
04 Banks can deduct the equivalent to automobiles, residential c fixed rate reverse repo
amount of incremental credit housing, and loans to micro, d open market operations
disbursed by them as ______, small and medium enterprises
over and above the outstanding (MSMEs), from their net 11 Which of the following is not an
level of credit to these segments demand and time liabilities instrument used by RBI under
as at the end of the fortnight ended (NDTL) for maintenance of the Liquidity Adjustment Framework
January 31, 2020 from their net cash reserve ratio (CRR), for __ to manage durable liquidity, as
demand and time liabilities years, till ____ part of new Liquidity
(NDTL) for maintenance of the a 5 years, 24.01.2025 Management Framework w.e.f.
cash reserve ratio (CRR) 14.02.20?
b 4 years, 24.01.2024 a Long Term Variable Rate Repo
a retail loans to automobiles,
Disclaimer : We have taken every care to provide information, we believe to be accurate We strongly believe that the subscribers
and reliable and do not assume responsibility of any kind nor shall be liable for losses & are the best consultants, we have. Based
consequence arising from use thereof. Since this information is based on the published on their feed back, we keep on redesigning
reports mostly, correctness or otherwise thereof may be verified by the user with the and restructring this publication. Kindly
original sources, in advance. .......................................................................Editor send your suggestions and views.
14 ♦ Banking events updatE ♦ March 2020
(LTR) - Tenor: beyond 14 days latitude and longitude of the b Rs.5 lac
b Long Term Variable Rate Reverse location where such live photo c Rs.2 lac
Repo (LTRR) - Tenor: beyond 14 is being taken by an authorised
d Rs.1 lac
days officer of the Reporting Entity
(RE) is called: 21 Under, Framework for imposing
c FX Swap Auctions monetary penalty on authorised
a Electronic validation
d Standing Deposit Facility (SDF) payment system operators /
b E-KYC banks under the Payment and
12 Under RBI’s liquidity adjustment
framework w.e.f. 14.02.20, c Digital KYC Settlement Systems Act 2007,
what is the min time period of d online validation what is max penalty which RBI
long term variable rate repo? can impose for non-quantifiable
17 Geotagging is mandatory in digital
contraventions:
a more than 14 days KYC process (video based
customer identification a min Rs.1 lac max Rs.10 lac
b more than 28 days
procedure), which means: b min Rs.2 lac max Rs.20 lac
c more than 1 year
a permanent address of the c min Rs.3 lac max Rs.50 lac
d more than 3 years
customer d min Rs.5 lac max Rs.100 lac
13 Under RBI’s liquidity adjustment
b live location of the customer Recalled Questions
framework w.e.f. 14.02.20,
what is the max time period of c current address of the customer 22 The CERSAI created under
variable rate repo and reverse d address of the branch, SARFAESI Act 2002, is an
repo (called fine tuned performing digital KYC abbreviation for which of the
operations)? 18 In case of offline verification of following:
a up to 1 day Aadhaar using XML file or a Central Electronic Registry of
b up to 3 days Aadhaar Secure QR Code, it shall Secured Asset and
be ensured that the XML file or Reconstruction of Security
c up to 10 days
QR code generation date is not Interest of India
d up to 13 days older than ___ from the date of b Central Electronic Registry of
14 Under Long Term Repo carrying out V-CIP. Securitization Asset
Operation (LTRO), what is min a one day Reconstruction and Security
bid amount? Interest of India
b 2 days
a Rs.1 lac c Central Electronic Registration of
c 3 days
b Rs.10 lac Securitization Asset
d 5 days
c Rs.25 lac Reconstruction and Security
19 All accounts opened through V- Interest
d Rs.100 lac CIP an be made operational only
15 Under Long Term Repo d Compulsory Electronic Registry
after:
Operation (LTRO), the interest of Securitization Asset
a after physical verification Reconstruction and Security
compounding is annual and
b after concurrent audit Interest
payment is made:
c after customer visits the branch 23 As per Government of India
a in advance
d after regular inspection notification, it is mandatory to file
b periodically
20 Under, Framework for imposing the particulars for registration of
c on maturity mortgage by deposit of title deeds
monetary penalty on authorised
d at discretion of investor payment system operators / within _____ of creation of the
16 Capturing live photo of the banks under the Payment and mortgage with Central Electronic
customer and officially valid Settlement Systems Act 2007, Registry of Securitization Asset
document or the proof of what is max penalty which RBI Reconstruction and Security
possession of Aadhaar, where can impose for quantifiable Interest of India in respect of all
offline verification cannot be contraventions: mortgages created on or after
carried out, along with the 31st March 2011.
a Rs.10 lac
 Banking events updatE ♦ March 2020 ♦15
d 12 years from date of loan a principal and agent
a 7 days b 15 days
e 12 years from date of loan or date b beneficiary and trustee
c 30 days d 45 days
or mortgage, whichever lower. c debtor and creditor
24 Your branch has sanctioned a bills
27 Within how many days does the d bank and a customer
purchasing limit of Rs.80 lac to
annual return of unclaimed
M/s Rameshwar Hardware e trustee and beneficiary
deposit accounts is required to
Limited under which demand bills 31 Unclaimed deposit with a
be submitted by banks to RBI,
of exchange accompanied by company would be shown in
following the days after close of
Railway Receipts or Goods their balance sheet as:
the calendar year:
Receipts are purchased. The
a 15 days b 23 days a Current asset.
company forgot to file the
particulars of the charge with c 30 days d 45 days b Contingent liability
Registrar of Companies and e 60 days c Intangible assets
inspecting official has raised an d current liability
28 Which of the following will be
objection. Which of the following 32 All frauds are to be reported to
considered a micro enterprise:
remedies is available to the RBI on ____ within _____:
company/bank? a engaged in manufacturing and
maximum investment in a FMR 3, 2 weeks
a seek ROC permission who has
equipment restricted to Rs.25 lac b FMR 2, 1 week
discretion to waive delay up to 60
days b engaged in services and c FMR 1, 3 weeks
maximum investment in plant d FMR 1, one week
b No need to file particular for such
and machinery restricted to Rs.10
limits as it is in the nature of 33 Non-Convertible Debentures
lac
pledge by way of constructive shall not be issued for maturities
possession c engaged in manufacturing and of less than ____ from the date
maximum investment in plant of issue:
c seek permission from National
and machinery restricted to Rs.10
Company Law Tribunal which a 7 days
lac
has replaced CLB. b 15 days
d engaged in services and
d seek permission from Ministry of c 30 days
maximum investment in
Company Affairs
equipment restricted to Rs.10 lac d 90 days
25 In the beginning of the financial
29 In which situation, in the loan 34 How would you determine the
year, the capital of a firm was
accounts the interest can be status of a minor person U/s 3 of
Rs.24000. The firm earned a
debited and taken to income to Majority Act:
profit of Rs.4500 and paid tax at
in-crease the profits: a Who is below age of 18 years.
20%. The partners also
withdrawn Rs.1500. What is the a It has become due b Who is below age of 21 years
closing balance in the capital b It has become due and stands c Who is below 18 years of age in
account. recovered if it is NPA account case natural guardian is alive and
a Rs.24000 c It has become due and account below 21 years if guardian is a
b Rs.26100 has not been a non-performing person appointed by court.
account d who declares himself that he is a
c Rs. 27000
d b and c above major
d inadequate information
e: None of the above
26 What period is available as Answers
limitation in case of mortgage: 30 A customer Y, deposits Rs.3000
01 a 02 c 03 d 04 a 05 d
with the bank for remittance by
a 3 years from date of mortgage 06 d 07 a 08 c 09 b 10 d
way of telegraphic transfer for 11 d 12 a 13 d 14 d 15 c
b 12 from date of mortgage credit of Z’s account at other 16 c 17 b 18 c 19 b 20 b
c 12 years from the date when the station which the bank has done. 21 d 22 b 23 c 24 a 25 b
mortgage money has become due The relationship between Z and 26 c 27 c 28 d 29 d 30 c
bank in this case is that of a 31 d 32 c 33 d 34 a
16 ♦ Banking
Banking events ♦
events updatE updatE March
March♦2020 ♦ 2020
16 Registration RNI No. 67802/98 Postal Regn No.CHD /0001/2015-17
Long Term Repo Operations (LTRO) Guidelines DATA COLUMN
RBI introduced LTRO as part of liquidity management framework on Business of Banks
(Rs.in cr) Mar31'19 Feb14-20
06.02.20 and made it operative w.e.f. 14.02.20. Aggregate deposits 10805150 13235538
The salient features of the operational guidelines are reproduced. Cash in hand/RBI 570490 634363
Investments 3043660 3785772
a) LTROs conducted under this scheme is in addition to the existing Bank Credit: 7881890 10041689
-Food 53930 73324
Liquidity Adjustment Facility (LAF) and marginal standing facility (MSF) -Non-Food 7827960 9968365
operations. The total amount of liquidity injected through these operations Cash-Deposit Ratio 5.27 4.63
Investment-Deposit 28.14 28.03
would be up to Rs.1,00,000 crores. Credit-Deposit 72.95 76.91
b) LTROs will be conducted on CBS (E-KUBER) platform. The operations (Rs.in cr) Money Stock
Mar31'19 Feb14-20
would be conducted at a fixed rate. M3 (Out of which) 15430870 16370023
(a) Currency with public 2052230 2258272
Banks would be required to place their requests for the amount sought (b) Demand deposits-Banks 1626310 1481205
under LTRO during the window timing at the prevailing policy repo rate. (c) Time Deposits - Banks 11720590 12597119
(d) Other deposits with RBI 31740 33427
Bids below or above policy rate will be rejected. Sources of Money Supply
c) In case of over-subscription, the allotment will be done on pro-rata (a) Net Bank credit to Govt 4387790
(b) Bank credit to Comrcl sectr 10380180
5000266
10694121
basis. RBI reserves the right to inject marginally higher amount than the (c) Net Forex assets of Banks 2977860 3614368
notified amount due to rounding effects. Important Banking Indicators
Statutory Liquidity Ratio 18.25% (10.01.2020)
d) The minimum bid amount would be Rupees one crore (Rs.1 cr) and Cash Reserve Ratio 04.00% (15.02.2013)
Overnight LAF (of NDTL) 0.25%
multiples thereof. The allotment would be in multiples of Rupees one 14days term Repo(of NDTL) 0.75%
crore. There will be no restriction on the maximum amount of bidding by Reverse Repo Rate 04.90% (04.10.2019)
Repo Rate 05.15% (04.10.2019)
individual bidders. MSF Rate 05.40% (04.10.2019)
Bank Rate 05.40% (04.10.2019)
e) The reversal of these operations would take place at the ‘start of day’ Small Savings Interest Rates
on the day of maturity. PPF 7.9% (01.07.2019)
5-year NSC 7.9% (01.07.2019)
f) The eligible collateral for LTROs and the applicable haircuts will remain Sukanya Smridhi 8.4% (01.07.2019)
the same as applicable for LAF. Senior Citizen Saving 8.6% (01.07.2019)
Capital & Money Market Indicators
g) All other terms and conditions as applicable to LAF operations, including Parameter end-Jan19 end-Feb20
facility for security substitution, will also be made applicable to the LTROs, Dollar-spot TT (Rs.) 70.91 70.22
BSE - Sensex (points) 36064 38144
mutatis mutandis. NSE - Nifty(S&P CNX) 10864 11133
h) The Reserve Bank had announced Long Term Repo Operations (LTROs) Foreign reserves (Million $) 399217
Gold /Oz in USD) 1299
476122
1621
for one-year and three-year tenors.
Clarifications issued by RBI INDIAN ECONOMY-IMPORTANT PARAMETERS
Growth estimate for FY 2020-21 : 6-6.5%
1. A market participant can place bids of amount less than or equal to the GDP@constant mkt prices (cr) 2019-20 : 20442233
notified amount. GVA@2011-12 basic prices (cr) 2018-19 : 12906936
RBI may reject all the bids of the participant if the total bid amount GDP projected by Govt. for 2020-21 : 22489420
Fiscal Deficit Target (2020-21) 3.5% of GDP : 796337 cr
submitted by the participant exceeds the notified amount. Revenue Deficit Target (2020-21) 2.7.% of GDP : 609219 cr
2. The interest payment will have to be made upon maturity of LTRO, i.e. Wholesale Price Index : 2.7%
Money Supply (M3) expansion - YoY : 10.3%
on the reversal date.
Exports during 2018-19 : 331.0 bn
3. The LTROs will be conducted on a fixed-rate basis and the rate will Imports during (2018-19) : 507.06 Bn
remain fixed for the tenor of the operation. The interest will be Export target - 2017-18 (in $) : 310 bn
India's share in world merchandise export : 1.70%
compounded on an annual basis.
India's currency rating (S&P) : BB Postv
4. The residual maturity of the securities offered as collateral under LTRO India's external debt (Mar 2019) US $ : 543.0 Bn
should be equal or more than the tenor of the LTRO at inception. Tax-GDP ratio (2018-19) : 12.1%
Apr- Jan20:Export $ 265.3 bn Imports : 398.5 bn
At any point of time, the residual maturity of replacement securities should Per capita Income 2018-19 (Rs.) : 126406
not be less than the remaining tenor of the LTRO. Indian economy's ranking in PPP terms : 3rd

The securities offered as a collateral for LTROs will be marked to market Indian economy's ranking in world in value: 7th
on a quarterly basis, on the basis of latest prices published by Financial OUR PUBLICATIONS : REFER PAGE 9,11
Benchmarks India Pvt. Ltd. (FBIL).
•
DATE OF DESPATCH - Mar 7/ 10, 2020

Published by Chand Singh at 1008, Sector 45-B, Chandigarh - Printed by Chand Singh in digital form. Editor - Chand Singh