Banking and Financial Awareness Digest: March 2023

Moody’s ups India’s GDP growth projection for 2023 to 5.5%

Current Affairs: Moody's Investors Service is a global rating agency that provides credit ratings, research and analysis for various sectors and entities. On March 1st 2023, Moody's raised India's economic growth forecast for 2023 to 5.5% from 4.8% pegged earlier.

About

The main reason for this revision was the higher capital expenditure proposed in the Union Budget 2023-24, which aimed to boost infrastructure spending and revive the economy after the Covid-19 pandemic. Moody's also cited a sustained economic momentum as a positive factor for India's growth outlook.
Moody's also raised its growth projections for other G-20 economies such as the US, Canada, the Euro area, Russia, Mexico and Turkiye, accounting for a stronger end to 2022.
According to Moody's, India had the highest growth rate of all G-20 countries followed by China at 5% and Indonesia at 4.8%.
For fiscal 2023-24, the Reserve Bank of India has projected real GDP growth at 6.4% while the Economic Survey had estimated it in the range of 6% to 6.8%.
Moody's said that India's growth outlook was supported by a strong recovery in private consumption and investment, as well as a favourable base effect from the sharp contraction in 2022.
Moody's also noted that India's fiscal deficit target of 6.8% of GDP for 2023-24 was higher than expected, but it reflected a credible commitment to fiscal consolidation and transparency.
Moody's said that India's credit profile remained constrained by low per capita income, high public debt, weak financial sector and governance challenges.
Moody's also warned that India faced downside risks from potential new waves of Covid-19 infections, geopolitical tensions with China and Pakistan, social unrest and environmental shocks.

HDFC Bank, IRCTC launch India’s most rewarding co-branded travel credit cards

Current Context: IRCTC and HDFC Bank have launched a co-branded travel credit card on NPCI’s Rupay network. The card offers attractive joining bonus, discounts on bookings, lounge access among other benefits. It is one of India’s most rewarding co-branded travel credit cards.

Details

The annual fee of this card is Rs. 499 plus applicable taxes. However, you can get it waived off if you spend Rs. 1.5 lakhs or more in an anniversary year.

Some of the other benefits of this card are:

You get a Rs 500 Amazon voucher on card activation within 30 days of card issuance.
You get 5 reward points per Rs 100 spent on ticket bookings at www.irctc.co.in.
You get 5 per cent cashback on booking via Smart Buy.
You get 8 complimentary IRCTC Railway Lounge Access per year

There are three ways to apply for this card:

You can visit the websites of IRCTC or HDFC Bank and fill out an online application form.
You can download the app of IRCTC or HDFC Bank and access the key details of the card.
You can walk in to the nearest HDFC Bank branch and submit your documents

RBI imposes restrictions on Musiri Urban Co-operative Bank

Current Context: RBI imposed restrictions on Musiri Urban Co-operative Bank because of its deteriorating financial condition. The bank cannot grant loans, make investments, or disburse payments without RBI’s approval.

Key facts

The restrictions on the lender will remain in force for six months from the close of business on March 3 and are subject to review, the RBI said in a statement.
The RBI said that these directions should not be construed as a cancellation of its banking license.
The bank will continue to undertake banking business with restrictions until its financial position improves.
The restrictions include a cap of Rs 5,000 on withdrawals by individual customers, a ban on granting or renewing loans and advances, making any investments or incurring any liability without prior approval of RBI.
The bank has been facing liquidity issues and has been unable to meet its depositors’ demands5 The RBI said that these directions should not be construed as a cancellation of its banking license. The bank will continue to undertake banking business with restrictions until its financial position improves.

RBI Imposes Rs 3.06 Crore Penalty On Amazon Pay (India) For Violation Of Norms

Current Context: Amazon Pay (India) is the digital payment arm of e-commerce giant Amazon. The Reserve Bank of India (RBI) has imposed a penalty of over Rs 3.06 crore on Amazon Pay (India) for failing to comply with certain rules related to Prepaid Payment Instruments (PPIs) and Know Your Customer (KYC) direction.

Key Highlights

The RBI had issued a notice to Amazon Pay (India) advising it to show cause as to why penalty should not be imposed for non-compliance with the directions. The RBI said that after considering Amazon Pay's reply, oral submissions made during personal hearing and examination of additional submissions, it concluded that imposition of monetary penalty was warranted.
Amazon's response to RBI's penalty was:"We remain deeply committed to operating as per regulatory guidelines and maintaining a high compliance bar, while we innovate on behalf of our customers to offer them a safe and convenient payments experience."

The exact reason for Amazon Pay's failure to comply with the rules is not clear from the available sources. However, some possible factors are:

Amazon Pay may have faced challenges in verifying the identity and address of its customers who use its PPI services.
Amazon Pay may have neglected to report or disclose its PPI transactions or customer data to RBI or other authorities as required by law
Amazon Pay may have violated other provisions of the Master Directions on PPIs issued by RBI in 2021, such as maintaining minimum net-worth, safeguarding customer funds, ensuring interoperability, etc.

RBI launches mission Har Payment Digital

Current Context: RBI Governor Shaktikanta Das launched 'Har Payment Digital' mission on March 6, 2023 as part of Digital Payments Awareness Week (DPAW) 2023.The mission aims to make every citizen a user of digital payment by reinforcing its ease and convenience and facilitating onboarding of new consumers into the digital payment system.

Key Points

The mission will run till Vision 2025, which has its theme as "E-Payments for Everyone, Everywhere and Everytime".
Various campaigns highlighting the digital payment channels available are being planned by banks and non-bank payment system operators.
The RBI Governor said that digital payments have grown exponentially in India in terms of volume, value and innovation in recent years.
He also said that digital payments have helped in enhancing financial inclusion, reducing cash dependence and promoting transparency.

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