Banking and Financial Inclusion

Context: Complementing the PMJDY, India unveiled the account aggregator (AA) network to overcome the challenges of access to micro-credit for individuals and micro, small and medium enterprises (MSMEs) The AA network along with Pradhan Mantri Jan Dhan Yojna (PMJDY) would help India formalize credit and boost economic growth in the post-covid era. Read about Account Aggregator from Prelims Notes. …

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Context: According to RBI Indian banking system has performed better than the expectation during the pandemic but it is still far from full recovery and there are still impending threats. How has banking sector performed during the pandemic?  The asset quality of banks has improved over the past year. Banks gross non-performing assets (GNPAs), which had begun to decline before …

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Context: Search and seizure operations at 60 premises of four ARCs have exposed the “unholy nexus” between the borrowers and the ARCs. Issues: The bad loans acquired by them were at far less value than the real value of the securities covering such loans. Minimum cash the ARCs paid to the lenders for such loans, …

Issues with Asset Reconstruction Companies (ARCs) – UPSC GS3 Read More »

Context: Ministry of Corporate Affairs (MCA) has published a draft framework for cross-border insolvency proceedings based on the UNCITRAL Model Law. Why there is a need for a separate law for cross-border insolvency? Cross-border insolvency involves a situation where an insolvent debtor has assets or creditors in more than one country. In such cases, a …

Need of cross border Insolvency Framework – UPSC GS3 Read More »

Context: National Asset Reconstruction Company (NARC) offers hopes for the faster clean-up of lenders’ balance sheets. NARCL is not a bank, but a specialised financial institution to help resolve the distressed assets of banks. Over the last 5 years, considerable progress has been made in resolving and recovering bad debts of banks. Despite this, there …

Bank NPAs : Importance of National Asset Reconstruction Company – UPSC GS3 Read More »

Steps taken to reform Debt Recovery Process: In 1962, after the Palai Central Bank failed, an amended RBI Act provided for a credit information bureau. It would have strengthened information sharing among bankers but it became dysfunctional soon. In 1971, a study group recommended setting up a Credit Information Trust. The entire system was discontinued in 1995. The Debt …

Debt Recovery in Banking – UPSC GS3 Read More »

Context: RBI had constituted the working group on digital lending including lending through online platforms and mobile apps under the chairmanship of Jayant Kumar Dash, Executive Director, RBI. The working group was set up in the backdrop of business conduct and customer protection concerns arising out of the increase in digital lending activities. The working group …

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According to the Chief economic adviser at State Bank of India (SBI), India is now ahead of China in financial inclusion metrics. India’s Financial Inclusion Metrics Mobile and Internet Banking Transactions: The mobile and Internet banking transactions have increased to 13,615 per 1,000 adults in 2020 from 183 in 2015. Bank Branches: The number of bank branches has …

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Background: Finance Ministry has issued a fresh set of norms to guide state-owned banks in adopting a uniform staff accountability framework for non-performing assets (NPAs) up to Rs 50 crore. Facts: PSBs have written off loans worth more than Rs 8 trillion over the past seven years, which is more than twice the capital infused …

Fixing PSU Bank Staff accountability – UPSC GS3 Read More »

History of Bank Nationalization in India: 14 banks with deposits of at least Rs 50 crore each were nationalised on the midnight of July 19, 1969, by Indira Gandhi. A second round of nationalisation of six more commercial banks with deposits of more than Rs 200 crore was done in 1980. Reasons behind bank nationalisation …

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