Banking Current Affairs 2018

Welcome to Banking Current Affairs 2018 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 latest 300 Banking Current Updates can be downloaded from This Link

India’s forex reserves at record high of $424.864 billion: RBI

According to the Reserve Bank of India (RBI), India’s forex (foreign exchange) reserves have touched record high of $424.864 billion in April 2018. The surge was due to massive spike in foreign currency assets (FCAs), a key component of the reserves. The forex reserve had crossed $400-billion mark for the first time in September 2017, but has since been fluctuating.

Forex Reserves

The forex are reserve assets held by a central bank in foreign currencies. It acts as buffer to be used in challenging times and used to back liabilities on their own issued currency as well as to influence monetary policy. Almost all countries in world, regardless of size of their economy, hold significant foreign exchange reserves.

The components of India’s FOREX Reserves include Foreign currency assets (FCAs), Gold Reserves, Special Drawing Rights (SDRs) and RBI’s Reserve position with International Monetary Fund (IMF). FCAs constitute largest component of Indian Forex Reserves and are expressed in US dollar terms.

FOREX Reserves in April 2018

  • Foreign currency assets (FCAs): $399.776 billion.
  • Gold reserves: $21.484 billion.
  • SDRs with IMF: $1.534 billion.
  • Reserve position with the IMF: $2.070 billion.

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RBI tightens reporting norms for Liberalised Remittance Scheme

The Reserve Bank of India (RBI) has tightened reporting norms for the Liberalised Remittance Scheme (LRS) under which individual can transfer up to US $2,50,000 abroad in a year. The purpose of tightening of norms is to improve monitoring and also to ensure compliance with LRS limits.

Key Facts

Currently, the LRS transactions are permitted by banks based on declaration made by remitter. The monitoring of adherence to limit is confined to obtaining such declaration without independent verification, in absence of reliable source of information.

Now under tightened reporting norms, daily reporting system by Authorised Dealer (AD) banks of transactions undertaken by individuals under LRS has been placed, which will be accessible to all the other ADs. It will be mandatory for banks to upload daily transaction-wise information undertaken by them under LRS.

Liberalised Remittance Scheme (LRS)

LRS is facility provided by RBI for all resident individuals including minors to freely remit upto certain amount in terms of US Dollar for current and capital account purposes or combination of both. The scheme was introduced in February 2004 and its regulations are provided under Foreign Exchange Management Act (FEMA), 1999. After it was launched, the LRS limit was US $25,000, but it has been revised in stages consistent with prevailing macro and micro economic conditions. At present, LRS limit for all resident individuals, including minors, is US $2,50,000 (Rs. 1.5 crore) per financial year.

Under LRS, individuals can make remittances for overseas education, travel, medical treatment, maintenance to relatives living abroad, gifting and donations. The remitted money can be used for purchase of shares and property as well. Individuals can also open, maintain and hold foreign currency accounts with overseas banks for carrying out transactions under it.

Restrictions: Under LRS, remittances cannot be used for trading on foreign exchange markets, purchase of Foreign Currency Convertible Bonds issued abroad by Indian companies and margin or margin calls to overseas exchanges and counterparties. Similarly, individuals are not allowed to send money to countries identified as ‘non cooperative jurisdictions’ by Financial Action Task Force (FAFT). It also prohibits remittances to entities identified as posing terrorist risks.

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