Current Affairs Economy & Banking

 The Karur Vysya Bank (KVB) has entered into a partnership with Star Health and Allied Insurance Co to provide a wide range of health insurance options to its customers. Under the agreement, all the health insurance products of Star Health & Allied Insurance will be made available through all 780 branches of the Karur Vysya Bank. This agreement helps the bank to provide cost-effective insurance products and quick settlement of claims its customers.

 YES Bank has launched a digital solution, “Loan in Seconds” for instant disbursement of retail loans. The account holders identified by the bank can avail this quick loan disbursal facility without any document. The solution aims to provide customers, completely paperless and hassle-free loans to help them meet their immediate financial needs. Eligible customers under ‘Loan in Seconds’ will receive communication from the bank with the link to apply for the loan.

 Government of India will bring an ordinance to put all cooperative banks under the Reserve Bank of India supervision. This decision was announced by Union information and broadcasting minister Prakash Javadekar. Now 1,482 urban cooperative banks and 58 multi-state cooperative banks came under the supervisory powers of the Reserve Bank of India. The RBI’s powers as they apply to the scheduled banks will also apply to cooperative banks. This decision will give an assurance to more than 86 million depositors in these banks that their money amounting to Rs 4.84 trillion will stay safe.

 The Karnataka Bank has rolled out a new product titled “KBL Micro Mitra” for the Micro entrepreneurs. Under the newly launched product, the Micro manufacturing and service enterprises will be offered a financial assistance of up to Rs 10 lakhs. This financial assistance would be provided either for working capital or for investment purposes. The financial assistance facility comes with a simplified procedure and competitive rate of interest. KBL Micro Mitra would be available for the Micro entrepreneurs across India through all the branches of Karnataka Bank. This will ensure timely credit assistance to the micro entrepreneurs who are playing an instrumental role in the recovery of the economy both in rural and urban India.

 In order to boost Infrastructure projects across all the sectors at a time of a global pandemic, several decisions were taken by the Union Cabinet under the chairmanship of Prime Minister of India Narendra Modi on 24th June 2020.
  • Animal Husbandry Infrastructure Development Fund (AHIDF)
The aim of setting up AHIDF is to unlock private sector investments in the animal husbandry sector. Through the fund, Infrastructural developments will be promoted in dairy, animal feed, and meat processing plants. As per Government estimate, the fund will help in creating up to 35 lakh jobs across the country. The total budget for the fund is Rs 15,000 crores. Beneficiaries of the fund will be MSMEs, Farmer Producer Organisations (FPOs), private Companies, Section 8 companies, and Individual Entrepreneurs working in the Animal Husbandry Sector. Beneficiaries will be provided with a 3 percent interest subvention by the Government of India.
  • Uttar Pradesh’s Khushinagar Airport declared as an International Airport
Khushinagar is a Buddhist pilgrimage town where Gautama Buddha attained Mahaparinirvana. The move will provide a much-needed boost to the tourism sector of the country in the post-COVID-19 world as International connectivity will increase number of foreign and as well as domestic tourists. This will lead to significant economic development in and around the region.
  • USD 121.27 million approved for Shwe Oil & Gas Project in Myanmar
ONGC Videsh Limited (OVL) was given approval by the Government with an additional Rs 909 crore (USD 121.27 million) for further development of the Shwe Oil & Gas project. The Shwe Oil & Gas Project is located in Myanmar. The project is a part of the consortium of companies. Apart from India, companies from Myanmar and South Korea are also a part of the Shwe project. From India, state-owned company GAIL is also a co-investor in the project. In July 2013, the first gas from the project was received.  OVL has invested Rs 3,949 crore on the Shwe gas project until 31st March 2019. Since 2014-15 the project has given investors positive cash flows. The additional investment provided to OVL will further help in the continuous development of the Shwe Project. The success of this oil and gas exploration project in a neighbouring country will help India in strengthing its energy security needs. It is also important for the overall global and as well as regionally for India to develop such energy bridges with the neighbours.

 The Reserve Bank of India has enhanced the withdrawal limit for depositors of Punjab and Maharashtra Cooperative Bank Limited, Mumbai to Rs 1 Lakh per depositor. The withdrawal limit was earlier set at Rs 50,000. According to RBI, with the enhancement of the withdrawal limit, more than 84% of the depositors of the bank will be able to withdraw their entire account balance. RBI placed the PMC bank under All-Inclusive Directions under sub-section (1) of Section 35 A read with Section 56 of the Banking Regulation Act, 1949 with effect from close of business on 23rd September 2019, in the interest of depositor protection. These directives were applicable till June 22, 2020. But, due to lockdown on account of COVID-19 pandemic the resolution process of the bank was negatively affected. Hence, these directives has been extended by RBI for a further period of six months from June 23, 2020 to December 22, 2020 subject to review.

 India’s 3rd largest lender, Bank of Baroda will completely digitize its lending operations including home, agriculture, Micro, Small and Medium Enterprises(MSME), personal and auto loans. The bank has recently completed its merger with Vijaya Bank and Dena Bank.
About Bank of Baroda Digital Lending:
  • The validation and disbursal of fresh loans will happen via this digital platform while past loans will also be digitised to cut costs and improve profitability.
  • The bank is planning to digitise a large proportion of its retail and MSME processes in the next six months.
  • The bank has set up a new vertical, digital lending department at the corporate office, which will have substantial overlap with various credit verticals including Retail, MSME, Agri & service verticals like Analytics centre, Risk Management, Marketing.
  • To set up this digital lending department the bank has reached out to the Big Four and some white shoe consultants like McKinsey and Boston Consulting Group.

  •  ICICI Home Finance Company Limited (HFC) has launched “SARAL” scheme for a special affordable house loan for urban and rural areas. The beneficiaries are women, lower, middle-income customers and economically weaker sections, with a maximum household income up to Rs 6 lakh per annum. 
    • About SARAL Scheme:
    The loan requires compulsory ownership of a woman in the country’s rural areas from Rs 3 lakh to Rs 6 lakh. The maximum limit of the loan is Rs 35 lakh. The interest rate of the loan starts from 7.98%. The maximum tenure of the loan is 20 years. Customers with pre-existing loans can also transfer their loans.

     Fitch Ratings has retained India’s sovereign rating at the lowest investment grade of “BBB-“, while the rating agency has revised downward its rating outlook for India to negative from stable. Fitch has cited increasing risk to the India’s growth and debt outlook, as a reason for the above ratings. Fitch Ratings stated that the COVID-19 pandemic has significantly weakened India’s growth outlook for fiscal year 2021, simultaneously exposing the challenges associated with a high public-debt burden. Although, the rating agency expects India’s economic activity to contract by 5% in the fiscal year 2021 before rebounding by 9.5% in fiscal year 2022.

     The Asian Development Bank has projected Indian economy to contract by 4% in Fiscal Year 2021. Indian economy has been projected to contract, as businesses came to a standstill for more than two months due to the nationwide lockdown implemented to contain the COVID-19. The Asian Development Bank expects India’s economy to recover in Fiscal Year 2022 with growth rate of 5%, as economic activity will get to its normal state gradually.


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