{"id":108482,"date":"2021-05-27T12:03:19","date_gmt":"2021-05-27T06:33:19","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=108482"},"modified":"2021-05-27T12:16:50","modified_gmt":"2021-05-27T06:46:50","slug":"money-and-banking-updates-prelims-capsule-2021","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/money-and-banking-updates-prelims-capsule-2021\/","title":{"rendered":"Money and Banking &#8211; Updates | Prelims Capsule 2021"},"content":{"rendered":"<p><b><span data-contrast=\"none\">Table of contents<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335551550&quot;:2,&quot;335551620&quot;:2,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><a href=\"#Note1\"><span data-contrast=\"none\">Network for Greening the Financial System<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/a><\/li>\n<li><a href=\"#Note2\"><span data-contrast=\"none\">New Umbrella Entity (NUE)<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note3\"><span data-contrast=\"none\">National Digital Currency<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/a><\/li>\n<li><a href=\"#Note4\"><span data-contrast=\"none\">India on US\u2019s \u2018Currency Watch list\u201d<\/span><span data-contrast=\"none\">\u202f<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note6\"><span data-contrast=\"none\">Regulations Review Authority 2.0<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note5\"><span data-contrast=\"none\">Currency Chest<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note7\"><span data-contrast=\"none\">PCA framework<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/a><\/li>\n<li><span data-contrast=\"none\"><a href=\"#Note8\">Domestic Systemically Important Banks (D-SIBs)\u202f<\/a>\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note9\"><span data-contrast=\"none\">Jayant Kumar Dash committee<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note10\"><span data-contrast=\"none\">Payment Infrastructure Development Fund\u202f<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\"><a href=\"#Note11\">Digital payments Index<\/a>\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\"><a href=\"#Note12\">Positive Pay Mechanism<\/a> \u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note13\"><span data-contrast=\"none\">DakPay<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note14\"><span data-contrast=\"none\">Better than cash alliance<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/a><\/li>\n<li><a href=\"#Note15\"><span data-contrast=\"none\">Priority Sector Lending (PSL)<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/a><\/li>\n<li><a href=\"#Note16\"><span data-contrast=\"none\">Report on Trend and Progress of Banking in India 2019-20\u202f<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note17\"><span data-contrast=\"none\">Non-Banking Financial Company (NBFC)<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note18\"><span data-contrast=\"none\">Depreciation of rupee<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note19\"><span data-contrast=\"none\">Corporate ownership of banks<\/span><\/a><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"#Note20\"><span data-contrast=\"none\"><span data-contrast=\"none\">FCRA Act<\/span><\/span><\/a><br \/>\n<hr \/>\n<\/li>\n<\/ul>\n<h3 style=\"text-align: center;\"><span style=\"font-size: 24pt;\"><b style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary);\"><a id=\"Note1\"><\/a>Network for Greening the Financial System<\/b><span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/span><\/h3>\n<p><span data-contrast=\"none\">\u202f<\/span><b><span data-contrast=\"none\">What is the news?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Reserve Bank of\u202fIndia (RBI) has joined the\u202f<\/span><b><span data-contrast=\"none\">Network for Greening the Financial System<\/span><\/b><b><span data-contrast=\"none\">\u202f(NGFS)<\/span><\/b><span data-contrast=\"none\">\u202fas a\u202fMember.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><b><span data-contrast=\"none\">Network for Greening the Financial\u202fSystem (NGFS):<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"none\">It<\/span><b><span data-contrast=\"none\">\u202f<\/span><\/b><span data-contrast=\"none\">was launched at the Paris One Planet Summit in December 2017.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">It<\/span><span data-contrast=\"none\">\u00a0is a group of Central banks and financial supervisors.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Aim<\/span><\/b><span data-contrast=\"none\">: to<\/span><span data-contrast=\"none\">\u00a0accelerate the scaling up of green finance and develop recommendations for central banks\u2019 role in climate change<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Location:\u00a0<\/span><\/b><span data-contrast=\"none\">Located at the Bank of France\u202f<\/span><b><span data-contrast=\"none\">headquartered in Paris.<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">As<\/span><b><span data-contrast=\"none\">\u00a0<\/span><\/b><span data-contrast=\"none\">of<\/span><b><span data-contrast=\"none\">\u00a0<\/span><\/b><span data-contrast=\"none\">April 2021, the\u202f<\/span><b><span data-contrast=\"none\">NGFS consists of 90 members and 13 observers.<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Significance for RBI:\u202f<\/span><\/b><span data-contrast=\"none\">As Green Finance has assumed significance in the context of climate change.\u202fSo<\/span><span data-contrast=\"none\">,<\/span><span data-contrast=\"none\">\u202fRBI expects to benefit from the membership of NGFS by learning and contributing to global efforts on Green Finance.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Green Finance<\/span><\/b><span data-contrast=\"auto\">: It<\/span><span data-contrast=\"auto\">\u00a0is a broad term that can refer to<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">financial investments flowing into sustainable development projects and initiatives, environmental products, and policies that encourage the development of a more sustainable. economy.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<hr \/>\n<h3 style=\"text-align: center;\"><b><span data-contrast=\"none\"><a id=\"Note2\"><\/a>New Umbrella Entity (NUE)<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">RBI, in August 2020, released a framework for setting up New Umbrella Entity or entities. <\/span><span data-contrast=\"auto\">Recently the Reserve Bank of India said that it is not in\u202ffavor\u202fof having direct and supervisory control over the\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/rbi-planning-umbrella-entities-for-retail-payment-systems\/\"><span data-contrast=\"none\">New Umbrella Entities<\/span><\/a><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Instead, the RBI wants agencies such as the National Payments Corporation of India (NPCI) or a newly formed body to take over the role.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is New Umbrella Entity?<\/span><\/b><b><span data-contrast=\"auto\">\u202f<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">These\u00a0<\/span><span data-contrast=\"auto\">e<\/span><span data-contrast=\"auto\">ntities will carry out various payment services, similar to the ones being provided by the NPCI right now.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">In February 2020, RBI proposed to create an alternative umbrella\u202forgani<\/span><span data-contrast=\"auto\">z<\/span><span data-contrast=\"auto\">ation\u202ffor retail payments. This is to\u00a0<\/span><b><span data-contrast=\"auto\">prevent the monopoly<\/span><\/b><span data-contrast=\"auto\">\u00a0of the\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/national-payments-corporation-of-india-npci\/\"><span data-contrast=\"none\">National Payment Corporation of India (NPCI).<\/span><\/a><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Presently NPCI is taking care of all retail payments systems in India.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"6\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">As envisaged by the RBI, New Umbrella Entities will be a\u00a0<\/span><b><span data-contrast=\"auto\">not-for-profit company<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Need for New Umbrella Entity:<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><b><span data-contrast=\"auto\">Enhance competition:<\/span><\/b><span data-contrast=\"auto\">\u202fAt present, the NPCI is the only entity handling the payment system. So, it is not for sure that the transaction costs are the lowest, or they cannot be reduced further. Similarly, the competition will also provide a variety of product offerings in the payment system.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">The monopoly of NPCI:<\/span><\/b><span data-contrast=\"auto\">\u202fPrivate players in the payments space have expressed few concerns with the NPCI. Further, the NPCI is the\u202f<\/span><span data-contrast=\"auto\">only entity managing all retail payments systems<\/span><span data-contrast=\"auto\">\u202fin India. So, the New Umbrella Entities will enhance the competition and improve the service delivery in the retail digital payment ecosystem.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">Functions of New Umbrella Entities<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">As per the RBI, the following will be the functions of these NUEs<\/span><span data-contrast=\"auto\">:\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Develop<\/span><\/b><span data-contrast=\"auto\">\u00a0new payment standards, methods, and technologies.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">O<\/span><\/b><b><span data-contrast=\"auto\">perate clearing and settlement systems<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">I<\/span><\/b><b><span data-contrast=\"auto\">dentify and manage\u00a0<\/span><\/b><span data-contrast=\"auto\">relevant\u00a0<\/span><b><span data-contrast=\"auto\">risks.\u202f<\/span><\/b><span data-contrast=\"auto\">This includes\u202frisks\u202frelated to settlement, liquidity, credit, and operation.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">P<\/span><\/b><b><span data-contrast=\"auto\">reserve the integrity<\/span><\/b><span data-contrast=\"auto\">\u00a0of the retail payment system.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">These entities will\u00a0<\/span><b><span data-contrast=\"auto\">monitor the system<\/span><\/b><span data-contrast=\"auto\">\u00a0both nationally and internationally to prevent shocks, frauds, and challenges that affect the system in general.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">RBI framework related to the New Umbrella Entities<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The RBI in its framework mentioned certain\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/rbi-unveils-framework-for-retail-payments-entity\/\"><span data-contrast=\"none\">guidelines for New Umbrella Entities<\/span><\/a><span data-contrast=\"auto\">. These are,<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Capital:<\/span><\/b><span data-contrast=\"auto\">\u202fThe pan-India new umbrella\u202fentity<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(NUE) or entities will focus on retail payment systems with a\u00a0<\/span><b><span data-contrast=\"auto\">minimum paid-up capital of Rs 500 crore<\/span><\/b><span data-contrast=\"auto\">.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Limit on investment<\/span><\/b><span data-contrast=\"auto\">: No<\/span><span data-contrast=\"auto\">\u00a0single promoter or group to hold more than\u00a0<\/span><b><span data-contrast=\"auto\">40%<\/span><\/b><span data-contrast=\"auto\">\u00a0investment in the NUE.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">NUE should maintain a\u00a0<\/span><b><span data-contrast=\"auto\">minimum net worth<\/span><\/b><span data-contrast=\"auto\">\u00a0of Rs. 300\u202f<\/span><span data-contrast=\"auto\">C<\/span><span data-contrast=\"auto\">rore\u202fat all times.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Ownership:<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-contrast=\"auto\">P<\/span><span data-contrast=\"auto\">romoter or the promoter group of the NUE should be \u2018<\/span><b><span data-contrast=\"auto\">owned and controlled by residents\u2019<\/span><\/b><span data-contrast=\"auto\">\u00a0with 3 years of experience in the payments ecosystem.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Governance:<\/span><\/b><span data-contrast=\"auto\">\u202fThe entity<\/span><b><span data-contrast=\"auto\">\u202f<\/span><\/b><span data-contrast=\"auto\">has to follow\u00a0<\/span><b><span data-contrast=\"auto\">corporate governance norms<\/span><\/b><span data-contrast=\"auto\">\u00a0set by the RBI. The RBI will retain the right to approve the appointment of directors and nominate a member on the entities\u2019 board.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Foreign Investment:\u202f<\/span><\/b><span data-contrast=\"auto\">As long as the NUE\u2019s comply with the other guidelines the\u00a0<\/span><span data-contrast=\"auto\">f<\/span><span data-contrast=\"auto\">oreign Investment is<\/span><b><span data-contrast=\"auto\">\u00a0allowed.<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><span style=\"font-size: 24pt;\"><b style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary);\"><a id=\"Note3\"><\/a>National Digital Currency<\/b><span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/span><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The draft Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 aims to prohibit all private cryptocurrencies. The Bill also aims to lay down the regulatory framework for the launch of an \u201cofficial digital currency\u201d.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"8\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">The growth of cryptocurrencies such as\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/bitcoins-in-india-an-overview\/\"><span data-contrast=\"none\">Bitcoin<\/span><\/a><span data-contrast=\"auto\">,\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/what-is-dogecoin-cryptocurrency\/\"><span data-contrast=\"none\">Dogecoin<\/span><\/a><span data-contrast=\"auto\">, Ethereum\u202f<\/span><span data-contrast=\"auto\">etc<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-contrast=\"auto\">has\u00a0<\/span><span data-contrast=\"auto\">raised challenges to fiat currencies.\u00a0<\/span><span data-contrast=\"auto\">It has made the central bank of each country explore the possibility of introducing their own digital currencies.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"8\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">The inter-ministerial committee (IMC) suggested a ban on private digital currencies, but it favors RBI-backed National Digital Currency or central bank digital currency (CBDC).\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is the CBDC or National Digital currency?<\/span><\/b><b><span data-contrast=\"auto\">\u202f<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">A Central Bank Digital Currency (CBDC), or\u202fnational digital currency, is simply\u00a0<\/span><b><span data-contrast=\"auto\">the digital form of a country\u2019s fiat currency<\/span><\/b><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"8\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Instead of printing paper currency or minting coins, the central bank issues electronic tokens.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"8\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">This token value is backed by the\u00a0<\/span><b><span data-contrast=\"auto\">full faith and credit<\/span><\/b><span data-contrast=\"auto\">\u00a0of the government.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Which countries have already rolled out their digital currency?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\"><br \/>\n<\/span><span data-contrast=\"auto\"><br \/>\nAccording to the Bank for International Settlements, more than 60 countries are currently experimenting with the CBDC. There are few Countries that already rolled out their national digital currency. Such as,<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Sweden<\/span><\/b><span data-contrast=\"auto\">\u202fis conducting real-world trials of their digital currency (<\/span><b><span data-contrast=\"auto\">krona)<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">The Bahamas<\/span><\/b><span data-contrast=\"auto\">\u202falready issued their digital currency \u201c<\/span><b><span data-contrast=\"auto\">Sand Dollar<\/span><\/b><span data-contrast=\"auto\">\u201d to all citizens<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><a href=\"https:\/\/forumias.com\/blog\/china-tests-state-run-digital-currency-in-4-cities-amid-pandemic\/\"><b><span data-contrast=\"none\">China<\/span><\/b><span data-contrast=\"none\">\u202fstarted a trial run of their digital currency<\/span><\/a><b><span data-contrast=\"auto\">\u202fe- RMB\u202f<\/span><\/b><span data-contrast=\"auto\">amid pandemic.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">They plan to implement pan-china in 2022. This is the first national digital currency operated by a major economy.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">SC Garg Committee<\/span><\/b><span data-contrast=\"auto\">\u202f\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">With the growth of digital currencies worldwide, various start-ups dealing with cryptocurrency have come up in India, such as\u202f<\/span><span data-contrast=\"auto\">Unocoin<\/span><span data-contrast=\"auto\">\u202fin 2013 and\u202f<\/span><span data-contrast=\"auto\">Zebpay<\/span><span data-contrast=\"auto\">\u202fin 2014. Further, their volatility is a cause of concern for India.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"11\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">So,\u202fthe government-appointed<\/span><b><span data-contrast=\"auto\">\u202fSC Garg Committee<\/span><\/b><span data-contrast=\"auto\">\u202ffor suggestions<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><a href=\"https:\/\/forumias.com\/blog\/cryptocurrency-panel-for-ban-on-private-digital-currencies-jail-time-of-up-to-10-years\/\"><b><span data-contrast=\"none\">Important recommendations of the panel:<\/span><\/b><\/a><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">The panel recommended\u00a0<\/span><b><span data-contrast=\"auto\">banning anybody who mines, hold, transact\u00a0<\/span><\/b><span data-contrast=\"auto\">or\u00a0<\/span><b><span data-contrast=\"auto\">deal\u00a0<\/span><\/b><span data-contrast=\"auto\">with cryptocurrencies in any form. Further, the panel recommend a jail term of one to 10 years for exchange or trading in digital currency.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The panel also proposes a\u00a0<\/span><b><span data-contrast=\"auto\">monetary penalty<\/span><\/b><span data-contrast=\"auto\">\u00a0of up to three times the loss caused to the exchequer or gains made by the cryptocurrency user whichever is higher.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The panel also recommended\u00a0<\/span><b><span data-contrast=\"auto\">completely banning all private cryptocurrencies<\/span><\/b><span data-contrast=\"auto\">\u00a0in India.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">However, the panel said that the government should keep an\u00a0<\/span><b><span data-contrast=\"auto\">open mind<\/span><\/b><span data-contrast=\"auto\">\u00a0on the potential issuance of cryptocurrencies by the Reserve Bank of India.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Further,\u00a0<\/span><span data-contrast=\"auto\">the committee also drafted a\u00a0<\/span><b><span data-contrast=\"auto\">bill Banning of Cryptocurrency &amp; Regulation of Official Digital Currency Bil<\/span><\/b><span data-contrast=\"auto\">l<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Advantages of rolling out National Digital Currency<\/span><\/b><b><span data-contrast=\"auto\">\u202f<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"17\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Improving efficiency in the financial system:\u202f<\/span><\/b><span data-contrast=\"auto\">As the currency in digital form, it can provide an efficient way for financial transaction. Further, digital currency also solves the challenges with Cash and coins. Cash and coins require expenses in storage and have inherent security risks like the\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/what-is-a-currency-chest\/\"><span data-contrast=\"none\">recent heist in the RBI currency chest<\/span><\/a><span data-contrast=\"auto\">.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"13\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Reducing systemic risk:\u202f<\/span><\/b><span data-contrast=\"auto\">\u202fThere are about 3,000 privately issued cryptocurrencies in the world. According to IMF, the key reason for considering national digital currency is to counter the growth of private forms of digital money. There is a possibility of these companies going bankrupt without any protection. This will create a loss for both investor and creditor. But the National Digital currency has government backing in case of any financial crisis.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"14\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Opportunity to private players:\u202f<\/span><\/b><span data-contrast=\"auto\">As the state-backed digital currency can provide investor\/consumer protection, the private can confidently invest in the associated infrastructure without any doubts over its regulation. This will improve the services to people.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"15\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Reduce volatility:\u202f<\/span><\/b><span data-contrast=\"auto\">The national digital currency will be regulated by the RBI. So, there will be less volatility compared to other digital currencies.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"16\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Helps in better macroeconomic management:<\/span><\/b><span data-contrast=\"auto\">\u202fCurrent RBI\u2019s work on\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/effectiveness-of-inflation-targeting-in-india-explained-pointwise\/\"><span data-contrast=\"none\">inflation targeting<\/span><\/a><span data-contrast=\"auto\">\u202fcan be extended to national digital currency also. Since India is planning to ban other cryptocurrencies, the RBI can better regulate digital and fiat currency.\u202f<\/span><span data-contrast=\"auto\">Thus<\/span><span data-contrast=\"auto\">\u202fupgrading to digital currency and balancing the macroeconomic stability.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note4\"><\/a>India on US\u2019s\u00a0\u2018Currency Watch list\u201d\u202f\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">What is the News?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The US treasury places India along with 10 other countries on its currency watch list<\/span><span data-contrast=\"auto\">\u00a0with potentially \u201cquestionable foreign exchange policies\u201d and \u201ccurrency manipulation\u201d.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is<\/span><\/b><b><span data-contrast=\"auto\">\u00a0meant by<\/span><\/b><b><span data-contrast=\"auto\">\u00a0Currency\u00a0<\/span><\/b><b><span data-contrast=\"auto\">Manipulato<\/span><\/b><b><span data-contrast=\"auto\">n<\/span><\/b><b><span data-contrast=\"auto\">?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Current Manipulators\u202f<\/span><\/b><span data-contrast=\"auto\">are countries engaging in \u201cunfair currency practices\u201d by deliberately devaluing their currency against the dollar.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The practice would mean that the country in question is\u00a0<\/span><b><span data-contrast=\"auto\">artificially lowering the value of its currency.<\/span><\/b><span data-contrast=\"auto\">\u00a0By that, it aims to gain an unfair advantage over others.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">This is because the devaluation would\u00a0<\/span><b><span data-contrast=\"auto\">boost exports<\/span><\/b><span data-contrast=\"auto\">\u00a0from that country. Thus, more exports will result in a reduction in trade deficits.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What are the c<\/span><\/b><b><span data-contrast=\"auto\">riteria<\/span><\/b><b><span data-contrast=\"auto\">\u00a0for being included in the watchlist?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">US places a country on Currency Watch List if it is meeting any two of the below three criteria. This includes:<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><b><span data-contrast=\"auto\">A \u201csignificant\u201d bilateral trade surplus with the US<\/span><\/b><span data-contrast=\"auto\">\u202f\u2014 at least USD 20 billion over a 12-month period.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><b><span data-contrast=\"auto\">Trade surplus\u00a0<\/span><\/b><span data-contrast=\"auto\">with a country means our exports to that country are more than our imports from that country<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"auto\">A current account surplus equivalent\u202f<\/span><\/b><span data-contrast=\"auto\">to at least 2% of gross domestic product (GDP) over a 12-month period.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">\u201cPersistent\u201d, one-sided intervention\u202f<\/span><\/b><span data-contrast=\"auto\">\u2014 when net purchases of foreign currency totals at least 2% of the country\u2019s GDP over a 12-month period. Further, it is conducted repeatedly, in at least six out of 12 months.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">Impact:<\/span><\/b><span data-contrast=\"auto\">\u202fThe designation of a country as a currency manipulator does not immediately attract any penalties. However, it\u00a0<\/span><b><span data-contrast=\"auto\">lowers the confidence about a country<\/span><\/b><span data-contrast=\"auto\">\u00a0in the global financial markets.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Why was India included in the Currency watch list?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"20\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">India has met two of the three criteria\u202f<\/span><\/b><span data-contrast=\"auto\">\u2014 the trade surplus criterion and the \u201cpersistent, one-sided intervention\u201d criterion.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note6\"><\/a>Regulations Review Authority 2.0\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">What is the News?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Recently, the\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/reserve-bank-of-india-rbi-governance\/\"><span data-contrast=\"none\">Reserve Bank of India<\/span><\/a><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RBI) announced the setting up of a new Regulations Review\u202fAuthority<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RRA 2.0)<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is a<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><b><span data-contrast=\"auto\">Regulations Review\u202fAuthority<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><b><span data-contrast=\"auto\">(RRA)<\/span><\/b><b><span data-contrast=\"auto\">?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"22\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">The RBI earlier set up the first RRA for a period of one year from April 1, 1999.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"22\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">This\u00a0<\/span><span data-contrast=\"auto\">authority\u00a0<\/span><span data-contrast=\"auto\">is for reviewing the regulations, circulars, reporting systems, based on the feedback from the public, banks and financial institutions.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is the\u00a0<\/span><\/b><b><span data-contrast=\"auto\">Regulations Review\u202fAuthority<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><b><span data-contrast=\"auto\">(RRA 2.0)<\/span><\/b><b><span data-contrast=\"auto\">?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"23\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">It\u202fwill streamline the regulatory instructions, reduce the compliance burden of the entities under regulations. The RRA 2.0 will achieve this by simplifying procedures and reduce reporting requirements wherever possible.<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"24\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Headed by:\u202f<\/span><\/b><span data-contrast=\"auto\">M\u00a0<\/span><span data-contrast=\"auto\">Rajeshwar<\/span><span data-contrast=\"auto\">\u00a0Rao, Deputy Governor of RBI\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"24\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Duration:\u202f<\/span><\/b><span data-contrast=\"auto\">O<\/span><span data-contrast=\"auto\">ne year from May 1.\u202f<\/span><span data-contrast=\"auto\">But,<\/span><span data-contrast=\"auto\">\u202fRBI can extend its tenure.<\/span><span data-contrast=\"auto\">\u202f<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><span style=\"font-size: 24pt;\"><b style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary);\"><a id=\"Note5\"><\/a>Currency Chest<\/b><span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/span><\/h3>\n<p><span data-contrast=\"none\">\u202f<\/span><b><span data-contrast=\"none\">Why in news?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">A Private Security Guard in Chandigarh has stolen Rs 4 crore from a Currency Chest of Axis Bank.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">What is a Currency Chest?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"none\">A currency\u00a0<\/span><\/b><b><span data-contrast=\"none\">chest\u202f<\/span><\/b><span data-contrast=\"none\">is a\u00a0<\/span><b><span data-contrast=\"none\">place<\/span><\/b><span data-contrast=\"none\">\u00a0where the Reserve Bank of India (RBI) stocks the money meant for banks and ATMs.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Place<\/span><\/b><span data-contrast=\"auto\">\u00a0=\u00a0<\/span><span data-contrast=\"auto\">branches of selected banks authorised by the RBI to stock rupee notes and coins.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">RBI offices in various cities receive the notes from note presses and coins from the mints. These are sent to the currency chests and small coin depots from where they are distributed to bank branches.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Administered\u202fby<\/span><\/b><span data-contrast=\"none\">: The RBI administers these chests.\u202f Even though these chests are usually situated on the premises of different banks.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Belongs\u202fto:<\/span><\/b><span data-contrast=\"none\">\u202fThe money present in the currency chest belongs to the RBI. But the money kept in the strong room outside the currency chests belongs to the bank.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Security arrangement for the chests<\/span><\/b><b><span data-contrast=\"none\">:\u00a0<\/span><\/b><span data-contrast=\"none\">The security of\u202f<\/span><a href=\"https:\/\/forumias.com\/blog\/reserve-bank-of-india-issues-norms-for-banks-to-set-up-currency-chests\/\"><span data-contrast=\"none\">currency chests<\/span><\/a><span data-contrast=\"none\">\u202fvaries from one bank to the other where the chests are situated. The Reserve Bank of India (RBI) reimburses the security expenses to the bank as per the set norms.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Recovery Procedure if stolen:\u202f<\/span><\/b><span data-contrast=\"none\">As per the set guidelines, the bank in which the currency chest is situated is liable to fulfil the loss of the currency chest.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note7\"><\/a>PCA framework\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Reserve Bank of\u202fIndia<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RBI) has taken out IDBI Bank from the prompt corrective\u202faction<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(PCA) framework<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">subject to certain conditions and continuous monitoring.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is Prompt corrective\u202faction<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><b><span data-contrast=\"auto\">(PCA) Framework?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">PCA<\/span><\/b><span data-contrast=\"auto\">\u202fis an RBI framework. Banks with weak financial metrics are put under the PCA framework by the Reserve Bank of\u202fIndia<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RBI).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Aim:\u202f<\/span><\/b><span data-contrast=\"auto\">It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Under the PCA regime, business restraints are imposed on struggling banks until they regain health<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">It is a structured early-intervention mechanism for banks that\u00a0<\/span><span data-contrast=\"auto\">have\u00a0<\/span><span data-contrast=\"auto\">become\u202f<\/span><b><span data-contrast=\"auto\">under-capitalized\u202f<\/span><\/b><span data-contrast=\"auto\">(<\/span><span data-contrast=\"auto\">lack of funds)\u00a0<\/span><span data-contrast=\"auto\">due to poor asset quality, or vulnerable due to loss of profitability.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">When was the PCA framework introduced?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"27\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">The RBI introduced the PCA framework in 2002.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">When does RBI invoke PCA?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The PCA framework is invoked when banks breach any of the<\/span><span data-contrast=\"auto\">\u00a0following<\/span><span data-contrast=\"auto\">\u00a0three key regulatory trigger points namely\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">Capital to risk-weighted assets ratio\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Net non-performing\u202fassets (NPA)\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Return on assets (<\/span><span data-contrast=\"auto\">RoA<\/span><span data-contrast=\"auto\">)<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">CAR<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">CAR\u00a0<\/span><span data-contrast=\"auto\">is a measure of how much capital a bank has available<\/span><span data-contrast=\"auto\">. It is a<\/span><span data-contrast=\"auto\">lso known as Capital to Risk (Weighted) Assets Ratio (CRAR)<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Regulatory authorities monitor this ratio to see if any banks are at risk of failure<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">A high CAR indicates that a\u00a0<\/span><span data-contrast=\"auto\">bank has an adequate amount of capital to deal with unexpected losses.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">A lower CAR means<\/span><span data-contrast=\"auto\">, a bank is at a higher risk of failure<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Net NPA<\/span><\/b><b><span data-contrast=\"auto\">\u00a0(NNPA)<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">NPA defined in the ARC document<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Net NPA = Sum total of all NPAs (Gross NPA) \u2013 Provisions<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Provisions = It is an amount that a bank sets aside from its profits or income in a particular quarter for non-performing assets<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">NNPA gives the exact value of NPA of a bank<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Return on Assets (<\/span><\/b><b><span data-contrast=\"auto\">RoA<\/span><\/b><b><span data-contrast=\"auto\">)<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">This indicates the profit being generated by a bank\u2019s assets<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"31\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">A n<\/span><span data-contrast=\"auto\">egative\u00a0<\/span><span data-contrast=\"auto\">RoA<\/span><span data-contrast=\"auto\">\u00a0implies the bank\u2019s assets are yielding negative return.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What are the restrictions on Banks when PCA is invoked?\u202f<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">There are two types of restrictions:<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Mandatory Restrictions:\u202f<\/span><\/b><span data-contrast=\"auto\">These include:<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Restrictions on Dividends\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Restrictions on Branch expansion\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Restrictions on Management compensation among others<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"31\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Discretionary Restrictions:\u202f<\/span><\/b><span data-contrast=\"auto\">These include:<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"32\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Curbs on lending and deposits.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"32\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">Recommending the bank owner to bring new management and board among others.\u202f<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note8\"><\/a>Domestic Systemically Important Banks (D-SIBs)\u202f\u202f<span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/strong><\/h3>\n<p><span data-contrast=\"auto\">\u202f<\/span><b><span data-contrast=\"none\">Why in News?<\/span><\/b><span data-contrast=\"none\">\u202f\u202f\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">Reserve Bank of\u202fIndia<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">(RBI) has retained SBI, ICICI and HDFC Bank in Domestic Systemically Important Banks (D-SIBs) list or banks that are considered as \u201cToo Big\u202f<\/span><span data-contrast=\"none\">To<\/span><span data-contrast=\"none\">\u202fFail\u201d.\u202f\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">What is a D-SIB?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"33\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"none\">D-SIB is a<\/span><\/b><span data-contrast=\"none\">\u202fbank that is Too Big\u202f<\/span><span data-contrast=\"none\">To<\/span><span data-contrast=\"none\">\u202fFail (TBTF). According to RBI, banks become D-SIBs due to their size, cross-jurisdictional activities, complexity and lack of substitute and interconnection.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"33\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">Banks, whose\u00a0<\/span><b><span data-contrast=\"none\">assets exceed 2% of GDP<\/span><\/b><span data-contrast=\"none\">\u00a0are considered part of this group.\u202f\u202f\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Which banks are considered D-SIBs?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">As of now, only three banks are there in this category, namely,<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">SBI<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">HDFC<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">ICICI<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"none\">What is the s<\/span><\/b><b><span data-contrast=\"none\">ignificance of D-SIBs<\/span><\/b><b><span data-contrast=\"none\">?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"33\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"none\">Failure of such banks will result into significant disruption to the essential banking services to banking system and the overall economy.\u202f\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"33\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><span data-contrast=\"none\">D-SIB tag also indicates that in case of distress, the government is expected to support these banks.\u202f\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"33\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"2\"><span data-contrast=\"none\">They are also subjected to higher levels of supervision so as to prevent disruption in financial services in the event of any failure.\u202f\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">What is the framework under which RBI deals with D-SIBs?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">D-SIB Framework:\u202f<\/span><\/b><span data-contrast=\"none\">The Reserve Bank had issued the framework for dealing with D-SIBs in 2014.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"none\">It requires the RBI to disclose the names of banks designated as D-SIBs starting from 2015.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">RBI places DSIBs in one of the 5 buckets based on their systemic importance\u202fscores<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">(SISs).\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">As part of this framework, these three banks have to maintain\u202f<\/span><b><span data-contrast=\"none\">additional Common Equity\u202fTier (CET) 1<\/span><\/b><span data-contrast=\"none\">\u202fcompared to other commercial banks.\u202f\u202f\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"none\">CET 1:<\/span><\/b><span data-contrast=\"none\">\u202fIt is a component of Tier 1 capital that includes ordinary shares and retained earnings<\/span><span data-contrast=\"none\">.\u202f\u202f<\/span><span data-contrast=\"none\">The implementation of CET1 started in 2014 as part of Basel III regulations\u00a0<\/span><span data-contrast=\"none\">regarding safeguarding the<\/span><span data-contrast=\"none\">\u00a0local economy from a financial crisis.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note9\"><\/a>Jayant Kumar Dash committee\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Reserve Bank of\u202fIndia<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RBI) has constituted a working group on\u00a0<\/span><b><span data-contrast=\"auto\">digital lending<\/span><\/b><span data-contrast=\"auto\">\u00a0\u2014 including online platforms and mobile apps.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Objective:\u202f<\/span><\/b><span data-contrast=\"auto\">The working group will study digital lending activities in the regulated and unregulated financial sector so that an appropriate regulatory approach can be put in place.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Composition:\u202f<\/span><\/b><span data-contrast=\"auto\">The working group comprises six members\u2013four will be from within\u00a0<\/span><b><span data-contrast=\"auto\">the RBI\u00a0<\/span><\/b><span data-contrast=\"auto\">and the remaining will be\u00a0<\/span><b><span data-contrast=\"auto\">external<\/span><\/b><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Jayant Kumar Dash<\/span><\/b><span data-contrast=\"auto\">, will head the group\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note10\"><\/a>Payment Infrastructure Development Fund\u202f\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Reserve Bank of\u202fIndia<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RBI) has announced operational guidelines for the Payments Infrastructure Development Fund (PIDF) scheme.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"37\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">A\u00a0<\/span><span data-contrast=\"auto\">High-Level Committee on Deepening of Digital Payments under the Chairmanship of Nandan Nilekani<\/span><span data-contrast=\"auto\">\u00a0had recommended creation of this fund.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"37\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Initially called the Acceptance Development Fund (ADF), the initiative was announced on 4 October 2019<\/span><\/li>\n<\/ul>\n<p><b style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\"><span data-contrast=\"auto\">What is PIDF scheme?<\/span><\/b><span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">This scheme is<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">aimed at encouraging deployment of more digital payment\u00a0<\/span><span data-contrast=\"auto\">acceptance\u00a0<\/span><span data-contrast=\"auto\">infrastructure in tier-3 to tier-6\u00a0<\/span><span data-contrast=\"auto\">centres<\/span><span data-contrast=\"auto\">\u00a0with a primary focus on North Eastern states<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"auto\">Purpose<\/span><\/b><span data-contrast=\"auto\">:\u00a0<\/span><span data-contrast=\"auto\">PIDF<\/span><span data-contrast=\"auto\">\u00a0will be used to subsidi<\/span><span data-contrast=\"auto\">z<\/span><span data-contrast=\"auto\">e\u00a0<\/span><b><span data-contrast=\"auto\">bank<\/span><\/b><span data-contrast=\"auto\">\u00a0and\u00a0<\/span><b><span data-contrast=\"auto\">non-banks<\/span><\/b><span data-contrast=\"auto\">\u00a0for payment infrastructure deployment and would be\u00a0<\/span><span data-contrast=\"auto\">based<\/span><span data-contrast=\"auto\">\u00a0upon achieving specific targets.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Card issuing banks and Card networks (like Visa) shall also contribute to the fund per transaction<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">It has a corpus of Rs. 345\u00a0<\/span><span data-contrast=\"auto\">C<\/span><span data-contrast=\"auto\">rore with Rs. 250\u00a0<\/span><span data-contrast=\"auto\">C<\/span><span data-contrast=\"auto\">rore contributed by the RBI and Rs. 95\u00a0<\/span><span data-contrast=\"auto\">C<\/span><span data-contrast=\"auto\">rore by the major authori<\/span><span data-contrast=\"auto\">z<\/span><span data-contrast=\"auto\">ed card networks in the country<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"auto\">The fund will also focus on those merchants who are yet to be\u202f<\/span><span data-contrast=\"auto\">terminalized\u00a0<\/span><span data-contrast=\"auto\">(merchants who do not have any payment acceptance device).<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Merchants engaged in services such as transport and hospitality, government payments, public distribution\u202fsystem<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(PDS) shops, healthcare may be included especially in targeted geographies.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Accountability<\/span><\/b><span data-contrast=\"auto\">: Acquirers of the subsidy shall submit quarterly reports on the achievement of targets to the RBI.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Duration of Fund:\u202f<\/span><\/b><span data-contrast=\"auto\">The fund will be operational for three years effective from 1st January, 2021 and may be extended for two more years.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">An\u00a0<\/span><b><span data-contrast=\"auto\">Advisory Council (AC)<\/span><\/b><span data-contrast=\"auto\">\u00a0under the chairmanship of RBI deputy governor BP Kanungo has been constituted for managing the PIDF<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Implementation<\/span><\/b><span data-contrast=\"auto\">\u00a0of targets under PIDF shall be\u00a0<\/span><b><span data-contrast=\"auto\">monitored by RBI<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><span data-contrast=\"auto\">with assistance from card networks, the Indian Banks\u2019 Association, and the Payments Council of India.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is meant by payment acceptance infrastructure?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Payment acceptance infrastructure includes physical\u00a0<\/span><span data-contrast=\"auto\">PoS<\/span><span data-contrast=\"auto\">,\u00a0<\/span><span data-contrast=\"auto\">mPoS<\/span><span data-contrast=\"auto\">\u00a0(mobile\u00a0<\/span><span data-contrast=\"auto\">PoS<\/span><span data-contrast=\"auto\">), GPRS (General Packet Radio Service), PSTN (Public Switched Telephone Network), QR code-based payments, among others.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">How are cities classified into different tiers?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Cities are divided into various tiers as per their population, as follows<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\"> <img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-108487 aligncenter\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/05\/Capturejsfjw.png?resize=671%2C275&#038;ssl=1\" alt=\"\" width=\"671\" height=\"275\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/05\/Capturejsfjw.png?resize=300%2C123&amp;ssl=1 300w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/05\/Capturejsfjw.png?w=555&amp;ssl=1 555w\" sizes=\"auto, (max-width: 671px) 100vw, 671px\" \/><\/span><\/p>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note11\"><\/a>Digital payments Index\u202f\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">News:\u202f<\/span><\/b><span data-contrast=\"auto\">Reserve Bank of\u202fIndia<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(RBI) has launched a composite Digital Payments\u202fIndex<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(DPI)<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is the Digital Payments Index?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Index, comprising of five broad parameters, will measure the extent of digitization across the country<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"38\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Parameters:<\/span><\/b><span data-contrast=\"auto\">\u202fThe index comprises five broad parameters with varying weights to measure the penetration of digital\u202fpayments.<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">The\u202ffive key parameters include:\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ol>\n<li style=\"list-style-type: none;\">\n<ol>\n<li><span data-contrast=\"auto\">Payment enablers (25%).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Payment infrastructure\u2014demand-side factors (10%).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Payment infrastructure\u2014supply-side factors (15%).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Payment performance (45%).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Consumer centricity (5%).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"38\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">These factors include multiple sub-parameters that would help the regulator conduct its study into the digital payment ecosystem.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\"> <img data-recalc-dims=\"1\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-108488 aligncenter\" src=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/05\/Capturekasjda.png?resize=669%2C386&#038;ssl=1\" alt=\"\" width=\"669\" height=\"386\" srcset=\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/05\/Capturekasjda.png?resize=300%2C173&amp;ssl=1 300w, https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2021\/05\/Capturekasjda.png?w=608&amp;ssl=1 608w\" sizes=\"auto, (max-width: 669px) 100vw, 669px\" \/><\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"38\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Duration of Releasing Index:\u202f<\/span><\/b><span data-contrast=\"auto\">The index shall be published on RBI\u2019s website on a\u00a0<\/span><b><span data-contrast=\"auto\">semi-annual basis<\/span><\/b><span data-contrast=\"auto\">\u00a0from March 2021 onwards with a\u00a0<\/span><b><span data-contrast=\"auto\">lag of 4 months<\/span><\/b><span data-contrast=\"auto\">.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"38\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Base Year<\/span><\/b><b><span data-contrast=\"auto\">\u00a0=\u00a0<\/span><\/b><span data-contrast=\"auto\">March 2018<\/span><span data-contrast=\"auto\">\u00a0i.e.,\u00a0<\/span><span data-contrast=\"auto\">DPI score for March 2018 is set at 100.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"38\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"2\"><span data-contrast=\"auto\">At\u202fa base of 100 for March 2018, RBI has measured that the index rose to 153.47 and 207.84 in 2019 and 2020 respectively<\/span><span data-contrast=\"auto\">\u00a0indicating appreciable growth.<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\"><a id=\"Note12\"><\/a>\u00a0<\/span><strong>Positive Pay Mechanism\u00a0\u202f\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"none\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">From January 1, 2021, the Reserve Bank of India (RBI) introduce<\/span><span data-contrast=\"none\">d<\/span><span data-contrast=\"none\">\u00a0the \u2018Positive Pay System\u2019 for cheque transactions above Rs 50,000 in a bid to enhance safety and eliminate frauds.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">What is Positive Pay Mechanism?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">It involves a process of reconfirming key details of large-value cheques.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"none\">Process:\u202f<\/span><\/b><span data-contrast=\"none\">Under this, the issuer of the cheque submits electronically through channels like SMS, mobile app and Internet banking, certain minimum details of cheque to the drawee bank<\/span><span data-contrast=\"none\">,\u00a0<\/span><span data-contrast=\"none\">details of which are cross-checked with the presented cheque by Cheque Truncation\u202fSystem<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">(CTS).<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Any\u202fdiscrepancy is flagged by CTS to the drawee bank and presenting bank who then take redressal measures.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Cheque Limits:\u202f<\/span><\/b><span data-contrast=\"none\">Banks will enable the new system for all account holders issuing cheques for amounts of Rs 50,000 and\u202fabove.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">It\u202fis\u00a0<\/span><b><span data-contrast=\"none\">mandatory<\/span><\/b><span data-contrast=\"none\">\u00a0in case of cheques for amounts of Rs 5,00,000 and above.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"none\">Developed by:\u202f<\/span><\/b><b><span data-contrast=\"none\">National Payments Corporation of India (NPCI)<\/span><\/b><span data-contrast=\"none\">\u00a0will develop the facility of Positive Pay in CTS and make it available to participant banks.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">NPCI<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">It is a \u201c<\/span><b><span data-contrast=\"auto\">Not for Profit<\/span><\/b><span data-contrast=\"auto\">\u201d umbrella organization for operating retail payments and settlement systems in India<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">NPCI\u00a0<\/span><span data-contrast=\"auto\">is an initiative of<\/span><b><span data-contrast=\"auto\">\u00a0RBI and Indian Banks\u2019 Association (IBA)<\/span><\/b><span data-contrast=\"auto\">\u00a0under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment &amp; Settlement Infrastructure in India.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">It aims in bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">The\u00a0<\/span><b><span data-contrast=\"auto\">ten core promoter banks<\/span><\/b><span data-contrast=\"auto\">\u00a0are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank N. A. and HSBC.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">RuPay<\/span><\/b><span data-contrast=\"auto\">, an indigenous payment card of India\u00a0<\/span><b><span data-contrast=\"auto\">launched by NPCI<\/span><\/b><span data-contrast=\"auto\">\u00a0for all banks of India.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Developed by National Payments Corporation of India,\u00a0<\/span><b><span data-contrast=\"auto\">Unified Payments Interface<\/span><\/b><b><span data-contrast=\"auto\">\u00a0(UPI)<\/span><\/b><span data-contrast=\"auto\">\u00a0is an instant real-time payment system, facilitating inter-bank transactions.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><b><span data-contrast=\"auto\">UPI<\/span><\/b><span data-contrast=\"auto\">: It<\/span><span data-contrast=\"auto\">\u00a0is a payment system that allows money transfer between any two bank accounts by using a smartphone.<\/span><span data-contrast=\"auto\">\u00a0A customer is able\u00a0<\/span><span data-contrast=\"auto\">to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking\/wallet passwords.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"41\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"2\"><span data-contrast=\"auto\">It also caters to the \u201c<\/span><b><span data-contrast=\"auto\">Peer to Peer<\/span><\/b><span data-contrast=\"auto\">\u201d collect request which can be scheduled and paid as per requirement and convenience<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note13\"><\/a>DakPay\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Department of Posts (<\/span><span data-contrast=\"auto\">DoP<\/span><span data-contrast=\"auto\">) and India Post Payments Bank<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(IPPB) unveiled a new digital payment app \u2018<\/span><span data-contrast=\"auto\">DakPay<\/span><span data-contrast=\"auto\">\u2019<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is\u00a0<\/span><\/b><b><span data-contrast=\"auto\">Dakpay<\/span><\/b><b><span data-contrast=\"auto\">?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"42\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">It is a digital payment app designed to<\/span><span data-contrast=\"auto\">\u00a0facilitate easy digital transactions and other banking services through the trusted Postal (\u2018Dak\u2019) network across the nation to cater to the financial needs(\u2018Pay\u2019) of various sections of the society.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"42\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Significance<\/span><\/b><span data-contrast=\"auto\">: The App is launched as part of its ongoing efforts to provide Digital Financial inclusion at the last mile across India.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">About I<\/span><\/b><b><span data-contrast=\"auto\">ndia Post Payment Bank<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">It has been established in 2018<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">under the Department of Posts, Ministry of Communication with\u00a0<\/span><b><span data-contrast=\"auto\">100% equity<\/span><\/b><span data-contrast=\"auto\">\u00a0owned by Government of India.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Mandate<\/span><\/b><span data-contrast=\"auto\">: To remove barriers for the unbanked &amp; underbanked and reach the last mile leveraging the Postal network.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note14\"><\/a>Better than cash alliance\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">India and UN-Based Better Than Cash Alliance organized a joint Peer learning exchange on fintech solutions for responsible digital payments at the last mile.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is Better than Cash Alliance?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">It was created in 2012 as a partnership of governments, companies and international organizations\u00a0<\/span><span data-contrast=\"auto\">to accelerate<\/span><span data-contrast=\"auto\">\u00a0the transition from cash to<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">digital payments<\/span><span data-contrast=\"auto\">\u00a0i<\/span><span data-contrast=\"auto\">n order to reduce poverty and drive inclusive growth.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Objectives:\u202f<\/span><\/b><span data-contrast=\"auto\">The Alliance Secretariat works with members on their journey to digitize payments by:\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Providing\u00a0<\/span><b><span data-contrast=\"auto\">advisory services<\/span><\/b><span data-contrast=\"auto\">\u00a0based on their priorities.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Sharing action-oriented research and fostering peer learning on responsible practices.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Conducting advocacy at national, regional and global level.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"auto\">It\u00a0<\/span><span data-contrast=\"auto\">is an implementing partner for the G20 Global Partnership for Financial Inclusion.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Launched by:\u202f<\/span><\/b><span data-contrast=\"auto\">United Nations Capital Development Fund, the United States Agency for International Development, the Bill &amp; Melinda Gates Foundation, Citigroup, the Ford Foundation, the Omidyar Network and Visa\u202fInc.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Members:\u202f<\/span><\/b><span data-contrast=\"auto\">The Alliance has 75 members which are committed to digitizing payments.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">India became a member in 2015<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note15\"><\/a>Priority Sector Lending (PSL)\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Reserve Bank of India (RBI)\u00a0<\/span><span data-contrast=\"auto\">recently\u00a0<\/span><span data-contrast=\"auto\">released revised priority sector lending (PSL) guidelines to augment funding for COVID-19 impacted companies.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">The PSL guidelines were last reviewed for commercial banks in April 2015 and for Urban Co-operative Banks (UCBs) in May 2018.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><i><span data-contrast=\"auto\">Aim:<\/span><\/i><\/b><span data-contrast=\"auto\">\u202fTo align Priority Sector lending with emerging national priorities and bring sharper focus on inclusive development<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Key Revised PSL Guidelines<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Bank finance for start-ups (up to \u20b950 crore), loans to farmers for installation of solar power plants for\u202f<\/span><span data-contrast=\"auto\">solarisation<\/span><span data-contrast=\"auto\">\u202fof grid connected agriculture pumps and loans for setting up Compressed\u202f<\/span><span data-contrast=\"auto\">BioGas<\/span><span data-contrast=\"auto\">\u202f(CBG) plants have been included as fresh categories eligible for finance under the priority sector.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The targets prescribed for \u201csmall and marginal farmers\u201d and \u201cweaker sections\u201d are being increased in a phased manner.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The loan limits for renewable energy have been doubled and for improvement of health infrastructure, credit limit for health infrastructure (including those under \u2018Ayushman Bharat\u2019) has been doubled.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\"><span data-contrast=\"auto\">What is meant by Priority Sector?<\/span><\/b><span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Priority Sector means\u00a0<\/span><span data-contrast=\"auto\">a<\/span><span data-contrast=\"auto\">\u00a0secto<\/span><span data-contrast=\"auto\">r<\/span><span data-contrast=\"auto\">\u00a0which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and\u00a0<\/span><span data-contrast=\"auto\">is<\/span><span data-contrast=\"auto\">\u00a0to be given priority over other sectors<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What are the sectors covered under PSL?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The categories under priority sector are as follows:<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><span data-contrast=\"auto\">Agriculture<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Micro, Small and Medium Enterprises<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Export Credit<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Education<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Housing<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Social Infrastructure<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Renewable Energy<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Others<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">What are RBI guidelines for PSL?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"48\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">All<\/span><b><span data-contrast=\"auto\">\u202fscheduled commercial banks<\/span><\/b><span data-contrast=\"auto\">\u202fand\u202f<\/span><b><span data-contrast=\"auto\">foreign banks<\/span><\/b><span data-contrast=\"auto\">\u202f(with a sizable presence in India) are mandated to set aside\u202f<\/span><b><span data-contrast=\"auto\">40% of<\/span><\/b><span data-contrast=\"auto\">\u202ftheir\u202f<\/span><b><span data-contrast=\"auto\">Adjusted Net Bank Credit (ANDC)<\/span><\/b><span data-contrast=\"auto\">\u202ffor lending to these sectors.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"48\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Regional rural banks,<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><b><span data-contrast=\"auto\">co-operative banks<\/span><\/b><span data-contrast=\"auto\">\u202fand\u202f<\/span><b><span data-contrast=\"auto\">small finance banks<\/span><\/b><span data-contrast=\"auto\">\u202fhave to allocate\u202f<\/span><b><span data-contrast=\"auto\">75% of ANDC<\/span><\/b><span data-contrast=\"auto\">\u202fto PSL.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note16\"><\/a>Report on Trend and Progress of Banking in India 2019-20\u202f\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Reserve Bank of India has released the Report on Trend and Progress of Banking in India 2019-20.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">About the report<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">The report is a\u00a0<\/span><b><span data-contrast=\"auto\">statutory publication<\/span><\/b><span data-contrast=\"auto\">\u00a0in compliance with Section 36 (2) of the Banking Regulation Act, 1949.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"49\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Purpose:\u202f<\/span><\/b><span data-contrast=\"auto\">It presents the performance of the banking sector, including co-operative banks, and non-banking financial institutions during 2019-20 and 2020-21 so far.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Key Takeaways<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Decline in NPAs:\u202f<\/span><\/b><span data-contrast=\"auto\">Scheduled Commercial\u202fBanks<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(SCBs) gross non-performing assets (GNPA) ratio declined from 9.1% at end-March 2019 to 8.2% at end-March 2020 and further to 7.5% at end-September 2020.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><b><span data-contrast=\"auto\">Scheduled Commercial\u202fBank<\/span><\/b><span data-contrast=\"auto\">: Any bank\u00a0<\/span><span data-contrast=\"auto\">included in the 2nd\u202f<\/span><b><span data-contrast=\"auto\">Schedule<\/span><\/b><span data-contrast=\"auto\">\u202fof the RBI Act 193<\/span><span data-contrast=\"auto\">4 is termed as a Scheduled Commercial Bank (SCB)<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Strengthened CRAR Ratio:\u202f<\/span><\/b><span data-contrast=\"auto\">Capital to risk weighted assets (CRAR) ratio of SCBs strengthened partly aided by\u202frecapitali<\/span><span data-contrast=\"auto\">z<\/span><span data-contrast=\"auto\">ation\u202fof public sector banks and capital raising from the market by both public and private sector banks.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"2\"><b><span data-contrast=\"auto\">Bank recapitalization:<\/span><\/b><span data-contrast=\"auto\">\u00a0It is a method via which government infuses capital into banks so that they are able to maintain capital adequacy norms<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"2\"><span data-contrast=\"auto\">In India,\u00a0<\/span><b><span data-contrast=\"auto\">scheduled commercial banks<\/span><\/b><span data-contrast=\"auto\">\u00a0are required to maintain a\u00a0<\/span><span data-contrast=\"auto\">Capital Adequacy Ratio (<\/span><span data-contrast=\"auto\">CAR<\/span><span data-contrast=\"auto\">)<\/span><span data-contrast=\"auto\">\u00a0of\u00a0<\/span><b><span data-contrast=\"auto\">9%<\/span><\/b><span data-contrast=\"auto\">\u00a0while Indian\u00a0<\/span><b><span data-contrast=\"auto\">public sector banks<\/span><\/b><span data-contrast=\"auto\">\u00a0are emphasized to maintain a CAR of\u00a0<\/span><b><span data-contrast=\"auto\">12%<\/span><\/b><span data-contrast=\"auto\">\u00a0as per RBI norms.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"3\"><span data-contrast=\"auto\">The Basel III norms\u00a0<\/span><span data-contrast=\"auto\">recommended\u00a0<\/span><span data-contrast=\"auto\">a capital to risk weighted assets of\u00a0<\/span><b><span data-contrast=\"auto\">8%<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><span data-contrast=\"auto\">Bank recapitalization can be done via various methods by the government. One of such methods is\u00a0<\/span><b><span data-contrast=\"auto\">bank recapitalization bonds<\/span><\/b><span data-contrast=\"auto\">\u00a0like, in 2017 government announced massive 1 lakh 35 crore bank recapitalization bonds.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><span data-contrast=\"auto\">These bonds are issued by the government and bought by the banks.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The money that government receives from the banks is put back in the bank.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">This money strengthens the balance sheet of a bank since the money received from the government is categorized as an investment and not a liability because a loan given to the government can never be a bad loan. Government will always pay it back.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">This innovative method ensures that no money is actually taken out from the state coffers thereby no affect on fiscal deficit in the short term<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Government has to\u00a0<\/span><span data-contrast=\"auto\">pay interest and the face value of the bonds<\/span><span data-contrast=\"auto\">\u00a0but it will happen slowly over the years and during that time banks can improve their credit situation.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Policy Measures:\u202f<\/span><\/b><span data-contrast=\"auto\">The Reserve Bank also undertook an array of policy measures to mitigate the effects of COVID-19; its regulatory ambit was reinforced by legislative amendments giving it greater powers over co-operative banks, non-banking financial companies (NBFCs), and housing finance companies (HFCs)<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note17\"><\/a>Non-Banking Financial Company (NBFC)\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The RBI has planned an important change in its regulatory approach towards India\u2019s non-banking financial companies (NBFCs). It plans to monitor larger NBFCs almost as closely as it monitors banks.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">What is RBI\u2019s proposed regulatory structure?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The RBI has introduced a\u00a0<\/span><b><span data-contrast=\"auto\">four-tiered regulatory structure<\/span><\/b><span data-contrast=\"auto\">. By this, RBI is striking a balance between the need for low regulations and less systemic risks in the sector.\u202f\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ol>\n<li><b><span data-contrast=\"auto\">Base layer:\u202f<\/span><\/b><span data-contrast=\"auto\">This layer will include the large number of small NBFCs in the country and will subject to the\u00a0<\/span><b><span data-contrast=\"auto\">least regulation<\/span><\/b><span data-contrast=\"auto\">. It is because they have a limited impact on systemic stability. The proposals for this set of NBFCs include:\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Entry-level net owned funds required to be raised\u202f<\/span><b><span data-contrast=\"auto\">to Rs 20 crore from Rs 2 crore.<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">NPA classification norm of\u202f<\/span><b><span data-contrast=\"auto\">180 days will be harmonized to 90 days<\/span><\/b><span data-contrast=\"auto\">.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Disclosure requirements will be widened by including disclosures on types of exposure, related party transactions, customer complaints.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"auto\">Middle Layer:\u202f<\/span><\/b><span data-contrast=\"auto\">It will consist of NBFCs that currently fall in the \u2018systemically important\u2019 category along with deposit-taking non-bank lenders.\u202f<\/span><b><span data-contrast=\"auto\">Housing Finance Companies, Infrastructure Finance Companies, Infrastructure Debt Funds, Core Investment Companies<\/span><\/b><span data-contrast=\"auto\">. The proposals for this set of NBFCs include:\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">It will be subjected to tighter corporate governance norms.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">No changes proposed in the\u202f<\/span><b><span data-contrast=\"auto\">capital-to-risk-assets ratio (CRAR)<\/span><\/b><span data-contrast=\"auto\">\u202fof 15% with a minimum Tier-I ratio of 10%.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">These NBFCs cannot provide loans to companies for buy-back of securities.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">NBFCs with 10 or more branches will be required to adopt core banking solutions.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"auto\">Upper Layer:\u202f<\/span><\/b><span data-contrast=\"auto\">It will include about 25-30 NBFCs and will be subjected to bank-like regulation.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">It will have to implement\u202f<\/span><b><span data-contrast=\"auto\">differential standard asset provisioning<\/span><\/b><span data-contrast=\"auto\">\u202fand also the large exposure framework as applicable to banks.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">The concept of\u202f<\/span><b><span data-contrast=\"auto\">Core Equity Tier-1<\/span><\/b><span data-contrast=\"auto\">\u202fwill be introduced for this category and is proposed to be set at 9%.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">They will also be subject to a\u202f<\/span><b><span data-contrast=\"auto\">mandatory listing requirement<\/span><\/b><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"auto\">Top Layer:<\/span><\/b><span data-contrast=\"auto\">\u202fThis layer will be empty for now and will be populated with NBFCs, where the RBI may see an elevated systemic risk.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ol>\n<p><b><span data-contrast=\"auto\">What is a NBFC?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">A Non-Banking Financial Company (NBFC) is a\u00a0<\/span><b><span data-contrast=\"auto\">company\u00a0<\/span><\/b><span data-contrast=\"auto\">registered under the\u00a0<\/span><b><span data-contrast=\"auto\">Companies Act, 1956<\/span><\/b><span data-contrast=\"auto\">\u00a0engaged in the business of\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"auto\">loans and advances<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[1440,720],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><span data-contrast=\"auto\">acquisition of shares\/stocks\/bonds\/debentures\/securities issued by Government or local authority or other marketable securities of a like nature<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[1440,720],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"2\"><span data-contrast=\"auto\">leasing, hire-purchase, insurance business, chit business\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:720,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[1440,720],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">NBFC<\/span><\/b><b><span data-contrast=\"auto\">\u00a0does not include\u00a0<\/span><\/b><span data-contrast=\"auto\">any institution whose principal business is that of<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">agriculture activity<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">industrial activit<\/span><span data-contrast=\"auto\">y<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">purchase or sale of any goods (other than securities) or providing any services and sale\/purchase\/construction of immovable property.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Residuary non-banking company<\/span><\/b><span data-contrast=\"auto\">:\u00a0<\/span><span data-contrast=\"auto\">A\u00a0<\/span><b><span data-contrast=\"auto\">non-banking institution<\/span><\/b><span data-contrast=\"auto\">\u00a0which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum\u00a0<\/span><span data-contrast=\"auto\">or in installments by way of contributions or in any other manner, is also a non-banking financial company<\/span><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">When a company is registered as NBFC by RBI<\/span><\/b><span data-contrast=\"auto\">?<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">A company which fulfils these criteria will be registered as NBFC by RBI.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">a company\u2019s financial assets constitute more than 50<\/span><span data-contrast=\"auto\">%\u00a0<\/span><span data-contrast=\"auto\">of the total assets<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">income from financial assets constitute more than 50<\/span><span data-contrast=\"auto\">%<\/span><span data-contrast=\"auto\">\u00a0of the gross income<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is difference between banks &amp; NBFCs<\/span><\/b><b><span data-contrast=\"auto\">?<\/span><\/b><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">NBFCs lend and make investments and hence their activities are\u00a0<\/span><span data-contrast=\"auto\">similar\u00a0<\/span><span data-contrast=\"auto\">to that of bank<\/span><span data-contrast=\"auto\">s with few differences,<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">NBFC cannot accept demand deposits<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation<\/span><span data-contrast=\"auto\">\u00a0(DICGC)<\/span><span data-contrast=\"auto\">\u00a0is not available to depositors of NBFCs, unlike in case of banks.<\/span><\/li>\n<\/ul>\n<p><b style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\"><span data-contrast=\"auto\">Should every NBFC be registered with RBI?<\/span><\/b><span style=\"background-color: var(--global--color-background); color: var(--global--color-primary); font-family: var(--global--font-secondary); font-size: var(--global--font-size-base);\" data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">As per<\/span><span data-contrast=\"auto\">\u00a0RBI Act, 1934, no\u00a0<\/span><span data-contrast=\"auto\">NBFC can operate without being registered with RBI but there are certain exceptions<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Venture Capital Fund\/Merchant Banking companies\/Stock broking companies registered with\u00a0<\/span><b><span data-contrast=\"auto\">SEBI<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Insurance Company holding a valid Certificate of Registration issued by\u00a0<\/span><b><span data-contrast=\"auto\">IRDA<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Nidhi companies<\/span><\/b><span data-contrast=\"auto\">\u00a0as notified under Companies Act, 1956<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Chit companies<\/span><\/b><span data-contrast=\"auto\">\u00a0as defined in the Chit Funds Act, 198<\/span><span data-contrast=\"auto\">2<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Housing Finance Companies<\/span><\/b><span data-contrast=\"auto\">\u00a0regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What are systemically important NBFCs?\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">NBFCs whose asset size is<\/span><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><b><span data-contrast=\"auto\">&gt;=<\/span><\/b><b><span data-contrast=\"auto\">\u00a0\u20b9 500\u00a0<\/span><\/b><b><span data-contrast=\"auto\">C<\/span><\/b><b><span data-contrast=\"auto\">r<\/span><\/b><span data-contrast=\"auto\">\u00a0or<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">as per last audited balance sheet are considered as systemically important NBFCs.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"50\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">The rationale for such classification is that the activities of such NBFCs will have a<\/span><span data-contrast=\"auto\">n impact\u00a0<\/span><span data-contrast=\"auto\">on the financial stability of the overall economy.<\/span><\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note18\"><\/a>Depreciation of rupee\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Recently, the rupee fell sharply by 105 paise. It is considered as one of the biggest single-session falls in 20 months.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The issue of concern here is:\u00a0<\/span><b><span data-contrast=\"auto\">Rupee Depreciation &amp; its management<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">What are the reasons for rupee depreciation?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">A combination of f<\/span><span data-contrast=\"none\">ollowing factors<\/span><span data-contrast=\"none\">,<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">C<\/span><span data-contrast=\"none\">oncerns over Covid-19 has created\u202f<\/span><b><span data-contrast=\"none\">uncertainty in the market.<\/span><\/b><span data-contrast=\"none\">\u202fThis affected the\u202fFDI<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">(Foreign Direct Investment) and\u202fFII<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">(Foreign Institutional Investment).\u202fSo<\/span><span data-contrast=\"none\">,<\/span><span data-contrast=\"none\">\u202fthe rupee weakens further.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[0]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">RBI\u2019s\u202f<\/span><b><span data-contrast=\"none\">Government Securities Acquisition\u202fProgramme<\/span><\/b><span data-contrast=\"none\">\u202f(G-SAP) that seeks to buy bonds worth Rs 1 lakh crore might be one of the reasons. It is a\u202f<\/span><b><span data-contrast=\"none\">quantitative easing policy<\/span><\/b><span data-contrast=\"none\">\u202ffollowed by RBI.\u00a0<\/span><span data-contrast=\"none\">When bonds are bought, money is infused into the economy leading to increased supply and anything under increased supply will fall in price.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[0]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"none\">S<\/span><\/b><b><span data-contrast=\"none\">trengthening of the dollar against the euro<\/span><\/b><span data-contrast=\"none\">\u202falso contributed to rupee depreciation.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[0]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">RBI\u2019s\u202f<\/span><b><span data-contrast=\"none\">status-quo on policy rates<\/span><\/b><span data-contrast=\"none\">\u202fis not helping to increase demand in the local economy. This will further impact the rupee.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"none\">Further, the value of the rupee will also be impacted by the<\/span><b><span data-contrast=\"none\">\u202fhigh bond yields in the US\u202f<\/span><\/b><span data-contrast=\"none\">and the inflow of dollars into the US.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[0]}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">What are the impacts of Rupee depreciation?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">It has both positive and negative impacts. For instance,<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Positive impact<\/span><\/b><b><span data-contrast=\"none\">:<\/span><\/b><span data-contrast=\"none\">\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"70\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Exports<\/span><\/b><b><span data-contrast=\"none\">\u00a0will be more competitive<\/span><\/b><span data-contrast=\"none\">: This is a prime and major benefit of currency depreciation. Goods exported by India shall be cheaper now. This can create increased demand for exports leading to reduction in trade deficits.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"69\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Beneficial to\u00a0<\/span><\/b><b><span data-contrast=\"none\">Non-Resident Indians<\/span><\/b><span data-contrast=\"none\">:\u00a0<\/span><span data-contrast=\"none\">\u00a0As they are sending money back\u202f<\/span><span data-contrast=\"none\">home<\/span><span data-contrast=\"none\">\u202fthey will get more rupees per dollar.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Negative impact<\/span><\/b><b><span data-contrast=\"none\">:\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"none\">Imports will be costly to buy like crude oil. This can lead to increased current account deficit<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">A depreciating rupee increases the cost of crude import. A rise in cost of crude raises fuel prices and inflation. Crude import accounts for almost 20% of India\u2019s imports.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><span data-contrast=\"none\">Cheaper\u00a0<\/span><span data-contrast=\"none\">ex<\/span><span data-contrast=\"none\">ports can also lead to their increased demand leading to\u00a0<\/span><b><span data-contrast=\"none\">demand-pull inflation<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">E<\/span><span data-contrast=\"none\">ducation cost in abroad<\/span><span data-contrast=\"none\">\u00a0will be higher. F<\/span><span data-contrast=\"none\">or example,<\/span><span data-contrast=\"none\">\u202f<\/span><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">H<\/span><span data-contrast=\"none\">igher education in the US might cost an annual fee of US$ 50,000. A 5% depreciation in the rupee (For example, from 72.5 to 76.125) will raise the cost for one year from Rs 36.26 lakh to Rs 38.06 lakh (Net loss Rs 1.8 lakh)<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">How to eliminate the Rupee depreciation and currency risk?<\/span><\/b><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"none\">There are multiple options to cover the currency volatility risk. They are,<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><b><span data-contrast=\"none\">Investing in international funds<\/span><\/b><span data-contrast=\"none\">\u202fthat invest in global markets through fund of funds. While the Indian investors invest in rupees, in the fund of funds the money gets invested in dollars at the current exchange rate. In case of rupee depreciation, this fund will fully protect against the currency depreciation risk.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">In this case, if a person planning for a quick investment (4-5 months) in foreign currency, there are two options to eliminate currency risk.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">One,\u202f<\/span><b><span data-contrast=\"none\">creating a deposit account in the US<\/span><\/b><span data-contrast=\"none\">\u202fand transferring the fund abroad.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">Two,\u202f<\/span><b><span data-contrast=\"none\">going for a currency hedge<\/span><\/b><span data-contrast=\"none\">\u202fin the exchanges\u202f<\/span><b><span data-contrast=\"none\">by investing in future contracts<\/span><\/b><b><span data-contrast=\"none\">\u00a0(mature in future)<\/span><\/b><b><span data-contrast=\"none\">\u202f<\/span><\/b><span data-contrast=\"none\">that will mature in 4-5 months. For example,<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"none\">A future contract worth $50,000, maturing in July at the rate of 74.5, will pay Rs 37.25 lakh<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"none\">If in December, the rupee depreciates to $77, Then the contract will yield a profit of Rs 1.25 lakh.<\/span><span data-contrast=\"none\">\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note19\"><\/a>Corporate ownership of banks<\/strong><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Recently, the\u00a0<\/span><span data-contrast=\"auto\">Internal Working Group (IWG) to the Reserve Bank of India the recommended making necessary amendments to the Banking Regulation Act, 1949 so as to allow industrial houses to enter into Indian Banking system.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Rationale to constitute IWG by RBI:<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The IWG was constituted to \u201creview extant ownership guidelines and corporate structure for Indian private sector banks\u201d for important reasons like\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"58\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">The\u202f<\/span><b><span data-contrast=\"auto\">total balance sheet of banks\u202f<\/span><\/b><span data-contrast=\"auto\">in India still constitutes\u202f<\/span><b><span data-contrast=\"auto\">less than 70 per cent of the GDP<\/span><\/b><span data-contrast=\"auto\">, which is much less compared to global peers such as China, where this ratio is closer to 175%.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"58\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">The\u202f<\/span><b><span data-contrast=\"auto\">domestic bank credit to the private sector is just 50% of GDP.\u202f<\/span><\/b><span data-contrast=\"auto\">But in economies such as China, Japan, the US and Korea it is upwards of 150 per cent.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"58\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">India\u2019s\u202f<\/span><b><span data-contrast=\"auto\">banking system<\/span><\/b><span data-contrast=\"auto\">\u202fhas been\u202f<\/span><b><span data-contrast=\"auto\">struggling to meet the credit demands<\/span><\/b><span data-contrast=\"auto\">\u202fof a growing economy.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"58\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">There is only\u00a0<\/span><b><span data-contrast=\"auto\">one Indian bank in the top 100 banks<\/span><\/b><span data-contrast=\"auto\">\u00a0globally by size. Further, Indian banks are also one of the\u00a0<\/span><b><span data-contrast=\"auto\">least cost-efficient<\/span><\/b><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">So, RBI Constituted a IWG to look into the ownership guidelines and corporate structure for Indian private banks.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Arguments against corporate ownership<\/span><\/b><b><span data-contrast=\"auto\">\u00a0of banks<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"55\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Issue of connected Lending:<\/span><\/b><span data-contrast=\"auto\">\u202fBusiness houses owning an in-house bank may lead to self-lending.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"55\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"2\"><b><span data-contrast=\"auto\">Regulation of Connected lending is difficult<\/span><\/b><span data-contrast=\"auto\">: It is clear from the experience of Indonesia and most advanced countries that regulating connected lending is impossible and the only solution is to ban corporate-owned banks<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p style=\"padding-left: 80px;\"><b><span data-contrast=\"auto\">Connected Lending<\/span><\/b><span data-contrast=\"auto\">:\u00a0<\/span><span data-contrast=\"auto\">It<\/span><span data-contrast=\"auto\">\u00a0refers to a situation where the promoter of a bank is also a borrower. There is a possibility\u00a0<\/span><span data-contrast=\"auto\">for the\u00a0<\/span><span data-contrast=\"auto\">promoter to channel the<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">depositors<\/span><span data-contrast=\"auto\">\u2019<\/span><span data-contrast=\"auto\">\u00a0money into their own ventures. Connected lending was the key factor behind 1997 Asian Financial crisis<\/span><span data-contrast=\"auto\">.\u00a0<\/span><span data-contrast=\"auto\">The recent episodes in ICICI Bank, Yes Bank, DHFL etc. were all examples of connected lending.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p style=\"padding-left: 80px;\"><b><span data-contrast=\"auto\">Challenges\u00a0<\/span><\/b><b><span data-contrast=\"auto\">associated in dealing with<\/span><\/b><b><span data-contrast=\"auto\">\u00a0connected lending<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:1440,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"63\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Multi sector cooperation required<\/span><\/b><span data-contrast=\"auto\">: Monitoring of transactions of corporate houses will require the cooperation of various law enforcement agencies.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"63\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Crony capitalism<\/span><\/b><span data-contrast=\"auto\">: Corporate houses can use their political clout to thwart such cooperation.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"63\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">No prevention possible<\/span><\/b><span data-contrast=\"auto\">: The RBI can only react to interconnected lending ex-post; it will not be able to prevent such exposure.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"63\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Complex process<\/span><\/b><span data-contrast=\"auto\">: In case, even if RBI could trace interconnected lending, any action taken on corporate will only cause a flight of deposits from the bank concerned and precipitate its failure.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"63\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Regulator credibility at stake<\/span><\/b><span data-contrast=\"auto\">: The regulator would be under enormous pressure to compromise on regulation. Pitting the regulator against powerful corporate houses could end up damaging the regulator.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720],&quot;469777927&quot;:[0],&quot;469777928&quot;:[8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"55\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">I<\/span><\/b><b><span data-contrast=\"auto\">ssue of Credit Quality:<\/span><\/b><span data-contrast=\"auto\">\u202fBanks cannot make good loans when it is owned by the borrower.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">I<\/span><span data-contrast=\"auto\">ndian financial sector reforms have aimed at improving both the quantity and the quality of credit. If India now starts granting banking\u202f<\/span><span data-contrast=\"auto\">licences<\/span><span data-contrast=\"auto\">\u202fto powerful, politically connected industrial houses, allowing them to determine how credit is allocated, it will effectively abandon the principle of ensuring that credit flows to the most economically efficient users.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Even under the existing financial regime, RBI was unable to detect at an early stage the connected lending which felled large regulated financial entities like IL&amp;FS, Yes Bank (Rana Kapoor and his entities held 10.6% as on end September 2018), DHFL (promoter holding 39%).\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Growth of monopoly market:\u202f<\/span><\/b><span data-contrast=\"auto\">Already, The Indian economy already suffers from over-concentration. The COVID-19 crisis is aggravating this\u00a0<\/span><span data-contrast=\"auto\">situation\u00a0<\/span><span data-contrast=\"auto\">because those with greater resources will not only more easily survive the crisis\u00a0<\/span><span data-contrast=\"auto\">but<\/span><span data-contrast=\"auto\">\u00a0will be able to take over small, medium and large enterprises that have not had the resilience or resources. In this scenario, if large industrial houses get banking\u202f<\/span><span data-contrast=\"auto\">licences<\/span><span data-contrast=\"auto\">, they will become even more powerful.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Overburdened RBI<\/span><\/b><span data-contrast=\"auto\">: RBI has encountered much difficulty in dealing with banking irregularities at Punjab National Bank, Yes Bank, ILFS and Lakshmi Vilas Bank. Regulation and supervision need to be strengthened considerably to deal with the current problems in the banking system before they are burdened with new regulatory tasks.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Can delay exiting of inefficient firms:<\/span><\/b><span data-contrast=\"auto\">\u202fThis makes it impossible for more efficient firms to grow and replace them. If industrial houses get direct access to financial resources, their capacity to delay or prevent exit altogether will only increase.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"5\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Poor governance<\/span><\/b><span data-contrast=\"auto\">\u00a0under the present structure is the major problem of Indian banking sector. Ex<\/span><span data-contrast=\"auto\">ample:<\/span><span data-contrast=\"auto\">\u00a0Despite spotting the fault at early stage in IL&amp;FS, RBI did not step up its governance activities and that resulted in the defaulting of the IL&amp;FS.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Bank for elites<\/span><\/b><span data-contrast=\"auto\">: In the past,\u00a0<\/span><span data-contrast=\"auto\">b<\/span><span data-contrast=\"auto\">anks were nationalized because the<\/span><span data-contrast=\"auto\">ir<\/span><span data-contrast=\"auto\">\u00a0ownership by the private sector was leading to \u201clarge concentration of resources in the hands of a few business families\u201d. The allowing of corporate might revive that.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Financial crisis in India<\/span><\/b><span data-contrast=\"auto\">: 2008 Global Financial crisis was a proof of how risky that the private sector banks are? Trusting them to operate at large scale instead of trust worthy and financially stable government-owned banking system might create a financial crisis in long run.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Inadequate to track<\/span><\/b><span data-contrast=\"auto\">: Corporate houses are\u00a0<\/span><span data-contrast=\"auto\">expert<\/span><span data-contrast=\"auto\">\u00a0at routing funds through a maze of entities in India and abroad. So, they can bypass the checks and balances and flout the norms.\u00a0<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"57\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Alternative options do exist:<\/span><\/b><span data-contrast=\"auto\">\u202fThe other powerful way to promote more good quality credit is to undertake serious reforms of the public sector banks.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Arguments for corporate ownership of banks<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">I<\/span><span data-contrast=\"auto\">ndustry-owned banks would increase the supply of credit, which is low and growing slowly.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Increased competition<\/span><\/b><span data-contrast=\"auto\">:\u00a0<\/span><span data-contrast=\"auto\">Privatization of banks can force public sector banks to perform due to increased competition<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Boost to financial inclusion<\/span><\/b><span data-contrast=\"auto\">: It can lead to\u00a0<\/span><span data-contrast=\"auto\">opening of more branches and subsequently bringing more people into the banking net.<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Is Corporate as Banks new to India?\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">No.\u00a0<\/span><span data-contrast=\"auto\">In February 2013, the RBI had issued guidelines that permitted corporate and industrial houses to apply for a banking\u00a0<\/span><span data-contrast=\"auto\">licence<\/span><span data-contrast=\"auto\">. Some houses applied, although a few withdrew\u00a0<\/span><span data-contrast=\"auto\">thei<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">rapplications<\/span><span data-contrast=\"auto\">\u00a0subsequently.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Only two entities qualified for a\u00a0<\/span><span data-contrast=\"auto\">licence<\/span><span data-contrast=\"auto\">, IDFC and Bandhan Financial Services. No corporate was ultimately given a bank\u00a0<\/span><span data-contrast=\"auto\">licence<\/span><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"auto\">The RBI maintained that it was open to letting in corporate companies to open banks. However, none of the applicants had met \u2018fit and proper\u2019 criteria.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"47\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">In 2014, the RBI\u00a0<\/span><b><span data-contrast=\"auto\">restored\u00a0<\/span><\/b><span data-contrast=\"auto\">the\u00a0<\/span><b><span data-contrast=\"auto\">prohibition<\/span><\/b><span data-contrast=\"auto\">\u00a0on the entry of corporate houses into banking<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is the way forward?<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"56\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">The way forward should be to\u202f<\/span><b><span data-contrast=\"auto\">privatize<\/span><\/b><b><span data-contrast=\"auto\">\u202fpublic sector banks<\/span><\/b><span data-contrast=\"auto\">\u00a0by allowing holding of stock by the general public.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"56\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"auto\">If the government exits banking ownership, it would lead to professional management and broader distribution of wealth. The banks would come under both SEBI and stringent RBI guidelines.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"59\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Improve private governance and regulatory\u202fcapacity:<\/span><\/b><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><span data-contrast=\"auto\">The\u202f<\/span><b><span data-contrast=\"auto\">Committee on Financial Sector Reforms (2008)<\/span><\/b><span data-contrast=\"auto\">\u202fheaded by then RBI Governor observed that it is premature to allow industrial houses to own banks. Though\u202fnecessary,<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">the\u202freform can wait till private governance and regulatory capacities improve.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"59\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Regulator side<\/span><\/b><b><span data-contrast=\"auto\">\u00a0reforms<\/span><\/b><b><span data-contrast=\"auto\">:<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Regulator has to enhance the credibility of the system by ensuring every deposit is safe especially with better governance.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">RBI should ensure the checks and balances before allowing corporates to become promoters.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Instead of debating with the allowing of corporate is good or bad? RBI can\u202f<\/span><b><span data-contrast=\"auto\">move ahead with the other recommendations<\/span><\/b><span data-contrast=\"auto\">\u202fwhich are really beneficial for the banking sector and economy as whole.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li><b><span data-contrast=\"auto\">Government side<\/span><\/b><span data-contrast=\"auto\">\u202f<\/span><b><span data-contrast=\"auto\">reforms<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><b><span data-contrast=\"auto\">Better Legal framework:\u202f<\/span><\/b><span data-contrast=\"auto\">If permitting corporates as bank promoters than the government not only need to amend the Banking Regulation Act, 1949 but also needs to amend various Acts to curb crony capitalism, liberal whistle blowing policies etc., but they all need strong political commitment.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Conclusion<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">R<\/span><span data-contrast=\"auto\">ather than concentration of too much economic power in the hands of corporates, it will be wise to carry out the long-pending banking reforms and strengthen the functional autonomy of RBI.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<hr \/>\n<h3 style=\"text-align: center;\"><strong><a id=\"Note20\"><\/a>FCRA Act\u00a0<\/strong><\/h3>\n<p><b><span data-contrast=\"auto\">Why in news?<\/span><\/b><br \/>\n<span data-contrast=\"auto\">Union Home Ministry has announced new guidelines for banks, under the Foreign Contribution (Regulation) Act. These guidelines are related to the donations received by non-governmental organizations (NGOs) and associations.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">New FCRA guidelines<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">The donations received in Indian rupees by the NGOs and associations\u00a0<\/span><b><span data-contrast=\"auto\">from any foreign source<\/span><\/b><span data-contrast=\"auto\">\u00a0should be treated as a foreign contribution. Even if that source is located in India at the time of such donation.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">It will include the contributions by foreigners of Indian origin like OCI or PIO cardholders, in Indian\u202frupees<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">(INR).\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">As per the existing rules, Banks need to report any receipt or utilization of any foreign contribution, by any NGO, association, or person. Banks should submit these reports to the Central government within 48 hours.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Rules cover all NGOs, whether they are registered or granted prior permission under the FCRA.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Any violation by the NGO or by the bank of these rules of FCRA may invite penal provisions under the FCRA Act, 2010.\u202f<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is\u00a0<\/span><\/b><b><span data-contrast=\"auto\">Foreign Contribution (Regulation) Act<\/span><\/b><b><span data-contrast=\"auto\">, 2010<\/span><\/b><b><span data-contrast=\"auto\">?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">FCRA was enacted in 1976 and amended in 2010. It\u00a0<\/span><b><span data-contrast=\"auto\">regulates foreign donations<\/span><\/b><span data-contrast=\"auto\">\u00a0and ensures that such contributions do not adversely affect internal security.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">It i<\/span><span data-contrast=\"auto\">s implemented by the\u00a0<\/span><b><span data-contrast=\"auto\">Ministry of Home Affairs<\/span><\/b><span data-contrast=\"auto\">.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Coverage<\/span><\/b><span data-contrast=\"auto\">: It is applicable to all associations, groups, and NGOs which intend to receive foreign donations.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Exemption:\u202f<\/span><\/b><span data-contrast=\"auto\">Members of the legislature and political parties, government officials, judges, and media persons are prohibited from receiving any foreign contribution.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">However, in 2017 the FCRA was amended through the Finance Bill. This amendment allowed political parties to receive funds from,\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:1080,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[720,1080],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span>\n<ul>\n<li><span data-contrast=\"auto\">The Indian subsidiary of a foreign company or\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:1800,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[1440,1800],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">A foreign company, in which an Indian holds 50% or more shares.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:1800,&quot;335559739&quot;:160,&quot;335559740&quot;:240,&quot;469777462&quot;:[1440,1800],&quot;469777927&quot;:[0,0],&quot;469777928&quot;:[0,8]}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"auto\">Registration<\/span><\/b><span data-contrast=\"auto\">: It is mandatory for all such NGOs to register themselves under the FCRA. The registration is initially valid for five years, and it can be renewed subsequently if they comply with all norms.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Amendment of FCRA Rules:\u202f<\/span><\/b><span data-contrast=\"auto\">In September 2020, the FCRA Act was amended by Parliament and a new provision was added. It makes it mandatory for all NGOs to receive foreign funds in a designated bank account at the State Bank of India (SBI) New Delhi branch.\u202f<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:240}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Table of contents\u00a0 Network for Greening the Financial System\u00a0 New Umbrella Entity (NUE)\u00a0 National Digital Currency\u00a0 India on US\u2019s \u2018Currency Watch list\u201d\u202f\u00a0 Regulations Review Authority 2.0\u00a0 Currency Chest\u00a0 PCA framework\u00a0 Domestic Systemically Important Banks (D-SIBs)\u202f\u202f\u00a0 Jayant Kumar Dash committee\u00a0 Payment Infrastructure Development Fund\u202f\u00a0 Digital payments Index\u202f\u00a0 Positive Pay Mechanism \u202f\u00a0 DakPay\u00a0 Better than cash alliance\u00a0&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/money-and-banking-updates-prelims-capsule-2021\/\">Continue reading <span class=\"screen-reader-text\">Money and Banking &#8211; Updates | Prelims Capsule 2021<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-108482","post","type-post","status-publish","format-standard","hentry","category-public","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/108482","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=108482"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/108482\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=108482"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=108482"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=108482"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}