Banking & Financial Awareness GK Digest : February 2024

RBI bars Paytm Payments Bank from accepting deposits after February 29

Current Context: The Reserve Bank of India (RBI) did indeed bar Paytm Payments Bank (PPBL) from accepting deposits and credit transactions after February 29, 2024.

About

• This was due to "persistent non-compliance" and "material supervisory concerns" identified by the RBI.
• Here are some key points to remember:
• Effective date: The restriction on deposits and credit transactions took effect on March 1, 2024.
• Reason for the ban: The RBI cited non-compliance with regulations and supervisory concerns identified in an external audit report.
• What's affected: PPBL cannot accept new deposits, top-ups, or carry out credit transactions in any customer accounts, wallets, FASTags, etc. However, withdrawals and utilization of existing balances are permitted.
• Future of PPBL: The current status of PPBL is unclear. The future course of action will depend on how PPBL addresses the RBI's concerns and seeks regulatory approval.

RBI revises norms for UCBs inclusion in second schedule, RBI Act, 1934

Current Context: The Reserve Bank of India (RBI) has revised the eligibility norms for the inclusion of Urban Co-operative Banks (UCBs) in the Second Schedule to the RBI Act, 1934. The revisions are aimed at aligning these norms with the Revised Regulatory Framework.

Details

• Here the details:
• Revised Norms for UCBs Inclusion in Second Schedule, RBI Act, 1934: The RBI has revised the eligibility norms for the inclusion of Urban Co-operative Banks (UCBs) in the Second Schedule to the RBI Act, 1934. The new norms are in line with the Revised Regulatory Framework. The eligibility criteria for UCBs now include a Capital to Risk (Weighted) Assets Ratio (CRAR) that is 3% above the minimum requirement, and no major regulatory concerns. These revised instructions are applicable to all Commercial Banks (including RRBs) and all Co-operative Banks and shall come into effect from April 1, 2024.
• Advance Payment for Gold Import via IIBX by TRQ Holders: The RBI has allowed Tariff Rate Quota (TRQ) holders under the India-United Arab Emirates (UAE) Comprehensive Economic Partnership Agreement (CEPA) to remit advance payment for eleven days for the import of gold through the India International Bullion Exchange IFSC Ltd (IIBX) against the TRQ. This decision is aimed at facilitating the import of gold by TRQ holders.

UPI has been formally launched at Eiffel Tower in Paris, France

Current Context: The Unified Payments Interface (UPI), a revolutionary payment system developed by the National Payments Corporation of India (NPCI), was formally launched at the iconic Eiffel Tower in Paris on 2nd February 2024.

 Key Points

• This significant event marks the global debut of UPI and is a part of Prime Minister Narendra Modi’s vision of taking UPI to a global level.
• The NPCI has tied up with French e-commerce and proximity payments Lyra, which will help ensure that the UPI payment mechanism is accepted in France, starting with the Eiffel Tower.
• This initiative is expected to facilitate seamless financial transactions for Indian tourists in France.

ESAF SFB & Edelweiss Tokio Life partners to offer Life Insurance Products

Current Context: ESAF Small Finance Bank has entered into a bancassurance partnership with Edelweiss Tokio Life Insurance on 2nd February 2024.

Key Facts

• This partnership aims to enhance the accessibility of innovative life insurance products, leveraging ESAF Small Finance Bank’s presence in rural markets across India.
• K. Paul Thomas, MD and CEO of ESAF Small Finance Bank, stated that this partnership aligns with their goal of providing their customers with a broad range of financial solutions.
• By extending the reach of life insurance to underserved communities, they are taking a significant step towards inclusive financial security.
• Sumit Rai, MD & CEO of Edelweiss Tokio Life Insurance, also expressed that their partnership with ESAF Small Finance Bank will enable them to cement their leadership in this region.
• They plan to collaborate with the Bank to improve their customer understanding in the region to bring innovative and relevant insurance solutions.

RBI approved HDFC Bank group to acquire up to 9.5 pc in 6 banks

Current Context: The Reserve Bank of India (RBI) has approved the HDFC Bank group to acquire an “aggregate holding” of up to 9.5% of the paid-up share capital or voting rights in six banks.

Key Highlights

• These banks are:
• Axis Bank
• Suryoday Small Finance Bank
• ICICI Bank
• Bandhan Bank
• YES Bank
• IndusInd Bank
• The term “aggregate holding” includes shareholding by the bank and entities under the same management/control, mutual funds, trustees, and promoter group entities.
• The RBI’s approval is valid for a period of one year from the date of the RBI’s letter, which is until February 4, 2025.
• HDFC Bank must ensure that the “aggregate holding” in these six banks does not exceed 9.50% of the paid‐up share capital or voting rights of the respective banks, at all times.
• While HDFC Bank does not intend to invest in these banks, since the “aggregate holding” of HDFC Bank group was likely to exceed the prescribed limit of 5%, an application seeking approval of the RBI for increase in investment limits was made.

This digest is not complete. Read the complete digest on the Financial Awareness Course.

Join here