Banking Current Affairs 2017

Welcome to Banking Current Affairs 2017 Section of GKToday. This section has current affairs on banking industry for IBPS Banking Recruitment, RBI Grade B, SBI PO, RRB and other banking examinations. An E-book compilation of 250 Banking Current Updates from June 2014 to December 2016 can be downloaded from This Link

RBI cuts repo rate by 25 bps to 6%

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has reduced short-term lending rate, or repo rate, by 25 basis points to 6%.  It was RBI’s third bimonthly policy review for the financial year 2017-18.

The decision of the MPC was consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term inflation target of 4% within a band of +/- 2%, while supporting growth.

Policy Rates

Repo rate: It is the rate at which RBI lends to its clients generally against government securities. It was reduced by 25 basis points to 6%. The rate cut comes after a slump in food prices in consumer inflation to a record low of 1.54%.

Reverse Repo Rate: It is the rate at which banks lend funds to the RBI. It was reduced by 25 bps to 5.75%.

Marginal Standing Facility (MSF) Rate: It is rate at which the scheduled banks can borrow funds overnight from RBI against government securities. It is a very short term borrowing scheme for scheduled banks. It adjusted to 6.25%.

Bank Rate: It is rate charged by the central bank for lending funds to commercial banks. It was set to 6.25%. It influences lending rates of commercial banks. Higher bank rate will translate to higher lending rates by the banks.

Cash Reserve Ratio (CRR): It is the amount of funds that the banks have to keep with the RBI. It was unchanged at 4%. The RBI uses the CRR to drain out excessive money from the system.

Statutory Liquidity Ratio (SLR): It was unchanged 20%. It is amount that banks have to maintain a stipulated proportion of their net demand and time liabilities (NDTL) in the form of liquid assets like cash, gold and unencumbered securities, treasury bills, dated securities etc.

About Monetary Policy Committee (MPC)

MPC is a committee of the central bank — Reserve Bank of India, headed by its Governor. It was set up by amending the RBI Act to provide for a statutory and institutionalised framework for MPC.

The 6 member MPC is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the target level.  The majority voice of the committee will be final in deciding the interest rates.

Composition of MPC includes Governor of RBI (ex officio Chairperson), Deputy Governor of RBI, in charge of Monetary Policy (Member), one officer of RBI (Member) and three members appointed by Central Government as members. Each member has one vote and governor has casting vote in case of tie.

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NPCI gets RBI nod to operate Bharat Bill Payment System

The National Payments Corporation of India (NPCI) has received final nod from the Reserve Bank of India (RBI) to function as the Bharat Bill Payment Central Unit (BBPCU) and operate the Bharat Bill Payment System (BBPS).

The final clearance from RBI comes almost a year after NPCI launched the BBPS pilot project to make payment of utility bills easier. The pilot started in August 2016 with eight BBPS operating units that had received in-principle approval from RBI.

The total number of Bharat Bill Payment Operating Units certified by NPCI now stands at 24. The certified units include 10 private sector banks, 3 public sector banks (Bank of Baroda, Union Bank of India and Indian Overseas Bank), five cooperative banks and six non-bank biller aggregators.

About Bharat Bill Payment System (BBPS)

BBPS is an integrated bill payment system offering interoperable and accessible bill payment service to customers through a network of agents, enabling multiple payment modes and providing instant confirmation of payment. The BBPS initiative aims to provide a major push to digital payments as it is a big step forward in formalizing the bill payment system in the country.

Under the BBPS framework, a customer will be able to pay several bills such as electricity, telephone, water, gas, and DTH television at a single location—physical or electronic—and receive instant confirmation once the payment is made. Nearly 45 crore bills are permitted under BBPS.

Payments through BBPS can be made using cash, transfer cheques and electronic modes. Bill aggregators and banks, who will function as operating units, will carry out these transactions for the customers. At present the bulk of transactions on BBPS are of electricity bills. It contributes to about 180 million bills per month out of which only 10% is digital.

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