Digital India Current Affairs - 2019
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The Reserve Bank of India (RBI) has constituted a high-level committee under the chairmanship of VG Kannan, Chief Executive of Indian Banks’ Association (IBA) to review the entire gamut of ATM charges and fees.
- Background: There are around 2 lakh ATMs in India. At end of April 2019, there were over 88.47 crore debit cards and 4.8 crore credit cards in function, and as per RBI data during April only 80.9 crore transactions were done through debit cards on ATM.
- Need: Over the years, uses of ATMs have grown significantly and there have been persistent demand of changing ATM charges and fees. Thus amid demands for reviewing the levies by bank, RBI constituted high-level committee.
- Constitution: The six member committee chaired by of VG Kannan, will consist of members namely- Dilip Asbe (CEO, National Payments Corporation of India (NPCI)), Giri Kumar Nair (CGM, State Bank of India (SBI), Sanjeev Patel (CEO, Tata Communications Payment Solutions (TCPSL)), S Sampath Kumar (Group Head, Liability Products, HDFC Bank), and K Srinivas (Director, Confederation of ATM Industry (CATMi)).
- It will examine existing patterns of costs, charges and interchange fees by banks for automated teller machines (ATMs) transactions.
- It will review overall patterns of usage of ATMs by cardholders and also assess impact (if any) on charges and interchange fees levied by banks.
- It will assess entire range of costs in respect of ATM ecosystem within the country.
- It will make recommendations on optimal charge or interchange fee structure and pattern.
- Timeframe: It will submit its report to RBI within two months from date of its first meeting.
Tags: CATMi • Confederation of ATM Industry • Debit Card • Digital India • High-Level Committee • Indian Bank’s Association • National Payments Corporation of India • RBI • Reserve Bank of India • State Bank of India • Tata Communications Payment Solutions • VG Kannan Committee
The Reserve bank of India (RBI) in its bi-monthly monetary policy review reduced repo rate by 25 basis points to 5.75% from current 6.0% with immediate effect. This is RBI’s third cut this year and has reduced Repo rate at lowest since 2010.
- With Repo Rate adjusted to 5.75%, consequently Reverse Repo Rate under Liquid Adjustment Facility (LAF) stands adjusted to 5.5% and Marginal Standing Facility (MSF) rate and the Bank Rate to 6.0%.
- Other revised Rates- Cash reserve ratio (CRR) unchanged at 4%; Retail inflation forecast raised marginally to 3% -3.1% for first half (H1) of 2019-20) and 3.4% -3.7% for second half (H2).
- GDP Growth Rate: RBI lowered Gross Domestic Product (GDP) growth forecast for financial year 2019-20 to 7% from 7.2% in April Monetary Policy. This is in range of 6.4% to 6.7% for first half (H1) of 2019-20 and 7.2-7.5% for second half (H2) with risks evenly balanced. This lowered forecast was taking into account current weak global demand due to escalation in trade wars and weakened private consumption in rural areas.
- The six member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das unanimously decided to reduce policy repo rate and to change stance of monetary policy from neutral to accommodative.
- MPC Composition: The MPC comprise of Shaktikanta Das, as its Chairman and members including Chetan Ghate, Pami Dua, Ravindra Dholakia, Michael Debabrata Patra, Viral Acharya. The next MPC meeting is scheduled from 5 to 7 August 2019.
- In an attempt of boosting digital transactions, RBI decided to do away with charges levied on RTGS and NEFT transactions and banks will be required to pass this benefit to their customers.
- Significance: The reduced repo rate was welcomed by industry body as this rate cut will encourage banks to lower their lending rates for both retail and corporate credits. This is important as reviving business confidence and consumer confidence in economy is need of hour.
- Way Forward: Although measure will rekindle economic growth and improve business sentiments but credit policy resolution and RBI Governor’s emphasis on faster and higher transfer of rate cuts will be reassured only if done by banks.
Tags: Bank Rate • Cash reserve ratio • CRR • Digital India • GDP Growth Rate • LAF • Liquid Adjustment Facility • Marginal Standing Facility • Monetary Policy Committee • MSF • NEFT • RBI Bi-monthly Monetary Policy Review • RBI Governor Shaktikanta Das • Repo Rate • Reserve Bank of India • Retail inflation forecast • Reverse Repo Rate • RR • RTGS