- 1 Important Current Affairs For UPSC ESE PRELIM 2020 EXAM: Part 3
- 2 Current affairs pertaining to Banking
- 2.0.1 1) 50 YEARS OF BANK NATIONALISATION
- 2.0.2 2) OMBUDSMAN SCHEME FOR DIGITAL
- 2.0.3 TRANSACTIONS (OSDT)
- 2.0.4 3) RBI’S ‘VISION 2021’ DOCUMENT ON
- 2.0.5 PAYMENT SYSTEMS
- 2.0.6 4) BIMAL JALAN COMMITTEE
- 2.0.7 5) BANK MERGER
- 2.0.8 6) DIGITAL PAYMENT ABHIYAN:
- 2.0.9 7) BHARAT BILL PAYMENT SYSTEM (BBPS)
- 2.0.10 8) DEVELOPMENT BANK
- 2.0.11 9) MFIN AND SA-DHAN LAUNCHES ‘CODE FOR RESPONSIBLE LENDING’
- 2.0.12 Significance:
- 2.0.13 Share this:
- 2.0.14 Related
Important Current Affairs For UPSC ESE PRELIM 2020 EXAM: Part 3
Current affairs pertaining to Economic Growth
1) GDP ESTIMATION IN INDIA
- Recently, there has been a controversy over India’s new GDP series and its estimation methodology. In 2015, the Central Statistics Office came up with a revised methodology for the calculation of GDP of the country.
- Change of base year to 2011-12 (from 2004-05)
- Valuation of Gross Value Added (GVA) & Net Value Added (NVA) at basic prices
- Considering GDP at market prices as headline GDP instead of GDP at factor cost, to make the new calculation more consumer-centric.
- Broader coverage of financial sector by including stock brokers, stock exchanges, asset management companies, mutual funds and pension funds, as well as regulatory bodies, SEBI, PFRDA and IRDA. Earlier estimates primarily covered commercial banks and NBFCs.
- Ensuring comprehensive coverage of corporate sector in mining, manufacturing & services.
- GVA is measure of value added in goods and services produced in economy i.e. GVA = economic output – input.
- GVA is sector specific while GDP is calculated by summation of GVA of all sectors of economy with taxes added and subsidies are deducted.
- Central Statistics Office (CSO) in the Ministry of Statistics and Programme Implementation (MoSPI) is responsible for the compilation of National Account Statistics including GDP
2) WORLD ECONOMIC OUTLOOK
- International Monetary Fund (IMF) in its update to the World Economic Outlook (WEO) has cut annual growth forecast for India, as it expects weaker domestic demand to limit an economic recovery.
- The economy is now expected to expand 7% in the year ending 31 March 2020, 0.3 percentage point slower than IMF’s April projection.
- However, India will still be the fastest growing major economy of the world and much ahead of China.
- Also, Reserve Bank of India (RBI), the Economic Survey and the Asian Development Bank have cut their growth outlook for India to 7%.
3) SLOWDOWN IN INDIAN ECONOMY
- Recent economic data indicates that there is slowdown in Indian economy.
- GDP: The recently released government data showed that Gross domestic product (GDP) grew at 5% in the first quarter of FY20. This is marking the slowest growth since the fourth quarter of FY13.
- Investment: The investment rate as measured by Gross Fixed Capital Formation (GFCF) as a per cent of GDP is showing a declining trend.
- Saving: Saving declined from 32.7 per cent in 2011 to 29.3 per cent in 2018. The decline in savings rate is because the economy is experiencing a declining wage growth (both rural and urban wages).
- Exports: During the period from 2011-2018, exports as a per cent of GDP also declined from 24.5 per cent to 19.6 per cent
Causes of slowdown
- Global economy
- A series of reform like Demonetisation, GST etc create disruptions in economy and give a severe blow to consumption and export growth.
- Tight monetary and fiscal policy and government committed to lowering its fiscal deficit, it left little room for government to increase its spending to boost the economy.
- Stress in financial sector due to rising NPA and NBFC crisis created liquidity crunch
Steps taken by government to revive economy
- Capital Infusion in Banks: The government announced upfront capital infusion of Rs 70,000 crore into public sector banks.
- Merger of bank
- Rollback of surcharge on FPI
- No angel tax
- FDI easing
- Relief in CSR
- MSMEs to get all their pending GST refunds
- Cut in corporate tax
- Boost for Real estate sector by giving 30,000- crore liquidity support to the struggling housing finance companies (HFCs).
Current affairs pertaining to Banking
1) 50 YEARS OF BANK NATIONALISATION
- 19th July, 2019 marked the 50th anniversary of the first phase of bank nationalization.
2) OMBUDSMAN SCHEME FOR DIGITAL
- Recently Reserve Bank of India (RBI) launched Ombudsman Scheme for Digital Transactions (OSDT) which will provide a cost-free and expeditious complaint redressal mechanism relating to deficiency in customer services in digital transactions conducted through non-bank entities (like mobile wallets or tech enabled payment companies using UPI for settlements) regulated by RBI.
- Ombudsman for Digital Transactions is a senior official appointed by the Reserve Bank of India (appointed for a period not exceeding 3 years at a time) to redress customer complaints against System Participants as defined in the Scheme for deficiency in certain services covered under the grounds of complaint.
3) RBI’S ‘VISION 2021’ DOCUMENT ON
- Recently, the Reserve Bank has released the ‘Payment and Settlement Systems in India: Vision 2019 – 2021′, with its core theme of ‘Empowering Exceptional (E) payment Experience’ to achieve “a highly digital and cashlite society”.
- The Vision 2021 has endeavoured to ensure that India has ‘state-of-the-art’ payment and settlement systems that are not just safe and secure, but are also efficient, fast and affordable.
4) BIMAL JALAN COMMITTEE
- Recently, the Reserve Bank of India (RBI) decided to transfer a surplus of Rs 1.76 lakh crore to the Government of India exchequer.
- Last year, RBI formed a committee under the chairmanship of Bimal Jalan to review the provisions under the Economic Capital Framework.
- The recent transfer includes Rs 1.23 lakh crore of surplus for 2018-19 and Rs 52,637 crore of excess provisions identified under a revised Economic Capital Framework (ECF) adopted by the RBI board.
5) BANK MERGER
- Recently government announced to merge 10 state-owned banks (merger of six publicsector banks (PSBs) with four better performing anchor banks) to create four large banks. Under the plan,
- Oriental Bank of Commerce and United Bank of India will be merged with Punjab National Bank;
- Canara Bank with Syndicate Bank;
- Andhra Bank and Corporation Bank with Union Bank of India;
- Allahabad Bank with Indian Bank.
This merger would bring number of public
schedule bank in India from 27 before 2017, to 12.
- Last year, the government had merged Dena Bank and Vijaya Bank with Bank of Baroda, creating the third-largest bank by loans in the country.
6) DIGITAL PAYMENT ABHIYAN:
- It aims at increasing awareness about cashless payment, educate end-users on the benefits of making digital payments, online financial security and urge them to adopt security and safety best practices.
- It is pan-India campaign crafted in seven languages — Hindi, English, Tamil, Telugu, Kannada, Bengali and Marathi.
- It will engage with users and make them aware of the dos and don’ts for different payment channels including UPI, wallets, cards as well as netbanking and mobile banking
7) BHARAT BILL PAYMENT SYSTEM (BBPS)
- It is an integrated bill payment system that offers interoperable bill payment service to customers online and via a network of agents on ground.
- This interoperable platform enables a customer to pay bills like telephone, water, gas, direct-to-home (DTH) and electricity at a single location (electronic or physical). The system provides multiple payment modes and instant confirmation of payment.
- BBPS functions under National Payments Corporation of India (NPCI).
- With the RBI currently expanding the scope of payment facility, RBI now allows other recurring/repetitive bill payments like school fees, insurance premiums, EMIs and municipal taxes, which can also be paid through BBPS.
8) DEVELOPMENT BANK
- Finance minister recently announced setting up a development bank as a slew of measures to boost the economy and financial market sentiments. Development banks are financial institutions that provide long-term credit for capital-intensive investments spread over a long period. Reliable and well-administered development financial institutions with a well-defined mandate and sound governance framework are an important vehicle to accelerate economic and social development.
9) MFIN AND SA-DHAN LAUNCHES ‘CODE FOR RESPONSIBLE LENDING’
- Microfinance Institutions Network (MFIN) and Sa-Dhan along with FIDC (Finance Industry Development Council) have jointly launched the ‘Code for Responsible Lending’ (CRL) for the micro credit industry. The CRL was launched at Sa-Dhan’s 15th Annual National Conference held in New Delhi.
- Sa-Dhan is Reserve Bank of India (RBI) recognised self-regulatory organisation and industry association for the microfinance industry.
About ‘Code for Responsible Lending’
- The CRL is sector-specific and entity-agnostic. A common CRL unveiled would bar more than three lenders offering loans to a single borrower and cap the size of total lending to Rs.1 lakh per borrower. A significant development in CRL adoption was signing up of Finance Industry Development Council (FIDC) which makes CRL more inclusive in its coverage.
- FIDC is the self-regulatory organisation forregistered NBFCs.
- CRL will be a step in right direction to restore confidence in non-banking lending community, as this will bring better discipline and harmony among asset financing, loan financing and micro financing NBFCs.
- In addition to CRL, a revised industry Code of Conduct (CoC) was also released for Microfinance Institutions (MFIs) that will act as a binding and compulsory set of principles with respect to lending practices.
- Currently, more than 90 entities have signed up for CRL as ‘responsible lenders’, and soon all microfinance lenders are expected to come forward to endorse and adhere to it.
- This launch is in line with Sa-Dhan’s objective of furthering responsible finance across entire sector.
- It is also a significant self-regulatory step across all RBI-regulated entities and others that aim towards safeguarding the interests of low-income customers by enhancing compliance and transparency.