Banking Finance September 2017

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BANK UPDATE
BANKING
Post demonetisation, UIDAI to banks: Open Aadhaar centres
NEWS
Both Private and Public sector banks has been asked by the UIDAI to set up
card transactions rose Aadhaar enrolment facility in at least one out of 10
up by 7% branches in the near future. At present, there are 25,000
Transactions through debit and credit active enrolment centres across the country but they op-
cards in- erate from their own premises and none of them is be-
creased by ing operated from bank premises.
7% after
note-ban, as Bill on banking regulation to get central nudge
against a Ministry of Finance is all set to come up with a list of
surge of over 23% in overall digital Bills, including the Banking Regulation (Amendment)
transactions, top government officials Bill, repeal of State Bank of India (Subsidiary Banks) Act,
told a parliamentary panel. Many of- 1959, among others, in the monsoon session. It is also
ficials from various ministeries pre- working on the Banning of Unregulated Deposit
sented their observations to the par- Schemes and Protection of Depositors Interests Bill.
liamentary standing committee. The
digital transactions in all modes in- SBI to use digital space and analytics for retail
creased by 23% to 27.5 million in May
2017 from 22.4 million in November
products
2016. The highest jump was wit- "In the digital space, the SBI will now put more retail
nessed in transactions through unified products. Adoption in the digital space will be quicker,
payments interface, from one million as opposed to conventional transactional banking,"
per day in November 2016 to 30 mil- said SBI Chairman Arundhati Bhattacharya. SBI plans
lion in May 2017. to mix and use the digital space and analytics and put
in more retail products for sale.
IMPS charges waived off
Differences between NPA estimates of IDBI
upto Rs. 1,000 IDBI Bank Ltd reported about the diversity between its own gross bad loan
In order to promote small transac- estimates and those made by the Reserve Bank of In-
tions, the State Bank of India had dia (RBI) was Rs6,816.60 crore at the end of 2015-16.
waived IMPS charges up to Rs. The bank reported gross NPAs of Rs24, 875.07 crore
1,000.Currently, Rs. 5 plus taxes as on 31 March 2016, against Rs31, 691.67 crore as-
were charged for fund transfer of up sessed by the RBI. Resultantly, the provisions had a dif-
to Rs. 1,000. ference of Rs2, 061.00 crore for 2015-16.
BANKING FINANCE | AUGUST | 2017 | 7

BANK UPDATE
Three-tier plan for PSBs Jan Dhan A/c deposits make an impact
Internal control plans are strength- A new high of Rs. 64,564 crores is touched by the deposits in Jan Dhan accounts.
ened by the The data was revealed by an RTI reply received from the
three tier Ministry of Finance. It shows that there were about 28.9
plan as de- crore PMJDY accounts on June 14 this year. Of these, 23.27
vised by the crore accounts were with public sector banks, 4.7 crore with
Public Sec- regional rural banks and 92.7 lakh with private ones.
tor Banks.
An informal rule of thumb is devised Advanced rise in bad education loans
to solve stressed asset cases by the As job market is getting a hit, the recovery of educational loans become diffi-
RBI. Smaller stressed accounts of less cult. The Indian banks have seen a 142 % rise in default by
than Rs1,000 crore would be sold to students who have educational loans in recent past. Public
asset reconstruction companies Sector Banks, as already weighed down by corporate de-
(ARCs), mid-sized cases of Rs1,000- faults are the worst hit as they account for over 90 per cent
5,000 crore will be resolved through of educational loans. Private Banks have managed to stay
the various RBI restructuring schemes away from this segment.
and larger cases will be tried at the In the education segment, the total non-performing assets
National Company Law Tribunal (NPAs), or loans on which borrowers have defaulted on pay-
(NCLT) in accordance with RBI rules. ments for more than the stipulated 90 days, stood at Rs 6,336 crore at the end
of December 2016, against Rs 2,615 crore in March 2013, the Reserve Bank of
Non Performing Assets India (RBI) revealed. This is 8.76 % of the total education loan outstandings of
to come down Rs 72,336 crore as of December 2016, against Rs 48,382 crore in March 2013,
A study by the Assocham revealed the RBI replied an RTI filed.
that as the RBI
plans to push for
Public sector banks to soon reduce to 12 in number
the resolution of The Central Government plans on a consolidation agenda to create 3-4 global
bad loans worth sized banks and reduce the Public Sector Banks to 12.
around Rs 8 lakh Some region centric banks like Punjab and Sind Bank and
crore by March Andhra Bank will continue as independent entities, while
2019, it could some mid-size lenders would also coexist. Currently there
bring down the NPAs and improve are 121 PSBs functioning.
the financial health of banks. Post success of SBI merger, the Ministry of Finance is considering clearing another
"So, it should be safe to assume that proposal if the bad loan scenario is improved. Mr. Jaitley recently mentioned the
the non-performing asset (NPAs) government is "actively working" towards consolidation of public sector banks but
mess will largely be resolved by the declined to provide details, saying this was price-sensitive information.
first quarter of financial year 2019-
20," mentions an Assocham study, 'Save public sector banks' day on July 19
titled "NPA Resolution: Light at the "Public sector banks are made to bear the cross for the sins of the private cor-
end of the tunnel by March 2019". porate defaulters", said C H Venkatachalam, General Secretary, All India Bank
Although the whole of the NPAs can Employees Association. The United Forum of Bank Unions observed July 19, the
be put on the altar of the Insolvency 48th anniversary of nationalisation of major banks, as 'Save public sector banks'
and Bankruptcy Code (IBC) resolution day. Members wore commemorative badges and displayed posters in front of all
mechanism, it has to be seen how branches, distributed leaflets demonstrations took place across the country.
much and how fast they actually go "Everyone knows that the main share of this danger is contributed by the corpo-
out from the balance sheets of banks rate defaulters who are taking our banks for a ride. It is high time that the gov-
which at this point of time seem ernment took stringent measures to recover the bad loans and take bold action
much stressed, it said. against the big defaulters." Venkatachalam said.
8 | 2017 | AUGUST | BANKING FINANCE

RBI CORNER
RESERVE BANK
Ministry to push back the RBI deadline on Basel III

NEWS
S Ganesh as Head-Dept
norms of Information Technol-
In a recent meeting with RBI, senior officials from the ministry pleaded for de-
ferment of Basel III implementation dates be- ogy: RBI
yond March 2019, saying it will help banks meet S Ganesh Kumar has been appointed as
the capital needs and increase credit flow to pro- one of the Execu-
ductive sectors along with balance sheet clean- tive Directors of
up. The global capital to risk norms, called Basel the Reserve Bank
III capital regulation, is being implemented in of India. He was
phased manner by Reserve Bank of India since earlier Chief Gen-
April 1, 2013 and should be fully implemented as on March 31, 2019. Then the eral Manager-in-
banks have to maintain a minimum common equity ratio of 8 % and total capital Charge, Department of Information
ratio of 11.5 % by March 2019. Technology. He replaced Chandan
Sinha who took up voluntary retire-
Onus on Banks to compensate for online frauds ment last month. In his new role,
If a customer loses money from his/her account due to online fraud then RBI Ganesh Kumar will look after the De-
made it clear to be the bank's onus to compensate partment of Information Technology,
for the loss. The Banks are liable for unauthorized Department of Payment and Settle-
electronic banking transactions, provided the cus- ment Systems and Department of Ex-
tomer communicates such transactions within a rea- ternal Investments and Operations.
sonable time period. This is the second time since May
that the central bank is taking a pro-customer ap- Rs 200 notes coming soon
proach to safeguard users against online frauds. Not- The Reserve Bank of India (RBI) plans
withstanding the umbrella cover offered to customers on these transactions, if to introduce Rs
communication from the customer was delayed and made 4-7 days after the 200 notes in the
incident, the customer's liability was a maximum of Rs. 5,000, Rs. 10,000 and near future to ease
Rs. 25,000 depending on the type of bank account or card. pressure on lower-
denomination currencies that are in
Ombudsman not to cater note-ban issues short supply. It is expected to get
"Banking Ombudsman Scheme (BO Scheme), 2006 specifies 27 grounds of com-
released by the end of 2017 and it
plaints under which complaints can be lodged. Complaints related to demonetisation
will greatly help in narrowing the
are not a ground of complaint specified under the Scheme," a Right to Informa-
demand and supply gap in smaller-
tion (RTI) query sent to the Reserve Bank has revealed. Thus, customers' com-
denomination currency bills.
plaints about note ban issues cannot be entertained under the scheme.

GST UPDATE
GST
No coercive steps against
NEWS
GST leviable on housing societies if monthly subscrip-
lawyers tion above Rs.5000/-month
The Delhi High Court Bench has re- Resident Welfare Associations charging more than Rs 5,000 per member as
quested monthly subscription and if the annual turnover of RWA
the Cen- by way of supplying of services and goods is more than
tral Gov- Rs 20 lakhs, then GST provisions are applicable
ernment In the GST regime, businesses with turnover of up to
to clarify Rs 20 lakh are exempt. Further, if the aggregate turn-
whether over of such RWA is up to Rs 20 lakh in a financial year,
services of lawyers and law firms are then such supplies will be exempted from GST, even if charges per member are
covered under GST. It has empha- more than Rs 5,000. However, RWAs supplying of services and goods aggregat-
sized not to take any coercive steps ing more than Rs 20 lakhs per annum will attract 18 % tax. There will be no GST
against lawyers and law firms which on annual subscription/fees charged as lodging/boarding charges by educational
are not registering or non-complying institutions from its students for hostel accommodation.
with the Central Goods and Services
Tax Act, Integrated Goods and Ser- Free food supply at religious places: No GST
vices Tax Act, or the Delhi Goods and
The Government is quite clear on its intentions when it comes to applicability of
Services Tax Act, until further notice.
GST. It has been clarified that no tax is at-
MSME Minister positive tracted on the free food supply at religious
places. However, the ingredients used in mak-
on Khadi's GST exemption ing such offerings including sugar, vegetable
Kalraj Mishra, Minister for Micro, edible oils, ghee, butter as well as the service
Small and Medium Enterprises for transportation of these goods will attract
(MSME) mentioned his hopes on ex- GST. Since GST applies to raw materials and services in successive stages of pro-
emption to Khadi products. Currently, duction, it is difficult to administer end use-based tax exemptions or concessions.
5 % tax is levied on the products while
it is 12% on the goods produced by Sale of old jewellery or old car - No GST
village industries. Even the finance "Even though the sale of old gold by an individual is for a consideration, it can-
minister (Arun Jaitley) had assured not be said to be in the course or furtherance of his business (as selling old gold
me to give a GST exemption for the jewellery is not the business of the said individual) and, hence, does not qualify
financial development of otherwise to be a supply," said the revenue secretary Hasmukh Adhia. Thus any sale of
economically backward lot of weav- old jewellery or old car will not attract any GST as it is not for furthering any
ers and spinners," he said. business.

GST UPDATE
GST poses to be revenue neutral in short term 60% of traders are com-
A report by Fitch Ratings emphasize on the fact that GST will support productiv-
ity and boost the long-term growth prospects but is un- puter illiterate
likely to increase tax revenue in the short-term. "GST According to the Confederation of All
will unify the indirect tax system and remove domestic Indian Traders
barriers to trade, which should support productivity gains (CAIT), a
and GDP growth over the long term," Fitch said, adding large num-
it is "unlikely to increase revenue in the short term." bers of trad-
ers are still
Very low impact on realty sector unaware about the fundamentals and
As GST is a consumption based tax, the real estate deal- compliance of the tax.
ers shall pass on the tax benefits to end consumers and The confederation released a white
therefore, marginally impacting the property prices. It paper; to disseminate information on
is expected to see a correction of upto 3% or inch up a GST said fulfilling digital compliance
bit from current levels. However, prices of ready-to- would be big as 60 % traders in India
move-in apartments with completion certificates will have no access to computers. The
remain steady as these properties are out of the GST ambit. traders' body has, therefore, urged
the government to open GST facilita-
Price burden on small businesses and informal workers tion centres in the offices of trade as-
"Even insurance premium is not spared from high taxation. Normal activities in sociations.
many of these sectors have been affected CIAT also sought an interim period of
and/ or collapsed, leading to massive job nine months to be provided during
losses," the Centre of Indian Trade Unions which no penal action may be taken
(CITU) said in a resolution adopted by it at its against any trader for procedural
central meeting held in Shimla. lapses.
The union reiterated that GST has adverse im-
pact on the unorganized sector workers and those engaged in small and decentralised MRP stickers to be re-
manufacturing such as tailoring, garments, textile, beedi, small drug manufactur-
ing, construction, matches & fireworks and passenger & goods transport.
printed
The suppliers have to reprint MRP
Goods imported by SEZ developers, units exempted stickers to
cover GST
from GST rates or
The Finance Ministry has exempted the goods and services imported by a unit legal con-
or a developer of a special economic zone (SEZ) from levy of integrated goods s e -
and services tax (iGST). Pratik Jain, Partner and Leader-Indirect Tax, PwC India, quences will be attracted. Food and
said that supplies to SEZs are zero rated and any imports of goods into SEZs are consumer affairs minister Ram Vilas
not taxable. This latest exemption from GST brings the same position that ex- Paswan said the government has
isted pre-GST as well, Jain told BusinessLine. given 3 months time till September
"This exemption was expected. The basic idea is supplies to SEZ must not at- to reprint the revised maximum re-
tract GST, whether it is domestic supplies or from abroad," he said. R tail price (MRP) with the implemen-
Muralidharan, Senior Director (indirect taxes), Deloitte in India said that the tation of the landmark GST. "Fall in
upfront exemption from GST to goods procured by SEZ units will help reduce the prices due to lower GST should be
passed on to consumers. ...The gov-
working capital requirements of these units. Abhishek Jain, Tax Partner, EY, said
ernment will take legal action against
that continuation of upfront exemption of GST for procurement of both goods
vendors not declaring revised MRP
and services by SEZs will benefit them and prevents any unwarranted blockage
after GST," he said.
of working capital.

GST UPDATE
Businesses must display Phone, Credit card bill to attract GST

GST impacts the consumer's phone and credit card bills and the rates are in-
GSTIN on sign boards creased. "If the invoice was generated after June
30, it will attract GST. For services, the tax is lev-
ied based on the date of supply of service or is-
sue of invoice," a senior Finance Ministry official
said.
The service providers are mandated to provide
an invoice within 30 days of the supply of service.
As a relaxation for insurance and banking companies, the law allows them to
issue an invoice within 45 days. "Our appeal is that issuing revised stickers with
Traders and businesses will have to the new price is not difficult. It should be done at the earliest," said Revenue
display the GST registration number Secretary, Hasmukh Adhia.
on their business sign boards and the "Services provided by an educational institution to students, faculty and staff are
registration certificate in their pre- exempt," it said, adding that there is no change in taxability of educational and
mises. other services on account of GST.
Also, composition dealers will have

to mention that they are availing the
All traders to be registered under GST by August 15:
composite scheme and are not en- PM
titled to collect taxes from people. Prime Minister Narendra Modi urged all Chief Secretaries to ensure that GST
registrations are closed by August 15. The Prime
"Every taxable person is required to Minister interacted with PRAGATI - the ICT based
display his GSTIN number on name platform for Pro Active Governance and Timely
board or sign board of business and Implementation, and reviewed the progress
is also required to display his regis- long-pending infrastructure projects in the rail-
tration certificate in business pre- way, road and petroleum sectors, spread over
several States including Maharashtra, Karnataka,
mises so that a citizen can easily find
Andhra Pradesh, Tamil Nadu, West Bengal,
out whether a person is registered
Odisha, Uttar Pradesh, Uttarakhand, Himachal Pradesh, and Arunachal Pradesh.
or not," a tax official said.
The Prime Minister also reviewed the progress of the Pradhan Mantri Awas
The composition dealer is required Yojana (Urban), handling and resolution of grievances related to CPWD, and
to mention in the business premises Directorate of Estates. Modi urged CPWD to encourage all vendors to come
along with registration certificate aboard the Government e-Marketplace (GeM) platform.
that he is not entitled to collect tax
from taxpayers. Assocham seeks way to compress use of chemical
fertilizers
"That is the legal requirement. So Industry body Assocham requested the cen-
that the citizen can find out whether tral government to review 18 % GST rate on
the person from whom he is buying select agriculture inputs like bio-fertilisers,
is entitled to collect tax from him or bio-pesticides and organic manures so as to
not," the official added. The Goods compress the use of chemical fertilisers.
and Services Taxpayer Identification
"Higher GST in this segment will directly pro-
Number (GSTIN) is a 15-digit number mote chemical usage thereby leading to in-
which taxpayers get after register- crease in green house gas emissions, besides
ing with the GST network portal. it will adversely impact public health," as mentioned in the letter to Mr. Jaitley.

ROUNDUP
INDUSTRY
Insolvency and Bankruptcy Code
NEWS
Country set to be the
Timeline of 180 days for resolution under the Code is important and the system
would evolve, said M S Sahoo, chairperson, Insol-
largest milk producer
vency and Bankruptcy Board of India (IBBI). Re- According to a report by the United
sponding to a query during a meeting with stake- Nations (UN)
holders Sahoo said, "Initially there may be some and the
problems as systems are not in place. As many Organisation
transactions go through, practices will be stream- for Eco-
lined, standardised and automated. Artificial intel- nomic Co-
ligence will come in and machines will take over a lot of the work." operation
and Development (OECD), India
He added: "Under the information utilities, we need to have information about would be the world's largest milk pro-
all credits, authenticate and verify them, make correct information available. ducer by 2026 and will account for
This will help the National Company Law Tribunal to admit or reject a matter, the biggest increase in wheat pro-
help insolvency professionals to verify the claims, so that the transactions move duction globally.
expeditiously. The regulation has been notified. Now it is for the market to come
up, seek registration and start working. Untraceable listed enti-
Jurisdiction-free tax assessment ties on regional stock ex-
The CBDT is framing a policy involving special team of officers to prepare modali- changes
ties for creation of jurisdiction free tax assessment. "This About half of the companies listed on
first-of-its-kind initiative will totally change the relationship regional stock
and dealing between an assessee and his assessing officer exchanges
(AO). The income tax returns (ITRs), scrutiny cases and all (RSE) across the
other I-T related correspondence of a taxpayer will go to country have
an officer chosen randomly by the database system who is vanished with
working in any I-T office of the country," a senior official said. investor money. All these companies
as moved on to the dissemination
Virtual currencies tracked by the government board are asked to submit a plan to
A federal government panel is evaluating options to control get listed on recognised stock ex-
or intervene the virtual currency in India. Digital currency changes such as the BSE and the NSE,
like bitcoin should be controlled through the central bank and which follow stringent net-worth and
capital markets regulator along with intelligence agencies other listing criteria, or to provide an
to monitor money laundering and terrorist financing. exit opportunity to shareholders.

ROUNDUP
Rs. 57,000 crore saved by Cash deposits during demonetisation to be verified

CBDT is to prepare and review a list of persons required to file Statement of
the Direct Benefit Trans- Financial Transactions for cash deposits into their
fer scheme bank accounts between November 11 and Decem-
According to government data, of the ber 30, 2016. It will also identify persons who have
Rs 57,029 not filed or have filed inaccurate statements on
crore saved cash deposits. An estimated 36.1 % of the Perma-
under DBT in nent Account Number (PAN) holders that made
2016-17, the cash transactions during demonetisation had not filed income tax returns, ac-
LPG subsidy cording to official data.
scheme 'Pahal' accounted for Rs
29,769 crore. As per the latest data Enhanced disclosure in Form 3CD
from Cabinet Secretariat, the New Form 3CD reflects enhanced disclosure requirements specifically in relation
MGNREGS saved Rs 11,741 crore, and to electronic clearing systems. Additional information
Rs 399 crore were saved in DBT trans- would now be required to be given where the repay-
fers for the National Social Assistance ment of loan or deposit or any specified advance ex-
Programme, which deals with, among ceeding prescribed limit is received otherwise than by
other things, old age and widow pen- a cheque or bank draft or use of electronic clearing sys-
sions, and the latest data from the tem through a bank account. The revised form also spe-
Cabinet Secretariat showed. cifically refers to information on use of electronic clearing system through a bank
account in addition to payments by way of account payee cheque or bank draft.
Sensex scales 32,000
Credit card bill payment exempt from cash dealing
peak
The Sensex breached the 32,000- limit
point mark Restrictions on cash dealings of Rs2 lakh or more will not apply to credit card bill
for the first payments, business correspondents appointed by banks
time and and issuers of prepaid instruments, the revenue depart-
closed re- ment has said. The Finance Act 2017 banned cash trans-
cently at action of Rs2 lakh or above with effect 1 April, with some
32,037.38, up 0.73% close. The Nifty exceptions. Through a notification, the income-tax de-
closed just 8.3 points short of 9,900. partment has exempted five entities from the purview
Supportive global markets, which of this section.
gained after Federal Reserve chair These include receipts by a business correspondent on behalf of a banking com-
Janet Yellen said the US central bank pany or cooperative bank; receipt by a company or institution issuing credit cards
will hike rates gradually, also helped. against bills raised in respect of one or more credit cards; receipt from an agent
by an issuer of prepaid payment instruments; receipt by a white label ATM op-
SEBI eases M&A rules erator from retail outlet; receipt which is not includible in the total income un-
After SEBI's Board Meeting, it an- der clause (17A) of section 10 of the I-T Act, 1961, have been excluded from the
nounced ex- purview of the Section 269ST.
emption to
buyers of GST cess hike on cigarettes
shares in dis- The GST council is focusing on increasing the cess on cigarettes to offset reduced
tressed com- tax revenue from the product. Accordingly, the tax burden
panies from the requirement of mak- on cigarettes will go up by Rs4.8-7.9 per 10 sticks, depend-
ing an open offer even if the pur- ing on their length and whether or not they have filters.
chase triggers such an event under "Each state specifically responded positively (to the proposal)
the takeover code. and this change will be effected from midnight," said Jaitley.

ROUNDUP
Deregistered companies to face charges for violating Dairy development pus-

taxation and money laundering hes Govt to borrow from
Nearly 1 lakh companies have been de-registered, including action against those JICA
for violating taxation and money-laundering laws as
The Central Government has sought
well as choking their access to banking. While the MCA
Rs 16,027 crore
has acted against them for not filing returns, it is now loan from Japan
going to approach banks with the list of companies International
where action has been taken to ensure that they are Cooperation
unable to operate their bank accounts or access loans. Agency (JICA)
"In the past, we noticed that some of the de-registered companies continued to organize vari-
to enjoy access to banking services due to lack of information flow. We want to ous progra-
prevent that, otherwise the whole purpose will be defeated," said a source. mmes to develop dairy sector and
meet rising domestic demand for milk
Independent Directors to be replaced within 90 days and milk products. "The government
The Corporate Affairs Ministry has altered the code for independent directors has submitted a proposal for availing
under Schedule IV of The Companies Act, 2013 to loan from Japan International Coop-
replace independent directors who resign or are eration Agency for 'Dairying through
Cooperatives-National Dairy Infra-
removed from the Board within 90 days, against
structure Plan'," the agriculture min-
the earlier 180 days.
istry said in a statement. The proposal
Moreover, the independent directors at their is in line with doubling farmer's income
separate meetings need not henceforth review the in the next five years.
performance of non-independent directors, of the
Board as a whole, or of the Chairman of the Board. SN Ananthasubramanian, Export share to reach
Practising Company Secretary and former Company Secretaries' Institute Presi- 51.6%
dent commented that this development has brought the Companies Act on par India's main export destinations in-
with the SEBI's listing regulations. "This shorter time period of 90 days will en- clude the US, Ja-
hance the cause of good governance in unlisted companies also," he said. pan, Hong Kong,
UAE, China,
Cattle Trade Rules flawed: Experts Singapore, UK
The Centre has no authority to make legislation or even subordinate legislation and Germany.
on the prohibition of cow slaughter as it is included Share of India's
as Directive Principle of State Policy. That is for total exports to top 10 destinations
the states to do, said former Lok Sabha Secretary worldwide has increased to 51.6 % in
General and constitutional expert PDT Achary. 2016-17. The country's merchandise
The contribution of animal husbandry in the exports to the US grew from USD
growth of India agriculture has been significant 39.14 billion in 2013-14 to USD 42.33
billion in 2016-17, PHDCCI President
in the recent years. This kind of restriction will only
Gopal Jiwarajka said in a statement.
discourage farmers from rearing cattle, said Vikas Rawal, Professor of Econom-
ics at the Jawaharlal Nehru University. Continuous export rise
NK Shukla, national joint secretary of All India Kisan Sabha, said there are at The country experienced 10 straight
least three rules in the notification that are particularly anti-farmer. Both seller months of rise in out bound trade in
and buyer of the cattle have been forced to give an undertaking that it was not June with 4.39%. The figure was
sold or bought for slaughter. More regressive is the section that bars a farmer, $23.56 billion in June. Growth has
who bought cattle, from selling it in the next six months. "What authority does been falling since March, when it hit
the government have to decide when should a farmer sell his cattle," asked a high of 27 %, the steepest in a little
Shukla. over five years.

LEGAL UPDATE
LEGAL
SC suggests more time for those who failed to deposit
CASES
Arbitrator cannot be
scrapped notes nominated by ineligible
A bench headed by chief justice J.S. Khehar asked the government to consider
an extension of time for those who had failed to de-
person
Recently in a Supreme Court ruling it
posit old, demonetized currency notes in their bank
was held that
account and inform the court of its possibility.The sug-
once an arbi-
gestion was made by the bench in favor of people who
trator pre-
had "genuine and valid reasons" and should be given
scribed in a
another opportunity to do so. contract be-
comes ineligible to act as such, he
Name struck off but firm exists in ROC list cannot nominate another person in
If a company's name was deleted once and then restored again with Registrar his place. It was a general practice
of Companies, the status of the entity would remain in government contracts and even in
same as it was. The same was mentioned by the Delhi some private contracts to prescribe
High Court recently in an international arbitration case, its own key managerial personnel as
Value Advisory Services (VAS) vs ZTE Corporation. "The the sole arbitrator, which is now chal-
company is a legal juristic entity and that clothes an as- lenged due to an amendment to the
sociation of persons with an independent and a sepa- Arbitration and Conciliation Act in
rate identity. However, such entity is not a hollow en- 2015 to bar such persons from act-
tity; its resources, human as well as material, constitute the substratum of such ing as arbitrator and it provided two
legal entity. Thus, even though the legal form may disappear, the substratum schedules - one setting guidelines
continues to exist and its form can be resuscitated. Once such order restoring and another disqualifying certain
the company to its legal status is passed, such company would be deemed to persons to prevent suspicion of bias.
have been always in existence", as stated by the Court. "It is inconceivable in law," the judg-
ment explained, "that the person
Award in favour of Glencore who is statutorily ineligible can nomi-
A dispute over an agreement between the two companies Glencore International nate a person. Once the infrastruc-
AG (supplier) and Dalmia Cement (Bharat) Ltd (Purchaser of coal) resulted in the ture collapses, the superstructure is
Delhi High Court ruling allowing the enforcement of a foreign award in favour of bound to collapse." The court high-
Swiss firm Glencore. It was alleged by Glencore that Dalmia had breached the lighted that allowing an ineligible
terms of contract by not accepting delivery of three shipments, to which Dalmia arbitrator to nominate a person
disputed the charge by stating the quality of the coal was not according to speci- would reflect the powers utilized by
fications. The London arbitrators awarded in favour of Glencore. the person him/herself.

LEGAL UPDATE
Contract for Naval gun justified Insecticide Act

UK based firm Emdigital Ltd' petition was dismissed against the Israeli firm Elbit Abundant power has been granted
Systems for supply of naval guns to India, by the by the Insec-
Delhi High Court. The British firm alleged the Is- ticide Act to
raeli firm cannot sell the guns as it was manufac- its inspectors
tured by a US company and it required parliamen- for suo motu
tary approval according to the law of that coun- collection of
try. The Israeli firm denied it stating that it had samples
obtained sanction. The High Court explained that from dealers and sending them for
according to US law, the second stage of approval could be sought after obtain- testing at the Central Insecticide
ing the contract and there was nothing in the Arms Export Control Act which Laboratory. It is also the inspector's
barred the Israeli firm from selling the guns to India. duty to do so if the person from
whom the sample is taken requests
SC quashes CESTAT order on anti dumping case for test and analysis.
The apex Court had recently upheld the order of the Customs, Excise and Ser-
vice Tax Appellate Tribunal (CESTAT) in an anti-dump-
Tractor with a trolley -
ing case, which favored importers of cold rolled stain-
less steel of certain specifications. The domestic in- Light Motor Vehicle
dustries had made representations to the respective The Supreme Court recently gave its
authorities that some firms were hiding specifications verdict that no sepa-
of the goods imported from different countries like rate licence for driv-
China, Japan, Taiwan, and the European Union. An- ing the ve-
other notification was issued to fill the gap. This was hicle is
questioned by the importers before the CESTAT. It allowed exemption from the needed if
duty. It led to the appeal before the Supreme Court, Commissioner of Customs the driver
Duty (Exports) vs. M/s Mascot International. has a Light
Motor Vehicle (LMV) licence for a
Payment terms does not reflect dispute free execution tractor attached to a trolley carrying
Even when a contractor accepts payment for the work done for the employer it goods. For the case in question Sant
does not mean that all disputes between them Lal vs. Rajesh, a tractor with a trol-
had been settled. If the contractor does not sign ley met with an accident. The motor
the final bill, he would not get even the payment accident claims tribunal held that the
admitted by the employer. To this, the Delhi driver did not carry endorsement for
High Court has stated that even if the contrac- driving the vehicle and therefore the
tor signs the usual clause of "full and final settle- insurance company was not liable to
ment" to get the payment, arbitration can be compensate the damage.
invoked on the disputed issues. The court stated so in its judgment in Union of
The only countermeasure for the vic-
India vs. Baga Brothers.
tims was to sue the owner who al-
Penal charges on website for misuse of trademark lowed the driver to take the vehicle.
However, on appeal, it was ruled that
The Delhi high court recently imposed a penal charge of Rs. 20 lakh on
no separate endorsement was neces-
99labels.com for selling spurious goods using the reg-
sary. The Apex Court held that the in-
istered trademarks in the name of Burberry Ltd. The
surance company was liable to pay
latter is involved in designing, manufacturing and sell-
compensation and that the liability
ing luxury goods, complained that the website sold
was joint and several, distributed
false goods using its trade marks registered in India
among the insurer, the owner and
and abroad. It was stated in the judgment that the
the driver.
illegal act of the website derogated the goodwill and reputation of the aggrieved.

HOUSING
HOUSING
DDA housing scheme re-
NEWS
Buyers requests government to correct the definition
ceives 5,000 applications of 'ongoing projects'
Delhi Development Authority has re- The promoters have heaved a sigh of relief after the launch of the UP-Rera
ceived around website, which would help them to immediately
5,000 applica- get a registration number, to start promoting their
tions for its pro- projects. However the buyers' have expressed dis-
posed new hous- satisfaction with the current form of RERA, where
ing scheme. As it has been notified as per the UP adaptation of
per senior offi- the Central Govt RERA.
cials the low turnout for application
The buyers approached local MLA to seek a review
may be a result of demonetisation.
of the Act as notified in the state. The MLA has assured the buyers over a call
The 2017 Housing Scheme of DDA, that the matter will be taken up at the cabinet level.
offers 12,000 flats for four income
categories. Scheme was launched on Though the UP RERA website has placed the original Act as passed by the Par-
June 30. The last date for submitting liament in March 2016, the notification mentioned on the site is that of October
applications is August 11. 2016 - the format where the definition of 'ongoing projects' has been altered to
"We held a meeting with our leave out a huge number of builders from the ambit of RERA.
partnering banks. Though the full de- As per the notification, an ongoing project is a project where development is
tails across different categories, we going on, for which completion has not been issued. This excludes projects where
are yet to receive, I can say that at services have been handed over to local authority for maintenance and com-
this point of time, about 5,000 appli- mon areas have been handed over to RWA. All development has been completed
cations have been received," DDA's and sale-lease deeds of 60% of the project have been completed. Documents
Principal Commissioner (Housing), J P have been submitted with local authority as application for completion.
Agarwal told. Agarwal added that
the housing authority will make ev- By this logic a major chunk of 82 builder projects of Noida Greater Noida was
ery possible efforts to address all exempted from the RERA. However, for those towers of a project which are
concomitant issues, including water incomplete, where construction is going on and for which completion has not
supply and transportation. been applied for or issued, RERA would continue to apply.
"Yes, some areas like Narela, Rohini, "Huge numbers of application for completion have been made over last one month
have connectivity issues, and some of in Noida and Greater Noida authorities. This easily means that a large number of
flats need repair, but before allotting ongoing apartments would fail to reap the benefit of RERA as these projects would
the flats, we will make them fit to not be legally required to register. This leaves the buyers in a compromised state,"
move in as well," he said. Rashesh Purohit, founder, NCR homebuyers association, told.

HOUSING
Real estate regulator starts operation Uttar Pradesh RERA site

The Real Estate Regulatory Authority (RERA) has begun its operation in
gets flooded with 15,000
Bengaluru, and has started accepting regis-
tration of projects, agents and complaints as complaints on first day
per provisions of the act. UP RERA website got application for
only eight
The State Government notified the RERA
projects on
rules recently. "The regulatory authority has the opening
begun functioning, and the principal secre- day. The
tary is heading it for the time being. The site also wit-
government will soon appoint a regular nessed huge
chairman," Housing Minister M.Krishnappa told reporters. The authority, he said, traffic of homebuyers and around
is clarifying doubts both online and offline, and will help home buyers. 15000 homebuyers registered their
Since the launch of the portal, many promoters and agents have submitted their complaints against the builders. In
order to control the rush the UP gov-
registration requests and paid the fee online, the government, RERA officials
ernment introduced a fees of Rs
said. The officials also urged developers of ongoing projects as well as those ready
1,000 lodge complaints.
for launch to register with the Authority.
"Aggrieved buyers have been lodging
Former Credai Bangalore president J.C.Sharma termed RERA going on stream their complaints since morning. They
as "it is better than never." His own company, Sobha Developers registered one are complaining not only about indi-
project and many others are in the pipeline. He, however, requested the regu- vidual projects but also about the way
lator for a 90-day window from the date of notification of RERA rules for devel- 'ongoing projects' have been defined
opers and real estate agents to get themselves registered. under UP RERA," said Abhishek
Kumar, the president of Noida Exten-
"RERA is going to put both fear and pressure among project developers, and
sion Flat Owners Welfare Association.
make them customer friendly. This will hopefully stop any diversion of funds by
developers from the project for which the money is collected," said Damla According to office bearers of Confed-
Mathew, MD at Damden Properties, a developer of budget homes. eration of Real Estate Developers As-
sociation (CREDAI) the site slowed
He, however, said he was unsure how this is going to play out in terms of sales. down as thousands of property buy-
"From demonitisation to GST to RERA have psychologically weakened the spirit ers registered their complaints. "The
of the real estate industry. The timing of RERA, I think, is wrong." complaints actually slowed down
builder registrations. However, things
LIC Housing dips by over 4% are going to become more transpar-
ent from now on with complaints
LIC Housing Finance share on bourse dropped as the company posted its Q1FY18
being out there for all to see," said
results lower than the industry esti- Amit Modi, vice-president, Credai
mate. LIC Housing Finance's NII for the (western UP).
quarter grew 9.2% yoy to Rs 936.95
The RERA website (http:www.up-
crore. The provisions declined by 10.3%
rera.in) has provisions for registration
yoy to 104.46 crore. However the net
of promoters, builders, projects and
profit for the quarter increased 15.3%
agents. In Gautam Budh Nagar, includ-
yoy to 470.06 crore. ing Noida and Greater Noida, there
LIC Housing Finance Ltd is currently are over 80 ongoing projects by 58
trading around Rs 691.5, down by Rs 29.4 or 4.08% from its previous closing of builders. Thousands of agents operate
Rs 720.9 on the BSE. The BSE group 'A' stock of face value Rs 2 has touched a 52 in both cities. A total of eight projects
week high of Rs 794.1 on 20-Jun-2017 and a 52 week low of Rs 470 on 09-Nov- were registered from three cities on
2016. the day one of the UP RERA launch.

MUTUAL FUND
MUTUAL FUND
Mutual funds asset base from small towns grows by Mutual fund folios hit
NEWS
46% record 5.8 crore at June
Due to initiatives taken by market watchdog Sebi and AMFI, the mutual funds
2017
asset base from small towns has surged 46%
With strong participation from retail
to Rs 3.5 trillion by June-end. According to
investors,
latest data available with Association of Mu-
the num-
tual Funds in India, the mutual funds' assets
ber of fo-
under management (AUM) from B15 loca-
lios in
tions - small towns beyond top 15 (T15) cities
Mutual
- grew from Rs 2.42 trillion in June-end 2016
Fund has grown by over 93 lakh to
to Rs3.54 trillion at the end of June 2017.
5.82 crore at the end of June 2017.
"The increase in investor education programmes has resulted in increasing in- This is an significant increase since last
vestor awareness and many first time investors from such towns are investing one year.
into mutual funds," Fundsindia.com founder and COO Srikanth Meenakshi said.
According to data released by Secu-
"Indian mutual fund industry is going through a very exciting growth phase and rities and Exchange Board of India on
advertising campaigns started by Sebi and Amfi have helped in increasing pen- total investor accounts with 42 active
etration of mutual funds in smaller cities," Vidya Bala, Head of MF Research at fund houses, the number of folios
Fundsindia.com said. rose to a record 5,82,30,384 at the
He further said Systematic investment plans (SIPs) have been the preferred route end of last month, from 4,89,24,391
for many investors to invest in mutual funds. To make the move attractive, Sebi in June end 2016, a gain of 93.06 lakh.
allowed more incentives for distribution of funds in B15 (beyond top 15 cities). The total number of investor ac-
Currently, B15 accounts for 18% of the total assets of the industry. Besides, these counts stood at 5.54 crore at the end
locations have a better balance of equity and non-equity assets. of March 2017. The folios are num-
Interestingly, major portion of direct investments were in non-equity oriented bers designated to individual investor
schemes where institutional investors dominate. B15 are the locations beyond accounts.
top 15 (T15) cities namely - New Delhi (including NCR), Mumbai (including Thane "The increase in folios has come pre-
and Navi Mumbai), Kolkata, Chennai, Bengaluru, Ahmedabad, Baroda, dominantly from the retail category
Chandigarh, Hyderabad, Jaipur, Kanpur, Lucknow, Panjim, Pune and Surat. as is evident by the strong double
Around 26% of assets held by individual investors is from B15 cities. Institutional digit growth in folios in equity, bal-
assets are mostly concentrated in T15 locations, accounting for a over 90% of anced and debt categories," Vidya
the total. Further, about 9% of the retail investors chose to invest directly, while Bala, Head of MF Research at
over 17% of HNI assets were invested directly. FundsIndia.com said.

MUTUAL FUND
$600 billion to flow into financial products in five years Mutual fund Equity in-
Helped by regulatory and policy initiatives, a whopping USD 600 billion worth of
savings is likely to flow into financial instruments,
flows jump 3-fold to Rs
including equities, mutual funds and insurance 28,000 crore
products in the next 5 years, said a report by
Ambit Corporate Finance. This is three times the
amount (USD 200 billion) of savings into the finan-
cial sector compared to the past 5 years.
According to the report, "opportunities from the
reset in financial services sector in India', assuming that 60 per cent of house-
hold savings shift to financial savings, nearly 40 per cent of this would flow into
capital markets, MFs and insurance, resulting in estimated result in investments
of about USD 600 billion over the next five years.
The equity mutual funds have seen
No steps taken in India for launching Sharia-compliant an inflow of over Rs 28,000 crore in
mutual funds: Reserve Bank April-June 2017, a surge of nearly
three-times from the year-ago level,
Reserve Bank of India in a reply to RTI application has informed that no steps
showing the increase in investor con-
have been taken for the introduction of
fidence. "Inflows in equity mutual
Sharia-compliant mutual funds in India.
fund schemes have been robust of
RBI said the Government of India had
late as investors chase higher returns
sought its comments on the launch of
in the wake of lower yields from fixed
Sharia-compliant mutual funds by State
income instruments and poor perfor-
Bank of India.
mance by realty and commodities
The RBI submitted its reply the same (gold)," Bajaj Capital CEO Rahul
month, it said. The Islamic or Sharia-com- Parikh said.
pliant financial system is based on the prin-
ciples of not charging an interest on deposits, as it is prohibited under Islam. "Besides, the higher inflows can be
attributed to the shift of flows from
"The Reserve Bank of India has not taken any step for introduction of Sharia-
income funds and money market
compliant mutual funds in India," the reply said. The State Bank of India in 2014
funds to equity, equity-linked saving
had announced the launch of the same. However, it was deferred to make it a
schemes (ELSS) and equity-oriented
better and more attractive fund in the future, according to an official intima-
balanced funds, due to low yields on
tion. H Abdur Raqeeb, General Secretary, Indian Centre for Islamic Finance - an
such segments at present. A year
NGO trying to introduce members of the Muslim community to the Sharia-com-
back, they were higher, a gap of al-
pliant banking system, said the initiation of such special mutual funds for a se-
most 75-125 basis points," he added.
lect group of people would be a much-desired and welcome step.
Parikh further said the spurt in in-
"It is a misconception that Sharia-compliant mutual funds are beneficial to a
flows in equity schemes can also be
particular community. These funds will benefit the economy and ensure finan-
linked to rise in new issuances or New
cial inclusion of those who avoid such investment for religious reasons," he said.
Fund Offers (NFOs) during the quar-
Raqeeb has been coordinating with various government and regulatory authori- ter under review as compared to the
ties for the introduction of the Sharia- complaint banking system in India. "When year-ago level and optimistic inves-
the launch of Sharia mutual fund was announced by SBI, some of the gulf coun- tors' sentiments. Money raised from
tries were very enthusiastic for investment. It is high time the RBI and the fi- NFOs focused on equity schemes was
nance ministry instructed SBI to relaunch the same," he said. at Rs 4,908 crore in April-June 2017,
SBI had rejected an RTI application seeking details on the relaunch of Sharia- much higher than Rs 173 crore gar-
compliant mutual funds , saying the "query is vague and not specific". nered in the same period last year.

CO-OPERATIVE BANK NEWS
CO-OPERATIVE BANK
NEWS
10 state cooperative Reserve Bank refuses to accept Rs. 200 crore old notes
banks under Income Tax deposit of Maharashtra Cooperative banks'
After the extra time allowed by RBI expired, the 31 district central cooperative
scanner for Rs 467 crore banks (DCCBs) in Maharashtra were still left
old note deposits with around old notes valued Rs.200 crore.
Ten district central cooperative banks RBI said that the cooperative banks col-
(DCCBs), lected these notes after they were
demonetised on November 8 last year. The
which had
Cooperative banks are planning to move
exchanged
court against the RBI's decision.
Rs 467 crore
demonetised On June 22nd, the finance ministry issued a
notes with notification, allowing DCCBs to deposit demonetised notes of Rs. 500 and Rs.
the Na- 1000 with the RBI in next four weeks. The DCCBs had Rs. 2,771.86 crore in banned
tional Bank for Agriculture and Rural notes before the issue of notification.
Development, and a Tamil Nadu- Cooperative banks in Pune and Nashik are left with Rs 22.25 crore and Rs 23
based cooperative bank, has been crore in scrapped notes, while Kolhapur has Rs 25.27 crore, Ahmednagar
pulledup by Income Tax department (Rs11.68crore), Nagpur (Rs 5.02crore) and Sangali (Rs14.72 crore).
for irregularities in exchange of old
Chhattisgarh government decides to merge all DCCBs
demonetised notes. It has been re-
ported that many villagers account into single state co-op bank
were used to deposit old Rs 500 and The Chhattisgarh government has decided to merge all district cooperative cen-
Rs 1,000 denominations. tral banks (DCCBs) of the state into a single State Coop-
erative Bank, with a aim to serve the farmers with bet-
"We were aware of many village
ter banking facilities, officials said.
headmen using farmers' bank ac-
counts to deposit old notes. Before Chief Minister Raman Singh in a cabinet meeting gave
getting down to action, we waited approval for merger. According to Mr Singh the merger
for the cooperative banks to ex- of all branches of DCCBs will be one of the major financial
reforms in the state. Cooperative banks play a significant
change the old notes.Our officials
role in paddy procurement and disbursements of short term agricultural loans
have now started checking the ac-
to farmers and in view of this, in-principle decision was taken to transform it
counts of the 10 DCCBs," a senior I-T
into a mega State Cooperative Bank (Apex bank) to ensure better banking ser-
official told.
vices to farmers, the CM said.

NEW APPOINTMENTS
PEOPLE ON THE MOVE
Mukesh Kumar Jain is the new face of Oriental Bank

The Central Government has recently appointed Mr. Mukesh Kumar Jain as Managing Director and
Chief Executive Officer of Oriental Bank of Commerce for a period of 3 years. Before this he was an
Executive director at Punjab & Sind Bank. He would be joining OBC, in the place of Mr. Animesh
Chauhan who has superannuated.
Mukesh Kr Jain
Kewal Handa in new Chairman of Union Bank

Kewal Handa has been appointed Chairman and part-time non-official Director of Union Bank of India.
Handa is a qualified Management Accountant and Company Secretary and holds a Master’s degree in
Commerce. He has also completed IIM-Ahmedabad’s Senior Management Development Programme.
Handa was Managing Director of Pfizer India from 2005 to 2012. He was also Managing Director of
Wyeth from 2009 to 2012. Handa has experience in finance, strategy, business development, mergers
and acquisitions, banking and corporate affairs, among others. Kewal Handa
Shinjini as Consumer Business Manager-Citi Bank

Citi Bank announced the appointment of Shinjini Kumar as Consumer Business Manager, Global Con-
sumer Banking, India, effective June 24. Shinjini would look after all of Citi's consumer businesses in-
cluding retail banking, wealth management, cards and mortgages in India. Her latest stint was with
Paytm where she served as Chief Executive Officer.
Shinjini Kumar
Economic Affairs Secretary - Subhash Garg

Senior bureaucrat Subhash Chandra Garg succeeds Shaktikanta Das and took charge as Secretary of
the Department of Economic Affairs (DEA) in the Finance Ministry.
He will oversee capital markets, Budget preparation as well as infrastructure financing and decide on
borrowing, along with RBI. He will also decide on funding by multilateral institutions.
Garg has widespread administrative experience with more than 30 years of service during which he Subhash Garg
handled key assignments, including administrative postings in his home state Rajasthan, a Finance
Ministry statement said.
Garg has also worked with the Central Government in various capacities.
He was posted as Director, DEA, Ministry of Finance, from May 2000 to September 2003. Later, he took over as Joint
Secretary, Department of Expenditure, with the same Ministry and continued to hold that position till May 2005.

PRESS RELEASE
Dr. M Ravi Kanth, CMD, HUDCO, inaugurated the Vijaya Bank's

Branch Managers Meet of NCR Region
Dr. M Ravi Kanth, CMD, HUDCO, inaugurated the Vijaya
Bank's Branch Managers Meet of NCR Region, to ensure
speedy disbursal of credit under the Pradhan Mantri Awas
Yojana - (Urban) aimed at providing 'Housing for All by
2022.' Dr. Ravi Kanth stressed that all stake holders have
to ensure the success of PMAY-U and Credit Linked Subsidy
Scheme, in which the bankers have a crucial role to play.
CMD, HUDCO assured of providing Information Education
Communication (IEC) Material and imparting training to
field level officers of Vijaya Bank across the country. Shri
Sidheshwar Patra, General Manager & Regional Head
Vijaya Bank was also present, and assured cooperation in
this endeavor.
State Bank of India, Jaipur celebrates Bank's Foundation day

State Bank of India, Administrative and Business Unit, Jaipur has celebrated Bank's Foundation day on 1st July. Various
programs were organized by the Bank on this occasion. Starting with lightning of the lamp by Chief General Manager
Shri Vijuy Ronjan, he invited all the staff members to take the Bank to a new height by providing their best customer
service & enabling customers on digital platform. A medical and health checkup camp was also organized at A&BU
Jaipur building. Further 'Disha Foundation' a social organization involved in rehabilitation of multiple disorders was
recognized for service towards society and was given a cheque of Rs. 3,91,500/- under CSR activity by the Bank.
A cultural program was also organized at 'Deep Smriti Auditorium" Mansarovar Jaipur in which noted poet Shri Surendra
Sharma, Comedian Shri Shambhu Shikhar, Singer Ravindra Upadhyaya and Dancers have given their best performance.
Bank has felicitated few staff and their family members for their contribution to various fields outside Bank. CGM Shri
Vijuy Ronjan alongwith General Managers Shri S. Sali, Shri A.K. Choudhary, Dy. General Managers and Staff members
with their families were present during the function.
HUDCO posts 51.80% growth in PAT

HUDCO's Quarterly results for the Quarter ended 30th June, 2017 reflect excellent performance on QoQ Basis. HUDCO
has posted 51.80% growth in Profit After Tax (PAT) in comparison with corresponding quarter ended June, 2016. HUDCO
sanctions increased by 100% on QoQ Basis and in the same period disbursements increased by 38% on QoQ Basis.
HUDCO is one of the Central Nodal Agencies (CNA) to channelize the subsidy under the Pradhan Mantri Awas Yojana's
Credit Linked Subsidy Scheme (CLSS) and is making sincere efforts in 'Reaching the Unreached'. HUDCO as a 47 years
old CPSE has always been an integral part of Govt of India's actionable programmes & policies pertaining to housing and
urban infrastructure. HUDCO has financed various prestigious projects such as Cochin International Airport, National
Games Village - Imphal, Bangalore Metro Rail, etc.
HUDCO is also extending financial assistance for flagship schemes of many State Govts. like Safe Drinking Water Project
'Mission Bhagirathi' and 'Two Bed Room Housing' of Govt. of Telangana and Affordable Housing Project of Govt. of Andhra
Pradesh.
During April - June Quarter, HUDCO has sanctioned loans to various housing projects to Uttar Pradesh, under Pradhan
Mantri Awas Yojana (Urban) & Pradhan Mantri Awas Yojana (Gramin) besides, Urban Infrastructure Schemes for
improvement of roads and construction of bridges.

PRESS RELEASE
Financial Results (Indian GAAP) of HDFC Bank for the Quarter ended
June 30, 2017
The Board of Directors of HDFC Bank Limited approved the 2017 were Rs. 1,558.8 crore (consisting of specific loan loss
Bank's (Indian GAAP) results for the quarter ended June 30, provisions Rs. 1,343.2 crore, general provisions Rs. 206.3
2017, at their meeting held in Mumbai on Monday, July 24, crore andother provisions Rs. 9.3crore) as against Rs. 866.7
2017. The accounts have been subjected to a 'Limited crore (consisting of specific loan loss provisions Rs. 832.3
Review' by the statutory auditors of the Bank. crore, general provisions of Rs. 1.1 crore andother
provisions Rs. 33.3 crore) for the corresponding
Financial Results: quarter ended June 30, 2016. General provisions
include additional provisions of Rs. 121.1 crore for standard
Profit & Loss Account: Quarter ended June 30, advances to stressed sectors.Profit before tax was up 20.4%
2017 to Rs. 5,961.2 crore.After providing Rs. 2,067.3 crore for
The Bank's total income for the quarter ended June 30, taxation, the Bank earned a net profit of Rs. 3,893.8
2017 was Rs. 22,185.4crore, up from Rs. 19,322.6 crore for crore, an increase of 20.2% over the quarter ended
the quarter ended June 30, 2016. Net revenues (net interest June 30, 2016.
income plus other income) increased by 21.7% to Rs.
12,887.4 crore for the quarter ended June 30, 2017 from Balance Sheet: As of June 30, 2017
Rs. 10,588.1 croreinthe corresponding quarter of the Total balance sheet size as of June 30, 2017 was Rs. 895,653
previous year. Net interest income (interest earned less crore as against Rs. 755,631 crore as of June 30, 2016.
interest expended) for the quarter ended June 30, 2017
grew by 20.4% to Rs. 9,370.7 crore, from Rs. 7,781.4 crore Total deposits as of June 30, 2017 were Rs. 671,376 crore,
for the quarter ended June 30, 2016, driven by average loan an increase of 17.0% over June 30, 2016. CASA deposits saw
growth of 20.7%and a core net interest margin for the healthy growth with savings account deposits growing by
quarter of 4.4%. 26.5% over the previous year to reach Rs. 193,105 crore
and current account deposits growing by 34.1% over the
Other income (non-interest revenue) at Rs. 3,516.7 crore was previous year to reach Rs. 102,030 crore. Time deposits
27.3% of the net revenues for the quarter ended June 30, were at Rs. 376,241 crore, an increase of 9.1% over the
2017 and grew by 25.3% over Rs. 2,806.6 crore in the previous year, resulting in CASA deposits comprising 44.0%
corresponding quarter ended June 30, 2016. The four of total deposits as on June 30, 2017.
components of other income for the quarter ended June 30,
2017 were fees & commissions of Rs. 2,578.1 crore (Rs. Advances as of June 30, 2017 were Rs. 580,976 crore, an
1,977.9 crore in the corresponding quarter of the previous increase of 23.4% over June 30, 2016. As per regulatory
year), foreign exchange & derivatives revenue of Rs. 296.8 [Basel 2] segment classification, retail loans grew by 21.9%
crore (Rs. 314.5crore for the corresponding quarter of the and wholesale loans grew by 25.5% (as per internal business
previous year), gain on revaluation / sale of investments of classification,the growth was 19.2% and 33.8%
Rs. 331.4 crore (Rs. 276.9 crore in the corresponding quarter respectively). The loan mix between retail: wholesale was
of the previous year) and miscellaneous income,including 54:46.
recoveries and dividend, of Rs. 310.3 crore (Rs. 237.4 crore
for the corresponding quarter of the previous year).
Capital Adequacy:
During the quarter ended June 30, 2017, the Bank raised
Operating expenses for the quarter ended June 30, 2017 Additional Tier 1 Capital Bonds of Rs. 8,000 crore and Tier
were Rs. 5,367.5 crore, an increase of 12.6% over Rs. 2 Bonds of Rs. 2,000 crore.The Bank's total Capital Adequacy
4,768.9 crore during the corresponding quarter of the Ratio (CAR) as per Basel III guidelines was at 15.6% as on
previous year. The core cost-to-income ratio for the quarter June 30, 2017 (15.5% as on June 30, 2016) as against a
was at 42.7% as against 46.2% for the corresponding regulatory requirement of 10.25% including Capital
quarter ended June 30, 2016. Conservation Buffer of 1.25%. Tier-I CAR was at 13.6% as
Provisions and contingencies for the quarter ended June 30, of June 30, 2017 compared to 13.3% as onJune 30, 2016.

PRESS RELEASE
Risk-weighted Assets were Rs. 690,370 crore (Rs. 551,676 as on June 30, 2017, as against 1.05% as on March 31, 2017,
crore as on June 30, 2016). and 1.04% as on June 30, 2016. During the quarter
endedJune 30, 2017, of the total increase in gross NPAs,
Network 60%pertained to the agricultural segment. Recoveries from
As of June 30, 2017, the Bank's distribution network was at agricultural advances were impacted during the quarter
4,727 branches and 12,220 ATM sacross 2,666 cities / towns byborrower expectations of farm loan waivers arising out of
as against 4,541 branches and 12,013 ATMs across 2,593 policy announcements in certain states. These loan waiver
cities / towns as of June 30, 2016. Of the total branches, policies are in the process of being finalised and implemented.
52% are in semi-urban and rural areas. As a prudent measure, the Bank has enhanced specific
provision coverage for its non-performing agricultural
Asset Quality advances. Net non-performing assets were at 0.4% of net
Gross non-performing assets were at 1.24% of gross advances advances as on June 30, 2017.
QNB Group Commences Operations in India

QNB Group, the largest financial institution in the Middle East and Africa, has recently commenced operations in the
city of Mumbai, the economic capital of the Republic of India. The start of the Group's operations in the Republic of
India comes in support of its vision to become a leading bank in the Middle East, Africa, and Southeast Asia by 2020, in
addition to establishing a foothold in highly competitive markets.
Through its new branch in India, the Group offers a full spectrum of banking products and services.The Group also offers
its rich experience in wealth management, investment portfolios, project finance, and the provision of smart banking
solutions and a range of innovative products and services designed to suit the requirements of the Indian market.
The Indian economy is the seventh largest in the world with an annual GDP of USD 2.3 tn in 2016. It is the world's
second most populated country and the fastest growing major economy. It has expanding trade and population ties with
Qatar and the Middle East region more broadly. In particular, India is the third largest importer of liquefied natural gas
from Qatar.
It is worth mentioning that QNB recently topped The Banker magazine's and ranked Best Bank in the Middle East and
Africa by Tier 1 capital, as well as ranking 82nd among the Top 1000 World Banks. QNB Group's total assets reached USD
211 billion as at 30 June 2017, the highest ever achieved by the Group, and net profit for the six months ended 30 June
2017 reached USD 1.8 billion.
QNB Group's presence through its subsidiaries and associate companies extends to more than 31 countries across three
continents providing a comprehensive range of advanced products and services. The total number of employees is more
than 27,900 operating through more than 1,250 locations serving more than 21 million customers, with an ATM network
of more than 4,300 machines.
Bank of Maharashtra under PCA

In view of the high net NPAs (11.76%) as of 31.03.2017, it has been decided by RBI to put Bank of Maharashtra under
Prompt Corrective Action (PCA), which is one of the supervisory tools to ensure sound financial health of the Bank. Its
objective is to facilitate the Bank to take corrective measures to improve its health. The PCA framework is NOT intended
to constrain or restrict Bank's normal operations for the general public. On the contrary it is intended to encourage
banks to conserve capital and augment their operational efficiency.
During 2016-17 Bank has maintained capital adequacy of 11.18%, improved CASA share from 36.6% to 44.89%, posted
healthy rise of 47% in non-interest Income and recorded higher NPA recoveries. Shri R. P Marathe, MD & CEO of the
Bank said that the PCA will in no way impact Bank's existing business operations and assured that the Bank will rebounce
with renewed vigour and vitality.

ARTICLE
The future of digital payments with contactless

mobility
F
or our dream to build a digital world to come alive, the shifts in consumer behaviour. While there are enough
wireless technologies have a critical role to play. use cases which have been successfully implemented type/
While the first step towards that dream is availabil- touch based methods, contactless/gesture based solutions
ity, "speed & convenience" at which you can ac- are now fast emerging.
cess your worldwill constitute the next level of
innovation.Applications and devices are now interconnected The contactless payments have been made possible simply
and allows for accessibility and portability, but the real because there is now the
differentiator will be to provide what you require at your fin- ability to securely manage
gertip without blinking an eyelid. Let us look at the key fac- transactions through a
tors driving this digital adoption in the payments industry. smart chip that contains on-
board crypto processors
Convenience which activate during the
From touch sensitive technologies, the world is now experi- transaction through low power RF signals.People are able
menting with waving, gesturing or just simple eye-tracking to conduct the transactions in offline mode and later
or mood sensing. Touch is now hygiene.All this cannot be synchronise with host systems in batches.This is an ideal mix
achieved without the support of an underlying wireless tech- of low cost module andspeedy distributed processing with
nology essentially using radio frequency (RF), low cost and the convenience of gesture based input.
low power electronics.
Every technology leader in the digital space whether it is
the internet, mobile or software segment has experimented
Speed
with contactless payments;However,majority of implemen-
Interconnection is critical but this need can also be
tations are either not interoperable or require a 24x7 con-
ahindrancefor efficient completion of an important task.
nected ecosystem which becomes a roadblock in the suc-
Technology has moved into a combination of both thick and
cess meter hitting high for these initiatives.
thin clients, best characterised by the mobile application
ecosystem.Offline computing along with synchronisation
To be truly accepted, these following measures will benefit:
capabilities allow you to achieve speedier transactions with-
X Accessibility and interoperability: Accepted anywhere
out losing out on interoperability.
and offers multiple uses
X Speed of transaction: local secure processing with batch
Pay and Go
synchronisation
Payments industry is no different and is swiftly embracing
X Convenience of transaction: Clutter free smooth ges-
About the author ture, like tap and wave
Nalin Bansal
Vice President and Business Head
National Common Mobility Card
RuPay Contactless and EMV The Reserve Bank of India (the Bank) took the first step
National Payments Corporation of India towards encouraging reforms in the payments and settle-
(NPCI)
ments system in the country to promote contactless pay-

ARTICLE
ment by waving off the need for two factor authentication transactions these cards can also be used to perform offline
for transactions less than Rs 2,000 through cards. Multiple contactless(Quick Tap) transactions for speed and conve-
players have introduced their version of contactless pay- nience. The key features of RuPay Contactless are as under:
ments but the most promising would be the one where the 1) It supports online (contact & contactless) & offline
customer can make a payment through a simple gesture (contactless only) transactions
within a fraction of second (Quick Tap). 2) There are dedicated storage areas for merchants/op-
erators to offer services through the same card along
Ministry of Urban Development sensed these technological with a stored value (Card balance) which is used for
advances and felt it was the right time to offer standards offline contactless transactions
which operators can adopt and offer ubiquitous payments
3) It contains the provision of topping up the stored value
across the country.They released the NCMC guidelines
(based on open loop RuPay Contactless specifications) with (card balance) with Cash at customer service point at
the vision to have a National common mobility card that will the option of the issuing entity.
operate across all open loop payment infrastructure. 4) It can be used for transit, toll, parking, merchant pay-
ments & all such similar low value payments
5) RuPay Contactless card can be issued as debit, credit
or prepaid with stored value (Card balance)
6) Since the transaction is permitted against available
balance, there is no opportunity of any loss to the bank.
Recently three projects went live in the country based on

NCMC contactless guidelines. They areBengaluru Metropoli-
tan Transport Corporation, Kochi Metro Rail Limited and
Ahmedabad Smart City. These projects have highlighted
successful deployment of open loop payment systems in the
country each in a specific area of consumer utility i.e. Metro,
Bus and Citizen Services keeping the objective of cost, con-
venience and speed intact. The transformation has only just
RuPay Contactless specification is a dual interface specifica- started and the future holds some exciting developments.
tion which can be used to issue dual interface card. Apart
from the standard online contactPOS, ATM and E-commerce The views expressed by the author are personal.
15 names recommended for ED in PSBs: Banks Board Bureau

Recommendation of 15 names for the post of Executive Directors in various Public Sector Banks has been made to the
Government. Following are the names recommended by the Banks Board Bureau: H Bhaskar; Chaitanya Gayatri
Chinthapalli; Govind N Dongre; Kul Bhushan Jain; Rajesh Jindal; Krishnan S; Atul Kumar; Birupaksha Mishra; Debashish
Mukherjee; Lingam Venkata Prabhakar; Murali Ramaswami; Matam Venkata Rao; Bajrang Singh Shekhawat; Ajay Kumar
Srivastava; and Rajesh Kumar Yaduvanshi.
Citi India net profits up by 12%

During 2016-17, Rs. 2,34,181 crore of loans were disbursed by Citi India, including those booked in offshore locations,
representing a 13.4 per cent growth over the previous year. It reported 12.15% increase in net profit for the year
ended March 31, 2017 at Rs. 3,626 crore. "Our results are a consequence of our execution focus, judicious expense
controls and sound risk management. Citi in India is well placed and committed to supporting our clients' investments
and growth," Parekh said in a statement.

INTERVIEW
Insurance, we have been encouraging this with slew of costs along with increasing incidence of new and fatal
initiatives like #TweetInsurance, Motor OTS, Travel Ezee, diseases. We have been participating in government
etc. which makes policy purchase more simpler and easier schemes and introducing policies that not only cover
for customers. treatment through modern medicines but also traditional
treatment like Ayurveda, Homeopathy, Unani, etc. Thus,
How has been your performance in current fiscal providing them with a holistic health cover.
and what business you are eyeing in the next
fiscal? Any other development you would like to share.
Bajaj Allianz General Insurance achieved growth at 30.9% Efficiencies in customer service has to move up, reach has
in FY 16-17 while industry grew at 29.7%. We have been to grow, distribution has to be strong and it has to multiply
the most profitable private insurer with a Profit after Tax at a very fast rate.
(PAT) of Rs. 728 crore with the highest solvency ratio of 261% Y We plan to make every process digital
and combined ratio of 96.8%. Y Empower our customers and channel partners with low
cost solutions.
Rising awareness levels coupled with increased disposable Y To be present in the remotest corner of the country by
income for Indians has led more people to buy health and providing customers with customized insurance
home insurance. In the next few years we will see these two solutions that meet their requirement.
lines of business to be a significant contributor in our
Y Provide the Indian consumers with innovative and easy
insurance business. The company is committed to work
to understand insurance products, thereby improving
towards creating more awareness on these subjects. We are
the penetration for personal lines of business like Health
actively reaching out to more tier 2 and 3 towns, and also
and Home Insurance in the country.
working on creating innovative and need based products in
home and health space. Y Create platforms for our customers and channel
partners so that they can be in touch with us on a real
There is heated competition in Health and Motor time basis and can enjoy ease of transaction
Segment. Your views about potentiality of the Y Bring in more efficiencies in our claim settlement
segment and focus of your company. procedures to further reduce TAT's on claim settlement
Motor Insurance has always been one of the key drivers for for all lines of businesses
our company and for the industry as well since it is Y To improve penetration of personal lines of business like
mandatory to have a motor insurance as per government health and home insurance
regulation. Although we have been working towards making
the process simpler for our customers by leveraging
About Tapan Singhel
technology to enhance customer experience. Our
DriveSmart feature uses telematics and is based on pay as A celebrated voice in the BFSI sector, he has over two and
you drive concept. It monitors and gives real time feedback a half decades of rich experience in the insurance indus-
to our customers on their driving habits. We have recently try. He has been with Bajaj Allianz since its inception in
launched Motor OTS where the customer can self-inspect 2001 and was an integral part of the team starting up the
the claim through our Insurance Wallet app and the claim insurance business in the retail market. Mr. Singhel has
is settled within 20 minutes if all the relevant documents been involved in various international projects like setting
are shared. up of retail business for Allianz in China and Bancassurance
development in the Asia-Pacific region. Based out of the
Health insurance is one of the most prominent segments and
company’s headquarters in Pune, he leads the company’s
is expected to grow significantly. The major triggers for
overall growth strategy.
customers to buy health insurance are rising healthcare

COVER STORY
NATION'S DIGITAL
INFRASTRUCTURE
BUILT BY NPCI
Introduction: ers. This connectivity is made possible through ATM Switch.

This is called as interoperability. This is result of creation of
The developments in Information and Computer Technology
common digital infrastructure, which is useable by every
(ICT) have brought number of innovations as digital banking
member bank. National Payments Corporation of India
products. These products provide the convenience in access-
(NPCI) has been building this digital infrastructure.
ing banking needs of the customers, anywhere and anytime.
It makes the banking services available to mass at the low-
NPCI is a body promoted by RBI and has presently ten core
est cost. Each bank is developing its own digital products to
promoter banks (State Bank of India, Punjab National Bank,
serve the customers and to acquire new customers.
Canara Bank, Bank of Baroda, Union bank of India, Bank of
India, ICICI Bank, HDFC Bank, Citibank and HSBC).NPCI, an
As of February 2017 Banks have deployed 2,07,402 ATMs
umbrella institution for all the Retail Payment Systems in
and 22,24,977 Point of Sale (PoS) terminals. To make an ATM
the country was incorporated in 2008.
of a specific bank, accessible to any bank customer there is
a need for establishing connectivity among the bank serv-
The core objective was to consolidate and integrate the
multiple systems with varying service levels into nation-wide
About the author uniform and standard business process for all retail payment
systems. The other objective was to facilitate an affordable
P Dhanasekaran payment mechanism to benefit the common man across the
Msc (Agri), CAIIB country and help financial inclusion. NPCI is aimed to oper-
Chief Manager (Faculty)
ate for the benefit of all the member banks and their cus-
Union Bank of India Staff College
Bengaluru tomers. NPCI has developed/ operating the following digi-
tal infrastructure:

ARTICLE
National Financial Switch- NFS: "RuPay", the word itself has a sense of nationality in it.
"RuPay" is the coinage of two terms Rupee and Payment.
In August 2003, IDRBT has developed NFS to link together
"RuPay" has the benefits of low cost and affordability, cus-
the country's ATMs
tomized product offering, inter-operability between pay-
in a single network.
ment channels and products & protection of information
The NFS consisted of
related to Indian Consumers.
an inter-ATM switch
and an e-commerce payment gateway.With the untiring
"RuPay" cards were launched in March 2011. "RuPay" cards
efforts of Indian Banker's Association (IBA), NFS was taken
are issued as debit card, credit card & prepaid cards. In
over by NPCI on 14 December 2009. This NFS facilitates the
PMJDY accounts as of Nov2016, 19.36 crore "RuPay" cards
seamless ATM transactions.
issued. NPCI has already achieved a milestone of 300 mil-
lion "RuPay" cards in circulation. Number of consumers us-
IMPS: ing "RuPay" cards on PoS and e-comm are also growing
IMPS offers an instant, 24X7, interbank electronic fund substantially.
transfer service
through mobile
BharatQR:
phones.IMPS is an
National Payments Corp. of India through RuPay cards along
emphatic tool to
with MasterCard, Visa and Ameri-
transfer money instantly within banks across India through
can Express-under instructions
mobile, internet and ATM which is not only safe but also
from the Reserve Bank of India
economical both in financial and non financial
(RBI), could jointly develop
perspectives.This facility is provided by NPCI through its ex-
BharatQR, a Quick Response Code
isting NFS switch.The Banks approved by RBI for mobile
to enable digital payments with-
banking service are allowed by NPCI to participate in IMPS.
out card swiping machines/ Point
of Sale (PoS).
IMPS enables bank customers to use mobile instruments as
a channel for accessing their bank accounts and to remit
funds.It makes payment simpler just with the mobile num- USSD:
ber of the beneficiary. It builds the foundation for a full range It is a common technology platform developed by NPCI which
of mobile based Banking services. allows the Banks
and TSPs (Telecom
RuPay: Service Providers)
The vision of NPCI being able to provide citizens of our coun- to seamlessly integrate with each other to provide banking
try anytime, any- services to the customers at large over the mobile phones
where payment (basic as well as Smartphone).
services which are
simple, easy to One of the innovative payment service launched by NPCI
use, safe, and secure, fast and also cost effective. NPCI aims includes *99# service, which works on Unstructured Supple-
to operate for the benefit of all the member banks and the mentary Service Data (USSD) channel. This service was
common man at large. launched envisioning the potential of Mobile Banking and
the need for immediate low value remittances which will
RuPay, a new card payment scheme launched by the Na- help in financial deepening and inclusion of underbanked
tional Payments Corporation of India (NPCI), has been con- society in the mainstream banking services. *99# service
ceived to fulfill RBI's vision to offer a domestic, open-loop, was dedicated to the nation by the Honorable Prime Minis-
multilateral system which allows all Indian banks and finan- ter of India Shri Narendra Modi on 28th August 2014 as part
cial institutions in India to participate in electronic payments. of Pradhan Mantri Jan Dhan Yojana (PMJDY).

ARTICLE
*99# service has been launched to take the banking services New Delhi on 01.07.2009. Subsequently RBI entrusted CTS
to every common man across the country. Banking custom- operations to NPCI since 10.12.2013. Now Grid-based CTS
ers can avail this service by dialing *99#, a "Common num- in New Delhi, Mumbai & Chennai grids are managed by
ber across all Telecom Service Providers (TSPs)" on their NPCI, which takes care of the processing of cheques among
mobile phone and transact through an interactive menu different banks.
displayed on the mobile screen. Key services offered under
*99# service include, interbank account to account fund National Automated Clearing House
transfer, balance enquiry, mini statement besides host of
other services. (NACH):
National Automated Clearing House (NACH) is a centralised
*99# service is currently offered by 43 leading banks & all system, launched with
GSM service providers and can be accessed in 12 different an aim to consolidate
languages including Hindi & English. *99# service is a unique multiple ECS systems
interoperable direct to consumer service that brings to- running across the
gether the diverse ecosystem partners such as Banks & TSPs. country and provides a framework for the harmonization of
standard & practices and removes local barriers/inhibitors.
Features of *99# Service: NACH system provides a national footprint covers the en-
tire core banking enabled bank branches spread across the
Y Works without Internet - Uses voice connectivity
geography of the country irrespective of the location of the
Y Round the clock availability (works even on holidays) bank branch.
Y Accessible through a common code *99# across all TSPs
NPCI has implemented "National Automated Clearing House
Y Works across all GSM service providers and mobile hand-
(NACH)" for Banks, Financial Institutions, Corporates and
sets
Government a web based solution to facilitate interbank,
Y Additional channel for banking and key catalyst for fi- high volume, electronic transactions which are repetitive
nancial inclusion and periodic in nature. NACH System can be used for mak-
Y Service also offered through BC Micro ATMs to serve ing bulk transactions towards distribution of subsidies, divi-
the rural populace dends, interest, salary, pension etc. and also for bulk trans-
actions towards collection of payments pertaining to tele-
*99*99# is a USSD based value added service from NPCI that phone, electricity, water, loans, investments in mutual funds,
facilitates the customers to check the status of his/her Aadhaar insurance premium etc.
number seeding/linking in the bank account. The service works
across all GSM service providers and brings together the diverse With the implementation of NACH system, NPCI intends to
ecosystem partners such as Banks & TSPs. provide a single set of rules (operating and business), open
standards and best industry practices for electronic trans-
Considering that various subsides and benefits of the State actions which are common across all the Participants, Ser-
and Central Government schemes under the Direct Benefit vice Providers and Users etc. NACH system also supports
Transfer (DBT) programme are being doled out on the basis Financial Inclusion measures initiated by Government, Gov-
of Aadhaar number of the beneficiary this service has proved ernment Agencies and Banks by providing support to
to be a convenient mechanism for the users to ascertain his/ Aadhaar based transactions.
her Aadhaar seeding/linking status in the bank account. The NACH system facilitates the member banks to design
their own products and also addresses specific needs of the
Cheque Truncation System (CTS): banks & corporates including a refined Mandate Manage-
CTS Clearing was implement System (MMS) and an online Dispute Management
mented by RBI in the Na- System (DMS) coupled with strong information exchange and
tional Capital Region (NCR), customised MIS capabilities.

ARTICLE
The NACH system provides a robust, secure and scalable Aadhaar Pay:
platform to the participants with both transaction and file Aadhaar-enabled payment system, or Aadhaar Pay, is an app
based transaction processing capabilities. It has best in class for merchants which will enable them to receive payments
security features, cost efficiency & payment performance through biometric authentication of the customer, provided
(STP) coupled with multi-level data validation facility acces- their bank accounts are linked to their Aadhaar number. The
sible to all participants across the country. biggest advantage through this method of payment is that
the customer does not need a credit or debit card, or even
Aadhaar Payment Bridge System (APBS): a smartphone.
NACH's Aadhaar Payment Bridge (APB) System, developed
A pilot was conducted in fair price shops in Andhra Pradesh
by NPCI has been helping the
where shopkeepers are accepting payments from PDS ben-
Government and Government
eficiaries to test the systems. The idea takes off from the
Agencies in making the Direct
existing Aadhaar-enabled payment system (AEPS) used by
Benefit Transfer scheme a suc-
bank business correspondents (BCs) in rural areas to disburse
cess. APB System has been successfully channelizing the and accept cash, using micro ATMs.
Government subsidies and benefits to the intended benefi-
ciaries using the Aadhaar numbers. The APB System links Unified Payments Interface (UPI):
the Government Departments and their sponsor banks on
Unified Payments Interface (UPI) is a system that powers
one side and beneficiary banks and beneficiary on the other
multiple bank accounts
hand.
into a single mobile ap-
plication (of any partici-
Aadhaar Enabled Payment System pating bank), merging
(AEPS): several banking features, seamless fund routing & merchant
payments into one hood. It also caters to the "Peer to Peer"
AEPS is a bank led model which allows online interoperable
collect request which can be scheduled and paid as per re-
financial inclusion
quirement and convenience.
transaction at PoS
(MicroATM) through
the Business corre-
UPI- Features:
Y Immediate money transfer through mobile device round
spondent of any bank using the Aadhaar authentication.
the clock 24*7 and 365 days.
The four Aadhaar enabled basic types of bank- Y Single mobile application for accessing different bank
accounts
ing transactions are as follows:-
Y Balance Enquiry Y Single Click 2 Factor Authentication - Aligned with the
Regulatory guidelines, yet provides for a very strong fea-
Y Cash Withdrawal
ture of seamless single click payment.
Y Cash Deposit
Y Virtual address of the customer for Pull & Push provides
Y Aadhaar to Aadhaar Funds Transfer for incremental security with the customer not required
to enter the details such as Card no, Account number
The only inputs required for a customer to do a IFSC etc.
transaction under this scenario are:- Y Bill Sharing with friends.
Y IIN (Identifying the Bank to which the customer is asso- Y Best answer to Cash on Delivery hassle, running to an
ciated) ATM or rendering exact amount.
Y Aadhaar Number Y Merchant Payment with Single Application or In-App
Y Fingerprint captured during their enrollment Payments.

ARTICLE
Y Scheduling PUSH and PULL Payments for various pur- check Balance of their linked Bank Account by clicking
poses. "REQUEST BALANCE".
Y Utility Bill Payments, Over the Counter Payments,
Barcode (Scan and Pay) based payments. Bharat Bill Payment System (BBPS):
Y Donations, Collections, Disbursements Scalable. Bill payment is a major component of the retail payment
transactions in
Y Raising Complaint from Mobile App directly.
India, and is
characterized
Bharat Interface for Money (BHIM): by the presence
Bharat Interface for Money (BHIM) is an app that lets us- of large number of billers, who provide a variety of payment
ers make simple, options to their customers. According to information avail-
easy and quick payable on the RBI website, the top 20 cities are generating
ment transactions INR 6,223 billion in bill payments every year - and over 70%
using Unified Pay- of these transactions are still predominantly being carried
ments Interface (UPI). Users can easily make direct bank to out by cash or cheques. In addition, the present bill payment
bank payments instantly and collect money using just Mo- infrastructure in India is largely biller-specific in terms of
bile number or Payment address. Service available is as modes of payment accepted and channels supported, and
follows: is still to support an 'anytime anywhere' payment option to
1. Send Money - Using this option, users can send money customers.
to anyone using Virtual Payment Address (VPA), Ac-
count no & IFSC and QR Scan. These opportunities have been identified by various organi-
2. Request Money - Using this option, users can collect zations that have aggregated various billers to provide a
money by entering Virtual Payment Address (VPA). Ad- single platform to make all these payments. As the next
ditionally through BHIM App, one can also transfer logical step in the evolution of the bill payment ecosystem,
money using Mobile No. (Mobile No should be registered there is a need for an integrated bill payment system in the
with BHIM or *99# and account should be linked). country that offers interoperable and accessible bill payment
services to customers through a network of agents, allows
3. Scan & Pay- Using this option, users can pay by scan-
multiple payment modes and provides instant confirmation
ning the QR code through Scan & Pay & generate their
of payments.
QR (Quick Response) code.
4. Transactions - Using this option, users can check trans- The Bharat Bill Payment System (BBPS) will function as a
action history and also pending UPI collect requests (if tiered structure for operating the bill payment system in the
any) and approve or reject. Users can raise complaint country under a single brand image. National Payments
for the declined transactions by clicking on Report is- Corporation of India (NPCI) will function as the authorized
sue in transactions. Bharat Bill Payment Central Unit (BBPCU), which will be
responsible for setting business standards, rules and proce-
5. Profile - Using this option, users can view the static QR
dures for technical and business requirements for all the
code and Payment addresses created. Users can also
participants.
share the QR code through various messenger applica-
tions like WhatsApp, Email etc. available on phone and NPCI, as the BBPCU, will also undertake clearing and settle-
can also download the QR code. ment activities related to transactions routed through BBPS.
6. Bank Account - Using this Option, users can see the bank Existing bill aggregators and banks are envisaged to work
account linked with their BHIM App and its PIN status. as Operating Units to provide an interoperable bill payment
Users can set/change their UPI PIN. Users can also system irrespective of which unit has on-boarded a particu-
change the bank account linked with BHIM App by click- lar biller. Payments may be made through the BBPS using
ing Change account provided in Menu. Also they can cash, transfer cheques and electronic modes.

ARTICLE
The BBPCU will not own any transaction financially from a operable transactions among the different banks. NPCI has
payment system perspective, working only as a medium to developed various products to play an instrumental role in
connect multiple billers and agents through various Oper- moving cash-intensive society to less-cash one.
ating Units. In addition to setting standards and ensuring
transaction security for the entire ecosystem, it will also This year NPCI has planned to launch National Common
ensure that queries, requests and complaints raised by cus- Mobility Card (NCMC) which can be used in all metros, buses
tomers are monitored and resolved on time. The BBPS will and suburban trains in an interoperable way. NPCI specifi-
act as an independent brand and is expected to increase cations on NCMC have been adopted for BMTC bus rides in
the confidence level of the customers with respect to trans- Bengaluru. Similarly, there are plans to use Tag based toll
action convenience, security, reliability, accessibility and gate payment (ETC-Electronic Toll Collection), which will
affordability. NPCI has already launched Pilot Project for enable the vehicles to move freely through the toll gates.
BBPS.
The digital infrastructure and the products created by NPCI
Interoperable Bunch Note Acceptor facilitated the process of demonetization by Govt. of India.
Cashless transactions through Unstructured Supplementary
(BNA)/ Cash Recycler: Service Data (USSD) for GSM phones, e-wallets, UPI and
The Banks have deployed BNAs at branches, these machines BHIM for smart phones and debit, credit and prepaid cards
at present cater only to the specific banks own customers. for PoS machines will facilitate the electronic payments by
Now NPCI has offered 'Interoperable Cash Deposit (ICD)' every section of society.
service in NFS (National Financial Switch). This enables the
banks to deploy the BNA/ Cash Recycler with ICD feature, NPCI is developing a metric to assess the extent to which
which can accept the cash in the account of any bank cus- electronic payments have gone universal in India and en-
tomer. Union Bank of India is the first bank to introduce sures every Indian has access to electronic payments in se-
Interoperable Cash Deposit Machine. cure, convenient and affordable way.
Conclusion: Reference:
NPCI has created digital infrastructure to facilitate inter- www.npci.org.in

ARTICLE
LEVY &
COLLECTION
OF TAX
I
n this issue we will discuss certain important aspects will be liable to pay tax, provided items of supply are not
of Levy and Collection of Tax under GST Regime. The exempted ones. The type of tax (i,e CGST, SGST or IGST)
issues like Liability under GST, Registration process, will depend upon the nature of supply viz. the inter-State
GSTN, Roles & functions of GST Council, a bird's eye supplies or the intra-State supplies.
view of GST Rates for goods are discussed here. Other as-
pects such as Rates in respect of services, Items exempted The intra-State supplies will be liable to both Central Goods
from GST, rate structure in brief, impact of rates on various and Services Tax (CGST) and State Goods and Services Tax
items of goods or services, legal aspects of levy and collec- (SGST) while the inter-State supplies will be liable to Inte-
tion will be discussed in subsequent issues. Here matters grated Goods and Services Tax (IGST).
are discussions are made in the form of FAQs for quick ref-
erence and better understanding of the readers. In the legal terms, "CGST" means the tax levied under the
Central Goods and Services Tax Act 2016, "SGST" means the
1. Who is liable to GST? tax levied under the State Goods and Services Tax Act, 2016
and "IGST" means the tax levied under the Integrated Goods
As per GST laws every supply of goods or services or both
and Services Tax Act, 2016.
About the author The CGST and the SGST would be levied at rates to be jointly
decided by the Centre Government and State Government
CA. R C Guria on the recommendations of the GST Council. CGST and SGST
M.Com, FCA, FIII (i,e Central Goods and Services Tax and State Goods and
R. C. Guria & Associates
Services Tax shall be levied on all intra-State supplies of
Chartered Accountants
goods and/or services on the value determined under sec-
tion 15 of CGST Act.

ARTICLE
2. How and when will you get your signed and developed by the Ministry of Finance, Govt. of
India to establish a uniform interface for the tax payer and
business registered under GST law? a common and shared IT infrastructure between the Cen-
You must know that GST registration is mandatory for any tre and States. The GSTN portal has been taken as a trusted
business when its aggregate supply of goods or service or National Information Utility (NIU) which provides reliable,
both exceeds Rs 20-lakh (Rs 10 lakh for NE States). The said efficient and robust IT Backbone for the smooth function-
aggregate turnover (supply) is the basic consideration and ing of the Goods & Services Tax system.
count for mandatory registration under GST. In other words
the aggregate turnover shall determine who needs to be The system is expected to process 3.5 billion invoices every
registered under GSTN (Goods and Service Tax Network). month, with the country's 8 million taxpayers required to
file about 37 tax returns every year in the GST Regime.
So if you have not registered your business under GST or if
you are a new business without having a VAT or service tax The necessary training has been conducted by CBEC in re-
or excise registration, you must get your business registered spect of GST Registration, Returns and Payment Modules
as per law and within the time limit prescribed for it. developed by GSTN GSTN has also conducted a pilot train-
ing on GST System Software, where about 3,200 taxpayers
3. What is the status of GST Registra- drawn from each state/UT and Centre have participated.
tion as on 20th May? 5. Who decides GST Rates, Rules, Re-

GST Registration status may give you certain idea about the
need of registration. AS per Revenue department report, funds, Levy and collection?
about 60.5-lakh entities have been registered in the GSTN GST Rates are finalized by the Central Government and the
(Goods and Services Tax Network) system up to 30th April. State Governments on the basis of recommendation of GST
The process of registration of the taxpayers in the GSTN Council. As per Article 279A (1) of the amended Constitu-
portal was suspended on April 30. As notified by the Gov- tion, the GST Council has been constituted by the President
ernment the registration process would re-open for 15 days of India within 60 days of the commencement of Article
from June 1, 2017 for remaining taxpayers to be enrolled 279A. As per Article 279A of the amended Constitution, the
under GST. The government intends to roll out GST (the GST Council is a joint forum of the Centre and the States.
Goods and Services Tax) w.e.f 1st July 2017.
The Parliament in April passed four bills to implement the
tax, while the GST Council has finalized rules and procedures
4. What is GSTN and how does work? regarding tax refund, registration; invoice debit and credit,
Let me mention briefly what the GSTN is meant for. The input-tax credit, valuation, transitional provisions and com-
GSTN is a unique and complex IT initiative and portal de- position for final approval by the Government and neces-
sary notification thereof. GST rates for Levy and collection
are recommended by GST Council. Importantly GST Coun-
cil consists of a) Union Finance Minister- Chairperson, b) The
Union Minister of State, in-charge of Revenue of finance-
Member, c) The Minister In-charge of finance or taxation
or any other Minister nominated by each State Government
Members.
6. What are the roles and objectives of

GST Council?
The mechanism of GST Council would ensure harmonization
on different aspects of GST between the Centre and the

ARTICLE
rate-structure so far finalized by GST

Council (up to 19-5-17)?
The fitment of rates of goods was discussed today during
the 14th GST Council meeting held at Srinagar, Jammu &
Kashmir for two days -18th & 19th May 2017. The Council
has broadly approved the GST rates for goods at nil rate,
5%, 12%, 18% and 28% to be levied on certain goods. Re-
portedly the GST Council on 18-5-2017 finalised tax rates on
80-90% of goods and services under the above-mentioned
four-slab structure fitted in 5, 12, 18 or 28% brackets with
essential items of daily use being kept in the lowest bracket
of 5%.
States as well as among States. It has been specifically pro- In the said meeting the Council headed by Union finance
vided that the GST Council, in its discharge of various func- minister and comprising representatives of all states, also
tions, would be guided by the need for a harmonized struc- approved rules for the Goods and Services Tax (GST) regime
ture of GST and for the development of a harmonized na- that is scheduled to kick in from 1 July. The fitments, as
tional market for goods and services. The GST Council is to observed by the GST Council, have been done in a way that
establish a mechanism to adjudicate disputes arising out of there is no increase in tax incidence. So rates close to the
its recommendation or implementation thereof. The Coun- present incidence of excise duty plus VAT or service tax has
cil has so far made recommendations to the Union and the been considered to be the rate under the GST.
States on important issues related to GST, like
X GST rates including the floor rates with bands, special
8. How Goods and commodities have
rates for raising additional resources during natural ca-
lamities/disasters or RNR been fitted under various GST Rate
X The goods and services that may be exempted from Slabs by the Council?
GST. For the purpose of deciding GST Rate Structure, GST coun-
X Principles governing Place of Supply cil has council has prepared GST Rate Schedule classifying
and grouping for goods and commodities into about 98
X Threshold limits for chargeability
chapters. Goods and commodities specified in the schedule
X Rules for Registration of taxpayers have been fitted under rates slabs of 0, 5%, 12%, 18% and
X Rules for Payment of tax 28% to be levied on the on the supply of goods and com-
modities specified therein. Following is an example of distri-
X Rules for Filing of returns
bution of items and goods for the rates under various slabs
X Rules for Invoicing, the Goods and Services Tax (GST) Council on 18th May 21,
X Rules for Debit & Credit notes 2017 decided the tax rates for 1,211 items, a majority kept
at 18%. Pertinently the rates on gold and beedi remained
X Valuation of supply of goods / services
undecided.
X Input tax credit
X Transition provision for migration to GST regime The products which are used on a daily basis such as food
X Composition scheme rule grains, hair oil, soaps and toothpaste as also electricity will
cost less from July 1 when the GST is scheduled to be rolled
X Special provisions for certain States, etc. out.
7. What are the salient points of GST While the Council fitted all but six items in 5, 12, 18 or 28%

ARTICLE
tax brackets, cars will attract the top rate as also a cess in cent levy, as per the items list put on CBEC website.
the range of 1 to 15 percent on top of it. Small cars will be
charged 1 percent cess on top of 28 percent tax, mid-sized GST on coal has been brought down to 5% from the current
and luxury cars will attract cess of 15 percent on top of the tax incidence of 11.69%, thereby making electricity genera-
peak rate. tion cheaper.
It is also learnt that while meat, fresh vegetables, honey, Common use products like hair oil, soaps and toothpaste will
jaggery, prasadam, kumkum, bindi, pappad and contracep- be charged with a single national sales tax or GST of 18 per
tives have been exempt from GST levy, items like pizza bread, cent instead of present 22-24 per cent tax incidence through
sevaiya, condensed milk, frozen vegetables will attract 5 per- a combination of central and state government levies
9. A bird's eye view of GST Rates for goods - as decided GST Council-few instances
GST Rates for certain Goods as decided by GST Council on 18-5-2017 - A few items for reference
Exempted Items 5% GST 12% GST 18% GST 28% GST
Food grains, gur, milk, Sugar, Tea, coffee, Butter, Ghee, Hair oil, soap, Consumer durables,
eggs, curd, unpacked Coal, edible oil, milk mobiles, cashew, toothpaste, capital cars, cement,
paneer, natural honey, food for babies, almonds, sausages, goods, industrial, custard, chewing
fresh vegetables, atta, skimmed milk powder, fruit juice, packed intermediaries, gum, pan masala,
basan, maida, Prasad, condensed milk, coconut, water pasta corn flakes, perfume, shampoo,
vegetable oil, common packed paneer, agarbatti, biogas, jams, soups, ice makeup, fireworks,
salt, Fish Seeds, Betal newsprint, umbrella, medicinal grade cream, toilet and motorcycles, avgas,
canejaggery Brooms, Beet sugar, hydrogen facial tissues, iron hair cream, hair dyes,
natural graphite, chalk, peroxide, iodine & steel, fountain prepared explosives
natural calcium, pen, Indian katha,
phosphates, thorium Fluorine, chlorine,
oxalate bromine,
artificial waxes
10. What logic or idea has been followed that there is no increase (in burden) on any commodity. On
many commodities, there is a reduction in tax rates and tax-
by council in deciding rate structure? on-tax will also go away, lowering the burden. Justifying the
According to Sri Arun Jaitley, "the Centre and states have rates he also said that "One criterion in mind is that the
decided on rates for specific products which may lead to overall impact should not be inflationary ... We are banking
lower prices for a majority of products of mass consump- on GST checking evasion and buoyancy in collection".
tion. The idea is to ensure that the impact of GST is not
inflationary. Rates on 1,211 items were finalized by the GST In the next issue we will discuss other aspects of Levy and
council with 81% facing a levy of up to 18%". He also added Collection of Tax under GST Regime.
Rise in online banking transactions

As a result of price cut on electronic fund transfers, the State Bank of India reported rise in NEFT and RTGS transaction
by 75%, assisting nearly 5.27 crore customers. As per the revised charges, the NEFT fee
for funds transfer up to Rs 10,000 has been halved to Re 1 and to Rs 2 for transfers up to
Rs 1 lakh. For transfers between Rs 1 lakh and Rs 2 lakh, the NEFT charge will be cut to Rs
3 from Rs 12. For transfers above Rs 2 lakh, the fee has been fixed at Rs 5 against Rs 20
now. For RTGS transactions, the charges will be Rs 5 for transactions between Rs 2 lakh
and Rs 5 lakh against Rs 20 now. If a customer transfers more than Rs 5 lakh through this
route, the new fee will be Rs 10 against Rs 40 at present. Charges would be different if the funds are transferred in
bank branches through executives.

ARTICLE
DICGC
FOR WHOM THE
BELL RINGS?
Background: coverage to the deposits of customers of Banks and for which

the corporation charges certain amount of premium. The
DICGC i.e Deposits Insurance and Credit guarantee
insurance cover which initially was Rs.1500/-,upon various
corporation, a wholly owned subsidiary of Reserve bank of
amendments from time to time, enhanced to Rs.100000/-
India, came in to existence on 15th July 1978. DICGC which
since 1st May 1993. The insurance cover of 1.00 lac is per
comprises Deposit Insurance which had its genesis through
depositor for deposits held by him in the same capacity and
Deposit Insurance Act 1961, came into force on 1st Jan 1962
same right at all the branches of a bank taken together.
and the Credit Guarantee Corporation having its genesis
through Credit Guarantee Corporation of India Ltd., a public
limited company promoted by Reserve Bank of India on Eligible Deposits for Insurance Cover:
January 14 1971. With a view to integrate the functions of The Corporation insures all bank deposits,such as savings,
DIC and CGCI , both were merged in 1978 to form DICGC. fixed, current, recurring, etc.except the (i) deposits of foreign
governments; (ii) deposits of Central / State Governments;
Role of DICGC: (iii)deposits of State Land Development Banks withthe State
DIC i.e Deposit insurance corporation provides the insurance co-operative banks; (iv) inter-bank deposits; (v) deposits
received outside India, and (vi) deposits specifically
About the author exempted by the Corporation with the previous approval of
the Reserve Bank.
Sandeep Gupta
Chief Manager(Faculty) Banks Covered :
Union Bank of India Staff Training Center
All commercial banks including the branches of foreign banks
Lucknow (UP)
functioning in India, Local Area Banks (LABs) and Regional

ARTICLE
Rural Banks (RRBs) are covered under the Deposit Insurance branches of that bank put together in the same capacity
Scheme.(ii) All eligible co-operative banks as defined in and in the same right, standing as on the date of
Section 2(gg) of the DICGC Act are covered. At present, all cancellation of registration (i.e., the date of cancellation
co-operative banks are covered under the Scheme. of licence or order forwinding up or liquidation) subject
to set-off of his dues to the bank, if any [Section
Insurance Premium: 16(1)read with 16(3) of the DICGC Act]. However,the
The Corporation collects insurance premia from insured payment to each depositor is subject to the limit of the
banks for administration of the deposit insurance system. insurance coverage fixed from time to time.
The premia to be paid by the insured banks are computed (ii) Further When a scheme of compromise or arrangement
on the basis of their assessable deposits. or re-construction or amalgamation is sanctioned for a
bank by a competent authority, and the scheme does
Insured banks pay advance insurance premia to the
not entitle the depositors to get credit for the full
Corporation semi-annually within two months from the
amount of the deposits on the date on which the
beginning of each financial half year, based on their deposits
scheme comes into force, the Corporation pays the
as at the end of previous half year. The premium paid by
difference between the full amount of deposit and the
the insured banks to the Corporation is required to be borne
amount actually received by the depositor under the
by the banks themselves and is not passed on to the
scheme or the limit of insurance cover in force at the
depositors.
time, whichever is less.
For delay in payment of premium, an insured bank is liable
to pay interest at the rate of 8 per cent above the Bank Fund maintained by the Corporation:
Rate on the default amount from the beginning of the The Corporation maintains three distinct Funds, viz.,
relevant half-year till the date of payment. (i) Deposit Insurance Fund (DIF); (ii) Credit Guarantee Fund
The rate of premium which initially was Rs 0.05 per 100 of (CGF), and (iii) General Fund (GF). The first two funds are
deposit has since been revised to Rs.0.10 wef 01.04.2005. created by accumulating the insurance premia and
guarantee fees respectively and are applied for settlement
of the respective claims.
Credit Guarantee Corporation:
As no credit institution is participating in any of the credit The General Fund is utilised for meeting the establishment
guarantee schemes administered by the Corporation, and administrative expenses of the Corporation. The surplus
presently it is not operating any of the schemes and deposit balances in all the three Funds are invested in Central
insurance remains the principal function of the Corporation. Government securities. Inter-Fund transfer between these
funds is permissible under the Act.
Settlement of Claims :
(i) In the event of the winding up or liquidation of an Capital of the Corporation:
insured bank, every depositor is entitled to payment of The authorised capital of the Corporation is 5 crores which
an amount equal to the deposits held by him at all the is entirely subscribed to by the Reserve Bank.
Performance of the corporation over the years

(taken from Annual report of DICGC as of 31st March 2016) (Values in crores rupees)
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16
Assessable deposits 49,52,427 57,87,400 66,21,000 76,16,600 84,75,100 94,05,300
Insured deposits 17,35,800 19,04,300 21,58,300 23,79,100 26,06,700 28,26,400
Claim paid since inception 4,017 4,305 4,505 4,608 4,929 5,000
Deposit Ins. Fund 24,704 30,093 36,120 40,618 50,453 60,300

ARTICLE
Premium Income 4,844 5,640 5,718 7,312 8,229 9,199

Investment income 1,801 2,353 2,768 3,390 4,032 4,783
Revenue Surplus 4,132 4,054 5,827 6,072 9,696 9,596
Fund balance 3,774 4,768 5,265 5,068 5,207 5,412
Fund Surplus 20,930 25,325 30,855 35,549 45,246 54,842
Outstanding Liab for Claims 603 689 905 392 314 252
Bank group wise Deposits (2015-16) ceived premium income of 9199 crores which seemingly
(Deposits in Crores) has been calculated at the level of assessable deposits
whereas the eligible deposit for the calculation and pay-
Type of Bank No of Assessable Insured ment of premium logically should have been the insured
Banks Deposits Deposits deposit which the corporation shall be paying eventu-
Commercial Banks 97 84,836 23,271 ally in the event of a claim arises if at all. With the in-
w/w SBI group 6 19,176 7,115 sured deposits, the premium amount works out to be
Public Sector Banks 21 42,644 12,309 2826 crores approx @ 10 paise per 100 of present pre-
mium rate.
Foreign Banks 45 4,342 119
Y Corporation has received a sum of 4783 crores as the
Private Banks 21 18,653 3,721
income through investments in the government securi-
Local Area banks 4 22 8 ties wherein the corporation is authorized by the Act
RRBs 56 2,641 1,624 to park its surplus funds.
Coop Banks 1974 6,575 3,368 Y Corporation has revenue surplus of 9596 crores as of
Total 2127 94,053 28,264 March 2016.
Y Corporation has a fund surplus of 54842 crores as of
Details of premium paid and Claim March 2016.
Settled during 2015-16 Y During the year corporation has paid claims of 47 crores
(Rs in crores) whereas since its inception i.e 1962, corporation has
Premium Income Paid Claim Settled paid a total of approx 5000 crores of claims within which
the claims paid on account of Commercial Banks+ have
Commercial Coop Commercial Coop
been approx 295 crores and that of Cooperative Banks
Banks/RRBs/LABs Banks Banks Banks
have been 4680 crores.
8551 (93%) 648 (7%) 0 47.14
Y Proportion wise, the share of banks other than Coop-
Total 9199.00 47.14 erative banks in the payment of premium as on
31.03.2016 has been 93% whereas that of cooperative
Observations : Banks has been mere 7 %, while on the other hand, the
Through a cursory look at the figures for the FY 2015-16 claim amount of 47 crores paid by the corporation
taken from the Annual report of the corporation and repro- during the year under reference has been 100% of
duced herein above, it is observed that Cooperative Banks and 0% for the other segment of
Y As of March 2016, out of total assessable deposits ( i.e Banks.
total deposits of banks net of inter-bank deposits etc)
of 94,05,300 crores, the insured deposits stands at Points to ponder:
28,26,400 which are approx 30% of assessable depos- Y The premium amount collected by corporation for the
its. assessable deposit instead of the insured deposit poses
Y During the year under reference, corporation has re- a question of logic.

ARTICLE
Y The proportion of premium paid by the Commercial However it is equally pertinent to note that over the years,
Banks/RRB/LABs to the corporation has been 93% with the increasing deposits levels of the banks, the premium
whereas the claim received since inception has been income of the corporation has been increasing and has been
mere 295 crores (6 % ) approx that too in gross terms. even triplicate to what it should have been if calculated
Y The proportion of premium paid by the Cooperative Banks logically to the insured level of deposits rather than the total
to the corporation has been 7% whereas the claim received assessable levels of deposits as is being done over the years.
since inception has been 94% approx in gross terms. The increasing income that the corporation receives and
Y The rate of premium has been uniform across all types relatively lesser claims being paid, has been resulting in huge
of banks, be it SBI group, RRBs or Cooperative Banks surplus funds with the corporation which it has been able
and within a type also, say Public Sector Banks, for all to invest and again earn handsomely-something with which
Banks, PNB, BOB, BOI etc or Uco, United Bank of In- DICGC would not have been conceived with.
dia, Dena bank etc. There is no consideration to the
The trend as reflected from the financials of the corpora-
qualitative aspects, geographical spread etc of differ-
tion clearly provides the ground to re-assess the need of
ent banks which have its own importance and relevance
DICGC, in its present form and with existing norms. Even
in the business profiles of the banks and their likely
with the implementation of Basle accord and the risk as-
chances of defaults for claims.
sessment & mitigant measures being adopted by the banks
Y For the delayed payment of premium, the Corporation in India, chances of bank’s failure become even more remote
levies penal interest of 8 % over the Bank rate which and that too, to the level where the DICGC has to step in
works out to be approx 16% PA. with the insurance amount, save for some poorly managed
cooperative banks that pose a little challenge.
Conclusion:
Further more, for the nationalized banks which have more
The concept and establishment of DICGC has been quite
than 50% stake of the government, chances of such banks
holistic and there has been a sense of confidence among
going into liquidation without repaying its depositors’ are
depositors about the safety of their hard earned monies with
unthinkable and hence such banks certainly do not account
their banks, at least to the extent they can survive with in
for the DICGC coverage and that too for full premium
the event of bank fails or amalgamated and not been able
equivalent to other non nationalised banks.
to repay. However through the study of the figures that have
been published in the corporation’s latest annual report of As far as the interest of depositors is concerned and the
March 2016, it is observed that over the years, the claims premiums to the corporation have to be maintained, it may
have been declining, probably more due to the stringent su- be logical to state on one hand that the corporation itself
pervisory guidelines and controls of the regulator i.e Reserve has sufficient funds at its disposal to honour such liabilities
Bank of India as well as the increasing awareness level while on the other hand, Reserve Bank of India itself has
among general public, customers etc. been flushed with huge funds and so may provide necessary
financial support to the corporation-its fully owned subsid-
iary. For, in present highly challenging times, wherein the
banks have been struggling hard to save their bottom lines
that already are into red, the monies that could be saved
through the premiums they have been constrained to pay
for no return, could bring a great respite.
It is therefore suggested that the Banks specially the com-

mercial banks should be exempted from the premium pay-
ments to the corporation or at least should be allowed to
suspend the payments for few years till they are able to
normalize their financial positions. T

RBI CIRCULAR
RBI CIRCULAR
Investment in plant and machinery for 3. Further, the Ministry has clarified that for the
investment in plant and machinery for the purpose of
the purpose of classification as Micro, classification of an enterprise as Micro, Small or
Small and Medium Enterprises - Medium, the purchase value of the plant and
machinery is to be reckoned and not the book value
documents to be relied upon (purchase value minus depreciation).
RBI/2017-18/21 4. In terms of OM F. No. 12(4)/2017 - SME dated May 31,
FIDD.MSME & NFS.BC.No.10/06.02.31/2017-18 2017, issued by the Ministry, the effective date for the
above provision would be from the date MSMED Act,
1. Please refer to our Master Direction 2006 came into force and not prospectively. Further,
FIDD.MSME&NFS.3/06.02.31/2016-17 dated July 21, the above provisions would be applicable to section 7
2016 on 'Lending to Micro, Small & Medium Enterprises (1) (a) and section 7 (1) (b) of the MSMED Act, 2006
(MSME) Sector' together with notification No. S.O. i.e. enterprises engaged in manufacturing of goods and
1722(E) dated October 5, 2006 issued by Ministry of rendering of services as well.
MSME, GoI, New Delhi. In terms of para 2 of the said
notification, while calculating the investment in plant Yours faithfully
and machinery, the original price thereof, shall be taken (Uma Shankar)
into account, irrespective of whether the plant and Chief General Manager-In- Charge
machinery are new or second hand.
2. In this regard, Ministry of MSME, GoI, vide their Office Audit Committee of the Board of
Memorandum (OM) F. No. 12(4)/2017-SME dated
March 8, 2017, have clarified that for ascertaining the
Directors - Nomination of Non-Executive
investment in plant and machinery for classification of Chairman
an enterprises as Micro, Small and Medium, the
RBI/2017-18/20
following documents could be relied upon:
DBS.ARS.BC.01/08.91.020/2017-18
(i) A copy of the invoice of the purchase of plant and
machinery; or 1. Please refer to Para 3 (ii) of our circular dated
(ii) Gross block for investment in plant and machinery September 26, 1995 on "Audit Committee of the Board
as shown in the audited accounts; or of Directors - Reconstitution" and Para (ii) of our circular
(iii) A certificate issued by a Chartered Accountant DOS.No.BC.3/08.91.020/96 dated January 20, 1997 on
regarding purchase price of plant and machinery. "Public Sector Banks - Audit Committee of the Board

RBI CIRCULAR
of Directors", wherein it has been advised that Audit 2. Joint holding and nomination
Committee of the Board of Directors (ACB) should be Multiple joint holders and nominees (of first holder) are
chaired by any one of the non-executive/ non-official permitted. Necessary details may be obtained from the
directors. applicants as per practice.
2. In view of the bifurcation of the post of Chairman and 3. Know-Your-Customer (KYC) requirements
Managing Director of Public Sector Banks (PSBs) by Know-Your-Customer (KYC) norms shall be the same as
Government of India into a non-executive Chairman to that for purchase of physical form of gold. Identification
give an overall policy direction to the bank and a full documents such as passport, Permanent Account
time executive Managing Director and Chief Executive Number (PAN) Card, Voter's Identity Card, Aadhaar
Officer (MD&CEO) to oversee the day to day card shall be required. In case of minors only, the bank
functioning of the bank (GOI notification dated April 24, account number may also be considered as valid for KYC
2015), it is clarified that in banks where the Board of verification. KYC will be done by the issuing banks/SHCIL
Directors is chaired by a non-executive Chairman, offices/Post Offices/agents.
there will not be any restriction if he/she is also 4. Interest on application money
nominated to the Audit Committee of the Board of Applicants will be paid interest at prevailing savings
Directors. bank rate from the date of realization of payment to
3. The other instructions, as amended from time to time, the settlement date, ie. the period for which they are
shall remain unchanged. out of funds. In case the applicant's bank account is not
4. Please acknowledge receipt. with the receiving bank, the interest has to be credited
by electronic fund transfer to the account details
Yours faithfully provided by the applicant.
(Indrani Banerjee) 5. Cancellation
Chief General Manager Cancellation of application is permitted till the closure
of the issue, i.e., July 14, 2017. Part cancellation of
submitted request for purchase of gold bonds is not
Sovereign Gold Bonds, 2017-18 - Series II permitted. No interest on application money needs to
- Operational Guidelines be paid if the application is cancelled.
RBI/2017-18/18 6. Lien marking
IDMD.CDD.No.29/14.04.050/2017-18 As the bonds are government securities, lien marking,
etc. will be as per the extant legal provisions of
This has reference to the GoI notification F.No.4(20)-B/ Government Securities Act, 2006 and rules framed
(W&M)/2017 and RBI circular IDMD.CDD.No.28/14.04.050/ there under.
2017-18 dated July 06, 2017 on the Sovereign Gold Bonds, 7. Agency arrangement
2017-18-Series II. FAQs in this regard have been placed on Scheduled Commercial Banks may engage NBFCs, NSC
our website (www.rbi.org.in). Operational guidelines with agents and others to collect application forms on their
regard to this scheme are given below: behalf. Banks may enter into arrangements or tie-ups
1. Application with such entities. Commission for distribution shall be
Application forms from investors will be received at paid at the rate of rupee one per hundred of the total
branches during normal banking hours from July 10, subscription received by the receiving offices on the
2017 to July 14, 2017. Receiving Offices need to ensure applications received and receiving offices shall share at
that the application is complete in all respects as least 50% of the commission so received with the agents
incomplete applications are liable to be rejected. or sub-agents for the business procured through them.
Relevant additional details may be obtained from the 8. Processing through RBI's e-Kuber system
applicants, where necessary. The Receiving Offices may Sovereign Gold Bonds will be available for subscription
make arrangements to enable the investors to apply at the branches of scheduled commercial banks and
online, in the interest of better customer service. designated post offices through RBI's e- Kuber system.

RBI CIRCULAR
The e-Kuber system can be accessed either through Interest rates for Small Savings Schemes
Infinet or Internet. The Receiving Offices need to enter
the data or carry out bulk upload for the subscriptions RBI/2017-18/22
received by them. They may ensure accuracy of entry DGBA.GBD. 69/15.02.005/2017-18
of data to prevent occurrence of any inadvertent
1. Please refer to our circular DGBA.GAD.2618/15.02.005/
errors. An immediate confirmation will be provided to
2016-17 dated April 6, 2017 on the above subject. The
them for receipt of application. In addition, a
Government of India, had vide their Office
confirmation scroll will be provided for file uploads to Memorandum (OM) No.F.No.01/04/2016–NS dated June
enable the Receiving Offices to update their database. 30, 2017 advised the rate of interest on various small
On the date of allotment, i.e., July 28, 2017. savings schemes for the second quarter of the financial
Certificates of Holding will be generated for all the year 2017-18 (copy enclosed).
subscriptions in the name of the sole/principal holder.
2. The contents of this circular may be brought to the
The Receiving Offices can download the same and take
notice of the branches of your bank operating
printouts. The Certificates of Holding will also be sent
Government Small Saving Schemes for necessary
through e-mail to the investors who have provided their
action. These should also be displayed on the notice
email address. The securities will be credited in their boards of your branches for information of the
de-mat accounts by the depositories, in due course, subscribers to these Schemes.
subject to matching of particulars furnished in the
application with the depositories' records. Yours faithfully
9. Printing Certificates of Holding
(V. S. Prajish)
Holding Certificate needs to be printed in colour on A4 Assistant General Manager
size 100 GSM paper.
10. Servicing and follow up
Sovereign Gold Bonds 2017-18 - Series II
Receiving Offices, i.e., branches of the Scheduled RBI/2017-18/17
Commercial Banks, designated post offices, SCHIL and IDMD.CDD.No.28/14.04.050/2017-18
stock exchanges (NSE Ltd and BSE) will "own" the
customer and provide necessary services with regards Government of India has vide its Notification F.No. 4(20)-
to this bond e.g. update contact details, receive B/(W&M)/2017 dated July 06, 2017 announced that the
requests for premature encashment, etc. Receiving Sovereign Gold Bonds 2017 -18- Series II ("the Bonds") will
Offices will be required to preserve applications till the be open for subscription from July 10, 2017 to July 14, 2017.
bonds are matured and are repaid. The Government of India may, with prior notice, close the
Scheme before the specified period. The terms and
11. Tradability
conditions of the issuance of the Bonds shall be as follows:
The Bonds shall be eligible for trading on a date notified
by the Reserve Bank of India. (It may be noted that 1. Eligibility for Investment:
only bonds held in demat form with depositories can The Bonds under this Scheme may be held by a person
be traded in stock exchanges) resident in India, being an individual, in his capacity as
such individual, or on behalf of minor child, or jointly
12. Contact details with any other individual. The bond may also be held
Any queries/clarifications may be e-mailed to the by a Trust, Charitable Institution and University. "Person
following: resident in India" is defined under section 2(v) read with
(a) Sovereign Gold Bond related: Please click here to section 2(u) of the Foreign Exchange Management Act,
send email. 1999
(b) IT related: Please click here to send email. 2. Form of Security
The Bonds shall be issued in the form of Government
Yours faithfully, of India Stock in accordance with section 3 of the
(Shyni Sunil) Government Securities Act, 2006. The investors will be
Deputy General Manager issued a Holding Certificate (Form C). The Bonds shall
be eligible for conversion into de-mat form.

RBI CIRCULAR
3. Date of Issue 10. Repayment

Date of issuance shall be July 28, 2017. The receiving office shall inform the investor of the date
4. Denomination of maturity of the Bond one month before its maturity.
The Bonds shall be denominated in units of one gram 11. Eligibility for Statutory Liquidity Ratio (SLR)
of gold and multiples thereof. Minimum investment in Investment in the Bonds shall be eligible for SLR.
the Bonds shall be one gram with a maximum limit of 12. Loan against Bonds
subscription of five hundred grams per person per fiscal The Bonds may be used as collateral for loans. The Loan
year (April - March). to Value ratio will be as applicable to ordinary gold loan
5. Issue Price mandated by the RBI from time to time. The lien on
Price of the Bonds shall be fixed in Indian Rupees on the Bonds shall be marked in the depository by the
the basis of simple average of closing price of gold of authorized banks.
999 purity published by the India Bullion and Jewelers 13. Tax Treatment
Association Limited for the week (Monday to Friday) Interest on the Bonds shall be taxable as per the
preceding the subscription period. The issue price shall provisions of the Income-tax Act, 1961. The capital
be ? 50 per gram less than the nominal value. gains tax arising on redemption of SGB to an individual
has been exempted. The indexation benefits will be
6. Interest
provided to long term capital gains arising to any
The Bonds shall bear interest at the rate of 2.50
person on transfer of bond.
percent (fixed rate) per annum on the amount of initial
investment. Interest shall be paid in half-yearly rests 14. Applications
and the last interest shall be payable on maturity along Subscription for the Bonds may be made in the
with the principal. prescribed application form (Form 'A') or in any other
form as near as thereto stating clearly the grams of
7. Receiving Offices gold and the full name and address of the applicant.
Scheduled Commercial Banks (excluding RRBs), The receiving office shall issue an acknowledgment
designated Post Offices (as may be notified), Stock receipt in Form 'B' to the applicant.
Holding Corporation of India Ltd (SHCIL) and recognized
15. Nomination
stock exchanges viz., National Stock Exchange of India
Nomination and its cancellation shall be made in Form
Limited and Bombay Stock Exchange Ltd. are
'D' and Form 'E', respectively, in accordance with the
authorized to receive applications for the Bonds either
provisions of the Government Securities Act, 2006 (38
directly or through agents.
of 2006) and the Government Securities Regulations,
8. Payment Options 2007, published in part III, Section 4 of the Gazette of
Payment shall be accepted in Indian Rupees through India dated December 1, 2007.
cash up to a maximum of ? 20,000/- or Demand Drafts 16. Transferability
or Cheque or Electronic banking. Where payment is The Bonds shall be transferable by execution of an
made through cheque or demand draft, the same shall Instrument of transfer as in Form 'F', in accordance with
be drawn in favour of receiving office. the provisions of the Government Securities Act, 2006
9. Redemption (38 of 2006) and the Government Securities
i) The Bonds shall be repayable on the expiration of Regulations, 2007, published in part III, Section 4 of the
eight years from July 28, 2017, the date of issue of Gazette of India dated December 1, 2007.
Gold bonds. Pre-mature redemption of the Bond 17. Tradability of bonds
is permitted from fifth year of the date of issue on The Bonds shall be eligible for trading from such date
the interest payment dates. as may be notified by the Reserve Bank of India.
ii) The redemption price shall be fixed in Indian 18. Commission for distribution
Rupees on the basis of the previous week's Commission for distribution shall be paid at the rate of
(Monday - Friday) simple average closing price for rupee one per hundred of the total subscription
gold of 999 purity, published by IBJA. received by the receiving offices on the applications
iii) The receiving office shall inform the investor of the received and receiving offices shall share at least 50%
date of maturity of the Gold Bond one month of the commission so received with the agents or sub-
before its maturity. agents for the business procured through them.

RBI CIRCULAR
19. All other terms and conditions specified in the

For update news on Banking & Finance Industry
notification of Government of India in the Ministry of
Finance (Department of Economic Affairs) vide number BANKING FINANCE
F. No.4(13) W&M/2008, dated 8th October 2008 shall A Leading Monthly Journal on Banking & Finance
apply to the Bonds. Covers Schemes
20. Operational guidelines relating to Sovereign Gold Bonds RBI Banking 1 Year 750
2016-17 - Series I are issued vide circular IDMD. CDD. Finance Rural/Co-op 3 Year 1500
No. 29/14.04.050/2017-18 dated July 06, 2017. Stock Market Risk Management 5 Year 2250
Yours faithfully, Subscribe Now !!
(Shyni Sunil) ORDER FORM
Deputy General Manager
New Rental Subscription No.
(Please tick)
Point of Presence (PoP) Services under Name of Executive :
Pension Fund Regulatory and Designation:
Development Authority (PFRDA) for Company's Name :
National Pension System (NPS) Address :
RBI/2017-18/16 Pincode :
Phone : Mobile :
DNBR(PD)CC.No.087/03.10.001/2017-18
Fax : E.Mail :
1. Please refer to Para 111 of Non-Banking Financial Publication Order :
Company - Systemically Important Non-Deposit taking
*Scheme Opted : No.of Copies
Company and Deposit taking Company (Reserve Bank)
(Please mention the scheme name example : It-1, Lit-1 or Combo 4-1)
Directions, 2016 prohibiting NBFCs from undertaking
PoP Services under the PFRDA for NPS. Period of Subscription : From to
2. On a review, it has been decided that NBFCs with asset Details of payment : Cash/M.O./D.D./Cheque* No
size of ? 500 crore and above which comply with the
prescribed CRAR and made net profit in the preceding Dt drawn Rs.
financial year be permitted to undertake PoP services Ordinary Registered Post (Please tick)
under PFRDA for NPS after registration with PFRDA. *For outstation cheque please add Rs.50/- towards bank charges.
Eligible NBFCs extending such services shall ensure that Outstation cheques of metro cities accepted only. No Charges ap-
the NPS subscription collected by them from the public plicable for payable at per cheques.
is deposited on the day of collection itself (T+0 basis; T Do not make any Cash Payment
is the date of receipt of clear funds, either by cash or for Subcription of Journals Signature of Subcriber
any other mode) with the Trustee Bank. The deposits
shall be made in the Trustee Bank account opened for Please tear and send it along with your letter
this purpose under the regulations framed by PFRDA
for NPS. NBFCs conducting PoP services shall strictly Mode of Payment
adhere to the guidelines framed by PFRDA. Any 1. Payable at per Cheque/Demand Draft favouring Sashi Pulbications
violation of the instructions above would invite Private Limited, Payable at Kolkata
supervisory action, including but not limited to 2. You can directly ECS/Deposit cash in our bank account number
cancellation of permission to undertake PoP services. below in your city and send us copy of Pay in slip by email.
A/C Name : Sashi Publications Private Limited
3. The updated para 111 of the above referred Directions A/C No. : 402120110000327
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Branch : V V K Road Branch., Kolkata, India
Yours faithfully IFSC Code : BKID0004021
(C.D. Srinivasan) Make Online Payment by Credit Card/Debit Card or your net banking
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STATISTICS
SAVINGS DEPOSITS WITH COMMERCIAL BANKS

(Rs. Billion)
Year Scheduled Commercial Banks Non-Scheduled
(As on Last Reporting) Indian Banks Foreign Banks Total (2+3) Commercial Banks
1 2 3 4 5
1977-78 54.82 2.08 56.90 0.05
1978-79 70.69 2.24 72.93 0.04
1979-80 86.03 2.41 88.44 0.05
1980-81 106.67 2.70 109.37 0.04
1981-82 126.92 3.04 129.95 0.05
1982-83 147.19 3.36 150.55 0.05
1983-84 174.30 3.81 178.11 0.06
1984-85 213.00 4.27 217.27 0.07
1985-86 240.71 4.85 245.55 0.09
1986-87 287.87 5.67 293.54 0.11
1987-88 325.46 6.25 331.71 0.15
1988-89 367.56 6.90 374.46 0.20
1989-90 437.44 8.23 445.67 -
1990-91 495.42 9.59 505.01 0.31
1991-92 555.54 13.48 569.02 0.31
1992-93 572.56 13.17 585.73 0.30
1993-94 694.34 17.18 711.51 0.19
1994-95 890.19 23.05 913.24 0.20
1995-96 993.47 25.14 1018.61 -
1996-97 1125.70 28.75 1154.45 -
1997-98 1367.70 31.94 1399.64 -
1998-99 1608.89 38.36 1647.25 -
1999-00 1871.73 47.27 1919.00 -
2000-01 2174.52 55.30 2229.82 -
2001-02 2721.19 69.88 2791.07 -
2002-03 3028.16 87.48 3115.65 -
2003-04 3731.37 122.32 3853.69 -
2004-05 4435.73 150.45 4586.18 -
2005-06 5563.03 188.27 5751.30 -
2006-07 6505.28 218.39 6723.67 -
2007-08 7471.89 250.93 7722.82 -
2008-09 8740.46 269.21 9009.67 -
2009-10 11011.71 355.04 11366.76 -
2010-11 13396.54 376.34 13772.88 -
2011-12 15010.18 381.59 15391.77 -
2012-13 17163.15 384.21 17547.36 -
2013-14 19650.51 403.90 20054.41 -
2014-15 21788.47 410.46 22198.92 -
2015-16 24928.46 436.98 25365.44 -
Note : Data are of weekly frequency till 1984-85 and fortnightly frequency thereafter.


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