Economic, Banking and Financial Awareness | SBI, IBPS, LIC, RBI, NABARD | Banking Awareness of 23, 24 and 25 May 2023 (2023)

Topic: Banking System

1. CoinDCX launched Okto, a decentralised finance wallet.

• Okto users can exchange tokens and earn money through approved decentralised finance services.
• Cryptocurrency exchange CoinDCX has also launched an AI-based multi-factor authentication to secure self-custodial decentralised finance (DeFi) wallets.
• So far, CoinDCX has made six protocol integrations. It targets 100 in next 4 to 6 weeks.
• The user will see the same interface on the mobile app regardless of the underlying protocol.
• The Web3 app eliminates the risk of a single point of failure. It does so by using multi-party computation (MPC) technology.
• In MPC, private keys used to control funds are not fully exposed. So, users’ funds are secured.
• The wallet supports multiple protocols. It is integrated with Web3 chains like Polygon, BSC, and Avalanche.

Topic: Appointments

2. Jayakumar S. Pillai’s appointment as Deputy Managing Director on the board of the IDBI Bank has been approved.

• The Board of Directors of IDBI Bank has approved his appointment for 3 years.
• His appointment is with effect from the date of his taking charge as specified in the RBI approval.
• He is currently working as Chief General Manager and Circle Head in Canara Bank, Mumbai.
• IDBI Bank has two Deputy Managing Director positions.
• It currently has one Deputy Managing Director (Suresh Khatanhar).
• The other Deputy Managing Director was Samuel Joseph Jebaraj.
• Samuel Joseph Jebaraj went to the National Bank for Financing Infrastructure and Development (NaBFID) as Deputy Managing Director (Lending & Project Finance) in early April 2023.
• IDBI Bank is a subsidiary of Life Insurance Corporation (LIC). It was set up in 1964. M. R. Kumar is its Chairman. Rakesh Sharma is its MD & CEO.

Topic: Regulatory Bodies/Financial Institutions

3. The norms for surety bonds have been relaxed by IRDAI to expand the surety insurance market.

• The aim of changes in the norms is to expand the surety insurance market by increasing the availability of surety bond products.
• IRDAI has reduced the solvency requirement applicable for surety bonds from 1.875 times to 1.5 times.
• It has also removed the 30% exposure limit on each contract underwritten by insurers.
• 'IRDAI (Surety Insurance Contracts) Guidelines' were issued by IRDAI in January 2022.
• Earlier, the cap on premiums that could be underwritten in a financial year by mono-line insurers transacting only surety insurance business was removed.
• Surety bonds:
  • They are a type of insurance policy. They protect parties involved in a transaction or contract from potential financial losses because of a breach of contract or other types of non-performance.
  • They serve as a risk mitigation tool to maintain integrity, quality, and adherence to contractual terms.
  • Surety bonds are legally binding contracts. They are entered into by three parties, which are the principal (usually a business owner or contractor), the obligee (usually a government entity) and the surety.

Topic: Reports and Indices

4. According to SBI’s report “Ecowrap”, a person now accesses an ATM eight times per year on average, down from 16 times previously.

• As per the report, every one rupee increase in the value of UPI transactions results in an 18 paisa decrease in debit card transactions.
• The observation is based on monthly time series data analysis for the period of April 2016 to April 2023.
• According to research by SBI’s economic research department (ERD), cash withdrawal through debit cards at ATMs has declined from November 2018.
• As per ERD’s research, rural and semi-urban areas are now accounting for 60% of share in UPI value/ volume.
• Top 15 States accounted for about 90% of share in UPI value/volume.
• As per Ecowrap, the most popular and preferred payment mode in India is UPI. It accounts for about 73% of the total digital payments.
• According to ERD’s analysis, the volume of UPI transactions has increased from 1.8 crore in FY17 to 8,375 crore in FY23.
• The value of UPI transactions has increased from ₹6,947 crore to ₹ 139-lakh crore during the FY17 to FY23. This is a jump of 2004 times.
• ERD said that CIC (currency in circulation) has declined to reach 12.4% of GDP in FY23. This is almost same level as 2015-16.
• As per ERD, the yearly growth in CIC has also declined from 16.6% in FY21 to 7.9% in FY23.

Topic: Indian Economy/Financial Market

5. Gross Foreign Direct Investment (FDI) inflows in FY23 declined 16.3%.

• According to the RBI, gross FDI in FY23 declined from $84.8 billion in FY22 to $71 billion in FY23.
• Net FDI also declined from $38.6 billion in FY22 to $28 billion in FY23 according to an article titled ‘State of the Economy’ in latest monthly bulletin of RBI.
• The highest decline in FDI inflows compared with the preceding year was recorded in manufacturing, computer services and communication services.
• As per the article, US, Switzerland, and Mauritius were the major contributors towards the decline in inflows.
• In 2022, in the semiconductor industry, India was the 2nd largest recipient of FDI ($26.2 billion). US was the largest recipient of FDI ($33.8 billion).
• In the semiconductor industry, China received only $0.5 billion as FDI.
• The overall cost of ECB loans increased steeply by 5.16 percentage points between March 2022 and March 2023.
• Net accretions to non-resident deposits rose from $3.2 billion a year ago to $8 billion in 2022-23.

Topic: Taxation

6. The Finance Ministry has announced an increase in the maximum limit for encashment of earned leave for income tax exemption.

• The maximum limit of 3 lakh rupees for tax exemption on leave encashment upon retirement of non-government salaried employees was last time fixed in 2002.
• At that time, the highest basic pay in the government was 30,000 rupees per month.
• In the budget for Fiscal Year 2023-24, Finance Minister Nirmala Sitharaman proposed to increase the limit to ₹25 lakh in line with the increase in government salaries.
• Finance Ministry has now issued a notification and said that the new limit has come into force with effect from the 1st April, 2023.
• This means an individual superannuating on or after April 01, 2023, will get the benefit of new limit.
• The new limit will apply in the new Income Tax regime as well as old one.

Topic: World Economy

7. Global steel output declined 2.4% in April.

• As per World Steel Association (worldsteel), production in 63 countries declined to 161.4 million tonnes (mt) against 162.7 mt in April 2022.
• Top producer China reported a decline of 1.5% compared to a year-ago period. It has produced 92.6 mt. China produced 95.7 mt in March 2023.
• India reported a 3.2% rise in production at 10.7 mt. It was lower than the 11.4 mt produced in March 2023.
• Steel production in Japan declined by 3.1% at 7.2 mt. Steel production in US declined 5.3% at 6.6 mt.
• Russia’s production was kept at 6.4 mt. It increased by 1.9% year-on-year.
• South Korea’s output increased. Germany’s output and Brazil’s output declined.
• For the January-April period, steel production in 63 nations was kept at 622.7 mt. These 63 nations account for 97% of world steel output.
• According to the Worldsteel, steel demand worldwide will grow 2.3% in 2023 and 1.7% in 2024 to reach 1,822 mt and 1,854 mt, respectively.

Topic: Reports and Indices

8. RBI’s economic activity index (EAI) has nowcast GDP growth for Q1 (April-June) FY24 at 7.6%.

• This is against real GDP growth of 7.8% projected in the April 2023 Bi-monthly Monetary Policy Statement.
• The nowcast GDP growth is based on partial data available for April 2023.
• The nowcast GDP growth is based on assuming an implied GDP growth of 5.1% for Q4 (January-March) FY23.
• The index of supply chain pressure for India (ISPI) remained at levels below historical average since July 2022.
• GDP growth in the first quarter of FY24 will be driven by private consumption. It will be supported by revival in rural demand.
• Domestic service sector activity will be led by the rebound in contact-intensive services. It will be led by resilience in construction activity.

Topic: Appointments

9. The appointment of Dolly Jha as Chief of Product & Research of BARC has been announced.

• She was previously managing director (MD) for Nielsen Media-India.
• Broadcast Audience Research Council India (BARC) is the television audience measurement industry body.
• BARC runs the largest audience measurement system in the world.
• It was established in 2010. It is headquartered in Mumbai. Nakul Chopra is its CEO. Shashi Sinha is its chairman.