1. WEEKLY FINANCIAL SNIPPETS – 28/01/2017
1. EVEN RBI DOES NOT HAVE ANY IDEA ABOUT FAKE NOTES: The Reserve Bank of India
has no confirmed data on the value of the fake currencies detected since the
demonetization of Rs 500 and Rs 1000 notes. This is in reply to a query raised under RTI.
2. CASH WITHDRAWAL RESTRICTIONS TO GO AWAY BY FEBRUARAY END: The Reserve
Bank of India has recently raised the ATM withdrawal limit to Rs.10,000/- a day but it
has maintained the weekly cap of Rs.24,000/- for savings account and Rs.1 lakh for
current account holders. But as per SBI estimates, over 80% of currency could be back in
circulation by February end, and hence the restrictions on cash withdrawals may be
completely lifted by February end.
3. RESTRUCTURED EDUCATION LOANS NOT TO BE TREATED AS NPAs: In order to
encourage banks to provide education loans , The RBI has clarified that rescheduling of
payment period of such loans due to unemployment of the borrower will not be treated
as restructured accounts for computing NPAs. Banks may allow three spells of
moratorium ( not exceeding 6 months each) during the life cycle of the education loan,
taking into account the unemployment/underemployment, and this will not be treated
as restructuring of loan account.
4. RBI WORKING ON PLAN TO REDUCE ONLINE CHARGES: The Reserve Bank of India is
working on a plan to reduce online transaction costs which the banks at present are
charging. This is a positive move to encourage more digital banking.
5. MORE PSU BANKS MAY SKIP DIVIDEND PAYOUT THIS FISCAL: Some Public Sector Banks
have already indicated to the Finance Ministry that it may not be possible for them to
pay dividend this year as their profits are likely to remain very low due to very poor
credit offtake, after effects of demonetization and increase in bad loans.
6. BORROWERS MAY SWITCH FROM BASE RATE TO MCLR: Declining interest rates, driven
by demonetization, will prompt existing bank borrowers to shift from base rate system
to the new MCLR mechanism as it will help them reduce interest burden and also reduce
their repayment cost. MCLR linked advances are estimated to be around 15-20% of the
total banking sector advances. This is as per ICRA press release.
7. BANKS’ SEEK TAX RELIEF TO EASE NPA BURDEN: Banks have asked the government for
lower taxes in the forthcoming budget, to compensate them for their efforts on financial
inclusion and demonetization. They have demanded tax exemption of 100 % on
provisions against bad loans. At present only 7.5% of the capital set aside for NPAs and
10% of the rural advances are deducted from gross income of the bank while all other
earnings are taxable.
8. ELECTION COMMISSION (EC) REQUESTS RBI TO INCREASE CASH WITHDRAWAL LIMIT
IN 5 STATES: The Election Commission has requested the RBI to enhance the weekly
cash withdrawal limit from Rs. 24,000/- to Rs.2,00,000/- for candidates contesting
elections in the 5 states which will have the state elections soon. The candidates have
represented their difficulty to Election Commission in meeting their campaign
expenditure.