Furthermore, a piece of advice to our readers would be to go through the highlighted portion of this article if they are running out of time or reading this just before their exams. We have also included the pictures related to almost every news in this article so that the readers can understand and remember them easily.
RBI in News
1.) RBI made changes in Gold Monetisation Scheme
On January 09, 2019 Reserve Bank of India made some changes in its Gold Monetisation Scheme (GMS), 2015 to make charitable institutions and central government eligible to deposit under the scheme. RBI also permitted joint deposits of two or more eligible depositors to be credited in the joint deposit account.
Gold Monetisation Scheme (GMS) 2015: The government had launched the Gold Monetisation Scheme in 2015 with the tagline “Earn while you secure” to mobilize the gold held by households and institutions in the country. The scheme allows bank customers to get the dual benefit of interest in the range of 2.25-2.50% on the deposited gold with an option of encashing the gold at the time of maturity. All the commercial banks except RRBs are approved to implement the scheme.
The gold can be deposited under the following three-term deposit plans –
Short Term: From 1 to 3 years and the deposit rates in this are decided by the concerned banks.
Medium Term: From 5 to 7 years and the deposit rates in this are decided by the central government.
Long Term: From 12 to 15 years and the deposit rates in this are decided by the central government.
The minimum deposit of gold under this scheme is 30 grams of any purity with no maximum limit. The capital gains (profit from the sale of property or investment) from this scheme are immune from income tax, wealth tax, and capital gains tax.
2.) Reserve Bank of India (RBI) has initiated a Survey on Retail Payment Habits of Individuals (SRPHi).
The Survey has been launched with a motive to capture the payment habits of individuals in various cities like Delhi, Mumbai, Chennai, Bengaluru, Kolkata, and Guwahati. RBI has appointed Sigma Research & Consulting Pvt Ltd to conduct the fieldwork of this survey successfully.
3.) RBI offers a one-time restructuring of debts to the MSME sector up to Rs. 25 crores.
This decision of RBI is to allow a one-time restructuring of existing debts up to Rs. 25 crores for the companies which have been defaulted on the payment but the loans are taken by them comes under standard assets. By this restructuring of existing debts, RBI is going to help the micro, small and medium enterprises (MSMEs) which is facing cash crunch following demonetization and GST implementation. The restructuring is most likely to be implemented by March 31, 2020.
4.) RBI to set up a committee on MSME under the chairmanship of Ex-SEBI Chief ‘UK Sinha’
On 2nd January 2019, the Reserve Bank of India decided to set up a committee to advocate long-term solutions for the economic and financial sustainability of the MSME sector in India. Further, according to the reports of RBI, the 8-member committee will also analyze the factors affecting the timely and adequate availability of finance to the sector. The expert committee will have to submit its’ report to the RBI, by the end of June 2019.
5.) Sri Lanka’s Central Bank to get a swap of USD 400 million to boost its nation’s reserve from RBI
On 9th January 2019, the Reserve Bank of India agreed to disburse 400 million US dollars to Sri Lanka in order to boost its nation’s reserve under a SAARC (South Asian Association for Regional Cooperation) swap facility system.
6.) RBI constituted a five-member high-level committee under ‘Nandan Nilekani’ in order to boost digital mode of payments.
On 8 January 2019, the Reserve Bank of India constituted a five-member panel under the chairmanship of former UIDAI’s chairman Nandan Nilekani to review the existing status of digital payments in order to suggest ways to enhance financial inclusion and also to encourage digitization of payments. The committee will also include Mrs. Aruna Sharma, the former secretary and minister of information technology along with Mr. H.R. Khan, the former deputy governor of RBI. The committee will also undertake the cross country analysis to discover the best practices for the safety and security of digital payments in the country.
7.) Reserve Bank of India to purchase government securities worth of Rs 375 billion under Open Market Operations
RBI has decided to inject Rs 375 billion (Rs. 37,500 crores) into the system through the purchase of government securities in order to increase liquidity under Open Market Operations (OMOs) in the month of February 2019, through three auctions of Rs 125 billion during the second, third and fourth week of February.
Open Market Operations: An open market operation is an activity by the central bank of a country to inject or absorb the liquidity in the form of currency to or from a bank or a group of banks.
8.) RBI issued guidelines to limit customers liability in fraudulent PPI transactions
On January 4, 2019, the Reserve Bank of India branch released the notification consisting of new guidelines for limiting the customer liability on unauthorized electronic payments which involves Prepared Payment Instruments (PPIs). RBI clarified in its statement that these guidelines are applicable to all authorized non-bank PPI issuers which comprises of mobile wallets such as (Paytm, MobiKwik, PhonePe, Oxygen etc.), prepaid payment cards and paper vouchers such as Sodexo. Moreover, in the case of a third-party breach, the customer will most probably not lose any money if reported within 3 days. And if fraud is reported within 4 to 7 days then the customer liability will be the same as the transaction value or Rs 10,000 per transaction, whichever is lower. The PPI issuer would be credited with the amount within 10 days.
What is the Liability?
In general, a Liability is a commitment or course of action to which a person is legally bound to pay or repay (something, especially money) in return for something received. In other words, the state of being legally responsible for something is known as Liability.
In finance, Liability is defined as the future sacrifices of economic benefits that a company or a person is committed to making to other entities as a consequence of past transactions or other past events.
9.) Nepal asked RBI to declare banned new currency notes of India, legal in the country
On January 6, 2019, the Central Bank of Nepal – the Nepal Rastra Bank writes to RBI for declaring the newly circulated Indian currency notes of denominations higher than Rs. 100 as a legal tender in Nepal. At present Nepal was allowed only to circulate and exchange the Indian currency notes of denomination Rs. 100 or less by the RBI. The Nepal Rastra Bank in a report stated that all the banks and Financial institutions of Nepal holds the Indian currency worth Rs. 48 million in the denomination of Rs. 500 and Rs. 1000.
10.) One Crore rupee fine on Bank of Maharashtra by RBI
On 16 January 2019, the Reserve Bank of India imposed a penalty of rupees 1 crore on state-owned Bank of Maharashtra for the non-compliance of KYC (Know Your Customer) guidelines and fraud classification norms. The fine has been imposed due to the failure of the bank to adhere to the directions & guidelines issued by RBI.
11.) Reserve Bank of India eased norms for External Commercial Borrowings.
On 16 January 2019 RBI announced the new External Commercial Borrowings (ECB) framework to improve the ease of doing business. According to the reports a few changes have been made which allows all the companies that are eligible for receiving foreign direct investments to raise funds through the ECB route. Also, the RBI has decided to keep the minimum average maturity period for all ECBs at 3 years from 5 years earlier, irrespective of the amount of borrowing. This excludes the borrowers which are specially permitted to borrow for a shorter period. The maximum limit for borrowing remains at 750 million dollars.
12) RBI granted ‘tokenization’ for the security of card transactions
On January 8, 2019, the Reserve Bank of India issued a notification for allowing the tokenization of transactions via credit, debit and prepaid cards in order to enhance the security and safety of the digital payment system in the country. By this process, the regulator will have to hide the confidential card details of the cardholder by making a transaction at Point of Sale (POS) terminals, QR codes or through any other payment modes.
The central bank of the country has notified the payment network companies like Visa, MasterCard, and even the third party payment applications to start offering card tokenization services.
What is Tokenization?
Tokenization is the process in which a unique code or token is issued by the bank to the card holder for masking the confidential card details. This facility can be offered initially through mobile phones and tablets. This method enhances the security of transactions with a new option of not sharing the original card number.
13.) RBI initiated two quarterly surveys to examine Manufacturing and Infrastructure Sector
On January 21, 2019, the Reserve Bank of India has originated two quarterly surveys named as Industrial Outlook Survey (IOS) and Services of Infrastructure Outlook Survey (SIOS) in order to examine the situations of manufacturing, infrastructure, service and business sectors of the country for the fourth of financial year 2018-19 i.e for the period from January to March 2019.
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