RBI Current Affairs - 2019

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RBI Unveils Guidelines on Small Finance Banks

The Reserve Bank of India (RBI) has released ‘Guidelines for ‘on tap’ Licensing of Small Finance Banks (SFB) in the Private Sector’. With these new guidelines, RBI has introduced major changes from earlier Guidelines issued by the apex bank on 27 November 2014, for licensing of Small Finance Banks in private sector.

New Guidelines on SFBs

  1. Licensing window will be open ‘on-tap’. The on-tap facility allows RBI to accept applications and grant licence for banks throughout the year. This policy also allows aspirants to apply for universal bank licence any time, subjected to fulfilling certain conditions. As of now, the RBI has issued licences to 10 SFBs.
  2. Minimum paid-up voting equity capital/ net worth requirement shall be Rs.200 crore.
  3. For Primary (Urban) Co-operative Banks (UCBs), aspiring to voluntarily transit into SFBs, initial requirement of net worth shall be at Rs.100 crores that will have to be increased to Rs.200 crores within 5 years from date of commencement of business. However, the net-worth of all SFBs currently in operation is in excess of Rs.200 crore.
  4. SFBs will have general permission to open banking outlets from date of commencement of operations.
  5. SFBs will be given scheduled bank status immediately upon commencement of operations.
  6. Payments Banks like Paytm an IndiaPost and Fino can apply for conversion into SFB after 5 years of operations, if they are otherwise eligible as per these guidelines.

RBI fifth bi-monthly Monetary Policy released

The Reserve Bank of India on December 5, 2019, released its fifth bi-monthly monetary policy statement for the year 2019-20.

Highlights

According to the policy, the repo rate was unchanged at 5.15%. Last time, it was cut by 135 basis points to a 9-year low. Accordingly, the reverse repo rate stood at 4.9% and the bank rate stood at 5.4%. The CPI projection was increased to 4.7% to 5.1%. It is to be noted that RBI is currently following target inflation at 4% with a band of ±2 per cent.

The Monetary Policy Committee said that the global economic activity has subdued since its last meeting.

Other Assessment of the committee

Among the other emerging markets, growth of China has decelerated in the Q3 and its exports have declined greatly mainly due to trade tensions with the US. The GDP growth of Russia and Brazil in the Q3 has accelerated. It was mainly due to agricultural output and industrial activities.