PART I

For Promotion Aspirants

By Amit Kumar Rath
Chief Manager
SBILD, Secunderabad
30.11.2019
Latest from RBI (30.11.2019)
Policy Repo Rate : 5.15%
Reverse Repo Rate : 4.90%
Marginal Standing Facility Rate : 5.40%
Bank Rate : 5.40%
CRR :4.00%
SLR :18.50%

RBI monetary policy: To keep the public and market sentiment high, RBI in its fourth bi-monthly
monetary policy statement for 2019-20 has cut the Repo rate by 25 bps to 5.15 percent.
Subsequently, the Reverse Repo rate reduced to 4.9 percent. This is the fifth consecutive time
that the RBI has reduced the repo rate in 2019. The RBI has also reduced the GDP
growth forecast from 6.9 percent to 6.1 percent for the current fiscal year 2019-20.

RBI’s six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das,
announced RBi’s fourth bi-monthly monetary policy for 2019-20 on October 4, 2019 after a
three-day-long meeting. All the six members of the MPC voted unanimously to change the
policy rates and MPC stance.

What Is Repo Rate?

Repo rate is the rate at which the RBI lends to commercial banks, typically, against government
securities. When the RBI raises the repo rate, it becomes more expensive for banks to borrow
from the central bank. When the RBI slashes the repo rate by 25 basis points, for instance it
becomes cheaper for commercial banks to borrow from the RBI. So, when the RBI raises the
repo rate, home loan interest rates usually rise and when the RBI cuts the repo rate, home loan
interest rates usually fall. When this happens, your equated monthly instalments decline too.
But, this is not necessarily true because in certain phases, commercial banks have adequate
cash, and they do not rely on the RBI to receive money.

What Is Reverse Repo Rate?

Reverse repo rate is the rate banks charge on funds they invest in government securities with
the RBI. When the reverse repo rate rises, banks may raise home loan interest rates, because it
becomes more profitable for commercial banks to invest in low-risk government securities
instead of lending to people investing in property in India. When the reverse repo rate falls,
home loan interest rates may fall.

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 What Is Cash Reserve Ratio (CRR)?
CRR is an instrument the RBI uses to control the liquidity in the system. Currently, the CRR is 4
per cent, though the range of permissible CRR is between 3 and 15 per cent. If the CRR is four,
this means that the banks will have to keep Rs 4 with the RBI whenever bank deposits increase
by Rs 100. Higher the CRR, lower the amount of money banks can lend out or invest. So, when
the CRR is higher, lower would be the liquidity and vice versa. It is not necessary that a hike in
the CRR would lead to a hike in home loan interest rate. But, as a hike in the CRR reduces the
supply of credit, when the RBI hikes the CRR, banks would raise home loan interest rates if the
demand for credit does not fall proportionately.

What Is Statutory Liquidity Ratio (SLR)?

Statutory liquidity ratio is the percentage of funds banks need to maintain in the form of liquid
assets at any point in time. But, banks need to maintain these funds in the form of government
securities, bonds or precious metals, and not in the form of cash. Currently, the SLR is 18.5 per
cent. These funds are largely invested in government securities. When the SLR is high, banks
have less money for commercial operations and hence less money to lend out. When this
happens, home loan interest rates often rise. When the SLR is low, similarly, home loan interest
rates are likely to fall.

What Is Marginal Standing Facility (MSF) Rate?

The MSF or Marginal Standing Facility (MSF) Rate is the rate at which RBI lends funds overnight
to scheduled banks, against government securities. RBI has introduced this borrowing scheme
to regulate short-term asset liability mismatch in a more effective manner. The MSF is
maintained at 25 bps higher than the repo rate. MSF basically provides a greater liquidity
cushion. Higher the MSF rate, more expensive is borrowing for banks, as well as corporate
borrowers and individuals. It is used by RBI to control the money supply in the country’s
financial system.

Key Differences between Repo Rate and MSF

Both repo rate and MSF are rates at which RBI lends money to various other banks. However,
there are some differences between the two, they are:
 The repo rate is applied to loans given to banks that are looking to meet their short-term
financial needs. While, the MSF is meant for lending overnight to banks.
 Repo rate is the rate at which money is lent by RBI to commercial banks, while MSF is a rate
at which RBI lends money to scheduled banks. (Commercial Banks refer to
both scheduled and non-scheduled commercial banks which are regulated
under Banking Regulation Act, 1949. Banks not under 2nd Schedule of the Reserve Bank of
India Act, 1934 are called non-scheduled banks.)

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 Lending at repo rates involve selling of bank’s securities as collateral to RBI along with a
repurchase agreement. Loans given at MSF rates involve providing government securities as
collateral.
 Another major difference between the MSF and repo rate is that as MSF banks are allowed to
use the securities that come under Statutory Liquidity Ratio (SLR) in the process of availing
loans from RBI.

What Is Bank Rate?

Bank Rate refers to the official interest rate at which RBI will provide loans to the
banking system which includes commercial / cooperative banks, development banks etc. Such
loans are given out either by direct lending or by rediscounting (buying back) the bills of
commercial banks and treasury bills.

Aditya Birla Finance becomes first company to list commercial papers on stock exchanges
Aditya Birla Finance Ltd (ABFL), the Non-Banking Financial Company (NBFC) arm of Aditya Birla
Capital, has now become the first company to list its commercial papers (CPs) on stock
exchanges. The move comes after stock exchanges- the BSE (Bombay Stock Exchange) and NSE
(National Stock Exchange), came out with a framework for listing of commercial papers (CPs), in
a bid to broaden investors’ participation in such securities.
Key Highlights
Aditya Birla Finance is first company to list its commercial paper with value date of 28
November 2019 and maturity date on 7 February 2020. ABFL is a well-diversified NBFC with a
long-term credit rating of AAA (stable) from both ICRA as well as India Ratings.

Listing of commercial papers is expected to lead to an efficient transmission of information

regarding corporate borrowings and liquidity positions to market participants. It will also
contribute effectively towards development of CP market and is expected to have a positive
effect on debt capital market.

What is a Commercial paper?

It is an unsecured money market instrument which is issued in form of promissory notes that
enables highly rated corporate borrowers to diversify their sources of short-term borrowings. It
also provides an additional instrument to investors. CPs can be issued for maturities between a
minimum of 7 days and a max of up to 1 year from date of issue. They are usually issued at a
discount from face value and reflects prevailing market interest rates.

SEBI issues framework for listing of Commercial Paper:

Markets regulator SEBI on 22nd Oct 2019 came out with a framework for listing of commercial
papers on stock exchanges in order to broaden investor participation in such securities. To
enable listing of commercial papers (CPs) and to ensure investor protection, Sebi noted that it is

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important that issuers, who intend to list such securities, make appropriate disclosures at the
time of listing and on a continuous basis.

The disclosure framework has been based on the recommendation of the Corporate Bonds and
Securitisation Advisory Committee (CoBoSAC), chaired by H R Khan, former deputy governor of
the Reserve Bank of India (RBI), Sebi said in a circular.

Under the guidelines, Sebi said an issuer who desires to list its CP needs to send an application
for listing along with the specified disclosures to the stock exchanges.

The disclosures pertain to details of the issuers, information related to change in directors as
well as auditors in past three financial years, including any change in the current year, details of
top-10 holders of equity shares, debt securities and CP of the company, any material
information and details of borrowings of the company, as on the latest quarter end. The issuer
will also have to disclose financial results, asset liability management and details of the issue.

Following the approval of the listing application by the concerned exchange, Sebi said these
disclosures along with the application need to be made available on the website of the bourse.
After the listing, the issuer will have to make disclosures about financial results and material
information during the tenure of the CP to the concerned stock exchange, which in turn need to
be disseminated the same on its website.

The regulator has asked stock exchanges to put in place necessary systems and procedures for
monitoring of these disclosures and issue a framework for imposition of fine in case of non-
compliance or inappropriate disclosures by issuers.

Former RBI deputy governor H R Khan to chair Micro-Finance panel

H R Khan, former deputy governor of Reserve Bank of India (RBI) has been appointed as first
chairman of steering committee panel on Code for Responsible Lending (CRL) in Micro-Credit.
Members of panel include: P Satish of Sa-Dhan, Sonia Krishnankutty of L&T Finance, Harsh
Shrivastava of MFIN and Srinivas Bonam of IndusInd Bank among others.

About Code for Responsible Lending (CRL)

It is a self-regulatory step for micro-credit industry making diverse entities such as banks, Non-
Banking Financial Company – Micro Finance Institution (NBFC-MFI) and NBFCs, adhere to
standards of customer protection. CRL was launched in September 2019 by Micro-finance
Institutions Network (MFIN) and Sa-Dhan, an RBI-recognised association of microfinance
institutions (MFIs), along with Finance Industry Development Council, an association of NBFCs.
It was envisaged to be guided and supervised by a steering committee representing banks,
Small Finance Banks (SFBs), NBFC-MFIs, NBFCs and industry associations under an eminent
independent chair.

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DHFL becomes 1st financial services firm to be taken to NCLT
The Reserve Bank of India (RBI) has referred Dewan Housing Finance Corp. Ltd (DHFL) to the
National Company Law Tribunal (NCLT) for insolvency proceedings, making it the first financial
services player to go NCLT for a possible debt resolution. DHFL has a debt of Rrs.83,873 crore.
As per the statutory inspection of DHFL conducted by the National Housing Bank, the DHFL
showed a serious deterioration in its finances. It had public deposits of Rs.6,188 crore as on 6
July 2019, down from Rs.10,166.72 crore as on 31 March 2018.
Key Highlights
RBI has filed an application for initiation of corporate insolvency resolution process against
DHFL under Section 227 of Insolvency and Bankruptcy Code (IBC), 2016 read with Rules 5 and 6
of Insolvency and Bankruptcy Rules, 2019.

R. Subramaniakumar, the RBI-appointed administrator for DHFL, will take over lender’s affairs
once his appointment is approved by National Company Law Tribunal (NCLT).

New Powers Granted to RBI

DHFL is first financial services firm to be sent to bankruptcy tribunal after government notified
the rules for referring financial services providers (FSPs) on 15 November 2019. Thereby now,
unlike insolvency proceedings for companies from other sectors, a Financial Services
Providers (FSPs) creditor/debtor cannot approach tribunal- the firm has to be referred by a
regulator.
Under new powers granted to RBI in Union budget, the central bank can take over
administration of privately-held financial services companies. Moreover, RBI can also remove
auditors, call for an audit of any group company, and have a say on compensation of top
management of a Non-Banking Financial Companies (NBFCs). As per new FSP insolvency rules,
an interim moratorium will start from the date of filing of application till its admission/
rejection.

Cabinet approves extension of norms for mandatory packaging in jute materials

Cabinet Committee on Economic Affairs (CCEA) has accorded its approval for mandatory
packaging of foodgrains and sugar in jute material for Jute Year 2019-20. The scope of
mandatory packaging norms under Jute Packaging Material (JPM) Act, 1987 has been retained
by Union Government as per 2018.
Cabinet decision mandates that 100% of food grains and 20% of sugar shall be mandatorily
packed in diversified jute bags. The decision also mandates that initially 10% of indents of jute
bags for packing foodgrains would be placed through reverse auction on Government e-
Marketplace (GeM) portal. The move will gradually usher in a regime of price discovery.

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Significance
The packaging of sugar in diversified jute bags will give an impetus to diversification of jute
industry. Moreover, the approval will benefit farmers and workers located in Eastern and North
Eastern regions of India particularly in West Bengal, Odisha, Assam, Bihar, Meghalaya, Tripura
and Andhra Pradesh.
Jute Industry in India
About 3.7 lakh workers and several lakh farm families are dependent for their livelihood on jute
sectors. Thus government has been making efforts for development of jute sector; increasing
quality and productivity of raw jute, boosting/sustaining demand for jute products and
diversification of jute sector.
Indian jute industry is predominantly dependent on Government sector which purchases jute
bags of value of over Rs.7,500 crore every year for packing food grains. This is also done in
order to sustain core demand for jute sector and to support livelihood of workers and farmers
dependent on sector.
Government Support provided to Jute Sector:
To improve productivity and quality of raw jute government launched a carefully designed
intervention, called Jute ICARE (Jute Improved Cultivation and Advanced Retting Exercise) in
January 2015. Under it Government has supported about 3 lakh jute farmers by disseminating
improved agronomic practices and interventions, which have resulted in enhancing quality and
productivity of raw jute and increasing income of jute farmers by Rs.10,000/hectare.
To support jute farmers, a grant of subsidy of Rs. 100 crore for 2 years starting from 2018-19
has been approved to enable Jute Corporation of India Limited (JCI) to conduct Minimum
Support Price (MSP) operations and ensure price stabilization in the jute sector. Moreover, JCI
is transferring 100% funds to jute farmers online for jute procurement under MSP and
commercial operations.
To support diversification of jute sector, National Jute Board in collaboration with National
Institute of Design and has opened Jute Design Cell at Gandhinagar. The government has also
taken up the promotion of Jute Geo Textiles and Agro-Textiles with State Governments
particularly those in North Eastern region and also with departments like Ministry of Road
Transport and Ministry of Water Resources.
To promote transparency in jute sector, government launched Jute SMART, an e-govt initiative
in December 2016. It provides an integrated platform for procurement of B-Twill sacking by
Government agencies.
Union Government has also imposed Definitive Anti-Dumping Duty on import of jute goods
from Bangladesh and Nepal with effect from 5 January 2017, to boost demand in the jute
sector.

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Cabinet approves loan waiver of worth Rs.4 Cr against Sikkim Mining Corporation
Cabinet Committee on Economic Affairs (CCEA) has approved waiver of repayment of loan and
interest thereon, of nearly worth Rs.4 crore outstanding against Sikkim Mining Corporation
(SMC) including interest accrued on total amount from 1 April 2019, till this approval
outstanding against SMC. CCEA is chaired by Prime Minister Narendra Modi.
Benefit: Further, accumulation of interest on principal loan will get extinguished and liquidation
process of Corporation will get completed.
About Sikkim Mining Corporation (SMC)
It was established on the 27 February 1960 as Joint Venture (JV) undertaking of Government of
Sikkim and Centre Government. SMC has been incurring losses every year since its inception.

Background: To optimise the financial health of SMC, a Consultant was engaged in 1999 which
among other things suggested diversification of Corporation’s activities and also strengthening
of technical staff in conjunction with cutting down of excess manpower at lower levels.
However, in 2003, keeping in view the recurring losses incurred by SMC, recommendation of
Accountant General of Sikkim as well as advice tendered by erstwhile Planning Commission
both partners of JVC (State & Central Government) engaged a Consultant to spell out a road
map for SMC’s future. Then on the basis of Consultants’s report & 107th Report of Public
Accounts Committee (PAC) of State Legislative Assembly of Sikkim, State and Central
Governments decided to close down SMC’s mining operations and to settle all its dues and
liabilities. Consequently, SMC’s mining operations at Bhotang and Phachey Khani mines were
closed down with effect from 1 January 2007. Liabilities towards employees of corporation
were settled from amount release by erstwhile Planning Commission and Ministry of
Development of North Eastern Region. Liabilities of the Corporation towards State Government
of Sikkim were waived off by State Government of Sikkim and amount accrued from sale of
scraps of machineries of corporation was returned to Government of India.

RBI enhances scope of Special Non-Resident Rupee accounts

The Reserve Bank of India (RBI) has enhanced scope of ‘Special Non-resident Rupee’ (SNRR) by
allowing persons residing outside India to open such accounts for purposes such as- (a) external
commercial borrowing (ECB), (b) trade credit and (c) Trade (Export/ Import) Invoicing, in
domestic currency. The step is taken to popularise cross-border transactions in Indian rupee
(INR).
Key Highlights
Objective: The step is taken with a view to promote usage of INR products by persons’ resident
outside India. Other reasons for allowing such move includes export/ import invoicing and
business related transactions outside International Financial Service Centre, all in domestic
currency of INR.
The apex bank, RBI in consultation with Government of India has been decided to expand the
scope of SNRR Account by permitting non-residents to open such accounts for rupee
denominated overseas borrowings and trade credit/ invoicing for popularising cross-border
transactions in domestic currency.

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 Any person resident outside India, having a business interest in India, can open a non-interest
bearing SNRR account with a bank for bona fide transactions in INR. In addition to this, the RBI,
in consultation with government has decided to rationalise certain other provisions for SNRR
Account such as removing the restriction on tenure of SNRR account (which is currently 7 years)
has for purposes given above.

What is an SNRR account? How is it different from a NRO account?

Any person resident outside India, having a business interest in India, can open a Special Non-
Resident Rupee Account (SNRR account) with an authorised dealer for the purpose of putting
through bona fide transactions in rupees which are in conformity with the provisions of the Act,
rules and regulations made thereunder. The features of the SNRR account are:

a. The SNRR account will carry the nomenclature of the specific business for which it is opened
and not earn any interest.
b. The debits/ credits and the balances in the account should be incidental and commensurate
with the business operations of the account holder.
c. Authorised Dealers are required to ensure that all the operations in the SNRR account are in
accordance with the provisions of the Act, rules and regulations made thereunder.
d. The tenure of the SNRR account should be concurrent to the tenure of the contract/ period of
operation/ the business of the account holder and in no case should exceed seven years.
Approval of the Reserve Bank shall be obtained in cases requiring renewal. However, the
restriction of seven years shall not be applicable to SNRR accounts opened by a person resident
outside India for the purpose of making investment in India in accordance with Foreign
Exchange Management (Transfer or issue of security by a person resident outside India)
Regulations, 2017, as amended from time to time.
e. No operations are permissible in the account after seven years from the date of opening of the
account.
f. The operations in the SNRR account should not result in the account holder making available
foreign exchange to any person resident in India against reimbursement in rupees or in any
other manner.
g. The balances in the SNRR account can be repatriated outside India.
h. Transfers from any NRO account to the SNRR account are not permitted.
i. All transactions in the SNRR account will be subject to payment of applicable taxes in India.
j. SNRR account may be designated as resident rupee account on the account holder becoming a
resident.
k. The amount due/ payable to non-resident nominee from the account of a deceased account
holder, will be credited to NRO account of the nominee with an authorised dealer/ authorised
bank in India.
l. Opening of SNRR accounts by Pakistan and Bangladesh nationals and entities incorporated in
Pakistan and Bangladesh requires prior approval of Reserve Bank.

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 The SNRR can be held only as a non-interest earning account, while an NRO account can earn
interest. While the balances in a NRO account are non-repatriable (except for current income
and to the extent permissible for NRIs/ PIOs under FEMA 13(R)), SNRR is a repatriable account.

5th India – Europe 29 Business Forum held in New Delhi

The 5th edition of India-Europe 29 Business Forum was recently held at Pravasi Bharatiya
Kendra in New Delhi from 20 to 21 November 2019. It was organized by industry body
Confederation of Indian Industry (CII) and Union Ministry of External Affairs. It saw participation
of some 400 delegates from 29 European countries. The focus sectors for this edition of forum
were Smart Cities, IT & ITES, Renewable Energy, Pharma and Artificial Intelligence (AI). India-
Europe 29 Business Forum is India’s largest European Platform.

Background
Europe 29 region: It stretches from Switzerland in west to Turkey in the east and Norway in the
north to Cyprus in the south. It comprises following countries: Austria, Albania, Liechtenstein,
Lithuania, Bosnia & Herzegovina, Croatia, Moldova, Macedonia, Bulgaria, Malta, Norway,
Denmark, Poland, Estonia, Romania, Finland, Serbia, Greece, Cyprus, Montenegro, Iceland,
Sweden, Latvia, Czech Republic Slovak Republic, Hungary, Slovenia, Switzerland and Turkey.
China’s “16+1″ mechanism
China is making inroads into this Europe 29 region with increased investments and joint
ventures. In 2012, it launched so called “16+1″ (i.e. China+16 European countries) mechanism
to boost cooperation between the two. The stated aim of this mechanism is to enhance and
expand investment, financial, scientific, transportation, educational and cultural cooperation
between China and Central and East European (CEE) countries. China has prioritized three areas
of economic cooperation: high-technology, green technology and infrastructure development
under this mechanism. Most of the 16+1 countries are European Union (EU) members, but the
grouping also includes five non-EU states. According to some critics, there are major misgivings
in Europe over 16+1 format as in it seen in EU as an attempt by China to divide union by
offering investments to less-developed members of EU in exchange for political influence.

India hosts World Customs Organization RCP meeting of Asia Pacific

India hosted the World Customs Organization (WCO) Asia Pacific Regional Contact Points (RCP)
that was held for 3 three days on Puducherry. The conference is being held for the fourth time
in India. Previously it was held in Jaipur and Cochin.
Highlights
 International Organizations like UNCTAD, Global Alliance on Trade Facilitation (GATF)
participated in the conference. They presented the best practices that are involved in customs
procedures.
 The conference also discussed about the key focus areas of the Asia Pacific Region. It includes
security, enforcement, facilitation and capacity building.

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 World Customs Organization
 The World Customs Organization is an inter-governmental Organization that is involved in
setting up principles and standards especially for cross border procedures and customs.
 The headquarters of WCO is located in Brussels.
 The Organization has divided the world into 6 regions to make the rules across borders of
these regions easier.
 India is a member of the organization.
Significance
 The Asia Pacific accounts to 37% of the world’s GDP.

 Also, the region is important for India as it is trying to increase its trade and investment in the
region. India is achieving this through its Act East Policy.
 The development of North East Region is also linked with India’s interests in Asia Pacific. India
is finding markets in the region for the export of goods from North East.
 It is also essential for India to increase its presence in the region as China has larger interests
in the region especially in the markets of the region.

Cabinet approves sale of Govt stake in five CPSEs including BPCL

The central government took a major step towards privatization on November 20, 2019. The
Union Cabinet approved the sale of government’s stake in Bharat Petroleum Corporation
Limited (BPCL), Shipping Corporation of India (SCI) and freight-linked container corporation of
India (CONCAR).

The government has also approved to bring down the stake of government in selected public
sector companies to below 51 per cent. Finance Minister Nirmala Sitharaman told the media
that the Numaligarh refinery will be separated from BPCL, the country's second-largest refinery
company. The decision was taken after the Cabinet Committee on Economic Affairs (CCEA)
meeting.

Five Central Public Sector Enterprises (CPSEs)

The government has taken this decision after approval of CCEA. These companies are - Tehri
Hydro Development Corporation India Limited (THDC), Bharat Petroleum Corporation Limited
(BPCL), North Eastern Electric Power Corporation Limited (NEEPCO), Shipping Corporation of
India (SCI) and Container Corporation of India (CONCOR).

Government to launch first fixed income ETF of bluechip PSUs

Union Government will launch India’s first fixed income Exchange Traded Fund (ETF) comprising
debt securities of large central public sector enterprises (PSUs) by mid-December 2019. It will
comprise only AAA-rated papers of the PSU companies. It is expected to have a size of Rs
15,000 crore to Rs 20,000 crore. It is expected to improve liquidity in corporate bond market,

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 smoothen borrowing plans of the participating state-owned companies and enhance investor
base.
About India’s 1st fixed income ETF
The proposed debt ETF will be first large fund in India that will provide retail investors
convenience to invest in fixed income product comprising a basket of securities, without need
to study individual bond issues.
It may be comprising of corporate debt securities in the form of bonds, debentures, credit-
linked note, promissory notes as underlying instruments. Large PSUs are expected to
participate in the maiden debt ETF.
Department of Investment and Public Asset Management (DIPAM) has appointed Edelweiss
Asset Management as the asset manager for this proposed debt ETF. The tax treatment of this
debt ETF will be same as that of debt mutual funds.

Benefits of this debt ETF:

It will provide safe investment option, alongside high liquidity. It will also help in deepening the
corporate bond market and will allow PSUs to borrow from the market. As these ETF units will
be listed on exchanges, it will provide new options to investors to own securities of
government-owned PSUs along with facility of overnight liquidity. Moreover, it will provide
investors higher yield than on fixed deposits. Compared with bank fixed deposits that generate
a post-tax return of around 5.5%, this debt ETF can provide return of over 7% for the investors.
Background
In the 2018-19 Union Budget, Union Government had announced that DIPAM is planning to
come out with debt ETF, which will help PSUs better plan their borrowing needs and capital
expenditure. At present there are number of gold and equity ETFs in markets, but there are no
debt ETFs, barring two government securities-based ETF that have not generated much investor
interest. In 2018-19, Union Government had launched Bharat-22 ETF and CPSE ETF comprising
stake sale in a basket of 22 and 11 government companies, respectively. These were used by
government to divest its equity in state-owned companies. It had helped government to raise
Rs 10,000 crore through CPSE-ETF and another Rs 4,368 crore through Bharat-22 ETF.

GoI merges three Insurance PSUs

The GoI will merge 3 public Sector Insurance Companies as announced in budget 2019-20. The
merger includes United India Insurance Limited, National Insurance Co Limited and Oriental
Insurance Company Limited.
Highlights
 The Budget 2019-2020 did not make provision of funds for insurers and the Department of
Financial Services. Therefore, the government institutions in the financial sector are forced to
seek supplementary demands to fulfil their purposes. The Budget allocated Rs 12,000 crore
for this.

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 The General Insurance Companies have sought Rs 500 crore to Rs 3000 crore each to avoid
falling below solvency ratio. However, the three companies that are to be merged are
struggling to maintain minimum solvency ratio of 1.5
Laws on solvency Ratio
According to the Guidelines of Insurance Regulatory and Development Authority of India, an
insurance company has to compulsorily maintain a minimum solvency ratio of 1.5.
The solvency ratio is calculated by dividing company’s tax net operating income by its total debt
obligation. The ratio indicates if the enterprise is able to meet its debt obligations. The lower
the ratio, the greater is its probability to default its debt obligations.

RBI increases household income limits for borrowers of NBFCs and MFIs
Reserve Bank of India increased the household income limits for borrowers of Non-Banking
Financial Companies (NBFCs) and microfinance institutions (MFIs) from 1 lakh to 1.25 lakh
rupees. Aim: The move is aimed at strengthening credit to those at the bottom of the
economic pyramid in rural areas. The limit is increased from 1.6 lakh for urban or semi-urban
areas to 2 lakh rupees. The limit has been increased after taking into consideration the
important role played by microfinance institutions in delivering credit to those at the bottom of
the economic pyramid and to enable them to play their assigned role in a growing economy.

Centre to infuse Rs.25,000 crore for the stalled real estate

The Central government has announced a fund of Rs.10,000 crore for the stalled real estate or
housing projects across the country. The move aimed to boost the ailing real estate sector. It
has been struggling with projects due to the liquidity crisis. The announcement was made by
the Union Finance Minister Nirmala Sitharaman. The Union Cabinet gave its approval to provide
priority debt financing for the completion of stalled projects in the affordable and middle-
income housing segment. The government will infuse Rs.10,000 crore into an Alternative
Investment Fund (AIF). Apart from this, the State Bank of India (SBI) and Life Insurance
Corporation (LIC) will contribute Rs.15,000 crore along with the government's fund.

Real estate sector: India's real estate sector started in early 2017 after demonetization. It was
affected severely in 2018 after major infrastructure IL&FS defaulted on loan payments. It totally
crippled non-banking financial companies (NBFC) sector, including housing finance companies
(HFC). The total stalled budget projects in the Mumbai Metropolitan Region (MMR) and the
National Capital Region (NCR) are the highest with at least 4,00,000 units. The approximate
value of projects running behind schedule in MMR and NCR adds up to Rs.3,60,000 crore.

Key Highlights

• Nirmala Sitharaman said that according to an estimate, around 1600 housing projects have
stalled in many cities like Mumbai, Delhi, Chennai, Bengaluru, Ahmedabad.

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• The government is creating a special fund to boost the housing sector, with the government
putting in 10,000 crores. This fund will be a total of 25,000 crores.

• This fund will be created under the category of Alternative Investment Fund (AIF) and it will
be registered with SEBI.

• The Finance Minister has also clarified that if a project of a unit has been started and is not
completed, it will get support, but another project of the same company which has not been
started, will not get the benefit.

What is Alternative Investment Fund?

It means any fund incorporated or established in India which is a privately collective investment
vehicle. Alternative Investment Fund or AIF collects funds from certain investors for investing it
in accordance with a defined investment policy for the benefit of its investors. The investors of
funds can be either Indian or foreigners. However, it doesn’t include funds covered under SEBI
(Collective Investment Schemes) Regulations, 1999, SEBI (Mutual Funds) Regulations, 1996 or
any other regulations of the Board to regulate fund management activities.

What is Angel Fund?

Angel Fund is basically a category of Venture Capital Fund (VCF) comes under AIF. It raises funds
from angel investors. They invest their money in accordance with the provisions of Chapter III-A
of AIF Regulations.

India opts out of RCEP agreement: Know all the reasons

India decided to not join the Regional Comprehensive Economic Partnership (RCEP) after it
failed to address India’s key concerns. The central government’s decision was hailed by all
opposition leaders in India, who were against the signing of the deal.

Prime Minister Narendra Modi made the announcement while speaking at the 2019 RCEP
Summit in Bangkok on November 4, 2019. The RCEP summit saw participation from many world
leaders. PM Modi, in his speech, said that India backs greater regional integration, freer trade
and adherence to a rule-based international order.

PM Modi continued by saying that India has been pro-actively, constructively and meaningfully
engaged in the RCEP negotiations since inception, however, during the 7 years of RCEP
negotiations many things including global economic and trade scenarios have changed. The
Prime Minister said that India cannot overlook these changes and added that the present RCEP
Agreement doesn’t properly reflect RCEP’s basic spirit.

India at RCEP 2019: Key Highlights from PM Modi’s speech

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India, after assessing the current global situation and the fairness and the balance of the RCEP
agreement, conveyed its decision to not join the partnership.

India stated that the agreement failed to address some of India’s major issues.

PM Narendra Modi highlighted that signing the RCEP agreement would have a negative impact
on the lives and livelihood of all Indians, especially the weaker sections of the society.

The Prime Minister stated that India had participated in the negotiations for the RCEP
agreement with good faith and with a clear view of its interest.

Given the current situation, PM Modi announced that not joining the agreement will be the
right decision for India, as it was against India’s economic interests and national priorities.

The Prime Minister said India stands for greater regional integration as well as for more free
trade and adherence to a rule-based international order.

Why did India opt out of RCEP?

India was looking for more protection of its domestic industry and agricultural sector from the
surge of imports under the deal, especially from China. Since the deal could not offer any such
specific protection, India decided to not join it to protect the national interest, protect the poor
and stop unfair imports. The decision came as the opposition racked up pressure on the
government to pull out of RCEP.

Reasons of Withdrawal
Trade Deficit
India has trade deficit with at least 11 of 15 RCEP countries. It has doubled in the last five years
from 54 billion USD in 2013-14 to 105 billion USD in 2018-19. Of this China alone accounts to 53
billion USD. Signing the RCEP will widen trade deficit and will empty foreign exchange reserve of
India at a faster rate.
Domestic market
Australia and New Zealand are now in search of free access to market their diary products.
Similarly Indonesia and Vietnam are looking for places to dump their less quality rubber. India
being the largest market in the world, dumping such less expensive goods will affect domestic
goods of India
The China Factor
The RCEP deal is in favor of China. China is now looking for greater access (as an alternate) to
Indian market with the trade war with the US. A failure to find an alternate will have a
cascading effect on Chinese economy and its global ambitions. India by not signing the RCEP
deal has refused to be a willing dumping ground of China’s trade imperialism.

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Impact
India’s decision to not sign RCEP will benefit the Indian farmers, small businesses, MSMEs, dairy
and the manufacturing sector, data security, pharmaceutical, steel & chemical industries.

India had concerns about getting swamped by imports under the agreement, which will put the
small Indian businesses and farmers at risk. According to Commerce and industry minister
Piyush Goyal, the decision of not joining the RCEP agreement will provide a boost to the ‘Make
in India’ initiative.

The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement
(FTA) between ASEAN nations and its FTA partners.
The ten ASEAN member nations include Singapore, Thailand, Vietnam, the Philippines,
Cambodia, Brunei, Laos, Malaysia, Myanmar and Indonesia.
The FTA partners of the ASEAN nations included China, Japan, Australia, New Zealand, South
Korea and India. After India’s pull out, ASEAN nations only have five FTA partners now.
For now, the remaining 15 nations have decided to go ahead with the agreement without India.
China, however, announced that India is welcome to join the RCEP whenever it is ready.
The negotiations for the RCEP agreement were formally launched in November 2012 at the
ASEAN Summit in Cambodia.

Government sets up panel to reduce stress in telecom sector

Rajiv Gauba Panel for telecom sector: To understand the stress and devise the strategy to
eliminate financial burden in the telecom sector, the government has set up a Committee of
Secretaries (CoS) under Cabinet Secretary Rajiv Gauba.
The Committee of Secretaries (CoS) will have representatives from law, finance and telecom
ministries that will study subjects like reduction in Spectrum Usage Charges (SUC) and
Universal Service Obligation Fund (USOF) charges, a 2-year moratorium on spectrum auction to
ease cash-flow in the sector.

The decision to set up a CoS comes after the apex court rejected the definition of AGR
(Adjusted Gross Revenue) given by telecom companies and sustained the government’s
definition of revenue.

Earlier on October 24, 2019, the Supreme Court ended the decade long legal tussle between
DoT (Department of Telecommunications)and telecom operators by rejecting the definition of
AGR mooted by telecom companies that excluded revenue from non-core telecom operations
such as rent, dividend and interest income. The court also asked the telecos to pay dues along
with interest within 90-days. Bharti Airtel and Vodafone Idea are the two companies that have
been hit hard by this decision. They will have to pay pending license fee and SUC dues of over
Rs 41,000 crore and 39000 crores respectively.

In total, the telecom companies will have to pay Rs. 92000 crore to the government for
spectrum and license fee dues that have accumulated over these years. Therefore, the telecos
are looking to extend the deadline and reduce the amount.

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Telecom Sector timeline:
1994: Telecom Sector liberalised under National Telecom Policy, 1994.

1999: national Telecom Policy formulated ( From fixed license fee to revenue-sharing fee)

1999: Government becomes a partner in Gross-revenue. 15% AGR fixed under revenue-sharing,
later reduced to 13%.

2013: AGR further reduced to 8%.

What is ‘Project Zero’ introduced by Amazon in India?

To block selling of counterfeit goods on its platform, e-commerce giant Amazon has introduced
‘Project Zero’ in India, in a bid to ensure that customers receive authentic goods when shopping
on Amazon.
What is ‘Project Zero’?
It introduces additional proactive mechanisms and powerful tools to identify, block and remove
counterfeits. More7,000 brands have already enrolled in Project Zero across United States,
Europe and Japan. A number of Indian brands participated in a pilot to help Amazon test the
experience in India.
How does Project Zero work? It combines advanced technology and innovation of Amazon
along with sophisticated knowledge that brands listed of platform have of their own intellectual
property as well as how best to detect counterfeits of their products. It does so through 3
powerful tools:
(1) Automated protections
(2) Self-Service Counterfeit Removal Tool– It works in a seamless manner and has brought relief
to brand owners.
(3) Product serialization– It is enabled by a unique code that brands apply within their
manufacturing and packaging process. It allows Amazon to individually scan and confirm
authenticity of every single purchase of a brand’s enrolled products through Amazon’s
marketplace.
Significance: Project Zero will ensure that customers always receive authentic goods when
shopping on Amazon. It could also lead to many more brands in India (from small and emerging
entrepreneurs to large multi-national brands) partner with Amazon to drive counterfeits to zero
and deliver a great shopping experience for customers.

OCI can now apply for National Pension System

The Overseas Citizens of India (OCI) will now be eligible to apply for National Pension System
(NPS) at par with Non Resident Indians (NRIs). The permission to permit OCI to enroll in NPS
was given by Pension Fund Regulatory and Development Authority (PFRDA). The decision is one
of the endeavours of PFRDA towards promoting and developing NPS and increasing pension
coverage in country.

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Key Highlights
As per a notification issued by Finance Ministry, now, any Indian citizen, resident or non-
resident and OCIs are eligible to join NPS till age of 65 years.
Condition: An OCI may subscribe to NPS provided such person is eligible to invest as per
provisions of PFRDA Act and accumulated saving will be repatriable, subject to Foreign
Exchange Management Act (FEMA) guidelines.
Till 26th of October 2019, the total number of subscribers under National Pension System (NPS)
and Atal Pension Yojana (APY) has crossed 3.18 crores and Asset under Management has grown
to over Rs.3.79 lakh crore. Subscribers enrolled under NPS includes more than 66 lakh
government employees and 19.2 lakhs subscribers in private sector with 6,812 entities
registered as corporates.
About National Pension System (NPS)
It was initially notified for Central government employees joining service on or after 1 January
2004. The NPS was subsequently adopted by almost all State Governments for its employees
and was later extended to all citizens of India (on a voluntary basis) from May 2009, to
corporates in December 2011 and to Non-Resident Indians (NRI) in October 2015.
A NPS subscriber can contribute regularly in a pension account during his/her working life,
withdraw a part of corpus in a lumpsum and use remaining corpus to buy an annuity to secure a
regular income after retirement.
In Union Budget 2019, the tax exemption limit under section 10(12A) of IT Act, for lump sum
withdrawal on exit/maturity from NPS was increased from 40% to 60%. Moreover, the
remaining 40% of corpus is already tax-exempt as it is mandatorily utilised for annuity
purchase.
NOTE: PFRDA is a pension regulator of India. It administers and regulates National Pension
System (NPS) and also administers Atal Pension Yojana (APY). It is a statutory authority
established by PFRDA Act of Parliament, to promote, regulate and ensure orderly growth of
NPS and pension schemes to which this Act applies.

RBI Bank increased the withdrawal limit of PMC bank to Rs.50,000 per account
The Reserve Bank of India (RBI) has increased the withdrawal limit for the customers of Punjab
and Maharashtra Cooperative (PMC) Bank to Rs.50,000 per account. The Central Bank made its
announcement after reviewing the liquidity position of the Bank and the ability of the Bank to
pay its depositors. With this relaxation, more than 78% of the depositors of the Bank will be
able to withdraw their entire account balance. This is the fifth time RBI has increased the
withdrawal limit since the Bank was placed under its direct control with an administrator. RBI's
ban over PMC Bank: On 23 September 2019, RBI barred the PMC Bank from carrying out its
functions, including granting, renewing, and loans and advances, make any investments, accept
fresh deposits, transactions for a period of six months. Generally, RBI monitors banks' health
and issues such kind of directions in case of concerns over the financial health of an institution.
The regulator did not mention any specific reasons for its restrictions on PMC Bank. The

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announcement did not cancel the banking license of the Bank. The restrictions will be in force
for six months.

The Reserve Bank of India has imposed caps on withdrawals made by customers of Punjab and
Maharashtra Cooperative Banks for 6 months. The imposition was invoked by the central bank
under Section 35 A of India’s Banking Regulation act, 1949.
PMC is spread across 6 states and has a network of 137 branches.

What are the restrictions imposed?

During the period of restriction, the customers of PMC bank are not allowed to withdraw more
than Rs 1,000. RBI has also imposed restrictions on lending by cooperative bank. The
notification issued by RBI said that the PMC banks cannot grant or renew loans, make
investment, borrow funds, accept fresh deposits, agree or disburse payments without prior
permission from the central bank. The bank said that the restrictions will be eased according to
the performance of PMC banks. However, the bank license had not been withdrawn.
Why were the restrictions imposed?
The restrictions were a precautionary measure to prevent a run on the bank. The gross bad
loans of the bank account to 3.76% of its advances and PMC discloses it is much higher than
this. Also, these restrictions are precautionary measures while the central bank completes its
audit on PMC. Though auditing of cooperative banks are done by state government, RBI has
power to audit cooperative banks once a year.
The bank reported profit of 99 crores in 2019 as compared to 100 crores in 2018. Similarly the
NPAs of the bank increased largely. It was 1.05% in 2018 and increased to 2.19% in 2019. The
capital adequacy ratio was 12.29% in 2018 and increased to 12.62% in 2019. Capital Adequacy
ratio is the measurement of bank’s available capital in terms of percentage of bank’s risk –
weighted credit exposures. It is calculated by dividing the bank’s capital by its risk weighted
assets.
What is Section 35 A of India’s Banking Regulation act, 1949?
Section 35A of the Banking Regulation act provides powers to RBI to give directions to banks. It
enables RBI with the power to take action in order to prevent a banking company acting
detrimental to the interests of the depositors.
Is PMC a scheduled bank?
Yes, PMC is a scheduled bank. It was provided the status of scheduled bank in 2000. The banks
that are accounted in the second schedule of RBI act, 1934 are called scheduled banks. The
banks with reserve capital more than 5 lakhs rupees are qualified to become scheduled banks.
The banks should also satisfy RBI that its affairs are carried out in a way with no harm to the
interest of the depositors.

RBI appoints Jai Bhagwan Bhoria as new administrator for PMC Bank
Reserve Bank of India (RBI) superseded the Board of crisis-hit Punjab and Maharashtra
Cooperative Bank Ltd. Mumbai She is appointed Jai Bhagwan Bhoria as the administrator of the

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bank. The RBI increased the amount of withdrawal allowed to the depositors from ₹1,000 to
₹10,000. The directives of RBI shall remain in force for a period of six months. The development
comes at a time when the lender's suspended MD reportedly admitted to the RBI that the
bank's actual exposure to the bankrupt HDIL is over ₹6,500 crore four times the regulatory cap
or a whopping 73% of its entire assets of ₹8,880 crore. The slum redevelopment focused
Housing Development and Infrastructure or HDIL is in the bankruptcy court now after being hit
by a severe cash crunch following the failure of some of its key projects in the city. The removal
of the now scam-hit bank's chairman Waryam Singh last year after it had found out his
involvement in sanctioning loans to realty developer HDIL and related-entities without proper
due diligence and much above the regulatory limits. Reserve Bank of India (RBI) Headquarters:
Mumbai Founder: British Raj Governor: Shaktikanta Das

ICICI Bank crosses 3 trillion market cap for the first time
ICICI Bank Ltd crossed the ₹3 trillion market capitalization for the making it the country's fourth
lender to achieve this milestone. The stock touched a fresh record high of ₹466 on the BSE, up
2.3% from its previous close. The scrip traded at ₹464 on the BSE, up 2.1%, with a market
capitalization of ₹3.01 trillion. The Sensex fell 0.51% to 38,833.22 points. ICICI Bank's stock has
gained 6.6%, while year-to-date it has advanced 28%. Earlier, HDFC Bank Ltd, State Bank of
India and Kotak Mahindra Bank had achieved this landmark. HDFC Bank remains India's most
valued bank with a market cap of ₹6.70 trillion, followed by Kotak Mahindra Bank with ₹3.02
trillion. The Foreign institutional investors (FII) holding in ICICI Bank has come down by 2.6%
quarter on quarter, the latest shareholding pattern shows. This can trigger its invisibility
multiplier in index, getting changed to 1 from 0.5. This will increase in doubling weight and
could see inflows of $1.20 billion. Bloomberg Quint also reported, quoting Morgan Stanley, that
there was a high probability of weight increase in ICICI Bank on MSCI, which could see inflows
of $900 mln. ICICI Bank will announce its September quarter earnings on 26 October. According
to 21 Bloomberg analyst estimates, the lender is expected to report a profit of ₹1270.40
crores.ICICI Bank to report a substantial pre-provisional operating profit growth of 28% year-on-
year led by healthy loan growth (15% YoY) and better net interest income growth (24% YoY).
NIM will remain stable quarter-on-quarter.

RBI bans banks to deploy DSAs

The Reserve Bank of India (RBI) announced a ban on banks to deploy direct selling agents
(DSAs) to sell retail loans and verifying borrowers' documents. Ban: ♦ The ban aims to bring
down cases of data theft and reduce operational risks. But it is expected that it might lead to
deceleration of consumer loans and credit cards. The move of RBI comes in response to the
queries of the banking industry. ♦ Currently, a considerable amount of retail assets, namely
personal loans, credit cards, and consumer credit are sourced through the DSA conduit. RBI

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plans to make the agents play a limited role. It also stressed the bank officials to carry out the
KYC procedures, involving verifying borrowers' original documents and not to be outsourced.
This move is to put an end to the misuse of data. ♦ This move by RNI might be connected to the
rules followed by the 39-member club of Financial Action Task Force (FATF).

Govt. accords ‘Maharatna’ status to Power Grid Corp, HPCL

Government of India has accorded ‘Maharatna’ status to public sector undertaking’s (PSU’s)
Hindustan Petroleum Corporation Limited (HPCL) and Power Grid Corporation. Two separate
orders to this effect were issued by Department of Public Enterprises, under Union Ministry of
Heavy Industry and Public Enterprises.
Key Highlights
The grant of Maharatna status to state-owned enterprises Hindustan Petroleum and Power
Grid Corporation will impart greater operational and financial autonomy thus enhancing
powers to their Boards to take financial decisions.
Boards of Maharatna PSU can make equity investments to undertake financial joint ventures
(JV) and wholly owned subsidiaries and undertake mergers and acquisitions (M&A) in India as
well as abroad. This is however subjected to a ceiling of 15% of net worth of concerned CPSE,
limited to Rs 5,000 crore in one project.
The Boards can also structure and implement schemes relating to personnel as well as human
resource management and training. They can also enter into technology JVs or other strategic
alliances, among others.
Holding companies of a ‘Maharatna’ PSU are also empowered to float fresh equity, transfer
assets, divest shareholding in subsidiaries, but are subjected to condition that the delegation
will only be in respect of subsidiaries set up by holding company.

Hindustan Petroleum Corporation Limited (HPCL) & Power Grid Corporation of India
It is an Indian oil and natural gas company which is headquartered at Mumbai, Maharashtra. It
was incorporated in 1974 after the takeover and merger of erstwhile Esso Standard and Lube
India. The merger was done through the Esso (Acquisition of Undertaking in India) Act passed
by Parliament.
Power Grid Corporation of India Limited is state-owned Maharatna company. It is India’s largest
electric power transmission utility firm engaged mainly in Transmission of Power. It is a listed
company since 2007 and is headquartered in Gurugram, Haryana.

Govt launches BHIM 2.0

Union Minister of Electronics and Information Technology (MeiTY) Ravi Shankar Prasad
unveiled a slew of new initiatives and programmes, including BHIM 2.0 that packs-in new
functionalities, supports additional languages and has increased transaction limits.
He also launched a host of new initiatives including MeitY Startup Hub (MSH) portal, Indian
Software Product Registry and selected Incubation Centres under Technology Incubation
Development for Entrepreneurs 2.0 (TIDE 2.0).

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 TIDE 2.0– It is aimed at strengthening nearly 2000 technology based startups in areas of
national concern by taking advantage of emerging technologies as well as empowering 51
incubation centers across the country.
About Bharat Interface for Money (BHIM)
BHIM is a UPI based payment interface application that allows real time fund transfer. It is
developed by National Payments Corporation of India (NPCI) and was launched in December
2016. It is in line with government’s vision of Digital India.
BHIM 2.0 Features
The upgradation has added a bunch of new functionalities and has made app more feature-rich
and effective.
The new version of BHIM also supports three additional languages- Konkani, Haryanvi and
Bhojpuri, over and above existing 13.
Other features-
 ‘Donation’ gateway

 Increased transaction limits for high value transactions- increasing the existing cap of Rs.
20,000 and now up to Rs. 1,00,000 from verified merchants.
 Llinking multiple bank accounts
 Offers from merchants
 Option of applying in IPO
 Gifting money

RIL becomes first Indian company to hit Rs. 9 lakh crore m-cap
Mukesh Ambani-led Oil-to-telecom major Reliance Industries (RIL) has become the first
company in India to hit the market capitalisation (m-cap) of Rs.9 lakh crore. RIL was also the
first company to reach Rs.8 lakh crore mark in August 2018. IT giant Tata Consultancy Services
(TCS) was at a distant second with a m-cap of Rs.7.66 lakh crore. It was the also second
company to reach Rs.8 lakh crore mark.
Key Highlights
On 18 October 2019, the market-cap of Reliance Industries (RIL) stood at Rs.9.03 lakh crore
when the stock traded at Rs.1,428, up 2% on the BSE SENSEX, ahead of its September quarter
earnings. This rise in share price helped the company reach the news milestone.
In 2007, RIL was the first Indian company to hit $100 billion mark in market-cap. RIL also
became first domestic firm to cross Rs.8 lakh crore mark in terms of market valuation in August
2018. In calendar 2019, the stock has climbed 28% so far.
RIL now aims to double the revenue of energy-to-telecom behemoth, riding on retail and
telecom segments by 2025.

What is market capitalisation (m-cap)?

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It is calculated by multiplying total number of company’s outstanding shares by the current
market price of one share. The market-cap figure of listed companies changes daily with stock
price movement.

Air India: 1st airline in world to use Taxibot on A-320 aircraft

Air India, the flag carrier airline of India has become the first airline in the world to use a
Taxibot on an A-320 aircraft with passengers on board. Ashwani Lohani, Chairman and MD of
Air India flagged off the flight AI665 (Delhi – to Mumbai) and it was carried to runway using
Taxibot at Terminal 3 of Indira Gandhi International Airport (IGI), New Delhi.
Significance: It is the first such usage on any Airbus aircraft worldwide and is a giant step
forward towards a cleaner environment. It is expected to bring down the consumption of fuel
by 85% and reduce engine wear and tear as the ignition will be turned on only when the aircraft
reaches runway. Taxibots will also help in decongesting boarding gates and the apron area by
providing efficient pushbacks.
What is Taxibot?
It is a robot-used aircraft tractor for taxiing an aircraft from parking bay to runway and vice-
versa. Since taxibot is a pilot controlled semi-robotic towbar-less aircraft tractor which is used
as alternate taxiing equipment, therefore it is possible to tow an aircraft from parking bay to
runway with its engines switched off.
Taxibots for now will be used for departing flights only and will be significantly used during
taxiing of an aircraft.

State Bank of India launches contactless mobile payment facility for credit card holders
SBI Card launched SBI Card Pay a payment feature based on Host Card Emulation (HCE)
technology for faster, convenient, and more secure card payments using mobile phones. Aim
Seamless, swift payments at a speed that matches the dynamic lifestyle of today's consumers.
We believe that contactless payments are playing a pivotal role in the country's digital
payments drive. Contactless payment in which you have to tap your credit card or debit card
has been on the rise due to the convenience it provides as payment is made just with a tap of
your credit or debit card, and you do not have to enter your PIN to make payment. SBI Card
The SBI Card contactless payment facility through mobile is built as part of the SBI Card mobile
app.SBI Card Pay cardholders have to do a one-time registration of their card on the latest
version of the SBI Card mobile app. The card is registered users can complete payments by
merely unlock their phone screens and bringing the mobile devices near the point of sale
terminal. This facility has been launched on the Visa platform will function on any Android
smartphone with Android OS KitKat version 4.4 and above. The contactless payments at Near
Field Communication (NFC)-enabled point of sale terminals with just one tap of your mobile
without using the physical credit card or entering any PIN. However, the contactless mobile
payment facility is currently being offered only on Visa cards. SBI Card in enabling Visa cards for
tap to pay transactions using the SBI Card mobile app, a first of its kind in India.The mobile app

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uses tokenization that converts customer's sensitive card information (card number, expiry
date, CVV) into a device-specific digital token. The card information transmitted wirelessly by
NFC is protected through tokenisation.The customers must set a device lock on their phones to
make payments.The HCE-enabled apps allow per transaction limit of up to Rs 2,000 and daily
transaction limit of up to Rs 10,000. SBI cardholders will be free to set their own sublimit as SBI
Card Pay to set desired per transaction and daily transaction limits.The credit card cannot be
misused even if you lose it unless your mobile phone is unlocked using the MPIN.

Conference on ‘One Nation One Tag – FASTag’ held in New Delhi

Union Minister for Road Transport & Highways Nitin Gadkari inaugurated a conference on ‘One
Nation One Tag – FASTag’ in New Delhi, to roll out the process for having a unified electronic
system across the country. MoS Road Transport and Highways, Gen. (Retd.) V.K Singh and
ministers and senior officials from several states were also present on the occasion.
Key Memorandum of Understanding (MoU) signed at Conference
MoU was signed between Indian Highways Management Company Ltd (IHMCL) and Goods and
Services Tax Network (GSTN) for integration of FASTag with GST e-way bill system. This
integration of FASTag with e-way bill system will not only help revenue authorities track
movement of vehicles but will also ensure that the vehicles are travelling to same destination
that transporter/trader had specified while generating e-way bill. Moreover, the supplier or
transporter will also be able to track their vehicles via SMS alerts generated at each toll plaza.
IHMCL also exchanged MoUs with several state departments/other agencies/ authorities for
integrating with FASTag. This would mean that the same FASTag affixed on the windscreen of a
vehicle can be used at every toll plaza in country under jurisdiction of different states or
agencies and other entities, thus providing seamless services to consumers across the country.
The move assumes special significance because from 1 December 2019, toll collections on all
National Highways will mandatorily be done through FASTag only.
What is FASTag? It is a simple to use, reloadable tag or device that employs Radio Frequency
Identification (RFID) technology which enables automatic deduction of toll charges and lets
vehicle pass through toll plaza without stopping for cash transaction.

SEBI new rule to impact foreign funds

The Securities and Exchange Board of India (SEBI) notified that only FPIs – Foreign Portfolio
Investors located in FATF countries or managed by an enterprise based under FATF jurisdiction
can deal in Participatory Notes.
Participatory Notes are financial instruments required by investors to invest in Indian stock
markets without being registered with SEBI.
Effects of notification
The step will majorly affect funds from Mauritius and Cayman Islands. They are not FATF
members and a major portion, 15 to 20% of FPI comes from these countries. Now these entities
can neither issue nor subscribe to Participatory Notes.

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 In simple terms, SEBI says that to be registered under category – I FPI, the entity should be from
a FATF member country. The category – II FPIs are not barred from accessing PNs. The category
I funds include pension, sovereign wealth funds, endowment funds and funds from FATF
member countries. Funds from non – FATF countries come under category II.
HR Khan Committee
The new rule is based on the HR Khan Committee’s recommendation. HR Khan Committee was
formed by SEBI under chairmanship of former deputy governor of RBI to streamline FPI. The
reforms initiated by SEBI based on the committee’s recommendation
 It eased eligibility terms of FPIs and KYC norms.

 NRIs, resident Indians are now allowed to be constituents of FPI if they own a share less than
25% of holding
Necessity of the step
The global economic scenario happening in different parts had great effect over Indian
economy. It included
 Since 2016, rupee value has depreciated over 16%. This implies that there is a risk of
increased inflation
 The small and mid – caps were tumbling. In October 2018, the small – cap index fell to 13,800
which was a 31% decrease. The mid cap index fell by 23%.
 Fear of US sanctions over India importing oil from Iran.
 Trade war between US and China
 Rising crude oil prices
About FATF
FATF is Financial Action Task Force that monitors money laundering and terrorism funding all
over the world. It also develops policies to curb money laundering and terror financing. It was
established in 1989 G7 summit that was held in Paris.

CBDT launches Documentation Identification Number

The Central Board of Direct Taxes (CBDT) has launched a computer-generated Document
Identification Number (DIN) to ensure greater transparency and accountability in tax
administration. Thus from now onwards, every CBDT communication will have to have a
documentation identification number. The DIN system has been created as per the direction of
Nirmala Sitharaman, Union Minister of Finance.
About Documentation Identification Number (DIN)
The path-breaking DIN system became operative from 1 October 2019 and will apply to all kind
of communications from Income Tax (IT) Department, whether it is related to investigation,
assessment, rectification, appeals and penalty among other things. On first day of systems’
implementation, nearly 17,500 communications have been generated with DIN.
Mandate: Any communication from IT Department without a computer-generated DIN, be it a
notice, letter, order and summon or any other correspondence, would be treated as invalid and
shall be deemed as if it has never been issued. Also, all such communications with DIN would be
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verifiable on e-filing portal and no communication would be issued manually without DIN. The
only exceptional circumstances is in the case if the communication is issued manually and it
would have to be uploaded and regularised on the system portal within 15 days of its issuance.
Benefits: DIS system would ensure greater accountability and transparency in tax
administration. This development would also help taxpayers detect fake notices and letters as
the notice would be verifiable on e-filing portal of department.

RBI issues guidelines on: on tap authorization of payment systems

The Reserve Bank of India (RBI) issued guidelines on 'on tap' authorization of payment systems
on 15 October. The guidelines, including minimum net worth criteria for different entities. Aim:
The guidelines aim to encourage innovation and competition among the entities. Guidelines: ♦
RBI has decided to offer on-tap authorization for entities, namely BBPOU (Bharat Bill Payment
Operating Unit), TReDS (Trade Receivables Discounting System), and WLAs (White Label ATMs).
♦ The guidelines say that the payment system operators must ensure interoperability among
different retail payment systems. The authorization would be given based on the merits of the
proposal ♦ The entities that desire to function or provide platforms for BBPOU should have an
Rs.100 crore net worth. The net amount should be maintained at all times. ♦ Whereas, in the
case of TReDS, the minimum paid-up equity capital should be Rs.25 crore. ♦ Also, the minimum
net worth for entities that enters the WLA segment should be Rs.100 crore. BBPS, TReDS, WLA:
The Bharat Bill Payment System (BBPS) is a repetitive bill payments platform. It currently covers
five segments, namely direct-to-home (DTH), electricity, gas, telecom, and water bills. TReDS
scheme facilitates the financing of invoices and bills of Ministry of Micro, Small and Medium
Enterprises (MSMEs) that are drawn on corporate buyers by way of discounting by financiers.
White Label ATMs are set up by non-bank entities.

RBI approved amalgamation of 13 DCBs to form Kerala Bank

The Reserve Bank of India (RBI) approved the amalgamation of all the 13 district co-operative
banks (DCBs) of Kerala with Kerala State Co-operative Bank to form the Kerala Bank. The move
aimed to transform the banking sector of the state. It was initiated by the Kerala State
government to form a state cooperative bank. Merger of DCBs: After the merger, the Kerala
Bank is expected to be the largest banking network in the state. The district cooperative banks
of the 13 districts in the state had approved the government's amalgamation scheme. Before
the merger, the banks should meet conditions laid by RBI. The Kerala state government has
been directed to fulfill the conditions and submit a compliance report to RBI before 31 March
2020.

RBI announces the NEFT fund transfer to be available round the clock
Reserve Bank of India (RBI) said that the online money transfer through National Electronic
Funds Transfer (NEFT) will be available 24x7 from now onwards. The announcement was made

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by the six-member Monetary Policy Committee (MPC) of RBI. NEFT timings: In August 2019, RBI
in its August Monetary Policy Review meets had announced round-the-clock availability of NEFT
payment system from December 2019. Currently, the NEFT payment system which is operated
by RBI as a retail payment system is available for customers from 8.00 am to 7.00 pm on all
working days of the week. 2nd and 4th Saturdays of the month are exceptional. The recent
announcement of making the availability of NEFT on a 24x7 basis is expected to revolutionize
the retail payments system of the country.

Nepal Central Bank releases 3 coins to mark Guru Nanak Dev's birth anniversary
The Central Bank of Nepal released three coins to commemorate the birth anniversary of Sikh
Guru Nanak Dev. The coins with denomination of NPR (Nepali Rupees) 100, 1000 and 2500
were jointly launched by Governor of Nepal Rastra Bank (NRB) Chiranjibi Nepal and Indian
Ambassador to Nepal Manjeev Singh Puri at Hotel Aloft in Kathmandu . The coins possess
monetary value and its sale will start from September 30, the NRB said. "Proud to be a Sikh
today. Proud to be a follower of Guru Nanak Dev. Sikhs residing in every part of the world that
too in large numbers. On the occasion, both dignitaries launched a book showcasing the Sikh
heritage in Nepal. It has been published by BP Koirala India-Nepal Foundation in co-ordination
with Embassy of India in Nepal. Before unveiling the book, Indian head of Mission gave a
comprehensive presentation bringing out key aspects of the Sikh heritage in Nepal. The event
was graced by the presence of Jathedar of Akal Takht S. Harpreet Singh, President of Shiromani
Gurudwara Prabhandhak Committee-Amritsar S. Gobind Singh Longowal. A few prominent Sikh
leaders from Punjab, including Charanjeet Singh Atwal, and former Deputy Speaker of Lok
Sabha also participated in the event.

Public Sector Banks to organise loan melas in 400 districts

Public-sector banks (PSBs) hold public meetings with borrowers for distributing loans in 400
districts of the country to boost demand ahead of the festive season. Union Finance Minister
Nirmala Sitharaman announced the banks will take help from non-banking financial companies
(NBFCs). The National Democratic Alliance (NDA) government will be following the footsteps of
its predecessor, the United Progressive Alliance (UPA) government introduced the concept of
loan mela to boost credit by directing banks to lend to people through public meetings. The
government has told PSBs not to declare stressed assets of micro, small and medium
enterprises (MSMEs) non-performing assets (NPAs) till March 31 next year. This will come as a
major boost to the sector with its 65 million firms employing around 120 million workers the
biggest job creation after the agriculture sector. The government is also considering a special
dispensation for the farm and MSME sectors. National Democratic Alliance (NDA) The
announcements were made by the finance minister held a review meeting with top executives
of PSB. The RBI says there is enough liquidity in the system but we keep hearing that it is not
reaching the ground level. This will ensure that loans will reach people transparently. Such

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public meetings will take place in two phases during September 24-29 in 200 districts and
October 10-15 in another 200 districts in shamiana or ceremonial tents. The banks have been
told to extend all kind of loans, including those for housing and vehicles. The banks will avail of
the special dispensation given by the RBI circular MSME sector Restructuring of Advances,
dated January 1, 2019. MSMEs are unable to repay loans within 90 days of the due date and
their accounts will not be treated as NPAs and banks will not seize their assets and take other
action for loan recovery. However, according to the RBI circular, the aggregate exposure,
including non-fund based facilities, of banks and NBFCs to the borrower should not exceed 25
crores as on January 1, 2019. It should continue to be a standard account as of January 1

SEBI sets up panel to create SSE

Capital market regulator Securities and Exchange Board of India (SEBI) set up a high-level panel
to suggest possible structures and regulations create Social Stock Exchanges (SSE). The move
comes after the budget announcement of the Finance Minister Nirmala Sitharaman in July
about setting up such exchanges to take the capital markets closer to the masses and meet
various social welfare objectives. Aim: The creation of Social Stock Exchanges (SSE) aims to
facilitate listing and fund-raising by social enterprises and voluntary organizations. It will also
raise capital as equity, debt or as units like a mutual fund. Roles and duties of the committee:
The working group has been asked to examine and make recommendations with respect to
possible structures and mechanisms within the securities market domain. This will facilitate the
raising of funds by social enterprises and voluntary organizations. Committee members: SEBI
plans to constitute a 15-member working group which will be headed by Ishaat Hussain,
Director at SBI Foundation and former Finance Director at Tata Sons. The members of the
committee include: T V Mohandas Pai, Chairman of Manipal Global Education and former
director of Infosys Roopa Kudva of Omidyar Network India Amit Chandra of Bain Capital
Saurabh Garg, Principal Secretary to Odisha government Shamika Ravi, Brookings India Director
of Research and member of PM's Economic Advisory Council Vineet Rai of Aavishkaar Venture
Girish G Sohani of BAIF Development Research Foundation Other members will include
representatives from the Ministry of Corporate Affairs, Department of Economic Affairs, BSE
and NSE. Also, three members of SEBI officials will also be on the panel, including one as the
Convener.

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RBI makes it Mandatory for Banks to Link Retail Loans with External Benchmarks from
October 1

The Reserve Bank of India mandatory for banks to link all new floating-rate loans for housing,
auto and MSMEs to an external benchmark like repo from October 1. Industry and retail
borrowers complaining that banks do not pass on the entire RBI's policy rate (repo rate).The
Reserve Bank of India (RBI) observed that due to various reasons, the transmission of policy
rate changes to the lending rate of banks under the current marginal cost of funds based
lending rate (MCLR) framework hThe banks to link all new floating rate personal or retail loans
and floating rate loans to MSMEs (micro, small and medium enterprises) toan external
benchmark effective October 1, 2019.The Reserve Bank already reduced the repo or short-term
lending rate by 110 basis points, but the banks have reportedly passed on only up to 40 bps to
borrowers. The external benchmarks to which the banks will be required to link their lending
rates, could be repo, 3-month or 6-month treasury bill yield or any other benchmark published
by theFinancial Benchmarks India Private Ltd (FBIL). The banks have also been asked to reset
the interest rate under the external benchmark at least once every three months.The circular
further said while the banks are free to decide the spread over the external benchmark, the
credit risk premium may undergo change only when borrower's credit assessment undergoes a
substantial change.The other components of spread including operating cost could be altered
once in three years. The decision of the RBI assumes significance amid the clamour for reducing
borrowing cost to push consumer demand, which is one of the major reasons for the slowdown
in the economy. High-frequency indicators like a significant drop in auto sales and other
consumer non-durable are pointing towards demand slowdown.The government announced a
slew of measures like liquidity support to the NBFC sector to further push credit disbursal.The
RBI had earlier asked the banks to link the rates to external benchmark from April 1, but it was
deferred as the lenders wanted more time.The State Bank of India become the first bank to link
its certain loans to the repo. Later, a host of other banks too started linking their loan products
to the repo or other external benchmarks. In August 2017, the RBI constituted an Internal Study
Group (ISG) to examine the working of the MCLR system that was put in place in April 2016. The
ISG had recommended the move over to an external benchmark based lending rate system.

Government announced four major bank mergers

The government announced that the four major bank mergers. The merger of 10 public sector
banks to be merged into four was announced by Finance Minister Nirmala Sitharaman. After
the merger, there will now be 12 public sector banks after the latest round of consolidation of
PSU banks. In 2017, there were 27 public sector banks. After the amalgamation, the
consolidation of public sector banks will be giving the scale. Banks to be merged: Under the
scheme of amalgamation, 1) Indian Bank will be merged with Allahabad Bank. In this merger,
anchor bank will be the Indian Bank 2) Punjab National Bank (PNB), Oriental Bank of Commerce
(OBC) and United Bank will be merged and PNB will be the anchor bank 3) Union Bank of India,
Andhra Bank, and Corporation Bank are to be merged and the anchor bank will be Union Bank

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of India 4) Canara Bank and Syndicate Bank will be merged. Canara Bank will be the anchor
bank The first merger with PNB will create a banking total business of Rs.17.9 lakh crore. After
this merging, PNB entity will have 11,437 branches. In the second merger, Canara Bank will
create the fourth-largest public sector lender with total business size of Rs.15.2 lakh crore and
9,609 branches.

State Bank of India aims to eliminate debit cards

State Bank of India bank debit cards from the banking system as the bank plans to promote
more digital payment solutions and eliminate the plastic cards. The debit cards by customers of
SBI which services a fifth of the population. Around 90 crore debit cards in the country as
against 3 crore credit cards, and pointed out to digital solutions like its own 'Yono' platform as
the key for achieving a debit card-less country. Kumar said through the Yono platform, one can
withdraw cash at automated teller machines or pay for purchases at a merchant establishment
without having a card at all. The bank already set up 68,000 'Yono cashpoints' and is in the
process of scaling it up massively to over 1 million in the next 18 months.which will make the
necessity to have a card even less. The Yono platform can also give credit for buying certain
merchandise, making the credit card in the pocket also as a stand-by. In the next five years,
there will be a limited need to have any plastic cards in your pocket, Kumar said, pointing out
that virtual coupons is the future. The QR code is also a very inexpensive way of ensuring
payments. State Bank of India Headquarters: Mumbai, Maharashtra Founded: 2 June 1806

RBI to issue revised norms for housing finance companies

The Reserve Bank of India (RBI) housing finance companies (HFCs) treated as a category of non-
banks release a revised regulatory framework for these entities. The Finance Act, 2019
amended the National Housing Bank Act, 1987, The conferring certain powers for the
regulation of HFCs with the Reserve Bank of India.HFCs be treated as one of the categories of
non-banking financial companies (NBFCs) for regulatory purposes. The Reserve Bank of India
will carry out a review of the extant regulatory framework applicable to HFCs and come out
with revised regulations in due course.HFCs will continue to comply with the directions issued
by the National Housing Bank (NHB) till the RBI issues a revised framework.The NHB continue to
carry out supervision of HFCs and they will continue to submit various returns to NHB. The
grievance redressal mechanism with regard to HFCs will also continue to be with the NHB. The
housing finance institution is desirous of making an application for registration under sub-
section 2 of section 29A of the National Housing Bank Act, 1987.Finance minister Nirmala
Sitharaman proposed an amendment to Section 45-IA of the RBI Act 1934 in the Finance
Bill.The amended Act empowers the central bank to supersede the board of NBFCs (other than
those owned by the government) and enable resolution of financially troubled NBFCs through a
merger or splitting them into viable and non-viable units called bridge institutions. The central

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bank can now remove auditors, call for audit of any group company of an NBFC and have a say
over the compensation of the senior management.

State Bank of India MD Dinesh Kumar Khara got an extension by 2 years after a review of his
performance
The Appointments Committee of the Cabinet, Government of India extended the tenure of
State Bank of India(SBI) Managing Director (MD)Dinesh Kumar Khara by another 2 years with
effect from August 9, 2019. He is appointed Managing Director of State Bank of India (SBI) for a
period of three years on August 10, 2016. He holds a Board level position in supervising the
businesses of SBI’s nonbanking subsidiaries He was engaged in diverse financial activities such
as Asset Management, Life Insurance, General Insurance, Custodial Services, Primary
Dealership,.etc. He joined SBI as Probationary Officer (PO) and has over 33 years of experience
in all sides of Commercial banking such as Retail Credit, deposit mobilization, international
banking operations, branch management. Khara worked in SBI’s Chicago office and was
associated with the overseas acquisition of Indian Ocean International Bank Mauritius (now SBI
Mauritius) during his stint in Overseas Expansion wing of International Banking Group. He also
worked as the MD&CEO of SBI Funds Management Pvt. Limited (SBIMF). About SBI:
Headquarter: Mumbai Chairman: Shri Rajnish Kumar

RBI relaxes ECB norms

The Reserve Bank of India (RBI) has further relaxed the norms related to external commercial
borrowing (ECB). It loosened the end-use restrictions with regard to working capital, general
corporate purpose and repayment of rupee loans. The move comes after RBI received feedback
from stakeholders. ♦ As per the relaxation, all the eligible borrowers are allowed to raise
following ECBs from recognised lenders with a minimum average maturity period of 10 years
for working capital purposes and general corporate purposes. The foreign branches and
overseas subsidiaries of Indian banks are exempted. ♦ It also permits borrowing for on-lending
by NBFCs for the above maturity and end-uses. ♦ Borrowers are allowed to raise ECBs with a
minimum average maturity period of 7 years for repayment of rupee loans that can be availed
domestically for capital expenditure.

RBI names Kanungo to run monetary policy portfolio

The RBI assigned Deputy Governor BP Kanungo to run the monetary policy portfolio after the
resignation of fellow Deputy Governor Viral Acharya. Kanungo, who will retain his currency
management portfolio, would become the sixth member of the Monetary Policy Committee
(MPC). Monetary Policy: Monetary policy is the process by which the monetary authority of a
country. Typically RBI, the central bank or currency board, controls either the cost of very short-
term borrowing or the money supply, often targeting inflation or the interest rate to ensure
price stability and general trust in the currency. RBI portfolios work: All the other three deputy
governors N S Vishwanathan, BP Kanungo and M K Jain made responsible for 12 departments

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each. Deputy Governor Jain has been given additional charge of corporate strategy and budget,
financial stability unit, and human resource management. Vishwanathan has also been
entrusted with departments dealing with financial market operations, financial market
regulations and international issues. The RBI, headed by Governor Shaktikanta Das, has four
deputy governors. The government has not yet finalised replacement of Acharya. Acharya Viral
V. Acharya is an Indian economist who was appointed as Deputy Governor of Reserve Bank of
India. He was a member of the Academic Council of the National Institute of Securities Markets,
Securities and Exchange Board of India since 2014.

In case of suggestions, please write to amit.rath@sbi.co.in

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