Weekly Top Finance News - Economy-Banking- FOR RBI GRADE B & SEBI GRADE A - 22 JUNE - 28 JUNE 2020 - Oliveboard
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Weekly Top
Economy-Banking-
Finance News
22 JUNE - 28 JUNE 2020
FOR RBI GRADE B & SEBI GRADE A
Weekly Top Economy-Banking-Finance News Free GA e-book
Weekly Top Economy-Banking-Finance News
22nd – 28th June 2020
1. IMF projects the Indian economy to contract by 4.5% in FY21
• IMF has projected a sharp contraction of 4.5 per cent in FY21, a steep drop from its
April forecast of a 1.9 per cent expansion, calling it a "historic low" for India.
• The silver lining, however, is that the country is expected to bounce back in FY22 with
a 6 per cent growth rate, the IMF said in its latest World Economic Outlook titled A
Crisis like No Other, An Uncertain Outlook.
• China is estimated to post 1 per cent growth in 2020 and revive to 8.2 per cent in 2021,
retaining the fastest-growing economy tag for the third straight year.
• IMF Chief Economist Gita Gopinath said after releasing the WEO update. According to
the IMF’s record, this is the lowest ever for India since 1961.
• The Indian economy grew by 4.2 per cent in 2019-20. The global output is seen
shrinking 4.9 per cent, and EMs by 3 per cent. “For the first time, all regions are
projected to experience negative growth in 2020,” said the IMF
2. Competition Commission approves Facebook-Jio deal worth $5.7 billion
• The Competition Commission of India (CCI) approved Facebook’s Rs 43,574 crore ($5.7
billion) investment in Jio Platforms, the digital arm of Reliance Industries.
• The deal would bring together JioMart, the e-commerce venture of Mukesh Ambani,
and Facebook’s WhatsApp platform to connect consumers with neighbourhood Kirana
stores. The anti-trust regulator sees if there is a business overlap between two parties
and whether this can lead to an appreciable adverse effect on competition. It also
examines closely if the acquirer has secured control over the management and
operations of the other company.
• As a part of the deal, Facebook will get one board seat and one observer seat on board
without any voting rights thus giving it a limited role in steering Jio operations
3. India GDP could contract 5.3% due to coronavirus 'disorder': India Ratings
India’s real gross domestic product in Financial Year 2020-21 could contract 5.3 per cent, said
India Ratings and Research as it flagged the "disorder" caused to the economy by Covid-19 and
the nationwide lockdown to contain the disease.
Weekly Top Economy-Banking-Finance News Free GA e-book
4. RBI pulls up banks, NBFCs for non-transparency in digital loans
• The Reserve Bank of India (RBI) said digital lending platforms must disclose to the
customers which bank or non-bank financial company (NBFC) these platforms are
working for so that customers availing so-called ‘hassle-free’ loans are not harassed
later.
• Banks and NBFCs are either direct floaters of these platforms, some of whom are also
registered with the RBI as ‘digital-only’ lenders, or the financial institutions have
outsourced the platform to a third party.
• The RBI warned that "outsourcing of any activity by banks/ NBFCs does not diminish
their obligations, as the onus of compliance with regulatory instructions rests solely
with them.".
• Since the bank or NBFC’s names are not disclosed in these digital platforms, the
customers do not get to know who to complaint about grievance redressal or know the
regulatory mechanism available to get relief.
5. SEBI comes out with guidelines on the order-to-trade ratio for algorithmic
trades
• The Securities and Exchange Board of India (SEBI) has put curbs on algorithmic trading.
• The regulator has directed stock exchanges to introduce tighter rules to bring down the
so-called order-to-trade ratio (OTR).
• “Stock exchanges may be permitted to introduce additional slabs up to OTR of 2,000
(from existing OTR of 500), and for OTR more than 2,000. Such slabs can be introduced
with a deterrent incremental penalty, which stock exchanges may decide jointly
Source: Business Standard
6. Govt plans to cap China FPI investments at 5%
• The department of economic affairs (DEA) and markets regulator Securities and
Exchange Board of India (SEBI) are considering capping investment by foreign portfolio
investors (FPIs) from the countries sharing a land border with India, especially China, at
5%.
• Currently, an FPI or a beneficial owner is allowed to hold up to 10% in a listed stock.
• Other measures being considered to include relatively stringent know your customer
(KYC) norms and a separate standard operating procedure (SOP) for approval, renewal,
and fresh investment from these neighbouring countries.
• At present, the investment by an FPI cannot exceed 10 per cent of the paid-up capital
of an Indian company. All FPIs taken together cannot acquire more than 24 per cent of
the paid-up capital of an Indian company.
• According to the SEBI regulations, FPIs are not allowed to invest in unlisted shares, and
investment in unlisted entities will be treated as an FDI.
Weekly Top Economy-Banking-Finance News Free GA e-book
7. Moody's projects India GDP to shrink 3.1% in 2020, flags geopolitical risk
• Moody's Investors Service on Monday projected the Indian economy to shrink 3.1 per
cent in 2020 and said clashes with China on the border also suggest rising geopolitical
risks in the Asian region where countries are particularly vulnerable to changes in
geopolitical dynamics.
• However, Moody's expects the economy to register 6.9 per cent growth in 2021.
• Moody's has forecast that China would be the only G-20 country to post growth this
year. The expectation is that China would grow 1 per cent in 2020, followed by a strong
rebound of 7.1 per cent in 2021.
• Moody's had cut India's credit rating by a notch to lowest investment grade 'Baa3' citing
challenges in implementing policies to boost growth and restrict fiscal slippage.
Weekly Top Economy-Banking-Finance News Free GA e-book
8. Sebi reports 13% total income growth at Rs 963 crore in 2018-19
• The Securities and Exchange Board of India (Sebi) has posted a 13 per cent increase in
its total income to over Rs 963 crore in 2018-19, mainly because of the rise in earnings
from fees and subscription income.
• According to the annual accounts of Sebi, the total expenditure of the regulator also
rose to Rs 492.34 crore for the year ended March 31, 2019, from Rs 414.46 crore in the
previous financial year.
• The other administrative expenses increased from Rs 121 crore to Rs 131 crore; the
establishment expenses climbed from Rs 244 crore to Rs 293 crore.
9. Banks sanction Rs 75,000-cr loans to MSMEs under the credit guarantee
scheme
• The finance ministry said banks have sanctioned over Rs 75,000 crore loans so far
under the Rs 3-trillion Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME
sector reeling under stress due to the coronavirus-induced lockdown.
• The scheme is the biggest fiscal component of the Rs 20 trillion Aatmanirbhar Bharat
Abhiyan package.
Source: Business Standard
10. RIL is the 57th most valuable firm globally by market-capitalisation
• Reliance Industries (RIL) became the first Indian company to be valued at $150 billion
(Rs 11 trillion market valuation).
• The oil-to-telecom conglomerate now stands at 57th position in the overall market
capitalisation (market-cap) ranking of listed companies globally.
• RIL, the only Indian company, is currently featuring in the top 100 list of most valued
global companies. Tata Consultancy Services (TCS) ranked at 104th position and HDFC
Bank which is at 149th position in the overall market-cap ranking.
• It is the fourth most-valued firm in the energy sector globally by market-cap – only after
Saudi Arabian Oil Company (Saudi Aramco), and US firms Exxon Mobil Corp (market-
cap around $194 billion; ranked 40th globally) and Chevron Corp (market-cap around
$169 billion; ranked 51st globally).Weekly Top Economy-Banking-Finance News Free GA e-book
11. RBI bars YES Bank from coupon payment on Upper Tier II bonds
• The Reserve Bank of India has restrained private sector lender YES Bank to pay interest
(coupon) on the Tier II bonds as its capital adequacy ratio was below regulatory
requirements.
• The private lender had approached banking sector regulator RBI seeking approval to
pay the interest due as on June 29, 2020, for Upper Tier II Bonds. These Unsecured
Non-Convertible Upper Tier II bonds carry a coupon of 10.25 per cent.
• Its overall capital adequacy ratio stood at 8.5 per cent at the end of March 2020 with
Common Equity tier I (CET I) of 6.3 per cent. Its stock was trading 1.8 per cent lower on
BSE. The capital adequacy ratio is below the regulatory requirements.
• The Interest amount due and remaining unpaid shall be accumulated and be paid later,
subject to Bank complying with the stipulated regulatory requirement.
12. Covid-19 impact: RBI asks banks to carry out detailed stress testing
• The Reserve Bank of India (RBI) has asked banks to carry out detailed stress tests due
to the impact of Covid-19 on their books and put capital-raising plans with board
approvals in place if needed.
• The central bank in its communiqué to chief executive officers of banks said stress tests
would consider three scenarios — baseline, medium, and severe stress — which will
cover all key financial parameters pertaining to the quality of the book.Weekly Top Economy-Banking-Finance News Free GA e-book
• If there is significant capital impairment, clear-cut-board approved capital-raising plans
are to be in place.
• The stress tests had indicated that under the baseline scenario, the gross non-
performing asset (GNPAs) ratios of all banks may move to 9.9 per cent by September
2020, from 9.3 per cent in September 2019 due to changes in the macroeconomic
scenario, a marginal increase in slippages, and the denominator effect of declining
credit growth.
• Under severe stress, the GNPA will rise to 10.5 per cent, and for 52 banks, it would
move up to 15.6 per cent, from 9.4 per cent. This may require additional tier-1 capital.
• Accordingly, the capital adequacy ratio (CAR) of 53 select banks was projected to come
down to 14.1 per cent by September 2020 under baseline expectations and 12.7 per
cent under severe stress from 14.9 per cent in September 2019.
• The RBI also noted that three banks had CAR below the minimum regulatory level of 9
per cent by September 2020, without considering any further planned recapitalisation.
However, if macroeconomic conditions deteriorate, five banks may record CAR below
9 per cent.Weekly Top Economy-Banking-Finance News Free GA e-book
13. Fitch revises outlook on 9 Indian banks' IDRs from stable to negative
• Global rating agency Fitch has revised the outlook from “stable” to “negative” on the
Long-Term Issuer Default Ratings (IDR) of nine Indian banks following revision in the
outlook on India rating ('BBB-').
• It affirmed rating on IDRs, Support Ratings (SR) and Support Rating Floors (SRF).
• The rating action covers nine banks - State Bank of India (SBI), Bank of Baroda (BOB),
BOB’s subsidiary in New Zealand, Bank of India (BOI), Canara Bank (Canara), Punjab
National Bank (PNB), ICICI Bank (ICICI), Axis Bank (Axis) and Export-Import Bank of India
(EXIM).
• The IDRs for Indian banks are support-driven and anchored to their respective SRFs.
They are based on an assessment of high to moderate probability of extraordinary state
support for these banks. This considers our assessment of the sovereign's ability and
propensity to provide extraordinary support
• The rating action does not affect the banks' Viability Ratings (VRs). EXIM does not have
a VR as its role as a policy bank assesses its standalone credit profile less meaningful.
• The Negative Outlook on India's reflects an increasing strain on the state's ability to
provide extraordinary support. The sovereign has limited fiscal space and there has
been a significant deterioration in fiscal metrics due to challenges from the Covid-19
pandemic.
14. Prashant Kumar to be new MD & CEO of YES Bank
YES Bank said it has approved the reconstitution of its board with Prashant Kumar as the new
MD & CEO.
Kumar, former chief financial officer, and deputy managing director of State Bank of India, is
currently overseeing the troubled private sector lender as RBI-appointed administrator.
Source: Business Standard
15. RBI extends enhanced borrowing limit to banks under MSF till Sept 30
• The RBI, as a temporary measure, had increased the borrowing limit of scheduled banks
under the marginal standing facility (MSF) scheme from 2% to 3% of their Net Demand
and Time Liabilities (NDTL) with effect from March 27, 2020.
• Under the MSF, banks can borrow overnight funds at their discretion by dipping into
the Statutory Liquidity Ratio (SLR). This relaxation, which was granted till June 30, 2020,
has now been extended till September 30.
• The marginal standing facility rate currently stands at 4.25 per cent.
• The RBI has also extended the relaxation on the minimum daily maintenance of the
Cash Reserve Ratio (CRR) at 80 per cent for a further period of three months till
September 25, 2020.Weekly Top Economy-Banking-Finance News Free GA e-book
16. SEBI relaxes pricing norms for preferential issues of listed companies
• The Securities and Exchange Board of India (SBI) has relaxed the pricing norms for
preferential issuances to ease the capital-raising process for listed companies.
• The new pricing formula will enable the issuance of new shares at recent stock prices.
• SEBI, however, has said the shares issued under the new pricing norms will be locked
in for three years and the pricing relaxation will be valid for issuances made until
December 2020.Weekly Top Economy-Banking-Finance News Free GA e-book
17. Cooperative banks to be supervised by RBI; Govt to bring an ordinance
• The Union government has decided to bring 1,482 urban cooperative banks and 58
multi-state cooperative banks, under the supervisory powers of the Reserve Bank of
India, said I&B minister Prakash Javadekar
• The RBI's powers as they apply to the scheduled banks will also apply to cooperative
banks, said the minister.
• Union government will bring an ordinance to put cooperative banks under RBI
supervision, announced the I&B minister.
• The decision to bring 1,540 cooperative banks under RBI's supervision will give an
assurance to more than 86 million depositors in these banks that their money
amounting to Rs 4.84 trillion will stay safe.
18. Union Cabinet also approved establishment of Animal Husbandry
Infrastructure Development Fund.
The Union government will provide 3% interest subvention to eligible beneficiaries, announced
Union Minister Giriraj Singh.
19. Pradhan Mantri MUDRA Yojana (PMMY)
• The government has decided to provide 2% interest subvention to borrowers under
the 'Shishu' category of the flagship Pradhan Mantri MUDRA Yojana (PMMY).
• Under the Shishu category, collateral free loans of up to Rs 50,000 are given to
beneficiaries.
• The PMMY was launched by Prime Minister Narendra Modi on April 8, 2015 for
providing loans up to 10 lakhs to non-corporate, non-farm small/micro enterprises.
• These loans are classified as MUDRA loans under PMMY. These loans are given by
commercial banks, RRBs, small finance banks, MFIs and NBFCs.
Source: Business StandardWeekly Top Economy-Banking-Finance News Free GA e-book
Study Material for RBI Grade B & SEBI Grade A 2020Weekly Top Economy-Banking-Finance News Free GA e-book
Weekly Top Economy-Banking-Finance News Free GA e-book
FREE Ebooks Current Affairs
Download Now Explore Now
FREE MOCK TESTS + TOPIC TESTS + SECTIONAL TESTS
For Banking, Insurance, SSC & Railways Exams
Web APP
BLOG FORUM
Your one-stop destination Interact with peers & experts,
for all exam related exchange scores
information & preparation & improve your preparation.
resources.
Explore Now Explore Now
www.OliveBoard.inYou can also read
