Financial Awareness at a Glance (11 June – 17 June 2018)

Dear readers,

Today, we are sharing the next part of our Banking and Finance Awareness Series “Financial Awareness at a Glance “. Go through this now to get all the important insights which took place last week in Banking and Finance Sector in India and world. This will immensely help you in upcoming exams.

Financial Awareness at a Glance

1. Canada hosts 44th G7 Summit

  • The 44th G7 summit was held on 8–9 June 2018, in La Malbaie, Quebec, Canada.
  • The theme of the summit is “Working together on climate change, oceans and clean energy”.
  • The leaders discussed the challenges and chances to move towards zero plastic waste and lessening plastic and microplastic in our oceans.
  • This was the sixth time since 1981 that Canada has hosted the meetings.
  • In accordance with the rotating presidency of the G7, next summits will be held in France (2019), and the USA (2020).
  • The 43rd G7 summit took place in 2017 in Sicily, Italy.

 About G7 

  • The Group of Seven (G7) is an informal grouping of seven of the world’s advanced economies, as well as the EU and European Commission.
  • They consist of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States and the presidency rotates every year.
  • It offers the leaders of these nations to come together and tackle the most challenging global issues of the time.

 Source: Business Standard

2. Justice BN Srikrishna-led team to probe charges against ICICI Bank CEO

  • Retired Supreme Court Judge Justice BN Srikrishna will head the investigation initiated by the board of ICICI Bank on allegations of corporate misconduct and quid pro quo against its Managing Director and CEO, Chanda Kochhar.
  • “The scope of enquiry would be comprehensive and include all relevant matters arising out of and in the course of examination of the facts and wherever warranted, use of forensics and e-mail reviews and records of statements of relevant personnel.

Note:

  • ICICI Bank MD & CEO Chanda Kochhar has been in the midst of allegations of quid pro quo in loans sanctioned by the bank to the Videocon Group and the Essar Group in return for funds given to her husband Deepak Kochhar’s firm NuPower Renewables.
  • The allegations are also being investigated by the Central Bureau of Investigation, Income Tax Department and market regulator SEBI.

 Source: The Hindu -Business Line

3. Fitch Ratings revises outlook on Axis Bank to negative from stable

  • Fitch Ratings affirmed the Long-Term Issuer Default Ratings (IDRs) and Viability Ratings of ICICI Bank and Axis Bank at ‘BBB-‘ and ‘bbb’, respectively.
  • Also, it has revised the outlook on Axis Bank to negative from stable.
  • Fitch has also downgraded ICICI’s Support Rating to ‘3’, from ‘2’, and revised its Support Rating Floor to ‘BB+’, from ‘BBB-‘.
  • On the negative outlook for Axis Bank, the rating agency said: “Axis’ IDR reflects rising pressure on its standalone profile relative to banks with a Viability Rating of ‘bbb-‘, stemming from heightened asset-quality stress and weak earnings.
  • Fitch has a negative outlook on the banking sector, as a whole. Most state banks reported losses in the financial year ending March 2018 and earnings at large private banks also came under significant pressure, with Axis reporting its first-ever quarterly loss.

 Source: The Economic Times

4. Govt. may launch Rs 500 crore credit enhancement fund in July

  • The government is likely to launch an Rs 500-crore credit enhancement fund next month to facilitate infrastructure investments by insurance and pension funds.
  • The fund was first announced in the financial budget for the fiscal year 2016-17.
  • According to the Kumar Vinay Pratap, joint secretary (infrastructure, policy and finance), ministry of finance – “India is launching a dedicated fund may be next month to provide credit enhancement for infrastructure projects which will help in upgrading credit ratings of bonds issued by infrastructure companies and facilitate investment from investors like pension and insurance funds,”.
  • The initial corpus of the fund, to be sponsored by IIFCL (India Infrastructure Finance Company), will be Rs 500 crore, and it will operate as a non-banking finance company.
  • IIFCL will hold 22.5% stake in the NBFC, while Asian Infrastructure Investment Bank (AIIB) has been offered by the Government to pick up 10% stake.

Note:

  • In India, at present only $110 billion is being invested in infrastructure against the requirement of $200 billion, leading many analysts to classify India as infrastructure deficit country.
  • Many of the of the present infrastructure project financing is done by the banking system. But all these lenders are saddled with the problem of non-performing assets (NPAs).
  • So, there is a need for the private sector to be more active on the infrastructure investment front. CEF will serve as an alternative for raising of money for infrastructure projects through corporate bonds.

 Source: The Times of India

5. RBI releases draft guidelines on Loan System for Delivery of Bank Credit

  • The Reserve Bank came out with draft guidelines on loan system for delivery of bank credit to improve discipline among larger borrowers enjoying working capital facility from the banking system.

The minimum level of ‘loan component’ and Effective date

  • “In respect of borrowers having aggregate fund based working capital limit of Rs 150 crore and above from the banking system, a minimum level of ‘loan component’ of 40 per cent shall be effective from October 1, 2018.
  • Accordingly, for such borrowers, the outstanding ‘loan component’ must be equal to at least 40 percent of the sanctioned fund based working capital limit, including ad hoc credit facilities.

 Risk weights for undrawn portion of cash credit limits

  • Effective from April 1, 2019, the undrawn portion of cash credit/ overdraft limits sanctioned to the aforesaid large borrowers, irrespective of whether unconditionally cancellable or not, shall attract a credit conversion factor of 20 percent.
  • The 40 percent loan component will be revised to 60 percent, with effect from April 1, 2019.

Source: RBI

6. Fitch ups India growth forecast to 7.4% for FY’19

  • Fitch Ratings in its Global Economic Outlook report raised India growth forecast for 2018-19 to 7.4 per cent from 7.3 per cent but cited higher financing costs and rising oil prices as risks to growth.
  • For 2019-20, it estimated the country to grow at 7.5 per cent.
  • The economy grew at 6.7 per cent in 2017-18 and 7.7 per cent in January-March quarter.
  • Fitch said the Indian rupee has been one of the worst performing currencies in Asia this year, although the depreciation was more muted than during the 2013 taper-tantrum episode.

 Note:

  • Last month, US-based Moody’s cut India’s growth forecast for 2018-19 to 7.3 per cent from 7.5 per cent citing rising oil prices.

 Source: The Economic Times

7. Former World Bank Economist Omar Al-Razzaz Sworn in as Jordan PM

  • Jordan’s King Abdullah swore in a new government led by a former World Bank economist and mandated to review a disputed tax system after widespread protests against IMF-driven austerity measures.
  • Jordan’s King Abdullah appointed Omar al-Razzaz, a Harvard-educated economist outside the ranks of the traditional political elite, as prime minister of the country.
  • Omar Al-Razzaz replaces Hani Mulki, a business-friendly politician who was dismissed to defuse public anger that triggered some of the largest popular protests in years.

Source: Channel NewsAsia

8. Karnataka Bank launches ‘Deposit Only Card’

  • Karnataka Bank Ltd has launched ‘KBL-Deposit Only Card’ that enables hassle-free cash deposit transactions at the bank’s 24X7 e-lobby services.
  • This card is specially meant for the bank’s current/overdraft customers. These customers can perform cash deposit transactions even with higher deposit limit at the bank’s bunch note acceptor (BNA) or cash recycler kiosks by using this card.
  • The limit for the cash deposit a day is Rs 10 lakh.

 Source: The Hindu -Business Line

9. Vijaya Bank bags PFRDA award

  • Public sector Vijaya Bank has bagged the Best Performing Public Sector Bank award for the financial year 2017-2018 from the Pension Fund Regulatory and Development Authority (PFRDA).
  • The bank has performed well under Atal Pension Yojana.
  • The award was given at the National Atal Pension Yojana Conference held at Delhi.

 Source: The Hindu -Business Line

10. Fitch downgrades viability rating of SBI, Bank of Baroda

  • Fitch Ratings has downgraded the viability rating (VR) of State Bank of India (SBI) and Bank of Baroda (BoB) by one notch to bb+ and bb, respectively, reflecting their weakened intrinsic risk profile due to the negative effect of poor asset quality and earnings on their capital position.
  • The banks’ core capital buffers also appear more vulnerable to moderate shocks, the global credit rating agency said in a statement.

 Note:

  • Viability Ratings (VRs) measure the intrinsic creditworthiness of a financial institution and reflects Fitch’s opinion on the likelihood that the entity will fail.
  • The one-notch downgrade of SBI reflects the bank’s vulnerable core capitalisation from its prolonged asset quality problems and weak earnings.
  • Fitch said the one-notch downgrade of BoB reflects increasing pressure on its capital position from extended financial weakness in terms of NPLs and earnings.

 Source: The Hindu -Business Line

11. Amazon India launches seller lending network

  • Amazon India launched its Seller Lending Network (SLN), which will allow sellers on the e-commerce major’s platform to seek loans from multiple third-party lenders.
  • Amazon India has partnered organisations like Aditya Birla Finance, Bank of Baroda, Capital First, Capital Float, Flexi loan, and Yes Bank for the lending programme.
  • “With this launch, a seller can perform all loan-related activities including viewing multiple loan offers, applying for loans and easy/automatic loan repayments by linking their Amazon sale proceeds to their loan account, all on Amazon’s Seller Central portal.

 Note:

  • Under SLN, sellers will get access to a wider selection of loan options from multiple lenders and loan types (term loans or overdraft loans) as well as competitive interest rates.

 Source: The Hindu -Business Line

12. HDFC fifth biggest consumer financial services company globally: Forbes

  • Housing finance major HDFC has been ranked as the 5th biggest public company globally in the ‘consumer financial services category’ on a list compiled by Forbes magazine.
  • American Express has topped this category, while Indiabulls Housing Finance is the only other Indian company (at 13th place) on the list.
  • In the consumer financial services category, HDFC’s rank has moved up from 7th place last year.
  • Other consumer financial services companies that made it to the list include Capital One Financial at the 159 place, followed by Visa (164), Orix (254), PayPal (337), Synchrony Financial (340), Discover Financial Services (356), and Mastercard (367), among others.
  • In the overall list, topped by China’s banking behemoth ICBC, HDFC took 321st place, up from 404th a year ago.
  • There are a total of 58 Indian companies on the overall list of 2,000 firms from across the world.
  • These include Reliance Industries at 83rd place, the only from India in the top-100. Besides, HDFC Bank is at 202nd, ONGC at 266th, Indian Oil at 270th and ICICI Bank at 320th.
  • Some of the other Indian companies in the overall list include Tata Motors at 385th position, Tata Consultancy Services (404), Larsen & Toubro (471) and State Bank of India (489).
  • The 16th annual Forbes Global 2000 list includes publicly-traded companies from 60 countries.

 Source: The Hindu -Business Line

13. YES Bank re-appoints Rana Kapoor as MD & CEO for 3 years

  • Private sector lender YES Bank has re-appointed Rana Kapoor as MD & CEO of the bank for a period of three years. The decision was taken at the 14th annual general meeting of the shareholders of the bank.
  • “The re-appointment will be effective for a period of three years from September 1, 2018, subject to final approval by the Reserve Bank of India (RBI),” the bank said in a release.

 Source: The Hindu -Business Line

14. Mauritius to host 11th World Hindi Conference

  • The 11th World Hindi Conference or Vishwa Hindi Sammellan will be held at Mauritius’ Port Louis.
  • The theme of the conference is “Global Hindi and Indian Sanskar”.
  • The dates of the conference are 18-20 August and will be held at Swami Vivekananda International Conference Center.
  • It sees participation from Hindi scholars, writers and laureates from different parts of the world who contribute to the language.
  • The World Hindi Conference is a major event dedicated to the Hindi language organised every three years by the External Affairs Ministry.
  • The previous conference was held in Bhopal in 2015.

Note:

  • The first World Hindi Conference was held in 1975 in Nagpur, India and was inaugurated by then Prime Minister of India Indira Gandhi. Since then, ten such conferences have been held in different parts of the world.

Source: ANI

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