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Top 5 Banking news of August's last week

Sep 1, 2016 14:15 IST

    Banking General Awareness section is the vital section for any bank recruitment exam. It is considered one of the scoring sections in bank exams. To crack this section, candidates need to update their current affairs of the national and international importance along with the banking industry.

    In order to help in your preparation, here the banking team of jagranjosh is providing top five banking news of last ten days.

    1. Unified Payments Interface introduced by banks


    Unified Payments Interface (UPI) was introduced on 25 August 2016 by four banks, namely Axis Bank, Union Bank of India, Federal Bank and Bank of Maharashtra. The app will allow customers to make payments via digital means.



    The app went live for these banks after National Payments Corporation of India (NPCI) issued letters to them asking them to make the apps available on Google Play Store. Apart from this, the UPI-enabled apps will be available for other 19-banks in near future.

    Initially, the facility, which is available on Google Play Store, will be available for bank customers with Android smartphones. Versions for Apple’s iOS operating system will be launched in next six months.

    UPI, a product of NPCI, will help move India towards a cashless economy. It will allow account holders across banks to send and receive money from their smart phones using virtual payments address without entering bank account details.

    The interface is a brainchild of RBI Governor Raghuram Rajan.

    Do You Know?

    • UPI is a set of standard Application Programming Interface (APIs).
    • It will allow customer to have multiple virtual address for accounts in various banks.
    • The new payments interface will also provide an option for scheduling push and pull transactions, such as sharing bills among peers.
    • It is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
    • National Payments Corporation of India (NPCI) is the umbrella organisation for all retail payments system in India.

    2. RBI announced interest subvention scheme for Women Self-Help Groups

    Reserve Bank of India (RBI) on 25 August 2016 asked all commercial and Co-operative banks to provide loans to women Self-Help Groups (SHGs) in rural areas at 7 percent per annum.

    The laons will be provided for the financial year 2016-17 under the Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (NRLM) in 250 districts.

    Interest subvention scheme for Women SHGs - Year 2016-17

    • All women self-help groups (SHGs) will be eligible for interest subvention on credit up to three lakh rupees at 7 percent per annum.
    • All banks will be subvented to the extent of difference between the weighted average interest charged and 7%, subject to the maximum limit of 5.5% for 2016-17.

    Further, the SHGs will be provided with an additional 3% subvention on the prompt repayment of loans. For the purpose of interest subvention of additional 3% on prompt repayment, an SHG account will be considered prompt payee if it satisfies the following criterion as specified by RBI.

    Note: NRLM (Aajeevika) was launched by the Union Ministry of Rural Development (MoRD) in June 2011. In 2015, the mission was replaced by the Deen Dayal Antyodaya Yojana.
    Aided in part through investment support by the World Bank, the NRLM aimed at creating efficient and effective institutional platforms of the rural poor. It seeks to enable them to increase household income through sustainable livelihood enhancements and improved access to financial services.

    3. SBI board approved merger of 5 associate banks, BMB with itself
    The State Bank of India (SBI) board in  August 2016 approved merger of its five associate banks and Bharatiya Mahila Bank (BMB) with itself.

    Apart from the BMB, the 5 associate banks that will be merged with the SBI are -
    I. State Bank of Bikaner and Jaipur
    II. State Bank of Hyderabad
    III. State Bank of Mysore
    IV. State Bank of Patiala
    V. State Bank of Travancore

    Further, the board also finalised the share swap ratio for three of the listed subsidiaries and Bharatiya Mahila Bank.

    The listed subsidiaries of the SBI are - State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore.

    Highlights of the merger

    • The merger will create a behemoth with an asset base of 37 lakh crore rupees or over 555 billion US dollar.
    • The merged entity will have 22500 branches and 58000 ATMs serving a customer base of over 50 crore.
    • SBI has close to 16500 branches, including 191 foreign offices across 36 countries while the five subsidiaries have nearly 6000 branches.
    • The merger necessitates changes in various acts that govern the functioning of the SBI and its subsidiary banks - which require Union cabinet approval.
    • The merger will make SBI as one of the top 50 banks in the world as currently no Indian bank features in the top 50 banks of the world.

    Background

    • The country's largest lender SBI had seven associate banks, of which it has merged State Bank of Saurashtra and State Bank of Indore with itself over the last 10 years.
    • The parent bank had advances of 15.09 trillion rupees and deposits of 17.31 trillion rupees as of the end of the March quarter.
    • Bank consolidation was proposed by the Union Government in March 2016 at a congregation of bankers and government officials where various issues pertaining to banks were discussed.
    • In June 2016, the Union Cabinet gave its approval for the merger.

    4. India Post Payments Bank incorporated

    The India Post Payments Bank Limited (IPPB) in August 2016 was incorporated. In this regard, it has received the Certificate of Incorporation (CI) from the Registrar of Companies, Ministry of Corporate Affairs under the Companies Act, 2013.

    With this incorporation, the bank has become the first Public Sector Undertaking (PSU) under the Department of Posts (DoP).

    The incorporation also paves the way for the constitution of the Board of the India Post Payments Bank Limited.

    Features of India Post Payments Bank Limited

    • It will allow all citizens of India, especially the 40 percent of the country's population that is outside the ambit of formal banking in the country will benefit from this project.
    • Its services will be available across the country through 650 payments bank branches, linked post offices and alternative channels riding on modern technology including mobiles, ATMs, PoS/m-PoS (mobile-Point of Sale) devices etc and simple digital payments.
    • Coupled with the physical presence across 1.55 lakh post offices and the reach of “The Dakiya”, the India Post Payments Bank aims to become a powerful and effective vehicle of real financial inclusion in the country.
    • It will generate new employment opportunities for skilled banking professionals and will generate opportunities for propagating financial literacy across the country.
    • It will create the largest bank in the world in terms of accessibility and in time, will encourage the move towards a less cash economy.

    Background

    • Considering the pace with which the bank has been incorporated, this could be the fastest roll out for a bank anywhere in the world.
    • Setting-up of the IPPB to further financial inclusion was one of the budgetary announcements in February 2015.
    • The Department of Posts had obtained the "in-principle approval" of the RBI in September 2015 to set up the India Post Payments Bank.
    • In June 2016, the Union Cabinet approved its formation with 100 percent Union Government's equity.
    • The India Post Payments Bank will leverage the Department’s network, reach, and resources to make simple, low-cost, quality financial services easily accessible to customers all over the country.
    • The DoP is expected to complete the roll out of its branches all over the country by September 2017.
    • The aspiration for the India Post Payments Bank is to become the most accessible bank in the world riding on state of the art banking and payments technology.

    5. Urjit R Patel appointed as 24th Governor of Reserve Bank of India



    Union Government in August 2016 appointed Dr. Urjit R Patel as the 24th governor of Reserve Bank of India (RBI). He will be having tenure of three years with effect from 4 September 2016.

    At present, Dr Patel is the Deputy Governor of RBI and is holding this assignment since 2013. With this appointment, he also becomes the eight Deputy Governor to be elevated as the Governor at RBI. He will succeed the present RBI Governor Dr. Raghuram Rajan, the former International Monetary Fund chief economist.

    Dr. Urjit R Patel

    • He headed a panel that recommended landmark changes to monetary policy in India, which included a switch to inflation-targeting and the creation of a panel to set interest rates.
    • In January 2016, he was reappointed as the deputy governor in charge of monetary policy, the department he ran since 2013.
    • Earlier between 1990 and 1995, he had worked with the International Monetary Fund (IMF) covering US, India, Bahamas and Myanmar.
    • He carried a doctorate from Yale University.
    • He also carries M Phil from Oxford.

    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

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