Banking

DFI Model for Infrastructure Financing- Need, Challenges, Way Forward

Banking / Financial/Security/Capital Market / Infrastructure

In the Union Budget 2021-22, the Finance Minister proposed the revival of the DFI model to meet the needs of infrastructure financing. The government has set a target of 5 lakh crore INR loan within 3 years. For this, the proposed DFI is to be capitalized with 20,000 crore INR. Given the importance of infrastructure development in the post-COVID world, there is a need to examine the viability of the DFI model and how it can be made to work in India.

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Bad banks- How Viable is the Idea?

Banking

In the wake of economic contraction and the concerns of an upcoming spike in NPAs, the Indian Banks Association proposed setting up a bad bank with a capital of 10,000 crore INR. This idea has been coming up every time a financial crisis threatens the banking sector. This time, the RBI has agreed to look into the possibility of establishing a bad bank- inviting criticisms from some sectors but encouragement from others.

Digital Banking During Pandemic – All You Need to Know

[GS3] Basics of cybersecurity / Banking / Financial Inclusion / Financial/Security/Capital Market

With the advent of COVID-19 crisis, social distancing has become the new normal. This has caused a surge in adoption of digital banking and payment solutions across the world. In India, banks are rapidly moving towards digital transactions, regardless of infrastructural challenges and glitches. This has led to instances of outages. These rapid changes may also cause potential threats of increased cybercrimes, which are novel and needs to be addressed efficiently in a rapid manner.

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Insolvency and Bankruptcy Code – Complete Analysis with recent issues

GS3 / NPA

Insolvency and bankruptcy code (IBC) was introduced in 2016 to address the mounting bad
loans (NPAs) problem. In this scenario, there are new performance and legal issues arising
from the implementation of IBC…

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Corporate Ownership of Banks – Challenges & Way Ahead

Banking / Business and Investment / Financial/Security/Capital Market

The RBI had recently released a report of the Internal Working Group that reviewed the current licensing and regulatory guidelines related to the ownership, control and corporate structure of private banks. This group’s most controversial recommendation was to allow corporate and industrial houses to promote and operate banks within the country. With banks playing a critical role in the economy, this recommendation, if implemented, will have large-scale implications in economic growth.

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Partial Credit Guarantee Scheme – Need, Issues, Way Ahead

Banking / Economic Growth & Development / Financial/Security/Capital Market / Schemes/Welfare Initiatives

The Central government has extended the Rs.45,0000 crore Partial Credit Guarantee Scheme 2.0 by another three months and has allowed the banks to invest more in better-rated NBFCs. The scheme was announced as a part of the ‘Atmanirbhar Bharat Abhiyan’ Package to provide liquidity support to weaker NBFCs, housing finance companies and microfinance institutions.

Yes Bank Crisis – Causes, Consequences & Measures

NPA

On 5th March 2020, the Reserve Bank of India (RBI) had imposed a 30-day moratorium on the YES Bank, superseded the bank’s board and appointed Prashant Kumar, who was serving as chief financial officer and deputy managing director at the State Bank of India (SBI) as an administrator. Under the moratorium, deposit withdrawals were capped at Rs.50,000 per person. The apex bank had also proposed a reconstruction plan under which the SBI shall take a maximum of 49% stake in the restructured capital of the bank. The YES Bank crisis is not unique or unprecedented as it came due to the growing number of bad loans caused by the issues faced by the country’s economy, which ranges from real estate to power and NBFCs. Thus, ensuring necessary reforms in the governance, policies, etc., to safeguard the country’s financial sector are a need of the hour.

Cryptocurrency and it’s regulation in India – Recent SC Verdict

[GS3] Science and Technology- developments and their applications and effects in everyday life / Banking / Important Court Verdicts / Internet

The Supreme Court, on March 2020, had struck down RBI’s controversial circular that prohibited any central bank regulated entities from providing banking services to anyone dealing with virtual or cryptocurrencies. This ruling allows banks to handle cryptocurrency transactions. Though this may threaten the country’s financial system, it does provide an opportunity for the government and the central bank to form regulatory frameworks and laws that, while allowing the use of cryptocurrencies, can ensure preventive measures that can counter private cryptocurrencies.

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