Top Banking Developments (JANUARY 2014)RBI issues clarifications about its “Clean Note Policy”

The Reserve Bank of India (RBI) dismissed rumours that it has stopped banks from

accepting scribbled currency notes from 1 January 2014 and announced that banks will

continue to accept currency notes with scribbling. However, it reiterated that writing or

scribbling on banknotes works against the Clean Note Policy (2013) to keep currency

notes clean and sought co-operation from public, institutions and others in keeping the

banknotes clean by not writing anything on them. It is worth mentioning that the Clean

Note Policy, 2013 has guidelines about doing-away with practices like stapling of

currency notes, writing (scribbling) on currency notes and re-issuing dirty notes to public

by banks.

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Universal Electronic Bank Account (UEBA) proposed by Nachiket More

Committee

The Nachiket Mor Committee made the important recommendation to provide a

Universal Electronic Bank Account (UEBA) each Indian citizen above the age of

eighteen years by 1 January 2016. The report of the committee was submitted during

January 2014. The committee in its report stated that the country should have enough

number and distribution of electronic payment access points so that “every single

resident would be within a 15 minute walking distance from such a point anywhere in

the country” by January 2016. On UEBAs, the panel said every resident should be

issued a UEBA automatically at the time of receiving their Aadhaar number by a “high

quality, national, full-service bank”. The complete formal name of Nachiket Mor

Committee is Committee on Comprehensive Financial Services for Small Businesses

and Low-Income Households. Nachiket Mor is the Member on the Central Board of

Directors of the RBI.

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Axis Bank becomes first Indian domestic private sector bank to have branch in

China

Axis Bank during January 2014 became the first Indian domestic private sector bank to

have a branch presence in China. This first branch of Axis Bank was opened in

Shanghai. The bank received permission from the China Banking Regulatory

Commission (CBRC) for opening this branch.

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Mayaram Panel on removing ambiguity between FDI and FII

The Arvind Mayaram led 4-member committee on defining FDI and FII and removing

the ambiguity between them presented its report during January 2014. The committee

recommended splitting overseas investment inflows into two categories – Foreign

Portfolio Investment (FPI) and Foreign Direct Investment (FDI) – with a minimum

composite cap of 49%. The committee also recommended an aggregate automatic limit

of 24% of FPI, which may be raised up to the extent of FDI permitted under the

automatic route.

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Union Govt. revised plans to open 10,000 new bank branches

The then Union Finance Minister P. Chidambaram during January 2014 announced

revising govt.’s target of opening new bank branches from 7,000 to 10,000 (per year).

He stated that the in effort to take banking services to rural areas, the govt. has planned

to open 10,000 new bank branches annually. This move is expected to create at-least

55,000 new bank jobs.

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Tamilnad Mercantile Bank announces 9000% interim dividend

During January 2014, Tamilnad Mercantile Bank (TMB) came to limelight for declaring

an interim dividend of 9000%, which was said to be the highest in India’s banking

industry. Tuticorin-based TMB took a decision to this effect at a meeting held during

January 2014. This dividend stood at Rs. 900 per share of Rs 10 each, for the fiscal

ending March 2014.

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P.J. Naik Committee for reviewing the governance of bank boards in India

constituted

The Reserve Bank of India (RBI) during January 2014 constituted an 8-member expert

committee led by former Axis bank Chairman and CEO PJ Naik to review the

governance of bank boards in India, which included examining the ownership and salary

structure of banks.

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CGTMSE provides risk coverage to BMB’s collateral-free loan scheme

The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) during

January 2014 agreed to provide risk cover to the Bharatiya Mahila Bank (BMB) for its

ambitious scheme collateral-free loan scheme. Under this scheme BMB is providing

collateral-free loans for amounts up to Rs. 1 crore to women entrepreneurs. CGTMSE is

a credit guarantee scheme, where a premium is paid either by the lender or the

applicant, and it is providing a guarantee cover for up to 80% of loans availed by women

owned or operated micro- and small enterprises.

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Vakrangee Ltd. receives authorization for operating White Label ATM

Vakrangee Ltd., which is engaged in providing e-governance solutions, during January

2014 received final authorization for operating White Label ATM (WLA) license from

Reserve Bank of India (RBI). Under, the RBI license, the company is entitled to set up

and run minimum 15,000 ATMs across the country in next three years. White label

ATMs are those which are not run by the Banks but by a non- banking entity in its own

brand name (like Vakrangee ATM) after passing through all the stringent qualification

and due-diligence process undertaken by RBI.

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Deutsche Asset Management becomes first private sector fund house to launch

IIF

Deutsche Asset Management India (DAMI) during January 2014 became the first

private sector fund house to launch an inflation indexed fund that aims to provide

inflation-adjusted returns to investors. DWS Inflation-Indexed Bond Fund is an open-

ended debt fund that opened for subscription on 16 January and closed on 27

January2014. Inflation indexed bonds (IIBs) are instruments where interest payment

and principal are linked to whole sale price index (WPI) inflation and these bonds are

currently available at an attractive yield of 3.6% above WPI. Government has been

issuing IIBs on a monthly basis since June 2013.

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State Bank of India came out with plans to outsource some of its ATM operations

India’s largest commercial bank SBI came out with plans to outsource the management

of some of its ATMs by taking calls from vendors. During January 2014 SBI called for a

Request for Proposal (RFP) from vendors to manage about 7,843 cash dispensers

(ATMs).

FEBRUARY 2014

India Post announces plan to install 3,000 ATMs and 1.35 lakh micro-ATMs

India Post (Indian postal department) during February 2014 rolled-out its ambitious plan

to install as many as 3,000 ATMs and 1.35 lakh micro-ATMs at its post offices across

the country for savings account holders by installing three ATMs in Chennai, New Delhi

and Bangalore. India’s first Post Office Savings Bank ATM was inaugurated on 27

February 2014 by the then Finance Minister P. Chidambaram at Chennai’s Thiyagaraya

Nagar Head Post Office. This initiative of opening Post Office Savings Bank ATM is part

of the government’s Rs. 4,909 crore IT modernisation scheme for the Department of

Posts specified in the interim budget for 2014-15The organisation plans to ramp up this

plan gradually and announced September 2015 as the deadline for installing these

ATMs and micro-ATMs. Under this plan, 1,000 ATMs with the India Post branding will

be put in within the first year, which will be ramped up massively to 3,000 in the next 18

months. To start with, the ATMs can be used only by 26 crore savings account-holders

who save with the postal department but India Post hopes that within six months of the

launch, it will get the interoperability permission from the Reserve Bank of India (RBI).

Postal savings are worth around Rs 6.05 trillion.

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7 th   Central Pay Commission constituted

During February 2014 the 7th Central Pay Commission was constituted by the Union

Govt. under chairmanship of Justice Ashok Kumar Mathur, former Judge of the

Supreme Court. The commission will put forward its recommendations for will revising

salaries of over 50 lakh central government employees and remuneration of 30 lakh

pensioners. The Commission has been mandated to submit its report in two years time

and its recommendations would be implemented from 1 January 2016. Earlier in

September 2013, the then Prime Minister Manmohan Singh had approved setting up of

the 7th Central Pay Commission. The other members of the Commission, include, Oil

Secretary Vivek Rae (full time Member), NIPFP Director Rathin Roy (part-time Member)

and OSD in Expenditure Department Meena Agarwal (Secretary).

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IBA advisory on use of Windows XP in PSU banks

The Indian Banks’ Association (IBA) during February 2014 issued an advisory to banks

to ensure business continuity after Microsoft ends support for its popular Windows XP

operating system on 8 April 2014. In its advisory it drew the attention of banks to a study

by Microsoft in which it claimed that very large number of Indian public bank branches

would become vulnerable following the U.S.-based firm’s decision to stop support to

Windows XP. The IBA claimed that around 34,000 public sector bank branches were

claimed to be affected by ending of support for Windows XP. Windows XP – launched in

October, 2000 was three generations behind the latest operating system Windows 8,

which was launched in October, 2012.

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Vodafone becomes India’s first telecom player to be fully owned by a foreign

company

Vodafone became India’s first telecom player to be fully owned by a foreign company

following approval of company’s FDI proposal by the Cabinet Committee on Economic

Affairs (CCEA) on 6 February 2014. The CCEA on 6 February approved the telecom

major Vodafone’s Rs 10,141 crore (or $1.6 billion) proposal to buy out minority

shareholders in its Indian unit. This was the single largest foreign investment in the

telecom sector.

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Union Govt.’s announcement about plastic notes in India

Union Govt. during February 2014 announced that plastic notes in the denomination of

Rs. 10 will be introduced on a trial basis in 5 cities of the country during the second half

of 2014. These 5 cities are – Kochi, Mysore, Jaipur, Shimla and Bhubaneswar.

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RBI agrees to set up Payments banks in India

In an important development the Reserve Bank of India (RBI) during February 2014

announced that in coming days Indian citizens without a bank account would be able to

withdraw cash from an ATM (automated teller machine) with the help of mobile

technology. For this a special category of banks – the Payments Banks would be

established. The Nachiket More Committee on Financial Inclusion had recommended

the set up of these banks. These banks will play important role in facilitating this system

under which a payment system will facilitate funds transfers from bank account holders

to those without accounts through ATMs. Under this initiative the sender can go to an

ATM with a participating bank and ask the money to be withdrawn from his account.

The intermediary then processes the payment and sends a code via mobile to the

recipient. The recipient takes that code to the nearest ATM of that participating bank,

punches in the code and withdraws the money.

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India Post launches its e-IPO facility

India Post (Dept. of Posts) on 13 February 2014 launched electronic Indian Postal

Order (e-IPO) for Indian Citizens living in India. e-IPO was especially developed to

facilitate paying online fee for seeking information under the RTI. e-IPO is a facility to

purchase an Indian Postal Order electronically for paying RTI fee online through e-Post

Office Portal (https://www.epostoffice.gov.in) or India Post web-site

(www.indiapost.gov.in). After paying the fee online one just need to annex the print-out

of the receipt to the RTI application. Earlier last year the Department had launched the

e-IPO on 22 March 2013 for Indian Citizens living abroad across the globe.

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Archana Bhargava quits her CMD post at United Bank of India

Archana Bhargava, the chairperson and managing director (CMD) of Kolkata-

headquartered United Bank of India (UBI) took voluntary retirement on 20 February

2014. The UBI was undergoing huge trouble at the time of her quitting, with the bank’s

gross non-performing assets jumped 194% to Rs. 8,545.50 crore as at December-end

2013 against Rs. 2,902 crore as at December-end 2012.

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G Gopalakrishna Committee on examining the recommendations of FSLRC

The Reserve Bank of India (RBI) during February 2014 constituted a committee under

G Gopalakrishna to examine the recommendations of the Financial Sector Legislative

Reforms Commission (FSLRC) relating to capacity building in the banking sector. G

Gopalakrishna is an Executive Director in the RBI. The committee will examine the skills

required at various levels/operations to deliver on the required role and also identify

qualifications relevant to specific areas of operation in banks and non-banks. Further, it

will evolve methodologies for prescribing certification for required qualifications. The

committee was also tasked with the responsibility of identifying capacity building

requirements keeping in view the role of financial sector and what it should deliver.

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Constitution of Public Debt Management Agency proposed

Public Debt Management Agency (PDMA) is the name of the proposed agency for

better management of the government’s borrowings which was announced by the Union

Finance Minister P. Chidambaram in his vote-on-account on 17 February 2014.

Chidambaram announced that the Centre is ready with the Public Debt Management

Agency Bill and that the proposed agency will be established as a non-statutory body

and is expected to begin work in the next fiscal. Former finance minister Pranab

Mukherjee had first announced setting up of PDMA in his budget speech of 2011-12.

The PDMA is expected to consist of RBI officials, civil servants and people from the

private sector.

MARCH 2014

RBI extends deadline for exchanging currency notes

The Reserve Bank of India (RBI) on 3 March 2014 extended the deadline for the public

to exchange currency notes printed before 2005 up to 1 January 2015. The public would

be able to exchange currency notes printed before 2005 by 1 January 2015. The RBI on

22 January 2014 had announced that it would withdraw from circulation all pre-2005

currency notes from 1 April 2014. Post-2005 notes have added security features and

help in curbing the menace of fake currency.

RBI extends Basel-III deadline

The Reserve Bank of India (RBI) on 27 March 2014 extended the deadline for

implementation of Basel III norms by the Indian banks to 31 March 2019 from the earlier

deadline of 31 March 2018. Under this norm Indian banks need to have a core capital

ratio of 8% and a total capital adequacy ratio of 11.5% against the present 9%. The

norm has been devised to strengthen the regulation, supervision and risk management

of the banking sector.

RBI’s   Inflation   Expectations   Survey

The Reserve Bank of India (RBI) during March 2014 launched the 35th round of Inflation

Expectations Survey. Under this survey the subjective assessments pertaining to

inflation were collected from about 5,000 households across 16 cities. The survey

sought qualitative responses from households on price changes (they foresee in

general prices as well as prices of specific product groups) in the next three months as

well as in the next one year and quantitative responses on current, three-month ahead

and one-year ahead inflation rates.

Central Bank of India sells entire stake in CIBIL

Central Bank of India sold its entire stake in credit information provider Credit

Information Bureau of India Limited (CIBIL) to Transunion International Inc (TII) during

March 2014. Central Bank had 5% stake in CIBIL while TII is the majority shareholder in

CIBIL at 27.5%. State Bank of India and ICICI Bank carry 10% each, while rest of 2.5%

is with Sundaram Finance Ltd. Among others, Bank of Baroda, Bank of India, Punjab

National Bank, Union Bank, Citicorp Finance (India), HSBC, Standard Chartered Bank,

Indian Overseas Bank and HDFC Ltd each hold 5% stake in CIBIL.

Union Govt. launch CPSE-ETF

Union Govt. on 18 March 2014 launched the exchange traded fund of Central public

sector enterprises (CPSE-ETF) hoping to raise Rs 3,000 crore. The long awaited

CPSE-ETF is an open-ended scheme comprising of shares of 10 Central public sector

enterprises and it includes ONGC, Coal India Limited, GAIL, Indian Oil Corporation

(IOC), Rural Electrification Corporation (REC), Oil India Limited (OIL), Container

Corporation of India Limited (CCIL), Power Finance Corporation (PFC), Engineers India

Limited (EIL) and Bharat Electronics Limited (BEL). Goldman Sachs India MF is

managing this ETF, which tracks an index fund but trades like a stock on the exchange

and is yet another avenue for the Union Govt. for selling its stake in CPSEs.

Union   Govt. sells stake in Axis Bank

Union Government on 21 March 2014 sold its 9% stake in private sector Axis Bank. The

stake was divested through the Specified Undertaking of UTI (SUUTI), which was

formed in 2003 is an offshoot of erstwhile UTI and held 20.72% in Axis Bank. The other

promoters of the bank are Life Insurance Corporation, General Insurance Corporation,

New India Assurance and National Insurance Company.

Aditya Puri Committee Credit Information Reports

HDFC Bank Chairman Aditya Puri headed the committee on Credit Information Reports

(CIRs), which submitted its report to the Reserve Bank of India (RBI) during March

2014. This committee recommended that customers should be given a free copy of their

credit profile as it would help in promoting financial discipline among loan seekers. The

committee also recommended use of common data formats and a common data quality

index that could assist credit institutions in determining the gaps in data.

SREI Infrastructure receives RBI approval for White label ATMs

Infrastructure finance company SREI Infrastructure Finance Ltd during March 2014

received RBI approval to set up a minimum of 9,000 white label ATMs (WLAs) in the

next three years in rural India. The company received a certificate of authorisation from

the RBI to set up, own and operate a payment system for WLAs effective 25 March

2014. Through these WLAs, the infrastructure financial institution will be able to take

financial products and services of the sponsor bank to the doorstep of the rural

population.

Immediate Payment Service (IMPS) launched

An all-India inter-bank money transfer service through the m-Pesa platform was

launched during March 2014. This service was launched by the means of an

association of the Immediate Payment Service (IMPS) of the National Payments

Corporation of India (NPCI) with the Mobile Commerce Solutions Ltd (MCSL). MCSL is

a leading pre-paid/remittance provider associated with the m-Pesa platform. Under this

service an MCSL (m-Pesa) user can send money to customers of any IMPS-enabled

bank using NPCI’s remittance platform. The National Payments Corporation of India

(NPCI) is the umbrella organisation of all retail payment systems in India, set up with the

support of the Reserve Bank of India and Indian Banks’ Association (IBA). Immediate

Payment Service (IMPS) is a remittance processing platform offered by NPCI that offers

instant, 24X7, electronic funds transfer through mobile, Internet or ATM between banks

and pre-paid providers.

Axis Bank launches its own Kisan Credit Card

Private sector bank Axis Bank on 27 March 2014 launched its own Kisan Credit Card

(KCC), which is aimed at helping farmers access liquidity round-the-clock. The bank

claimed that it is first new generation private sector bank to launch an electronic Kisan

Credit Card on the RuPay platform. The KCC scheme was introduced in August 1998

and since then, a host of banks, a majority of them in the state-run space, have

launched such cards.

APRIL and MAY 2014

IDFC Limited and Bandhan Financial Services get banking licences

The Reserve Bank of India (RBI) on 2 April 2014 granted in-principle approval of bank

licences to two entities – IDFC Limited and Bandhan Financial Services Private Limited.

These two firms pipped to post 23 other applicants, which included some well-known

financial and industrial houses like Muthoot Finance, Reliance Capital, Tata Sons, IFCI,

Aditya Birla Nuvo, Bajaj Finserv, LIC Housing Finance, L&T Finance Holdings and

Shriram Capital. IDFC was established in 1997 and acts as a specialized financial

intermediary for infrastructure projects. Bandhan Financial is India’s largest micro

finance institution with over 4.5 lakh borrowers and was set up in 2002.

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RBI issues its first-ever bi-monthly monetary policy statement

The Reserve Bank of India (RBI) issued its first-ever bi-monthly monetary policy

statement on 1 April 2014. Before this the RBI was issuing quarterly monetary policy

reviews. Bi-monthly reviews were started so as to have greater control over monetary

aspects of country’s economy.

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Gandhi appointed new RBI Deputy Governor

Gandhi was appointed as the new Deputy Governor of the Reserve Bank of India (RBI)

on 3 April 2014. He was appointed by the Union Govt. for a period of three years. The

appointment followed Anand Sinha relinquishing his charge as Deputy Governor in mid-

January 2014.

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Arvind Mayaram appointed Finance Secretary

The Union Govt. appointed Arvind Mayaram as the new Finance Secretary on 15 April

2014. Before this he was the Economic Affairs Secretary. He replaced Sumit Bose who

retired on 31 March 2014.

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New Companies Act comes in force from 1 April 2014

The Companies Act, 2013 came into effect from 1 April 2014. It replaced the

Companies Act of 1956 which was being followed in the country for decades.

Companies Act, 2013 is an Act of the Parliament of India which regulates incorporation

of a company, responsibilities of a company, directors and dissolution of a company.

The 2013 Act is divided into 29 chapters containing 470 clauses as against 658

Sections in the Companies Act, 1956 and has 7 schedules. The President of India gave

his assent to this act during August 2013.

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IFC completes its first global rupee bond programme

The International Finance Corporation (IFC) on 11 April 2014 completed its first global

rupee bond programme worth $ 1 billion. Washington D.C. headquartered-IFC

completed this huge issue in three rounds and the third and final round of bond issue

totalling Rs 12 billion (about $ 194 million) was completed on 11 April. Under its global

rupee bond programme, IFC has also issued three-year bonds totalling Rs 30 billion

and five-year bonds totalling Rs 20 billion. This issue was launched to strengthen India’s

capital markets and attract greater foreign investment.

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RBI announces relief for loan takers

The Reserve Bank of India (RBI) on 7 May 2014 announced major relief for loan takers

of housing, auto and personal loans by directing all the commercial banks not to levy

any penalty on pre-payment of loans under floating rate scheme that cover housing,

auto as well as personal loans. The RBI advised that banks will not be permitted to

charge foreclosure charges/ pre-payment penalties on all floating rate term loans

sanctioned to individual borrowers, with immediate effect. Floating loan products include

housing, corporate, vehicle and personal loans. During 2012, RBI had barred banks

from levying foreclosure charges or pre-payment penalties on home loans on floating

interest rate basis.

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RBI issues guidelines for minor bank operators

The Reserve Bank of India (RBI) on 6 May 2014 issued the guidelines allowing minors

to operate bank accounts independently with a view to promote financial inclusion and

bring uniformity in opening of such accounts in banks. In these guidelines it prescribed

10 years as the age for minors to operate bank accounts. According to the guidelines

issued by the RBI, minors above 10 years of age can open and operate independently

savings bank account and use other facilities like ATM and cheque books.

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First co-branded cricket credit card launched

IPL franchisee Delhi Daredevils during May 2014 launched a co-branded cricket credit

card in partnership with Ratnakar Bank Ltd, a private sector bank. This was the first time

that a commercial bank and a leading cricket franchise came together to launch a co-

branded cricket credit card. The card brings to its cardholders exclusive privileges like

meeting and greeting the Delhi Daredevils team, personal and original memorabilia,

coaching camps, free match tickets, talk shows, etc.

JUNE-JULY 2014

SBI launches sbiINTOUCH branches

State Bank of India (SBI) on 1 July 2014 launched six digital branches across the nation

to serve tech-savvy customers. These branches are named sbiINTOUCH. One of such

branches in Delhi was inaugurated on this day by Finance Minister Arun Jaitley. These

sbiINTOUCH branches will include instant account opening with personalised debit

cards, instant loan approvals for education, car and home and remote expert advisors

available via video links. The new branches will be located in malls and will be primarily

aimed at youth, who look for digital banking.

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The Banking and Economics Conclave 2014

The State Bank of India (SBI) organised ‘The Banking and Economics Conclave 2014′,

a national level banking conclave, at Mumbai from 17 June 2014. The conclave was

organised for the first time and was on the lines of ‘Bancon’, an event organised by

Indian Bank’s Association (IBA) each year. It was also the first time that a commercial

bank has organised an event of this magnitude.

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RBI for sector-wise bank disclosures for advances

The Reserve Bank of India (RBI) on 17 June 2014 asked banks to make sector-wise

disclosure of their advances from 2014-15 onwards with a view to encourage them to

actively manage exposure to various segments. This direction was based on the

recommendations made by the Dr. Nachiket Mor Committee on Comprehensive

Financial Services for Small Businesses and Low Income Households. This committee

in its report had recommended that banks actively manage their exposures to various

sectors, including priority sectors.

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IDBI celebrates Golden Jubilee

Public sector financial entity IDBI (formerly called Industrial Development Bank of India)

celebrated its 50th anniversary (Golden Jubilee) during July 2014. IDBI was established

in 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank

of India (RBI). In 1976, the ownership of IDBI was transferred to the Government of

India and it was made the principal financial institution for coordinating the activities of

institutions engaged in financing, promoting and developing industry in India. IDBI

provided financial assistance, both in rupee and foreign currencies, for green-field

projects as also for expansion, modernisation and diversification purposes. During

September 2004 the RBI incorporated IDBI as a ‘scheduled bank’ under the RBI Act,

1934. Consequently, IDBI, formally entered the portals of banking business as IDBI Ltd.

from 1 October 2004. The commercial banking arm, IDBI BANK, was merged into IDBI

in 2005.

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BCSBI proposes to put performance ratings of banks in public domain

The performance ratings of banks operating in India would be put on the public domain

from next year. Banking Codes Standards Board of India (BCSBI) would share this

information in public domain. BCSBI was set up as an independent and autonomous

body in 2007 by the Reserve Bank of India (RBI) to ensure that the common consumer

of financial services from the banking industry gets what he/she has been promised.

BCSBI is rating banks on customer services on five parameters – information

dissemination, transparency, customer-centricity, grievance redressal system and

customer feedback. Of the 48 banks rated for customer service, only five received high

ratings; 25 were rated above average; 17 average; and one below average. The ratings

have been shared with the banks. The ratings were given based on a survey conducted

by BCSBI across 69 cities, involving 3,000 branches and 6,000 customers.

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Revival of Kisan Vikas Patra

The revival of the Kisan Vikas Patra (KVP) was announced in the Union Budget 2014-

15 on 10 July 2014. The KVP was discontinued from November 2011 on the

recommendation of the Shyamala Gopinath Committee.

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TCS becomes first Indian company to cross Rs. 5 lakh crore market capitalization

Tata Consultancy Services (TCS) on 23 July 2014 became the first Indian company to

cross market capitalization value of Rs. 5 lakh crore. TCS’s market capitalization

crossed 5 lakh crore mark on account of appreciation in the price of TCS scrip following

good financial results and record dividend declaration by the company. State-held

ONGC’s market cap of around Rs. 3.5 lakh crore is way behind that of TCS. It is worth

mentioning that TCS’ market cap is more than the combined market cap of its nearest

three rivals – Infosys (Rs 1.90 lakh crore), Wipro (Rs 1.39 lakh crore) and HCL Tech

(Rs 1.07 lakh crore).

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Kotak Mahindra Bank purchases 5% stake in MCX

Private sector bank Kotak Mahindra Bank agreed to buy a 15% stake in beleaguered

Multi Commodity Exchange of India Ltd (MCX), announcement of which pushed the

stock value of MCX by more than 10% on 21 July 2014. The commodity market

regulator, Forward Market Commission (FMC), had ordered MCX to reduce its

promoter- Financial Technologies’ (FT’s) stake from 26 to 2% in December last year

after FT was found not fit and proper to own stake in any exchange, following the NSEL

crisis. However, since the promoter repeatedly missed the deadline for reducing its

stake, the regulator said it would not allow the exchange to issue any new contracts

beyond August, unless they did so.

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TARC recommends abolishing the post of Revenue Secretary

The Tax Administration Reform Commission (TARC) headed by Parthasarathi Shome in

its first report presented during June 2014 recommended abolishing the post of Finance

Secretary in the Ministry of Finance. It thus endorsed the recommendations given by the

Raja J Chelliah Committee of 1992 for abolishing this post.  Raja J Chelliah was

instrumental in bringing about the early reforms to the direct taxation structure.

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SEBI brings consultation paper in Crowd Funding

The Securities and Exchange Board of India (SEBI) on 17 June 2014 came out with a

consultation paper on crowd funding, an alternative funding source to help start-ups

struggling to raise funds. Under this, funding (in small amounts) is sought from multiple

investors through a web-based platform or a social networking site for a specific project,

business venture or social cause. According to SEBI’s consultation paper SEBI wants

the issue fund-raising capped at Rs. 10 crore a year for each start-up. Only national

stock exchanges and SEBI-registered depositories are eligible to set up a crowd-

funding platform.

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IEO recommends scrapping Planning Commission

Independent Evaluation Office (IEO) in its report presented during June 2014,

recommended that the Planning Commission should be replaced by a reforms and

solution body as it has exceeded the scope of its authority by acting as a control

commission. IEO in its report stated that since the Planning Commission has defied

attempts to reform it to bring it in line with the needs of a modern economy and the

trend of empowering the States, it is proposed that the Planning Commission be

replaced.

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Rangarajan Panel on studying the methodology of Tendulkar Committee

Rangarajan headed the committee on Tendulkar Committee methodology for estimating

poverty, the report of which was submitted to Planning Commission on 1 July 2014. C.

Rangarajan, the former chief of Prime Minister’s Economic Advisory Council (PMEAC),

submitted the report to planning minister Rao Inderjit Singh. The Planning Commission

in May 2012 had constituted the expert group under the then PMEAC chairman C

Rangarajan to review the Tendulkar Committee methodology for estimating poverty,

following an uproar over the number of poor in the country. The Planning Commission’s

estimates had drawn flak in September, 2011 when in an affidavit to the Supreme Court

it was stated that households with per capita consumption of more than Rs. 32 in urban

areas and Rs. 26 in rural will not be treated as poor.

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HR Khan re-appointed as RBI Deputy Governor

Harun Rashid Khan was re-appointed as the Deputy Governor of the Reserve Bank of

India (RBI) on 3 July 2014 by the Union Govt. The appointment was made for two years

with effect from 4 July 2014 or until further orders, whichever is earlier. Khan was

appointed deputy governor in July 2011 for a three-year term, which was set to expire

on 3 July.

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CONCOR becomes 17 th   Navratna status company

PSU-company Container Corporation of India Limited (CONCOR) on 23 July 2014

became the 17th Navratna status company. CONCOR is a PSU engaged in providing

comprehensive logistics solutions. It has the largest network of 62 inland container

depots (ICDs)/container freight stations in India. In addition to providing inland transport

by rail for containers, it has also expanded to cover management of ports, air cargo

complexes and establishing cold-chain. The Government of India (GoI) holds 61.80%

stake in CONCOR (as per the shareholding pattern as on 30 June 2014).

AUGUST and SEPTEMBER 2014

Pradhan Mantri Jan Dhan Yojana (PMJDY) launched

The ambitious Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched formally on 28

September 2014 by the Prime Minister Narendra Modi at function held at Vigyan

Bhawan in New Delhi. The scheme promoted mainly to end financial untouchability in

India saw the opening of an estimated 1.5 crore bank accounts across the country on

this single day.

Following are the main benefits for account holders of PMJDY

a) A RuPay debit card for every account holder

b) Rs. 1 lakh accident insurance cover

c) Rs. 5,000 overdraft facility

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KPMG hired for validation of PMJDY

International professional services firm KPMG was hired by the Union Finance Ministry

to undertake a validation exercise of the number of basic bank accounts opened by the

banks under the Pradhan Mantri Jan Dhan Yojana (PMJDY). KPMG would provide

some comfort to the Finance Ministry that the numbers submitted by the banks

pertaining to PMJDY were accurate and reflected the true picture.

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SBI launches its 1 st   first multi-currency international debit card

State Bank of India (SBI) on 8 September 2014 launched its first multi-currency

international debit card to allow consumers to use a single card to pay in multiple

currencies. This card launched in a tie-up with MasterCard would, at present, enable

customers to load four international currencies in this card. These 4 currencies include

US dollar, euro, Great Britain pound and Singapore dollar. More currencies will be

added going forward as the card has the facility to be loaded up to 12 currencies.

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S.S. Mundra becomes fourth Deputy Governor of RBI

Subhash Sheoratan Mundra (S.S. Mundra) took over as the fourth Deputy Governor of

the Reserve Bank of India (RBI) during July 2014. He took the charge as the Deputy

Governor of the RBI on 31 July 2014. Three other deputy governors of the RBI are Urjit

Patel, HR Khan, and R. Gandhi. Before taking this responsibility at RBI, Mundra was the

Chairman and Managing Director (CMD) of the public-sector bank – Bank of Baroda

(BOB). Mundra filled the vacancy created by the retirement of K.C. Chakrabarty in April

2014, two months before his five-year tenure was come to an end.

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ICICI Bank launches ‘Cardless Cash Withdrawal’

Private-sector bank ICICI Bank announced its unique ‘Cardless Cash Withdrawal’

service on 10 September 2014, which allows its customers to transfer money from their

account to anyone in India with a mobile number. Under the ‘Cardless Cash Withdrawal’

service, the recipient can withdraw money round the clock without using a debit card

from over 10,000 ATMs of ICICI Bank across the country. One can do this even without

having a bank account of any bank. However, the sender needs to be an ICICI Bank

savings account holder. The facility can be initiated by any ICICI Bank savings account

customer (sender) by logging into internet banking of ICICI Bank website.

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SBI tops in India’s mobile banking

State Bank of India (SBI) claimed first spot in the mobile banking segment in the

country, as reported in the latest data released by the RBI on 15 September 2014. SBI’s

total number of mobile banking users stood at 1.15 crore. ICICI Bank stood second with

19.5 lakh users and was followed by Axis Bank (13.6 lakh), Yes Bank (4.3 lakh) and

HDFC Bank (3.5 lakh). The number of SBI’s mobile banking users is larger than the

mobile banking customer base of large banks in the West. Only a couple of Chinese

banks have more mobile banking customers. SBI’s emergence as country’s largest

mobile banking operator came as a surprise as traditionally new generation private

banks and foreign banks have been the early adopters of alternative platforms like

mobile banking.

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Securities Law (Amendment) Bill passed

Indian Parliament on 12 August 2014 passed the Securities Law (Amendment) Bill,

2014, which will empower SEBI to act against ponzi operators and market manipulators

more effectively. The bill was passed by the Lok Sabha on 6 August 2014 and the Rajya

Sabha passed it on 12 August 2014. It empowers SEBI to act against ponzi operators

and market manipulators more effectively through search and seizure, attachment

orders and recovery proceedings and with access to call data records. This marks a

dilution from the direct powers granted to SEBI Chairman through as many as three

ordinances in the past one year to authorise search and seizure operations. Under the

act constituted (with the passing of this bill), a special SEBI court would be set up in

Mumbai to fast track prosecution proceedings launched by SEBI, as also to clear search

and seizure operations proposed by SEBI.

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RBI reduces number of mandated free transactions in 6 metro cities

The Reserve Bank of India (RBI) on 14 August 2014 announced its decision to reduce

the number of mandated free transactions for savings bank account holders at other

bank ATMs located in six metro cities from five to three per month. This reduction would

come into effect from 1 November 2014. The six metro cities (Mumbai, New Delhi,

Chennai, Kolkata, Bengaluru and Hyderabad) were chosen first for reducing the number

of mandated free transactions as they are well-served in terms of payment

infrastructure. This reduction in the number of mandated free transactions will, however,

not apply to customers having no-frills/small/Basic Savings Bank Deposit Account

(BSBDA) type of accounts as well as for transactions done by savings bank account

holders at ATMs situated outside these six metro cities. Banks are also free to offer free

transactions above this mandated limit.

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Forensic Audit of Dena Bank and Oriental Bank of Commerce

On 20 August 2014 the Finance Ministry ordered a forensic audit to be done at the

branches of two banks – Dena Bank and Oriental Bank of Commerce (OBC) in view of

the reports of misappropriation of funds worth Rs. 436 crore. According to media

reports, a Mumbai-based branch manager of Dena Bank mobilised fixed deposits (FDs),

using middlemen, to the tune of Rs 256.5 crore from seven corporates, while in the case

of OBC, misappropriation of funds to the tune of Rs. 180 crore was reported. In the

wake of rising scams in public sector banks, the Finance Ministry is looking at various

steps, including strengthening of risk.

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RBI releases Charter of Customer Rights

The Reserve Bank of India (RBI) on 22 August 2014 released the charter of customer

rights, which seeks to provide the right to be treated with courtesy to both the customer

and the financial services provider. Following are the important clauses of this charter-

- The customer should not be unfairly discriminated against on grounds such as

gender, age, religion, caste and physical ability when offering and delivering

financial products by the financial services provider

- The key risks associated with the financial product as well as any features that

may especially disadvantage the customer should be made known to him/her by

the financial services provider

- The financial services provider should provide customers with product terms

and conditions that are in simple language, easily understandable, and with

sufficient information that the customer could be reasonably expected to make an

appropriate choice of product

- The financial services provider may, however, have certain special products

which are specifically designed for members of a target market group or may use

defensible, commercially acceptable economic rationale for discriminating

between customers

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Vijaya Bhaskar Committee on Shadow Banking

The Reserve Bank of India (RBI) on 18 August 2014 constituted a 15-member inter-

regulatory committee to monitor the growing phenomenon of shadow banking. P. Vijaya

Bhaskar, Executive Director of RBI, has been appointed as the Chairman of this

committee. Shadow banking refers to banking-like activity by non-banking finance

companies (NBFCs) that remain outside the regulatory net. They generally operate as

intermediaries between investors and borrowers. The role of this newly constituted

committee will be to find out the volume of money in shadow banks, who the investors

are and direction of the money flow, etc. Also real estate dealings will be looked into

very meticulously by the committee. The 15-member committee comprises of officials of

the RBI, Securities and Exchange Board of India (SEBI), Central Economic Intelligence

Bureau and the National Housing Bank (NHB).

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Syndicate Bank CMD S.K. Jain arrested

S.K. Jain, the Chairman and Managing Director (CMD) of public-sector Syndicate Bank

was arrested by the CBI on 2 August 2014 on charges of allegedly accepting a bribe of

Rs 50 lakh to enhance the credit limit of some companies. Jain was appointed CMD of

state-owned Syndicate Bank in July last year for a period of five years. He was one of

the youngest CMDs of a public sector bank and was due to retire in 2020.