Emerging Young Writers
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T H E M A G A Z I N E B Y B A N K I N G C O M M I T T E E 1 5 T H M A Y 2 0 2 1 BANK BLAST V O L U M E - I EMERGING YOUNG WRITERS E X C L U S I V E A R T I C L E ! SMALL FINANCE BANKS GOING PUBLIC C O N T E N T S P A G E 1 MESSAGE FROM DR. R. K. SINHA P A G E 2 MESSAGE FROM HEAD OF ESIC - BANKING COMMITTEE P A G E 3 COMMITTEE MEMBERS P A G E 4 RBI POLICY RATES AND RESERVE RATIOS P A G E 5 - 7 RBI'S PLAN TO TACKLE THE 2ND WAVE OF COVID - 19 P A G E 8 - 9 SMALL FINANCE BANKS GOING PUBLIC P A G E 1 0 - 1 2 E-VIDEO KYC PROGRESSION OF BANKS IN INDIA M E S S A G E . Students of Effective Solutions Through Institutional Committee (ESIC) - Banking have carved out specific developmental and strategic goals besides routine activities. These all will be ultimately leading to the enrichment of knowledge in banking areas for the students of JAGSOM, IFIM Institutions, and even beyond to the larger fraternity of students. I am sure that the high spirit and commitment of the students of the Banking Committee, will distinguish them a class apart and in this process enhance their learnings for planning, executing, and maintaining high standards of deliverables. Dr. Rajendra Kumar Sinha Professor & Chairperson, Centre of My compliments on the 1st issue of "BANK BLAST" and best wishes for Excellence in Banking excellence in future endeavours. Jagdish Sheth School of Management P A G E 1 | E S I C - B A N K I N G M E S S A G E . The objective of the ESIC - Banking Committee is to create banking awareness among the students of IFIM Institutions. Through this "Bank Blast" magazine, we are going to share the latest developments by placing important updates, Bank reforms, articles on various BFSI trending news, opportunities for students like Webinar details, Job roles in the BFSI sector, etc. All efforts have been made to cover all aspects of the BFSI sector and make the students aware of all developmental activities that are happening around them. We are sure that the magazine will be Tara Prasad Mund found useful and will meet the Head of ESIC - Banking Committee expectation of all the students to explore more about the BFSI job Jagdish Sheth School of Management roles and the skillset required to apply for a job in the BFSI sector. We welcome your suggestions for the improvement of the magazine. P A G E 2 | E S I C - B A N K I N G FACULTY MENTOR COMMITTEE HEAD Dr. Rajendra Kumar Tara Prasad Mund Sinha COMMITTEE MEMBERS Kumar Mayank Divya Rao Sonam Jaiswal Darshana Ghosh Janardhan Reddy Veluru Naveen Kotti Venkata Srikrishna P A G E 3 | E S I C - B A N K I N G P o l i c y R a t e s : P o l i c y R e p o R a t e : 4 . 0 0 % R e v e r s e R e p o R a t e : 3 . 3 5 % M a r g i n a l S t a n d i n g F a c i l i t y R a t e : 4 . 2 5 % B a n k R a t e : 4 . 2 5 % R e s e r v e R a t i o s : C a s h R e s e r v e R a t i o : 3 . 5 0 % S t a t u t o r y L i q u i d i t y R a t i o : 1 8 . 0 0 % P A G E 4 | E S I C - B A N K I N G RBI'S PLAN TO TACKLE THE 2ND WAVE OF COVID - 19 The Reserve Bank of India (RBI) on May 5 announced several measures to protect small and medium businesses, individual borrowers from the adverse impact of the intense second wave of COVID-19 across the country. The RBI announced a Resolution Framework 2.0 for COVID-related stressed assets of individuals, small businesses, and MSMEs and also expressed its resolve to do everything at its command to ‘save human lives and restore livelihoods through all means possible'. Measures Taken: In the fight against the second wave, alleviating any constraint from the financing side for all stakeholders. Small businesses and financial entities at the grass-root level are bearing the biggest brunt of the second wave of infections. Term Liquidity Facility of ₹50,000 crores to Ease Access to Emergency Health Services To boost the provision of immediate liquidity for ramping up COVID-related healthcare infrastructure and services in the country, and on-tap liquidity window of ₹50,000 crores with tenors of up to three years at the repo rate is being opened till March 31, 2022. Banks are being incentivized for quick delivery of credit under the scheme through the extension of priority sector classification to such lending up to March 31, 2022. These loans will continue to be classified under the priority sector till repayment or maturity, whichever is earlier. Special Long-Term Repo Operations (SLTRO) for Small Finance Banks (SFBs) SFBs have been playing a prominent role by acting as a conduit for the last-mile supply of credit to individuals and small businesses. To provide further support to small business units, micro, and small industries, and other unorganized sectors P A G E 5 | E S I C - B A N K I N G entities adversely affected during the current wave of the pandemic, it has been decided to conduct special three-year long-term repo operations (SLTRO) of ₹10,000 crores at a repo rate for the SFBs, to be deployed for fresh lending of up to ₹10 lakh per borrower. Lending by Small Finance Banks (SFB) to Micro-Finance Institutions MFIs for on-lending to be classified as Priority Sector Lending (PSL) At present, lending by SFBs to MFIs for on-lending is not reckoned for PSL classification. SFBs are now being permitted to reckon fresh lending to smaller MFIs (with asset size of up to ₹500 crores) for on-lending to individual borrowers as priority sector lending. This facility will be available up to March 31, 2022. Credit to MSME Entrepreneurs To incentivize credit flow to the MSME borrowers, in February 2021 Scheduled Commercial Banks could deduct credit disbursed to new MSME borrowers from their net demand and time liabilities (NDTL) for calculation of the cash reserve ratio. Resolution Framework 2.0 for COVID Related Stressed Assets of Individuals, Small Businesses, and MSMEs. The resurgence of the COVID-19 pandemic in India in recent weeks and the associated containment measures adopted at local/regional levels have created new uncertainties and impacted the nascent economic revival that was taking shape. (a) Borrowers i.e. individuals and small businesses and MSMEs having aggregate exposure of up to ₹25 crores and who has not availed restructuring under any of the earlier restructuring frameworks (including under the Resolution Framework 1.0 dated August 6, 2020), and who were classified as ‘Standard’ as on March 31, 2021, shall be eligible to be considered under Resolution Framework 2.0. Restructuring under the proposed framework may be invoked up to September 30, 2021, and shall have to be implemented within 90 days after invocation. (b) In respect of individual borrowers and small businesses who have availed restructuring of their loans under Resolution Framework 1.0, where the resolution plan permitted moratorium of less than two years, lending institutions are being permitted to use this window to modify such plans to the extent of increasing the period of the moratorium and/or extending the residual tenor up to a total of 2 years. Other conditions will remain the same. (c) In respect of small businesses and MSMEs restructured earlier, lending institutions are also being permitted as a one-time measure, to review the working capital sanctioned limits, based on a reassessment of the working capital cycle, margins, etc. Rationalization of Compliance to KYC Requirements Taking forward the initiatives of the Reserve Bank for enhancing customer convenience, it has been decided to rationalize certain components of the extant KYC norms. P A G E 6 | E S I C - B A N K I N G Which includes: (a) Extending the scope of video KYC known as V-CIP (video-based customer identification process) for new categories of customers such as proprietorship firms, authorized signatories, and beneficial owners of Legal Entities and for periodic updation of KYC; (b) Conversion of limited KYC accounts opened on the basis of Aadhaar e-KYC authentication in non-face-to-face mode to fully KYC-compliant accounts; (c) Enabling the use of KYC Identifier of Centralised KYC Registry (CKYCR) for V- CIP and submission of electronic documents (including identity documents issued through DigiLocker) as identify proof; (d) Introduction of more customer-friendly options, including the use of digital channels for the purpose of periodic updation of KYC details of customers. Further, keeping in view the COVID related restrictions in various parts of the country, Regulated Entities are being advised that for the customer accounts where periodic KYC updating is due/pending, no punitive restriction shall be imposed till December 31, 2021, unless warranted due to any other reason or under instructions of any regulator/enforcement agency/court of law, etc.