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Monthly Banking Awareness PDF Issue #18 – May 2019 Features: RBI Policy Rates Type of Risks Detailed Banking News (May 2019) Expected Banking Questions Page 1 of 19 Join Our Telegram Group to Get Instant Notifications, Study Materials, Quizzes & PDFs: https://t.me/exampunditofficial For Quality Study Materials & Practice Quiz Visit: www.exampundit.in | For Free PDF Materials Visit: pdf.exampundi.in Monthly Banking Awareness PDF – May 2019 About Reserve bank of India Headquarter at Mumbai The Governor of RBI is Shaktikanta Das The slogan is “ India’s central Bank” RBI Follows July to June Financial Cycle Why does RBI Follow July to June Financial Year? The banks in India follow April to March financial year and hence their annual financial information is compiled after that. RBI follows July to June financial year because RBI as a supervisor and regulator looks into the books of banks and then analyses and prepares its statutory document called as Annual Report. So a lag of 3 months from normal financial cycle (Apr-Mar) is justified as this is the time which RBI uses to analyse the information. Current Policy Rates: Policy Repo Rate 6.0% Reverse Repo Rate 5.75 % Marginal Standing Facility Rate 6.25% Bank Rate 6.25% CRR 4% SLR 19.25% Types of Risks There are eight major risk in banking sector 1. Credit risk 2. Market risk 3. Operational risk 4. Liquidity risk 5. Business risk 6. Reputational risk 7. Systemic risk 8. Moral hazard Credit risk: The lender may lose the principle of the loan or the interest associated with it due to the borrower fails to repay it. It defines that credit risk as the potential that a bank borrower, or counter-party, will fail to meet its payment obligations regarding the terms agreed with the bank. Page 2 of 19 Join Our Telegram Group to Get Instant Notifications, Study Materials, Quizzes & PDFs: https://t.me/exampunditofficial For Quality Study Materials & Practice Quiz Visit: www.exampundit.in | For Free PDF Materials Visit: pdf.exampundi.in Monthly Banking Awareness PDF – May 2019 Market Risk: Risks arises due to the factor affecting the overall performance of the financial market There are 4 components of market risks: 1. Interest Risk: losses due to movements in interest rates 2. Equity Risk: losses due to changes in stock prices 3. Commodity Risk: losses due to change in commodity prices. 4. Foreign Exchange Risk: loss due to change in the value of the bank’s assets or liabilities Operational risk: Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, and systems or external events. There are three main causes of this risk: 1. Human Intervention & Error 2. Failure of the IT/internal software & systems. 3. Failure of Internal Processes to transmit data & information accurately Liquidity risk The risk of a bank not being able to finance its day to day operations. The inability of a bank to provide cash Business risk Business risk is the risk of an organization to have lower than foreseen benefits or experience a misfortune instead of taking a benefit. Reputational risk Reputational risk implies the public’s loss of confidence in a bank due to a negative perception or image that could be created with/without any evidence of wrongdoing by the bank. Reputational value is often measured in terms of brand value. Reputational risk could stem from: 1. The inability of the bank to honor government/regulatory commitments 2. Nonobservance of the code of conduct under corporate governance 3. Mismanagement/Manipulation of customer records 4. Ineffective customer service/after sales services Systemic risk: Systemic risk is the ups and downs of returns caused by macroeconomic factors that affect all risky assets It consists of day to day fluctuations in a stock’s price. Moral hazard: Moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. It arises when both the parties have incomplete information about each other. Page 3 of 19 Join Our Telegram Group to Get Instant Notifications, Study Materials, Quizzes & PDFs: https://t.me/exampunditofficial For Quality Study Materials & Practice Quiz Visit: www.exampundit.in | For Free PDF Materials Visit: pdf.exampundi.in Monthly Banking Awareness PDF – May 2019 Banking News in May 2019 CORPORATE AFFAIRS MINISTRY PLANS TO INTRODUCE ARTIFICIAL INTELLIGENCE SYSTEM IN MCA21PORTAL MCA 21 is the electronic backbone for dissemination of information to all stakeholders, including the regulator, corporate and investors. All filings under the companies law are submitted to the ministry through this portal Corporate affairs ministry plans to introduce artificial intelligence system in the MCA 21 portal as it seeks to make compliance process easier as well as ensure routine enforcement activities are done round-the-clock on autopilot basis. GOVT PROHIBITS IMPORTS OF NON-BIS COMPLIANT SECOND-HAND ELECTRONICS, IT GOODS Import of second-hand or refurbished electronics and IT goods without registration with the Bureau of Indian Standards (BIS) is prohibited, the government has said. Under the Electronics and IT Goods (Requirement of Compulsory Registration) order 2012, imports of these goods are allowed through the registration with the BIS or on specific exemption letter from the ministry of IT and electronics (MeitY). Without the registration and compliance with BIS labelling requirements, it said, the imported goods will be re-exported by the importer, otherwise the customs authorities will deform those products and dispose of them as scrap. DCIL INKS MOU WITH WAPCOS TO IDENTIFY SUITABLE FUTURE PROJECTS The Dredging Corporation of India Limited (DCIL) has inked a memorandum of understanding (MoU) with WAPCOS Limited to jointly identify suitable future projects and carry out geotechnical investigation and engineering consultancy in fields like Water Resources, Power and Infrastructure Port and Harbour dredging. The other areas include shallow water dredging, beach nourishment, lake rehabilitation, flood management, erosion control, river morphology and other related sectors. FDI IN SERVICES SECTOR GROWS 37 PC TO 9.15 BN IN 2018-19 Foreign direct investment in services sector grew 36.5 per cent to 9.15 billion US dollars in 2018-19 fiscal. According to the Department for Promotion of Industry and Internal Trade (DPIIT), the sector attracted FDI worth 6.7 billion dollars in 2017-18 fiscal. Services sector includes finance, banking, insurance, outsourcing, R&D, courier, tech testing and analysis. Increasing FDI inflows in the services sector is vital as it contributes over 60 per cent to the gross domestic product. The sector accounts for about 18 per cent of the total FDI India received between April 2000 and March 2019. Overall FDI inflows declined for first time in the last six years in 2018-19, falling 1 per cent to USD 44.37. Page 4 of 19 Join Our Telegram Group to Get Instant Notifications, Study Materials, Quizzes & PDFs: https://t.me/exampunditofficial For Quality Study Materials & Practice Quiz Visit: www.exampundit.in | For Free PDF Materials Visit: pdf.exampundi.in Monthly Banking Awareness PDF – May 2019 GST COLLECTION REACHES RECORD HIGH OF RS 1.13 LAKH CRORE IN APRIL The government has set a GST collection target of Rs 6.10 lakh crore from CGST and Rs 1.01 lakh crore as compensation cess for the financial year 2019-20 GERMAN PAYMENTS COMPANY WIRECARD TEAMS UP WITH INDIA TO ISSUE PAN CARDS German payments company Wirecard said it would work with India to simplify the process of issuing tax identity cards required to open bank accounts, transfer money or complete business transactions. The deal, with state company UTI Infrastructure Technology and Financial Services, seeks to widen the distribution of so-called PAN cards in the country of 1.3 billion where most people still live and work in the informal economy. Wirecard, which is already present in India, said its network of 15,000 retail agents in 350 cities would help collect and scan in the documents that people need to apply for a PAN card. GOVT TO MERGE CSO WITH NSSO TO CREATE NEW STATS BODY This skips any mention of National Statistical Commission (NSC), which oversees all statistical work done in India. This order does not equate Secretary (Statistics and Programme Implementation) with Chief Statistician of India. Thus, It is beingwidely perceived as a dent on autonomy of Indian statistical system. NSSO was earlier an attached office of MoSPI, which gave it a legally distinct identity from ministry and NSC used to oversee all aspects of statistical work. With merger of CSO and NSSO, autonomy of NSSO will be gone and NSC’s control over NSSO will not be there. INCOME TAX DEPT ISSUED ₹64,700 CRORE REFUND IN CURRENT FISCAL The Income Tax department has issued ₹64,700 crore worth refunds in the current fiscal, and for full 2018- 19 fiscal the amount released was over ₹1.61 lakh crore, In a written reply to a question in the Lok Sabha, she said over 6.49 crore electronic returns were submitted for assessment year 2018-19 (financial year 2017- 18), up 18.65% from over 5.47 crore in assessment year 2017-18. "The government has accorded high priority to issue refunds for all taxpayers including small taxpayers.