Banking Current Affairs 2016

India’s Dinesh Sharma elected to board of directors of AIIB

India’s Dinesh Sharma has been elected to the board of directors of the China-sponsored Asian Infrastructure Investment Bank (AIIB).

He has been elected to the 12-member board through a secret ballot. This is the first board of directors of AIIB in which 57 nations are founding members including India.

The inaugural meeting of the board of the governors of the AIIB also held in Beijing after its formal launch. The meeting approved by-laws, rules and codes of conduct for the bank.

It should be noted that Union Finance Minister Arun Jaitley is the designated governor of the AIIB from India. However he was represented by Mr. Sharma at the meeting.

Presently, Dinesh Sharma is serving as Additional Secretary of Union Ministry of Finance.

Comment

  • The election of India to board of directors of the AIIB is expected to provide significant role for it as it is the forum that approves the loans for projects.
  • With authorised capital of 100 billion dollars, AIIB is expected to begin loan approvals before the end year 2016.
  • It will provide financial support for infrastructure development and regional connectivity in Asia in sectors including energy, transportation, urban construction and logistics as well as education and healthcare.

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SBI Launches First Dedicated Branch For Startups – SBI InCube

India’s largest lender, State Bank of India (SBI) has launched dedicated specialized branch for start-ups called ‘SBI InCube’ in Bengaluru, Karnataka.

It was announced by BI Chairman Arundhati Bhattacharya in Bengaluru, Karnataka.

SBI InCube

  • The ‘SBI InCube’ branch will cater to the specific financial needs by providing advisory services to the budding entrepreneurs under one roof
  • It will assist start-ups in cash management, regulations, taxation, mentoring, foreign exchange and remittances and other financial services.
  • InCube in its current form will not fund start-ups i.e. it will not provide loans. However it will give them loans when they turn more mature.
  • It will also not help start-ups to raise funds from equity market as it not part of bank’s mandate.
  • InCube branch in Bengaluru will be headed by an assistant general manager and a team of three other officers.
  • Soon SBI will be launching these branches in Pune and National Capital Region (NCR).

SBI Exclusif

  • SBI also has launched wealth management service ‘Exclusif’ to target the fast-growing affluent segment in the country.
  • This service will provide customers a dedicated Relationship Manager to take care of all their banking and investment needs.

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ICICI Bank partners with FINO PayTech for payments bank space

India’s largest private sector lender ICICI Bank has partnered with FINO PayTech to foray into the payments bank space.

With this partnership, ICICI Bank joins some of the leading lenders of the country that have partnered with payments banks. For example, Kotak Mahindra Bank (KMB) and State Bank of India (SBI) have picked up stake in payments banks to be floated by Bharti Group and Reliance Industries respectively.

Key facts

  • FINO Paytech along with 10 other entities had received ‘in principle’ licence from the Reserve Bank of India (RBI) to start a payment bank.
  • ICICI Group has purchased about 16 per cent stake in the FINO PayTech making it one of the largest domestic shareholder.
  • The tie-up with ICICI Bank will help FINO to extend services which a payments bank is not allowed to offer. It will also help it to build some banking products and services that they cannot offer on our own.

Presently, RBI regulations allow universal banks to invest up to 30 per cent in payments bank. RBI regulations also mandate 51 per cent of the equity of the payments bank should be with domestic entities.

In case of FINO PayTech it has about 70 per cent stake is with foreign entities. Before starting payments bank business it is going to raise capital which will help bring down foreign shareholding within prescribed limit.

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