BANKING & FINANCIAL CURRENT AFFAIRS JANUARY 2022
Highlights of Union Budget 2022-23
Introduction of the Budget
Finance Minister Nirmala Sitharaman has presented the said budget.
The total size of the budget 2022-23 is Rs 39.45 Lakh Crore. This figure also represents Total Receipt and Total expenditure as per the Budgeted Estimates for 2022-23. Total receipts other than borrowings in 2022-23 estimated at Rs. 22.84 lakh crore.
Key highlights
- She said that the country is expected to grow at 9.27 per cent.
- 7 focus areas:
(1) PM Gati Shakti
(2) Inclusive Development
(3) Productivity Enhancement
(4) Sunrise Opportunities
(5) Energy Transition
(6) Climate Action and
(7) Financing of investments. - ‘Amrit Kal’ of next 25 years – from India at 75 to India at 100.
- Production Linked Incentive schemes in 14 sectors with the potential to create 60 lakh new jobs, and the additional new production of Rs.30 lakh crore.
- In selected ITIs in all states drone courses will be started and Startups will be promoted to facilitate Drone Shakti to make drone a service.
- Emergency Credit Line Guarantee Scheme to be extended up to March 2023, guaranteed cover extended by another Rs 50,000 crore. The total cover under the scheme is now Rs 5 lakh crore. An additional amount has been earmarked for the hospitality sector.
Announcement of Ken-Betwa River linking project worth Rs 44,605 crore.
- Issuance of e-passports will be rolled out in 2022-23 to make it easier for citizens. Ease of business 2.0 will be launched.
- 5G spectrum auctions to be carried out in calendar 2022 to enable the launch of services within FY22- 23.
- Special Economic Zones Act will be replaced with new legislation for the development of enterprises and hubs. It will cover the existing industrial enclaves and enhance the competitiveness of exports.
- Effective capital expenditure of the Central government is estimated at Rs 10.68 lakh crore in 2022-23, about 4.1% of GDP.
- Digital rupee to be issued using blockchain and other technologies and will be issued by RBI starting 2022-23. This will give a big boost to the economy.
Tax Proposals
- Taxpayer can file an updated return on payment of taxes within two years from the end of the relevant assessment year.
- Both Centre and States govt employees’ tax deduction limit to be increased from 10% to 14% to help the social security benefits of state government employees and bring them at par with the Central govt employees.
- Income from transfer of digital assets (Cryptocurrency) to be charged 30% tax, plus 1% tax on the transaction.
- Existing tax benefits for startups, which were offered redemption of taxes for 3 consecutive years, to be extended by 1 more year.
- Income from Long Term Capital Gains will be taxed at 15%.
- Customs on polished diamonds, gemstones cut to 5%. Simply sawn diamonds will be exempted. To facilitate the export of jewellery through ecommerce, simplified regulations will be in place by June this year.
- Deduction for employer contribution to NPS increased to 14% from 10% earlier for State govt employees on par with central govt employees.
- No set off permitted against other income.
- Alternate Minimum Tax for cooperative societies to be cut to 15%. The proposal will reduce the surcharge on cooperative societies to be reduced from 12% to 7%, for those whose income is between Rs 1 crore and Rs 10 crore.
- Proposes fiscal deficit of 4.5% of GDP by 2025/26
- Projects fiscal deficit of 6.4% of GDP in 2022/23
- Revised fiscal deficit for 2021/22 at 6.9% of GDP
- Total expenditure in 2022/23 seen at 39.45 trillion rupees
- States will be allowed 4% fiscal deficit to GDP in FY23
- 50 year interest free loans over and above normal borrowing allocated to states
- Financial inclusion– 100% of 1.5 lakh post offices will come on the core banking system, net banking, mobile banking, ATMs, and also providing online transfer of funds between post office accounts and bank accounts.
- Fiscal Deficit target set at 6.4% for FY23.
- Education sector- States will be encouraged to revise syllabi of agricultural universities to focus on natural, zero-budget & organic farming, modern-day agriculture. One class, one TV channel’ program of PM eVIDYA will be expanded from 12 to 200 TV channels.
- Indian Railways: PM Gati Shakti one of the four pillars of growth. 25,000 km of national highways to be built in 2022-23.
400 new-generations Vande Bharat trains with higher efficiency will be developed in the next three years.
Over 2,000 km of the rail network to be brought under the indigenous world-class technology KAWACH, for safety and capacity augmentation. India’s farmers. - Chemical-free natural farming to be promoted in India.
- Infrastructure- In 2022-23, 80 lakh houses will be completed for identified beneficiaries of PM Awas Yojana; 60,000 houses will be identified as beneficiaries for PM Awas Yojana in rural & urban areas.
- Defence: 68% of the capital procurement budget for Defence to be earmarked for domestic industry to promote Aatmanirbharta and reduce dependence on imports.
- Parvatmala– National Ropeways Development Program to be taken up on PPP mode.
- Skill Development- Digital Ecosystem for Skilling and Livelihood (DESH-Stack e-portal) will be launched to empower citizens to skill, reskill or upskill through on-line training.
Budget Allocation to Major Scheme
- National Health Mission- Rs.37,800 Crore
- Jal Jeevan Mission- Rs.60,000 Crore
- National Education Mission- Rs.39,553 Crore
- Pradhan Mantri Gram Sadak Yojana- Rs.19,000 Crore
- PM Kisan- Rs.68,000 Crore
- Aatmanirbhar Bharat Rojgar Yojana- Rs. 6,400 Crore
- Pardhan Mantri Swasthya Suraksha Yojana- Rs.10,000 Crore
- PLI for Large Scale Electronics and IT Hardware Rs. 5,300 Crore
Top 5 Ministry in terms of Budget Allocation (2022- 23)
- Ministry Budget Ministry of Defence– Rs. 5,25,166.15 Crore
- Ministry of Consumer Affairs, Food and Public Distribution- 2,17,684.46 Crore
- Ministry of Road Transport and Highways– Rs.1,99,107.71 Crore
- Ministry of Home Affairs– Rs.1,85,776.55 Crore
- Ministry of Railways– Rs.1,40,367.13 Crore
Banking & Financial Current Affairs
- The Reserve Bank of India (RBI) has extended the deadline for periodic KYC updates from December 31 to March 31, 2022 in view of prevalent uncertainty due to a new variant of COVID-19 – Omicron.
- Reserve Bank of India has retained State Bank of India, ICICI Bank and HDFC Bank as Domestic Systemically Important Banks (D-SIBs).
Domestic Systemically Important Banks are those banks which if fail would have a significant impact on the economy. - RBI has approved Fino Payments Bank for commencing international (Cross Border) remittance business under the Money Transfer Service Scheme (MTSS).
- RBI has issued a framework for facilitating small-value digital payments in offline mode using cards, wallets, mobile devices, etc. to push digital transactions in rural and semi-urban areas. The upper limit of an offline payment transaction was fixed at Rs 200, with a total limit of Rs 2,000 at any point in time.
- Reserve Bank of India has cancelled the Certificate of Authorisation (CoA) of two Payment System Operators (PSOs): Muthoot Vehicle and Asset Finance Limited and Eko India Financial Services Private Limited, citing non-compliance with regulatory requirements under the Payment and Settlement Systems Act, 2007.
- RBI issued eligibility criteria for entities that harness data from credit information companies (CICs) or credit bureaus. Now a company’s net worth must be at least Rs 2 crore and owned and controlled by resident Indian citizens to become a designated user with a credit bureau.
- Reserve Bank of India has increased the threshold limit from Rs. 5 crore to Rs 7.5 crore for all Commercial Banks except Regional Rural Banks, Local Area Banks, and Payments Banks to maintain the Liquidity Coverage Ratio (LCR) on deposits and other ‘extension of funds’ received from non-financial small business customers.
- Reserve Bank of India has set up a separate internal fintech department with effect from January 04, 2022. It will subsume the FinTech Division of Department of Payment and Settlement Systems, Central Office (DPSS, CO). Ajay Kumar Choudhary is appointed as head of the department.
- Security Printing and Minting Corporation of India Limited (SPMCIL) has set up ‘new banknote printing lines’ at its Currency Note Press, Nashik and Bank Note Press, Dewas.
There are four printing presses for printing and supply of Banknotes in India. These are Dewas (Madhya Pradesh), Nasik (Maharashtra) owned by SPMCIL, Mysore (Karnataka) and Salboni (West Bengal) owned by Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL). - SBI Cards and Payment Services have tied up with Paytm for card tokenisation to protect the data of the cardholders and make payments through Paytm.
Tokenisation means masking the original card number by replacing it with a set of unique characters, termed as token which secures the customer’s card details when a transaction is under process. - Airtel Payments Bank has been categorised as a scheduled bank by the RBI.
- SBI General Insurance Company Ltd has launched a campaign titled “BahaneChhodoTaxBachao” to increase awareness around the need to buy health insurance to save tax along with other benefits of opting for health insurance.
- RBL Bank and Google have made strategic collaboration to fuel the Bank’s customer experience strategy through the digital platform, Abacus 2.0.
- The name of YES Mutual Fund has been changed to WhiteOak Capital Mutual Fund. The changes in the names are effective from January 12, 2022. White Oak got the license to run a mutual fund.
- State Bank of India (SBI) has issued $300 million Formosa bonds and listed the issuance on India INX GIFT IFSC. Thus SBI is the first Indian entity to raise money through Formosa Bond, which is a bond issued in Taiwan.
- Ujjivan Small Finance Bank (SFB) has launched “Platina Fixed Deposit”, offering interest of 15 basis points (bps) higher than the regular term deposit rates provided by Ujjivan SFB. It is a non-callable deposit, where partial & premature withdrawal is not applicable.
- The Government of India has sanctioned and notified the Scheme for the amalgamation of the Punjab and Maharashtra Co-operative Bank Ltd with Unity Small Finance Bank Ltd. All the branches of the PMC Bank will function as branches of Unity Small Finance Bank Ltd from January 25, 2022.
Economy Current Affairs
- The rating agency India Ratings and Research (Ind-Ra) has downgraded the GDP of India from 9.4% to 9.3% for the current fiscal FY 2021-2022.
- Total assets managed under NPS and APY pension schemes of the Pension Fund Regulatory and Development Authority (PFRDA), have crossed 6.99 lakh crore. Total AUM under these schemes was at Rs 5, 78,025 crore as of March 31, 2021.
- National Statistical Office (NSO) has estimated India’s GDP to grow at 9.2% in 2021-22.
- The deposits in bank accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme have crossed Rs 1.5 lakh crore marks. The data of finance ministry revealed that over 44.23 crore accounts have been opened under the scheme.
- The World Bank in its ‘Global Economic Prospects’ report retained its FY22 growth forecast for India at 8.3% but upgraded it to 8.7% for FY23, from 7.5% estimated earlier.
- As per the United Nations World Economic Situation and Prospects (WESP) report, 2022; GDP growth forecast of India in fiscal 2022 is estimated to grow at 6.5%.
- India Ratings and Research (Ind-Ra) wholly owned subsidiary of the Fitch Group has projected GDP growth rate of the Indian economy to grow at 7.6 % in 2022-23.
- The International Monetary Fund (IMF) has cut India’s economic growth forecast for the current fiscal 2021-22 (FY22) from 9.5% to 9%, in its latest world economic outlook report.
Business Current Affairs
- Insurance Regulatory and Development Authority of India (IRDAI) has stated that LIC, GIC Re and New India continue to be identified as Domestic Systemically Important Insurers (D-SIIs) for 2021-22.
D-SIIs mean whose distress or failure would cause significant dislocation in the domestic financial system. - Life Insurance Corporation (LIC) of India has inaugurated “Digi Zone” to enhance its digital footprint. LIC’s Digi Zone can be used by the customers to purchase policies online, pay the premium and avail of other services.
- Tech Mahindra has approved a proposal for the acquisition of a 100% stake in Allyis India and Green Investments, for a total consideration of USD 125 million.
- NTPC Ltd. (State-owned power Generation Company) will acquire 5% equity stake in Power Exchange of India Ltd (PXIL). The government is planning to expand the share of the spot power market in the total electricity supply in India to 25% by 2023-24. Presently, the size of short-term power trading is about 5%.
- Nippon Life India Asset Management Ltd. has announced the launch of India’s First Auto sector ETF – Nippon India Nifty Auto ETF.
- NPCI Bharat BillPay Ltd. (NBBL) has introduced a functionality called ‘Unified Presentment Management System’ (UPMS).
- Reliance Industries Ltd (RIL) has announced the acquisition of a controlling stake of 73.37% in Mandarin Oriental New York, a premium luxury hotel in midtown Manhattan.
- The Ministry of External Affairs (MEA) has signed an agreement with Tata Consultancy Services Limited (TCS) for the second phase of the Passport Seva Programme (PSP-V2.0).
TCS will be the service provider for the Passport Seva Project, which it has been for over 10 years. - The Central Government of India is set to become the largest shareholder in India’s 3rd largest network Vodafone Idea. The company’s board approved the conversion of Rs 16,000 crores in interest into equity.
- By achieving the landmark of over 926 million UPI transactions in a single month, Paytm Payments Bank Ltd (PPBL) became the largest and fastest-growing UPI beneficiary bank in India.
- NPCI and Reliance Jio have announced that UPI AUTOPAY has now been introduced for the telecom industry with Jio. Jio’s integration with UPI AUTOPAY has made it the first player in the telecom industry to go live with the unique e-mandate feature that was launched by NPCI.
- MobiKwik, and Buy Now Pay Later (BNPL) Fintech companies launched ‘ClickPay’ for its customers, in collaboration with NPCI Bharat BillPay Ltd. (NBBL).
- Tata Group has chosen State Bank of India, Bank of Baroda and HDFC Bank as preferred bankers for Air India. Air India is the largest international carrier out of India with an 18.6% market share.
- Paytm Money has introduced “India’s first” intelligent messenger called ‘Pops’ with which users can receive specific information related to their stocks, portfolio, market news, market movements in an easy to consume format, all in one place.
- Swiggy has signed a $700 million funding round led by asset manager Invesco. The total valuation of Swiggy now has reached to $10.7 billion i.e. it is now a decacorn.
A decacorn is a startup with a valuation of more than $10 billion. - Fullerton India and One97 Communications Limited, which owns the brand Paytm, have announced a partnership to provide lending products to merchant partners and consumers.
- The government of India officially handed over “Air India” to the Tata Group on January 27, 2022. The total value of the deal is Rs 18,000 crore.
- Pencilton has recently launched PencilCard, a debit card that is compliant with National Common Mobility Card standards. Pencilton is a teen-focused Fintech startup based in India that was launched in partnership with Transcorp.
The National Common Mobility Card was developed by India’s Ministry of Housing and Urban Affairs in early 2019. It allows the user to pay for travel, toll duties, retail shopping and withdraw money.