Yojana January 2018 Summary: Banking Reforms (Part - 2) (Download PDF)

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📹 📝 Resolving Insolvency: India improved ease of doing business world ranking by 30 places to 103rd position than previous 136th rank in 2017. Insolvency and Bankruptcy code with Insolvency and Bankruptcy Board of India in 2016 – insolvency arises when firm cannot pay its dues to its lenders & can be tackled by restructuring the debt.

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Yojana January 2018 Summary: Banking Reforms (In English)

Dr. Manishika Jain explains Yojana January 2018: Banking Reforms (Special Issue)

  • Presidency Towns Insolvency Act, 1909
  • Provincial Insolvency Act, 1920
  • Both these act are still in statute under Section 243 of code, which provides for repeal of these enactments has not been notified
  • National Company Law Tribunal (NCLT) – insolvency resolution for companies
  • Debt Recovery Tribunal – insolvency resolution for individuals
  • Time bound process with default over Rs. 1 Lakh to be resolved by NCLT – resolution to be completed within 180 days and extendable for 90 days
  • Fast track resolution for 90 days extendable to 45 days – only for small companies with paid up capital of Rs. 50 lakh or turnover of Rs. 2 crore and startups - during this process creditors claims are frozen
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Insolvency & Bankruptcy Code & IBBI

Dr. Manishika Jain explains Insolvency & Bankruptcy Code & IBBI What is Insolvency, Bankruptcy & Liquidation?

  • Creditors committee meets within 7 days of constitution and decides 75 % of votes to either replace or confirm interim Insolvency Professional as resolution professional
  • NPA at high level mainly in power, steel, road and textiles
  • RBI asked banks to refer 12 largest bad loans for resolution under code
  • Around 376 cases have been referred to NCLT over 1st nine months – most of these have been filed by operational creditors and rest by financial creditors
  • IBBI notifies regulations for handling of grievances and complaints – stakeholder can file a complaint with fee of Rs. 2500
  • Arcelor Mittal has strong bid for distressed asset of Utam Galva (company under NPA) – it is not a promotor of Utam Galva & there is no objective reason for it to be prevented from bidding for any steel asset. It owns 29 % stake in Utam Galva but along with Miglani it is one of the promoters in disclosure to BSE
  • 👌 IBC – related party as someone who controls more than 20 % of voting rights in distressed company & also directors in a public company with more than 2 % stake
  • 👌 SEBI act define promoter and promoter group as someone with more than 10 % equity and control over running of company

Strengthening of Cyber Security

Digitalization influence changing consumer behavior, financial inclusion and leveraging smart phone use and mobile penetration

After BHIM app was launched in Dec 2016 – number of transactions had grown 200 times exponentially from 40,000 to 82 lakh transactions per month

Bhim Aadhaaar is digital payment acceptance solution by Aadhaar authentication

Cyber Security runs through confidentiality, integrity and availability following stakeholders:

  • Customer/Originator – anti-virus signature; keep password or PIN confidential

  • Originating Institution – maintain consistency, accuracy and trustworthiness of data

  • Processing agency – NPCI (National Payments Corporation of India), Mumbai or IDBRT (Institute for Development and Research in Banking Technology), Hyderabad

  • Beneficiary institution – maintain consistency, accuracy and trustworthiness of data

  • Beneficiary – share correct IFSC and VPA (Virtual Payment Address) to the beneficiary

📝 National Cyber Security Policy, 2013

Build a secure and resilient cyberspace for citizens, businesses and government

  • Create secure ecosystem

  • Create assurance framework for IT and security

  • Encourage open standards

  • Strengthen regulatory framework

  • Create mechanism for security threat

  • National Computer Emergency Response Team (CERT-in)

  • Secure e-governance

  • Protection and resilience of critical information infrastructure

  • Promote cutting edge research

  • HRD through education and training

Cyber Swachhta Kendra (Botnet cleaning and Malware Analysis Center)

  • Launched under section 70B of IT Act, 2000

  • Detect botnet infection and prevent further infection by notifying, cleaning and securing system of end-users

  • USB Pratirodh – control unauthorized usage of removable USB storage devices

  • Samvid app – desktop based application whitelisting solution for windows OS

  • M-Kavach – device for security of android mobile devices

  • Browser JSGuard- browser extension which detects and defends malicious HTML and Javascript attacks

📝 IT Act, 2000

Primary law dealing with cybercrime and electronic commerce amended in 2008

  1. Digital and electronic signature
  2. Digital governance
  3. Attribution, acknowledgment and dispatch of electronic records
  4. Secure electronic records
  5. Regulation of certifying authorities
  6. Electronic signature certificates
  • Offences includes tampering with computer, hacking (Section 66 - 3 yr imprisonment or Rs. 5 lakh fine), receive stolen computer (Section 66D-3 yr imprisonment or Rs. 1 lakh fine), use password (Section 66 C - 3 yr imprisonment or Rs. 1 lakh fine), cheat with computers, cyber terrorism, fail to maintain records or decrypt data and misrepresentation
  • Section 420 of Indian penal code applicable for credit card fraud dealing with cheating and dishonesty inducing delivery of property (maximum punishment is 7 years and fine)
  • RBI – zero liability (fraudulent transaction) and limited liability for bank customers against any fraud
  • RBI made mandatory to register customers for text alerts and permit reporting unauthorized transactions by reply to alert message
  • 👌 Phishing – social engineering attack to steal user data, login credentials and credit card numbers
  • Rural Banking: Translating Vision to Reality
  • 1976 – launch of Regional Rural Banks
  • India is still home to 24 % unbanked adults and 2/3rd of South Asia’s
  • About 31 crore potentially bankable rural Indians don’t have access to formal banking systems
  • Due to irregular income and expenditure (social and medical emergency) in rural areas, banks have high non performing loans in rural areas
  • Banks need more customer per branch/channel to break even in rural areas

Develop inclusive rural financial system:

  1. Product strategy

  2. Process

  3. Partnerships

  4. Protection

  5. Profitability

  6. Productivity

  7. People

  • 1st constructed attempt for financial inclusion in 2005 – by KC Chakraborthy Chairman of Indian Bank – Mangalam village was 1st village where all households were provided with banking facilities
  • Facilitate general credit cards for small deposits for people intending to open accounts with annual deposits of less than 50,000
  • By Sept 2016,50 million Kisan Credit Cards were issued
  • HP, Kerala and Puducherry announced 100 % financial inclusion in all districts
  • RBI’s 2020 vision – open 600 million new customers account and service them
  • Business Correspondents (BC) model to reach the rural poor
  • Innovative products to cater poor villagers
  • ICT enabled environment as lever to achieve financial inclusion
  • Reduce overall transactions cost
  • Provide cheap remittance facilities
  • Increase credit absorption capacity in rural areas
  • Of 6 lakh villages, 18,000 have no electricity – so for financial inclusion infrastructure is must
  • India has world’s largest postal network
  • SHG-Bank Linkage program of NABARD has biggest micro credit program in the world

Some steps involves

  1. Jan Dhan Yojana

  2. MUDRA accounts

  3. Social sector reforms and schemes

  4. Banking services by banking correspondents

  5. Concession on credit and debit transactions

  6. Aadhaar enabled micro ATMS

  7. Promote differential banking by new licenses

  8. JAM trinity

  9. Direct benefit transfer scheme

  10. Priority sector lending targets may not reach deserved

Mission Indradhanush: Revamp PSB in India

Reforms as:

  • Appointments – separate post for chairman and MD

  • Bank Board Bureau – body of professionals to replace appointments board

  • Capitalization: meet Basel III norms

  • Destress PSB – project monitoring group, pending policy decisions, respective discoms for early reforms, change extant duty regime without impacting downstream user industry

  • NPA disclosures – early recognition of financial distress, steps for resolution and fair recovery of lenders; tightened norms for Asset Reconstruction Companies

  • Empowerment

  • Accountability

  • Governance Reforms (started with GyanSangam conclave of PSB and FI in 2015 in Pune) – Insolvency and Bankruptcy Code & recapitalization of PSBs

  • Consolidation of Banks – merger of 6 SBI associate banks and Bhartiya Mahila bank with SBI

Indradhanush 2.0: Comprehensive plan for recapitalization of public sector lenders to make sure that they remain solvent and comply with global capital adequacy norms Basel III.

👌 Specialized Banks

EXIM Bank – Export Import Bank under act in 1981 and started in 1982 – for exports has warehousing finance, export lines of credit facilities, long term working capital, cash flow financing and non-funded capital scheme

NABARD – National Bank for Agriculture and Rural Development came in existence in 1982 – refinance agriculture and development

NHB - National Housing Bank – established in 1988 under National Housing Bank Act, 1987 to accelerate housing financial institutions – development and risk management, project finance and refinancing operations

SIDBI – Small Industries Development Bank of India – set up in 1990 for promotion, financing and development of MSMEs as they account for 5.1 crore units, employ 11.7 crore, manufacture 6000 products, contribute to 45 % manufacturing output, 40 % of export in value and 37 % of GDP

📹 Bharatmala Pariyojana

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Bharatmala Pariyojana

Dr. Manishika Jain explains Bharatmala Pariyojana as an umbrella program

NHDP was 1st program in 1998

Study high density origin destination patterns

Decongest stretches by creating bypass, ring road, multimodal logistic paarks to enable freight movement, develop infrastructure along borders

👌 Has 6 components:

  • Economic corridor: carry 80 % freight traffic

  • Inter-corridor and feeder corridors

  • National corridor efficiency improvement

  • Border and international connectivity roads

  • Coastal and port connectivity roads

  • Greenfield expressways

Phase I – total 24,800 km of roads are planned with 10,000 residual roads and Rs. 5,35,000 crore in 5 years

Impact – optimized efficiency of traffic movements, develop corridors, connect 550 districts, create investment opportunities, upgrade corridor network, improve vehicle utilization, faster transit and have positive impact on Logistic Performance Index

India’S Credit Ratings: Boost to Investor’S Sentiments

  • Moody rating upgraded from BAA3 to BAA2 and outlook from positive to stable
  • Upgraded considering introduction of GST, insolvency and bankruptcy code, raise FDI limit, ease of doing business index
  • While Standards and Poor (S&P) did not upgrade India’s rating
  • Credit Ratings consider broad financial, macroeconomic and stability of indicators – don’t use rule based method and are subjective
  • Moody’s examines expected losses which are part of broader likelihood of defaults
  • S&P is more interested in creditworthiness of the borrowers
  • India depend on rating of international CRA a – to raise capital in international financial market & attract foreign investment
  • Indicators include total and external debt to GDP ratio, GDP growth, GDP per capita, capital and FDI inflow, fiscal and current account deficit and default history of economy
  • India has grown 7.68 % over last 10 years
  • Current account deficit reached 4.8 % of GDP in 2013 along with high fiscal deficit of 7 % of GDP
  • Make in India focus on 25 potential sectors that generate 100 million jobs with increasing share of India’s GDP to 25 % by 2020 – reforms of infrastructure, easing environmental approvals, ease of doing business, incentive to MSMEs, labor law reforms, easing FDI norms, promoting open economy and efficient trade policy reforms
  • Total gross debt to GDP is major factor that peaked in 2003 at 84.2 % and improved gradually at 69.5 % in 2016
  • Fiscal Responsibility and Budget Management (FRBM) committee is committed to decrease debt to GDP ratio to below 60 % by 2023
  • External debt – long term debt comprises of 83 % total external debt and short term debt hover at 17%
  • India’s forex reserve has increased from US $199.179 billion in 2007 to US $360.176 billion in 2016
  • S&P downgraded China from A + to AA- that is stable to negative while it did not upgrade India despite improvements in macro fundamentals
  • S&P rated India 4 times in last 10 years and keep it at status quo of BBB-
  • Moody’s took more than 13 years to upgrade India to BAA2 from BAA3 (in 2004 it upgraded from BA1 to BAA3)
  • Initiatives under Ease of Doing Business
  • 24 × 7 e-business portal
  • Reduce corporate tax rate from 30 % to 25 % in next 4 years
  • Proposed new bankruptcy law to allow easier exit for investors
  • One time settlement of tax disputes
  • 50 amendments to companies act proposed
  • Enable registration of company in 1 day
  • More allocation to 1500 multi-skill institutes for training
  • Tax and duty cut on imports of intermediary inputs
  • Documents for exports and imports reduced from 11 to 3
  • Delicensing of defense items – 56 % defense items out of licensing requirements
  • NRI investments treated as Indian investment
  • Gross debt to GDP ratio has deteriorated for many nations but increased 239.2 % for Japan, 112 % for Singapore, 107 % for USA and 99 % for Spain – however the rating has remained the same
  • However, it seems international CRA have been unfair towards India for ratings
  • Credit to GDP ratio increased from 142 % in 2010 to 205 % in 2016 but for India it was 70%
  • FDI inflows more than doubled from $23 billion in 2007 to $56 billion in 2016, highest annual FDI ever
  • Out of the total India’s debt, public debt stands at 42 % of GDP of which external debt is mere 4%

📝 Big Data Analysis in Banking Industry

Process to examine large and varied data sets to help organizations make more informed business decisions

  • Understand and target customers

  • Understand and optimize business process

  • Improve healthcare and public health

  • Improve science and research

  • Improve and optimize cities and countries

  • Improve security and law enforcement

It is used in companies like Walmart, Netflix, Microsoft, Royal Bank of Scotland and USA Govt. Recently used in USA and India elections

Under digital revolution by 2020, new data of 1.7MB/sec will be created per human being on this planet

Indian Banking uses big data analytics for

  • Spending patterns

  • Social media

  • Levels of risk

  • Credit scores

  • Loans

  • Available credit

  • Savings balance

  • Income

📝 Identinomics where individual needs are to be known in advance and instead of pushing products we must sell what customer needs

Bank have more data than any other industry

Data collection through branches, apps banking, internet banking, SMS, credit rating and credit information companies

Data storage – contact organizations that follow big data analytics

Data analysis and utilization


  • Extract data of preferred customers for personalized gifts

  • Extract data from credit rating agencies to help bank to identify desired rated customers to be chased

  • Extract information on housing loan borrowers more than 25 lakhs

  • Use data to improve performance – how can I optimize the marketing budget?

India’S Membership for European Bank for Reconstruction and Development Approved by Cabinet

  • Improve India’s investment & investment climate
  • Enhance competitive strength
  • Open new vistas for Indian professionals
  • Get more employment opportunities
  • Initial minimum investment for membership will be Euro 1 million – buy minimum number of 100 shares for membership

Subsidizing MDR Charges on Debit Card/BHIM/AePS Transactions

  • Merchant discount rate applicable on transactions upto Rs. 2000 to borne by government for 2 years from 1 Jan 2018
  • Increase adoption of digital payments, increase digital transaction volume and move to less cash economy

Trajectory for Solar Generating Capacity Announced

  • Commission 175 GW of renewable energy, 100 GW of solar generating capacity and 60 GW of wind power by 2022
  • Domestic manufacturing of 20GW in near future
  • Floating solar power plants over dams, offshore wind energy systems and hybrid solar wind power systems
  • Power sale agreement for purchase of wind power under solar energy corporation with UP, Bihar, Jharkhand, Assam, Punjab, Goa and Odisha – with Renew Power, Orange, Inox, Green Infra, Adani Green to set wind power plants in Gujarat TN and MP

📝 👌 National Nutrition Mission Approved

  • 3 year budget of Rs. 9046.17 crore form 2017 - 18
  • Map schemes for malnutrition
  • Robust convergence mechanism
  • ICT based real time monitoring system
  • Eliminate registers used by Anganwadi workers
  • Social audit
  • Set up nutrition resource centers
  • Benefit more than 10 crore people
  • Reduce low birth weight by 2%, stunting by 2%, undernutrition by 2 % and anemia by 3%

International Film Festival of India Awards

  • Morocco born French Director Robin Campillo’s drama film “120 BPM” won golden peacock award – about homosexuality and AIDS epidemics
  • Chinese director ivian Qu – Best Director Award for 2017 film “Angels wear White”
  • Best actor Male – Nahuel Perez Biscaryat
  • Best actor Female – Parvathy TK
  • Special Jury Award – Mahesh Narayan for “Take Off”
  • Bolivian Director Kiro Russo won Silver Peacock for best Feature Film of Director – film “Dark Skull”
  • Manouj Kadaamh’s Marathi film “Kshitij” won ICFT-UNESCO Gandhi Medal
  • Canada’s director Atom Egoyan won IFFI 2017 Lifetime Achievement Award

NE States

  • 👌 Hornbill festival – Nagaland
  • 👌 60 MW Tuirial HEP dedicated to nation in Mizoram – now Mizoram will be 3rd surplus state after Sikkim and Tripura
  • Non Lapsable Central Pool of Resources scheme with 90: 10 funding till March 2020
  • Approval of North East Special Infrastructure Development Scheme from 2017 - 18 with 100 % central govt. funding – health care and education as main focus areas

Integrated Command and Control Center Projects

  • Enable fast and efficient citizen service delivery in 20 cities
  • Improvement under citywise service level improvement plan and AMRUT scheme
  • Performance grant of 14th Finance Commission for financial and service level reforms
  • AMRUT reforms in 111 urban management and governance reforms
  • Incentive fund with rapid and transformational reforms along governance, financing and planning

📝 Schemes for Women Empowerment

  • PM Mahla Shakti Kendra
  • Student volunteers
  • Beti Bacho Beti Padhao
  • For violence cases – One Stop Centers
  • Common task force at national, state and district level
  • Improve declining child sex ratio
  • Students as agents of change

👌 GES Summit 2017 – Global Entrepreneurship Summit

  • 1st time in South Asia in Hyderabad
  • Women first, prosperity for all
  • Connect silicon valley with Hyderabad
  • Contribute to create New India by 2022
  • Come, Make in India and Invest in India

👌 National Trachoma Survey Report

  • India is now free from infective trachoma
  • Active infective trachoma is now eliminated with prevalence of only 0.7%- much below criteria given by WHO which states less than 5 % in age 10 years and less
  • Trachoma is disease of poor environmental and personal hygiene with inadequate access to water and sanitation
  • Mainly found in Gujarat, Rajasthan, Punjab, Haryana, UP and Nicobar islands

J & K

  • Private coaching to be allowed only from 9 am to 5: 30 pm in winter seasons
  • Power connections to be seeded with aadhaar and ration cards
  • Construction of Eklayva Model Residential Schools in Kulgam and Anantnag
  • Upgradation of hostels for Gujjar and Bakarwals into residential schools at Poonch, Rajouri, Kathua, Doda, Bandipora and Kupwara
  • 34 e-classrooms established for tribal areas

Loan Agreement with World Bank for SANKALP Project

  • 👌 SANKALP – Skill Acquisition and Knowledge Awareness for Livelihood Promotion
  • Loan of USD 250 million
  • Expand skill training by PPP model
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Yojana January 2018 Summary: Banking Reforms (In Hindi)

Dr. Manishika Jain explains Yojana January 2018: Banking Reforms (Special Issue)

👌 implies important for Objective Questions/MCQ

📝 implies important for Subjective Questions

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- Published/Last Modified on: January 31, 2018


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