What is Positive Pay Mechanism? Positive Pay is a fraud detection tool adopted by banks to protect customers against forged, altered or counterfeit cheques. It crosses verifies all details of the cheque issued before funds are encashed by the beneficiary. In case of a mismatch, the cheque is sent back to the issuer for examination. …
Account Aggregator(AA): Account Aggregator is a non-banking financial company that simply facilitates sharing of financial information in a real-time and data-blind manner between regulated entities. The licence for Account Aggregators(AAs) is issued by the Reserve Bank of India(RBI). State Bank of India, ICICI Bank, Axis Bank, IDFC First Bank, Kotak Mahindra Bank, HDFC Bank, IndusInd Bank and Federal Bank …
What is Prompt corrective action(PCA) Framework? PCA is an RBI framework. Banks with weak financial metrics are put under the PCA framework by the Reserve Bank of India(RBI). Aim: It aims to check the problem of Non-Performing Assets (NPAs) in the Indian banking sector. When was the PCA framework introduced? The RBI introduced the PCA framework in …
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Urban Cooperative Banks (UCBs) are registered as cooperative societies under the provisions of, either the State Cooperative Societies Act of the State concerned or the Multi State Cooperative Societies Act, 2002. They are regulated and supervised by the Registrar of Cooperative Societies (RCS) of State concerned or by the Central Registrar of Cooperative Societies (CRCS), as the …
Context: RBI has decided not to open up the banking sector for industrial and corporate houses. Pros of allowing Corporate Houses in Banking: Corporate houses will bring capital and expertise to banking. A move towards liberalization: Very few countries bar entry of corporate houses in banking. India needs more banks to cater to the diverse needs of both …
What are Neobanks? Neobanks are financial institutions that give customers a cheaper alternative to traditional banks. These are digital banks without any physical branches, offering services that traditional banks don’t, and doing so efficiently. In India, these firms don’t have a bank licence of their own but rely on bank partners to offer licensed services.
RBI’s Transfer of Surplus to Government: RBI transfers its surplus profits to the Government according to the provisions of Section 47 of the Reserve Bank of India Act, 1934. Section 47 says that surplus profits of the RBI are to be transferred to the government. Surplus profit is the profit left after making various contingency provisions for bad and …
Asset Reconstruction Company (ARC): Asset Reconstruction Company (ARC) is a specialized financial institution that buys the Non-Performing Assets (NPAs) from banks and financial institutions. It helps banks in cleaning up their balance sheets. Thus, it helps banks to concentrate on normal banking activities. Banks, Instead of going after the defaulters, can focus on selling their bad assets …
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2021: IBC Amendment Ordinance 2021 amends the Insolvency and Bankruptcy Code, 2016. The Amendment allows the use of Pre-Packaged insolvency resolution as an alternative resolution mechanism for MSMEs. The threshold limit to trigger the Pre-Packaged insolvency resolution is between Rs 10 lakh to 1 Crore. What is Pre-Pack insolvency resolution? A …
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Positive Pay Mechanism: It involves a process of reconfirming key details of large-value cheques. Process: Under this, the issuer of the cheque submits electronically through channels like SMS, mobile app and Internet banking, certain minimum details of cheque to the drawee bank, details of which are cross-checked with the presented cheque by Cheque Truncation System(CTS). Any …