Banking and Financial Awareness July 2019: Week III

Bimal Jalan Committee Report on RBI Surplus Funds

The Bimal Jalan Committee on Economic Capital Framework met on 17th July 2019 for the final time to decide on transferring of surplus reserves to the government.
It’s a 6 member committee headed by Bimal Jalan (former RBI governor) and other members include Finance Secretary Subhash C Garg, RBI deputy governor Rakesh Mohan (vice-chairman of the panel), RBI deputy governor NS Vishwanathan, and RBI central board members Sudhir Mankad and Bharat Doshi.
RBI had the total surplus cash reserve of Rs 9.43 lakh crore on 30th June 2018.
According to the finance ministry, the buffer of 28 % of gross assets maintained by the RBI is well above the global norm of around 14 %.

The Finance Minister proposed an amendment to the SEBI Act in the budget 2019-20 which will transfer 75% of SEBI’s surplus funds to the central government.
SEBI chairman Ajay Tyagi has asked to review the proposal of transfer of surplus funds as it will compromise the autonomy of SEBI and its functioning.
Two provisions as presented in the finance bill were opposed by SEBI- the First one is related to the transfer of surplus funds and second one seeking prior approval from finance ministry for raising expenses.

The bank has received in-principle regulatory approvals to set up its IFSC Banking Unit in GIFT city, Gujarat.
The Gujarat International Finance Tec-City (GIFT City) is envisaged as a hub to bring offshore financial transactions.
The GIFT city is working with organisations to help build a hub for aircraft leasing and financing within GIFT City.
The banking business at GIFT IFSC has already seen a 167% jump in just 2 years.

As per SEBI’s new norm, if the additional provisioning of NPAs identified by RBI exceeds 10% of the reported profit before provisions and contingencies, then all the listed banks have to disclose to the stock exchanges divergences in the asset provisioning and classification.
Earlier, the threshold for the NPAs provisioning was 15% of the reported profit.
It also added that if the additional gross NPAs accessed by the RBI exceed 15% of the published incremental gross NPAs, then the disclosure will be mandatory.

The finance Bill, 2019 which will amend the SEBI Act has been passed by the Lok Sabha on 18th July 2019.
The finance bill is a money bill, it means once passed by the Lok Sabha, it would become law unchanged even if the Rajya Sabha wants to amend it.
SEBI chairman Ajay Tyagi has said it a premature step, as the issue is under discussion in the Financial Stability and Development Council.
With the amendment, SEBI has to take the government’s approval for expanding its organisational capacity, IT infrastructure and other soft and physical infrastructure.

The World Bank along with Asian Infrastructure Investment Bank (AIIB) was to provide a share of $715 million of critical funding for infrastructure development of the City.
The construction of Amravati city is the brainchild of former CM, N. Chandrababu Naidu and PM Modi laid the foundation for the project in 2015.
The World Bank was considering the project under Amravati sustainable Infrastructure and Institutional Development Project and Amravati Sustainable Capital City Development Project.
A.P. was split in 2014, and Hyderabad was shared as the capital by both states (Telangana and A.P.) for10 years.

Asian Development Bank (ADB) has lowered the inflation forecast for India to 4.1% in FY 2020.
ADB has supplemented Asian Development Outlook (ADO) 2019 which said that India will be the main driver to lower the inflation for the south Asian region.
The inflation forecast for South Asia for 2019 was lowered from 4.7% to 4.5%, mainly due to a lowered forecast for India.
RBI has raised the retail inflation forecast marginally to 3-3.1% for the 1st half of fiscal in its last monetary policy review in June.