Banking Current Affairs 2015

RBI lowers repo rate by 50 basis points to 6.75 per cent

Reserve Bank of India (RBI) has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 50 basis points from 7.25 per cent to 6.75 per cent with immediate effect.

It was announced in the recently released fourth bi-monthly policy of RBI since January 2015.

4th bi-monthly policy of RBI  says that

  • Policy repo rate under the LAF: Reduced by the 50 basis points from 7.25 per cent to 6.75 per cent.
  • Cash reserve ratio (CRR): of scheduled banks has kept unchanged at 4 per cent of net demand and time liabilities (NDTL).
  • Continuation of liquidity under overnight repos at 0.25 per cent of bank-wise NDTL at the LAF repo rate.
  • Continuation of liquidity under 14-day term repos as well as longer term repos of up to 0.75 per cent of NDTL of the banking system through auctions.
  • Continuation with overnight/term variable rate repos and reverse repos to smooth liquidity.


This surprise repo rate cut decision was taken by RBI on the basis of an assessment of the current and evolving macroeconomic situation in the country. This decision was taken following abating of inflationary pressures, full monsoon outturn, no changes in US central bank actions,  and greater transmission of the RBI’s front-loaded past actions.


RBI approves 10 entities to set up Small Finance Banks

The Reserve Bank of India (RBI) has granted in principle approval to 10 entities to set up small finance banks to provide basic banking services to small farmers and micro industries.

The in-principle approval will enable these entities comply with the guidelines on Small Finance Banks and will be valid for 18 months.

10 entities are: Au Financiers (India) Ltd, Capital Local Area Bank, Disha Microfin Private Ltd, Equitas Holdings P Limited, ESAF Microfinance and Investments Private Ltd, Janalakshmi Financial Services Private Limited, RGVN (North East) Microfinance Limited, Suryoday Micro Finance Private Ltd, Ujjivan Financial Services Private Ltd and Utkarsh Micro Finance Private Ltd.

As per RBI guidelines, the small finance banks can provide basic banking services in order to promote financial inclusion.

It will include services like accepting deposits and lending to the unbanked sections such as micro business enterprises, small farmers, micro and small industries and unorganised sector entities.


Gujarat tops in ease of doing business in India: World Bank Report

Gujarat has been placed to top position in World Bank’s first ever ranking of States on the ease of doing business in India.

The World Bank report titled Assessment of State Implementation of Business Reforms was released in New Delhi under the aegis of the Confederation of Indian Industry (CII).

The inaugural edition of report reflected the ease of doing business in all Indian States at sub-regional level.

Key facts

  • All States were assessed over a six-month period from January to June 2015 on the basis of percentage scores in a 98-point reforms agenda.
  • The Union Department of Industrial Policy and Promotion, CII, Federation of Indian Chambers of Commerce and Industry (FICCI and KPMG were involved in the exercise.
  • Top 5 States: Gujarat (71.14%), Andhra Pradesh (70.12%), Jharkhand (63.09%), Chhattisgarh (62.45%) and Madhya Pradesh (62.00%).
  • Bottom 5 states: Mizoram (6.37%), Jammu and Kashmir (5.93%), Meghalaya (4.38%), Nagaland (3.41%) and Arunachal Pradesh (1.23%).
  • The largest recipients of foreign investments Maharashtra and Tamil Nadu were placed at eighth and twelfth position with less than 50 per cent scores.
  • The focus of the study for assessment was mostly undertaken on eight key important parameters: The setting up of a business, complying with environment procedures, allotment of land and obtaining construction permit, complying with labour regulations, registering and complying with tax procedures, obtaining infrastructure-related utilities, carrying out inspections and enforcing contracts.