Like we did over the last couple of years, we would be covering a bit on IIFT 2016, SNAP 2016 GK Preparation this year as well. Over the last few years, one can almost be assured of at least a couple of questions from Indian Finance and one does not need to prepare a lot or to remember a lot of stuff. We have compiled a knowledge capsule of the important highlights of 2016. There will be a separate post on statistics which will cover the interest rates, GDP, etc.

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IIFT 2016, SNAP 2016 GK Preparation

IIFT 2016, SNAP 2016 GK Preparation – Finance in India

Introduction

The Indian banking system consists of 26 public sector banks, 25 private sector banks, 43 foreign banks, 56 regional rural banks, 1,589 urban cooperative banks and 93,550 rural cooperative banks, in addition to cooperative credit institutions.

The central bank granted in-principle approval to 11 payments banks (can accept deposits and remittances, but are not allowed to extend any loans)

1. Reliance Industries
2. Aditya Birla Nuvo
3. Vodafone
4. Airtel
5. Department of Posts
6. Cholamandalam Distribution Services
7. Tech Mahindra
8. National Securities Depository Limited (NSDL)
9. Fino PayTech
10. Sun Pharma
11. PayTM

10 small finance banks in FY 2015-16.

1. Au Financiers (Jaipur)
2. Capital Local Area Bank (Jalandhar)
3. Disha Microfin (Ahmedabad)
4. Equitas Holdings (Chennai)
5. ESAF Microfinance and Investments (Chennai)
6. Janalakshmi Financial Services (Bengaluru)
7. RGVN (Northeast) Microfinance (Guwahati)
8. Suryoday Micro Finance (Navi Mumbai)
9. Ujjivan Financial Services (Bengaluru)
10. Utkarsh Micro Finance (Varanasi)

Investments/developments

Key investments and developments in India’s banking industry include:

• RBL Bank Limited, an Indian private sector bank, has raised Rs 330 crore (US$ 49.6 million) from a UK-based development finance institution CDC Group Plc
• The State Bank of India (SBI) signed an agreement with The World Bank for a Rs 4,200 crore (US$ 625 million) credit facility, aimed at financing grid connected rooftop solar photovoltaic (GRPV) projects in India.
• Canada Pension Plan Investment Board (CPPIB), an investment management company, has bought a large stake in Kotak Mahindra Bank Ltd from Japan-based Sumitomo Mitsui Banking Corporation.
• India’s first small finance bank called the Capital Small Finance Bank has started its operations by launching 10 branch offices in Punjab, and aims to increase the number of branches to 29 in the current FY 2016-17.
• Exim Bank of India and the Government of Andhra Pradesh has signed a Memorandum of Understanding (MoU) to promote exports in the state.
• Kotak Mahindra Bank Limited has bought 19.9 per cent stake in Airtel M Commerce Services Limited (AMSL) for Rs 98.38 crore (US$ 14.43 million) to set up a payments bank. AMSL provides semi-closed prepaid instrument and offers services under the ‘Airtel Money’ brand name.
• India’s largest public sector bank, State Bank of India (SBI), has opened its first branch dedicated to serving start-up companies, in Bengaluru.
• Global rating agency Moody’s has upgraded its outlook for the Indian banking system to stable from negative based on its assessment of five drivers including improvement in operating environment and stable asset risk and capital scenario.
• Lok Capital, a private equity investor backed by US-based non-profit organisation Rockefeller Foundation, plans to invest up to US$ 15 million in two proposed small finance banks in India over the next one year.
• IDFC Bank has become the latest new bank to start operations with 23 branches, including 15 branches in rural areas of Madhya Pradesh.
• The RBI has allowed Indian alternative investment funds (AIFs), to invest abroad, in order to increase the investment opportunities for these funds.
• Bandhan Financial Services raised Rs 1,600 crore (US$ 234.8 million) from two international institutional investors to help convert its microfinance business into a full service bank. Bandhan, one of the two entities to get a banking licence along with IDFC, launched its banking operations in August 2015.

Government Initiatives

The government and the regulator have undertaken several measures to strengthen the Indian banking sector.

• The Reserve Bank of India (RBI) has released the Vision 2018 document, aimed at encouraging greater use of electronic payments by all sections of society by bringing down paper-based transactions, increasing the usage of digital channels, and boosting the customer base for mobile banking.
• The Reserve Bank of India (RBI) has issued guidelines for priority sector lending certificates (PSLCs), according to which banks can issue four different kinds of PSLCs—those for the shortfall in agriculture lending, lending to small and marginal farmers, lending to micro enterprises and for overall lending targets – to meet their priority sector lending targets.
• Under Pradhan Mantri Jan Dhan Yojna (PMJDY), 250.5 million accounts! have been opened and 192.2 million RuPay debit cards have been issued as of October 12, 2016. These new accounts have mustered deposits worth almost Rs 44,480 crore (US$ 6.67 billion).
• The Government of India is looking to set up a special fund, as a part of National Investment and Infrastructure Fund (NIIF), to deal with stressed assets of banks. The special fund will potentially take over assets which are viable but don’t have additional fresh equity from promoters coming in to complete the project.
• To provide relief to the state electricity distribution companies, Government of India has proposed to their lenders that 75 per cent of their loans be converted to state government bonds in two phases by March 2017. This will help several banks, especially public sector banks, to offload credit to state electricity distribution companies from their loan book, thereby improving their asset quality.
• Government of India aims to extend insurance, pension and credit facilities to those excluded from these benefits under the PradhanMantri Jan DhanYojana (PMJDY).
• To facilitate an easy access to finance by Micro and Small Enterprises (MSEs), the Government/RBI has launched Credit Guarantee Fund Scheme to provide guarantee cover for collateral free credit facilities extended to MSEs upto Rs 1 Crore (US$ 0.15 million). Moreover, Micro Units Development & Refinance Agency (MUDRA) Ltd. was also established to refinance all Micro-finance Institutions (MFIs), which are in the business of lending to micro / small business entities engaged in manufacturing, trading and services activities up to Rs 10 lakh (US$ 0.015 million).

 

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Mock Test Series for IIFT 2016 (6 mocks at Rs. 299 only)

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You may check out our static GK articles and download the pdfs from last year: IIFT 2016 and SNAP 2016 GK Preparation

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A few links that you might be interested in:

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(All values and statistics taken from the IBEF Report – September 2016)