Financial Institutions Current Affairs - 2020

PM SVANidhi app launched

On July 17, 2020, PM SVANidhi app was launched by the Minister of Urban Affairs. The application aims to provide user-friendly digital interface for lending institutions and their functionaries to source and process loan applications of street vendors.

Highlights

The application will help in enabling business correspondents of micro lending institutions, banks, Non-Banking Financial Corporation to get maximum coverage. The application will also provide paper-less lending facilities.

Key Features

The main features of the application include e-KYC (Know Your Customer) of application, real-time monitoring, vendor search in the survey and processing of applicants.

PM SVANidhi

The scheme was launched to help the street vendors. There are more than 50 lakh street vendors in the country. The scheme will provide working capital of Rs 10,000 as working loan capital to the street vendors. The capital can be repaid within a year. This will benefit the street vendors largely as they were affected by COVID-19 badly.

RBI releases Framework for sale of Loan Exposure and Securitization of Standard Assets

The Reserve Bank of India recently released draft framework for “Sale of Loan Exposures” and “Securitization of Standard Assets”.

Highlights

The guidelines issued are applicable to Scheduled Commercial Banks. This includes All India Financial Institutions such as EXIM Bank, NABARD, Non-Banking Financial Companies. The guidelines have also included recommendations of Committee on Development of Housing Finance Securitization Market in India that was chaired by Dr Harsh Vardhan. Also, the guidelines included the recommendations made by the Task Force set up on the Development of Secondary Market for Corporate Loans. Both the Committee and the Task Force were set up by the Reserve Bank of India.

Key Features of the Guidelines

  • The Guidelines has proposed Two Capital Measurement approach. This includes Securitisation External Ratings based approach and Securitisation Standardised Approach.
  • Simple Transparent Comparable Securitisation has been prescribed to define preferential capital treatment.
  • The new guidelines allowed Securitisation of exposures that are purchased from other lenders
  • The Stressed Assets under the new guidelines shall be sold only through novation and assignment.