Current Affairs Dec 2015 - Banking

News 1 - RBI liable to disclose information about banks under RTI Act: Supreme Court.

The Supreme Court on 16 December 2015 held that the Reserve Bank of India (RBI) is liable to disclose information about the banks and financial institutions for their action against the loan defaulters including industrialists under the Right to Information (RTI) Act, 2005. The ruling was made by a bench headed by M Y Eqbal and C Nagappan.

This Bench gave the ruling against the petition filed by PP Kapoor, who had asked about the details of the loans taken by the industrialists that have not been repaid and he had asked about the names of the top defaulters, who have not repaid their loans to public sector banks.

Ruling Bench

News 2 - RBI released final guidelines of Marginal Cost of Funds Methodology to calculate Interest Rates.

The Reserve Bank of India (RBI) on 17 December 2015 released the final guidelines on computing interest rates on advances based on the Marginal Cost of Funds Methodology. These guidelines will come into effect from 1 April 2016.

The new methodology is aimed at bringing uniformity among Base Rates of Banks, so that they will be more sensitive to any changes in the policy rates of the RBI, like the Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), etc.

  • This new methodology will help improve the transmission of policy rates into the lending rates of banks.

  • These guidelines are also expected to ensure availability of bank credit at interest rates, which are fair to the borrowers as well as the banks.

  • Further, marginal cost pricing of loans will help the banks become more competitive and enhance their long run value and contribution to economic growth.

News 3 - Axis Bank launches country's first 'display variant' debit card.

Display Variant Debit Card

Axis Bank launched a 'display variant' debit card, which does away with the hassles of generating one time password (OTP) over SMS while transacting. This card, which is being made available for high-value NRE customers, has an embedded EMV chip, a display screen and a touch-sensitive button, which helps generating the OTP on the card itself.

News 4 - RBI bars 56 NBFCs from conducting business.

RBI

The Reserve Bank of India has cancelled the certificate of registration of 56 non-banking finance companies (NBFCs). Following the cancellation of registration certificate, these companies cannot transact in the business of an NBFC as laid down under the Reserve Bank of India Act, 1934.

News 5 - Centre to support rural entrepreneurs under MUDRA.

PM Modi

In an effort to support rural entrepreneurs of India, the Centre on Saturday said it would think of giving loans under the Micro Units Development and Refinance Agency (MUDRA) Yojana of the Prime Minister Narendra Modi. It provides services for Small Entrepreneurs.

News 6 - RBI announced revised Priority Sector Lending norms for Regional Rural Banks.

RBI

The Reserve Bank of India (RBI) announced revised Priority Sector Lending (PSL) norms for Regional Rural Banks (RRBs). Among other things, the PSL target was increased to 75 percent of total outstanding from the existing 60 percent. The revised target will be effective from 1 January 2016.

  • Medium enterprises, social infrastructure and renewable energy were included under PSL category.

  • Loans to individual farmers, for the purpose of PSL, was increased to 50 lakh rupees from the present 10 lakh rupees against pledge / hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months.

  • The RBI has lowered the quantum of loans that will qualify as PSL. Against the earlier limit of 25 lakh rupees, loans to individuals up to 20 lakh rupees only are considered as PSL as per revised guidelines. Housing loans to banks’ own employees will be excluded from this limit.

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