Commercial Banks Current Affairs - 2019

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RBI issues norms to set up Currency Chests

The Reserve Bank of India (RBI) has issued guidelines for banks to set up new currency chests. The guidelines include:

  • Area of the strong room/ vault of at least 1,500 sq ft. For those situated in hilly/ inaccessible places, the strong room/ vault area of at least 600 sq ft.
  • The new chests should have a processing capacity of 6.6 lakh pieces of banknotes per day. Those situated in the hilly/ inaccessible places, a capacity of 2.1 lakh pieces of banknotes per day.
  • The currency chests should have Chest Balance Limit (CBL)  of Rs 1,000 crore, subject to ground realities and reasonable restrictions, at the discretion of the Reserve Bank.

Currency Chest

Currency chest is the place where the currency is stored. These chests act as the distributives of RBI cash and enable RBI to take back soiled notes and mutilated notes from the public.

As per the RBI’s annual report of 2017-18, the currency management infrastructure consists of a network of 19 issue offices of the Reserve Bank, 3,975 currency chest and 3,654 small coin depots of commercial, co-operative and regional rural banks spread across the country.

Month: Categories: Business, Economy & BankingUPSC

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RBI defers adoption of Ind-AS by 1 year for banks

The Reserve Bank of India (RBI) has deferred adoption of Indian Accounting Standards (Ind AS) by commercial banks for year (till April 2019) due to unpreparedness of banks to migrate to the new accounting system.

RBI has requested Government to amend Banking Regulation Act, 1949 as format of financial statements as prescribed under Schedule 3 of Act is not amenable to reporting financial statements under Ind-AS. Moreover, RBI in its assessment has found that some of banks are still not prepared to move into new accounting regime. RBI will continue to have proforma of financial statements from banks to monitor progress banks are making towards migration to Ind-AS.

Ind AS

Ind AS is global accounting practice that lender is mandated to adopt. The practice is on par with International Financial Reporting Standard (IFRS) 9.  It governs the accounting and recording of financial transactions as well as presentation of statements such as profit and loss account and balance sheet of lender or a company.

Background

Banks and non-banking financial companies currently follow generally accepted accounting principles (GAAP) standards. Corporate entities started complying with IndAS with effect from 1 April 2016. In February 2016, RBI had issued circular mandating commercial banks, barring regional rural banks to implement Ind AS from April 1, 2018. As part of this, RBI was asking banks to submit half-yearly returns based in Ind-AS format. Key change under new rules was need to provision for accounts based on expected loss, instead of when account turns into a non-performing asset (NPA). It is estimated that scheduled commercial banks may need up to Rs 89,000 crore towards incremental provisioning for advances while transiting to Ind-AS regime.

Month: Categories: Business, Economy & Banking

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