A Monthly Newsletter of Indian Institute of Banking & Finance

(ISO 9001 : 2015 CERTIFIED)

Committed to
professional excellence

Volume No. : 14 Issue No. : 2 September 2021 No. of Pages - 8

MISSION
VISION To develop professionally qualified and
To be premier Institute for competent bankers and finance professionals
developing and nurturing competent primarily through a process of education,
professionals in banking and finance training, examination, consultancy /
field. counselling and continuing professional
development programs.

Online
Examination
Mock Test
E-Learning
Face Book

You
Tube

Training

Mobile App

INSIDE
Video
Lecture
Top Stories...............................2
Banking Policies.......................2
Banking Developments............3
Regulator Speaks.....................4
Economic Wrap Up...................4
Forex........................................5
Glossary...................................5
Financial Basics.......................5
Institute’s Training Activities......6
News from the Institute.............6
Green Initiative.........................7
Market Round Up.....................7
"The information / news items contained in this publication have appeared in various external sources / media for public use or
consumption and are now meant only for members and subscribers. The views expressed and / or events narrated/ stated in
IIBF
the said information 1 sources. IIBF neither holds nor September
VISION/ news items are as perceived by the respective assumes any responsibility
2021
for the correctness or adequacy or otherwise of the news items / events or any information whatsoever."
 Top Stories - Banking Policies

TOP STORIES

Composite FI Index introduced by RBI to showcase extent of financial inclusion

Aiming to measure the level of financial inclusion achieved in the country, the Reserve Bank of India (RBI) has
introduced an annual composite Financial Inclusion index (FI-Index) - a single value parameter ranging from 0
and 100, with 0 representing complete financial exclusion and 100 representing full financial inclusion. The results
of the index will be published every year in July and will include details of banking, investments, insurance, postal
and pension sector. Weighted parameters, such as the access (35%), usage (45%), and quality (20%), will be used to
determine the FI. There would be no base year considered for FI.
RBI issues new guidelines for locker management
The RBI has issued revised guidelines for locker management. W.e.f. 1st January 2022, these guidelines will be
applicable to both, new and the existing safe deposit lockers, in all banks. As per the revised mandates, banks will
have to maintain a branch-wise list of vacant lockers, apart from a waiting list in CBS, to ensure transparency in
allotment of their lockers. At the time of allotting a locker, the bank will be allowed to obtain a Term Deposit, which
would cover three years’ rent and the charges for breaking open the locker in case of such eventuality.
Target achievement dates under Covid recast scheme 1.0, extended
In the aftermath of the second wave of Covid-19, the RBI has extended the target date for achieving various financial
parameters under the Covid resolution framework 1.0. Considering the adverse impact that the second wave has had
on revival of businesses and the difficulties it may create in meeting operational parameters in time, the target date
has now been deferred from March 31, 2022 to October 1, 2022.
RBI imposes penalties on ATMs for non-replenishment of cash
W.e.f. 1st October 2021, the RBI will be implementing a scheme of penalty for non-replenishment of ATMs. Under
this scheme, banks and white label ATM operators will be penalised with Rs. 10,000 per ATM if their ATMs suffer a
cash-out beyond 10 hours in a month. The apex bank has also asked banks to submit system-generated statements
to the RBI’s ‘Issue Department’ if their ATMs go down in case of non-availability of cash, whereas for WLATMs, the
banks will have to furnish a separate statement on cash-out.
RBI makes changes to the Indo-Nepal Remittance scheme
With an aim to foster trade payments between India and Nepal, and also to facilitate person-to-person remittances
electronically to Nepal, the RBI has revised the Indo-Nepal Remittance Facility Scheme, to come into force from
October 1, 2021. As per the new guidelines, the ceiling per transaction has been increased four-fold to ` 2 lakh
and the cap of 12 remittances in a year per remitter has been removed. Remittances by way of cash from walk-in
customers or non-customers shall be accepted by banks. However, these shall be subject to a ceiling of ` 50,000 per
remittance with a maximum of 12 remittances in a year.

Banking Policies
Collateral-free loans to SHGs hiked by RBI
Collateral-free loans of SHGs under Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-
NRLM) have been hiked by the RBI from the previous ` 10 lakhs to now ` 20 lakhs. For loans to SHGs above ` 10
lakh and up to ` 20 lakh, there would be no lien marked or no collateral against savings bank account of SHGs. The
entire loan would be eligible for coverage under Credit Guarantee Fund for Micro Units (CGFMU).

IIBF VISION 2 September 2021

 Banking Policies - Banking Developments

Norms for current account relaxed and deadline for implementation extended: RBI
The RBI has permitted time for banks to implement new guidelines for opening of current accounts till October 31,
2021. According to the new guidelines, there will be no restriction on the opening of current accounts by any bank,
if exposure of the banking system to those borrowers, who have not availed CC/OD facility from any bank, is less
than ` 5 crore. In the case of borrowers who have not availed CC/OD facility from any bank and the exposure of
the banking system is more than ` 5 crore but less than ` 50 crore, there is no restriction on lending banks to such
borrowers from opening a current account.
RBI hikes incentives to banks for distributing coins to public
W.e.f. September 1, 2021, banks have hiked the incentive being given to banks for distributing coins to the members
of public, from the earlier Rs. 25 per bag to Rs. 65 per bag. An added incentive of Rs 10 per bag would be given for
coin distribution done in rural and semi-urban areas. This additional incentive will be paid subject to submission
of an auditor’s certificate to this effect. The distribution of coins shall also be verified by the RBI’s Regional Offices
during inspection of currency chest or during incognito visits to branches.
PIDF Reserve to now include beneficiaries of PM SVANidhi Programme
Aiming to include maximum street vendors covered under the  PM SVANidhi programme  in Tier 1 and 2
centres by encouraging deployment of Point of Sale (PoS) infrastructure, the RBI has announced the extension
of Payments Infrastructure Development Fund  (PIDF) scheme to select street vendors in Tier 1 and 2
centres. Street vendors in Tier-3 to Tier-6 centres will continue to be covered under the scheme, as before.
RBI directive on compensation of key officials of private banks
The RBI has stipulated that the fair value of all share-linked incentives paid by private banks to their CEOs, whole-
time directors and other key functionaries should be recognised as an expense during the relevant accounting period.
These directives have also been made mandatory for all banks, including local area banks, small finance banks and
foreign banks vis-à-vis all share-linked instruments granted after the accounting period ending March 31, 2021.

Banking Developments
RBI crafts framework to manage risks in outsourcing of processes by PSOs
The RBI has established a framework for outsourcing payment and settlement-related activities by payment system
operators (PSOs). Among other things, the main aim of this framework is to provide minimum standards to manage
risks that arise in outsourcing of payment and settlement-related activities, ensure security and confidentiality of
customer information in the custody or possession of the service provider and to immediately notify RBI about any
breach of security or leakage of confidential information related to customers. PSOs have been given a deadline of
March 31, 2022 to make all their outsourcing arrangements compliant with the framework.
RBI includes more devices to help undertake tokenised card transactions
Expanding the ambit for tokenised card transactions, the RBI has now increased the type of devices permitted for
the same. Accordingly, tokenised card transactions can now be undertaken from consumer devices such as laptops,
desktops, wearables (wrist watches, bands, etc.), and Internet of Things (IoT) devices, subject to conditions. The
facility would only be available to interested card holders and is expected to make the transaction process more safe,
secure and convenient.
Master directions issued for PPIs; classification norms changed
The RBI has issued Master Directions on Prepaid Payment Instruments (PPIs), which include a fresh classification of
the instruments. As per the master directions, no entity can establish and operate payment systems for PPIs without
prior approval or authorisation of the RBI. Also, the closed systems, semi-closed systems and open system PPIs have
now been re-classified as small PPIs and full KYC PPIs.

IIBF VISION 3 September 2021

 Regulator Speaks - Economic Wrap Up

Regulator Speaks
Any policy action to be very carefully calibrated and well-timed: RBI Governor Shaktikanta Das
In a response to CPI inflation projection for FY22, the Governor stated that domestic factors majorly impact the
monetary policy. There are three points that the Governor specially emphasized on, in a recent interview with the
Hindu Business Line. Firstly, he focussed on the process of economic revival and how the financial markets have
revived on the back of policies adopted by the RBI. He also stressed on the coordination between fiscal, monetary
and government policies. Secondly, he focussed on inflation and an expectation of inflationary spike in future
quarters. He spoke about inflation being driven by supply side factors, thereby giving time to for the economy to
restore the balance between demand and supply. Thirdly, he emphasized on the situation being an extraordinary
– yet volatile – one; further adding that the RBI is committed to maintaining financial stability, especially to
retain it in the medium term.
RBI may alter policy course in more durable times: RBI Governor
The RBI Governor Mr Shaktikanta Das has averred that the apex bank may think of changing its policy course only
after economic activity shows signs of “durability and sustainability”. He also stated to CNBC Asia that presently it
is not the right time to alter the course, because capacity utilisation is nowhere near pre-pandemic levels, and there
is a slack in the economy. The governor expects consumer demand to “increase substantially” by the end of the year,
“over the current levels” or “over the levels seen where the Covid impact took them down”. Speaking about private
cryptocurrencies, the Governor affirmed that RBI still remains concerned about their impact on financial stability.
RBI Governor sees potential for further expansion of GSec market in India
RBI Governor Mr Shaktikanta Das, in his keynote speech at the 21st FIMMDA-PDAI Conference, opines that
notwithstanding the robust evolution of the G-sec market in India, there is scope for further development to remain
in sync with the emerging requirements. The RBI and the Government are trying their best to enable international
settlement of transactions in G-secs through International Central Securities Depositories (ICSDs). While the
market for ‘special repo’ does facilitate borrowing of securities, it would be worth considering other alternatives that
ensure adequate supply of securities to the market across the spectrum of maturities.
Technology is revolutionising the competitive landscape in the financial system: MK Jain
RBI Deputy Governor Mr. MK Jain, in his speech at the India International Centre, opines that entry of BigTech firms
and innovative Fintech players into the traditional domain of banks have revolutionised the way in which financial
transactions are carried out, even when banks are also adopting the technology at the same pace. He emphasized that
in a scenario where underlying economic conditions change, a homogenous financial system will be less resilient and
prone to systemic crisis. Hence, it is necessary to have different entities that follow different business models. He also
noted that borrowers are probably the first to see early signs of difficulties in their respective segments i.e., when the
information is held from the lenders, their ability to identify risks early is severely hampered.The Deputy Governor
also emphasized that unbundling of banking services is a reality.

Economic Wrap Up
Performance of some of the key economic indicators as on July 2021 are highlighted below:
• Inflation remained above the band of 6%
• G-Sec yield steepened mildly owing to inflation measures. 10 year G-Sec yield reached 6.2% at end-July 2021 as
compared to 6.05% at end-June. 10 year AAA rated corporate bond yields rose by 9 bps in July over June to reach
6.88%.
• Bank credit growth showed encouraging trends with non-food credit growth crossing the 6.5% in mid-July 2021
• Gross FDI inflows more than doubled to USD 18.3 billion in April-May 2021 compared to USD 8.5 billion in the
corresponding period of previous year.
• Foreign exchange reserves reached US$ 620.1 billion by end July 2021, equivalent to more than 18 months of
2020-21 imports

IIBF VISION 4 September 2021

 Forex - Grossary - Financial Basics

Forex
Foreign Exchange Reserves
Item As on August 27, 2021
` Cr. US$ Mn.
1 2
1 Total Reserves 4669426 633558
1.1 Foreign Currency Assets 4212584 571600
1.2 Gold 275932 37441
1.3 SDRs 143028 19407
1.4 Reserve Position in the IMF 37883 5110
Source: Reserve Bank Of India
Benchmark Rates for FCNR(B) Deposits applicable for September 2021
Base Rates for FCNR(B) Deposits
Currency 1 Year 2 Years 3 Years 4 Years 5 Years
USD 0.17200 0.31200 0.53800 0.71700 0.87200
GBP 0.22670 0.4847 0.5785 0.6420 0.6890
EUR -0.51000 -0.480 -0.441 -0.394 -0.344
JPY -0.01630 0.009 -0.001 -0.002 0.001
CAD 0.58000 0.81000 1.029 1.191 1.294
AUD 0.09800 0.251 0.450 0.654 0.816
CHF -0.67750 -0.663 -0.608 -0.545 -0.473
DKK -0.13210 -0.1116 -0.0905 -0.0460 -0.0040
NZD 0.99750 1.308 1.483 1.585 1.663
SEK 0.01600 0.072 0.163 0.224 0.302
SGD 0.27500 0.448 0.710 0.915 1.050
HKD 0.24000 0.360 0.560 0.740 0.875
MYR 1.95000 2.190 2.400 2.540 2.650
Source: www.fedai.org.in

Glossary
Payment System Operator (PSO)
PSOs are those who are authorised by RBI to commence or operate any payment system in India. It has since
authorised various PSOs such as CCIL (financial market infrastructure - central counterparty), NPCI (retail
payments organisation), card payment networks, cross-border inbound money transfers entities, ATM networks,
PPI issuers, Instant Money Transfer operators, TReDS platform providers and Bharat Bill Payment Operating Units
(BBPOUs) to operate payment systems in the country.

Financial Basics
Capex to Operating Cash Ratio
The ratio measures how much of a company’s operating cash flow is funnelled into capital expenditure projects.
The formula for calculating the ratio is given as Cash flow from Operations / Capex.

IIBF VISION 5 September 2021

 Institute’s Training Activities - News from the Institute

Institute’s Training Activities

Training Programmes for the month of September 2021
Programmes Dates Location
Foreign Exchange Operations 13 - 15 September 2021
th th

Certified Credit Professional 14th - 16th September 2021

Balance sheet reading & Ratio analysis 15th - 16th September 2021 Virtual
Certified Bank Trainer 27th - 29th September 2021
Certified Treasury Professional 21s - 23rd September 2021

News from the Institute

HR Meet of Training Heads of Banks / Financial Institutions
The annual meeting of the GMs of Training Heads of various public, private, co-operative banks was held on
27th August 2021. The Inaugural address was delivered by Mr. Rajkiran Rai G, MD&CEO, Union Bank of India and
President, IIBF. This was followed by a keynote address from GM-HR, RBI, Mr. R. Giridharan. A special address was
delivered by Dr. (Fr.) George Sebastian, Director XLRI, Xavier School of Business, Delhi Campus. A panel discussion
was conducted on “Transforming HR in the Digital World” with panellists from public sector, private sector and
co-operative banks. The conference was attended in large numbers from all banks.
Revised CAIIB elective subjects from 2021 examinations
The number of CAIIB elective subjects being offered by the Institute has been rationalised from 11 subjects to 6
subjects. For the examinations to be conducted from 2021 onwards, only 6 electives will be offered. Retail Banking
shall also include the Digital Banking courseware. Candidates, who have already chosen any one of the discontinued
5 electives, will have to choose any one of the 6 elective subjects. For more details, please visit our website
www.iibf.org.in..
E-learning for All
The Institute has introduced “E-learning for All” where any individual irrespective of his/her Membership status or
Exam Registration status can access the E-learning modules developed by the Institute on various contemporary
topics of Banking & Finance. For more details visit www.iibf.org.in.
Collaboration with GARP, USA
The Institute has entered into a MoU with the Global Association of Risk Professionals (GARP), USA for
offering the Financial Risk & Regulations (FRR) course to JAIIB or CAIIB passed candidates at a discounted fee
of USD 300. The next window for registration will open from Oct 1-15, 2021. For more details, please visit our
website www.iibf.org.in.
Collaboration with XLRI, Jamshedpur
The Institute has entered into a collaboration with XLRI, Jamshedpur for conducting a “Leadership Development
Program for Bank/FIs”. The 2nd batch of the programme is scheduled to start from Oct 17, 2021. For more details
visit www.iibf.org.in.
Exam dates for JAIIB/DB&F/SOB/CAIIB/CAIIB Electives
The JAIIB/DB&F/SOB exams are tentatively scheduled to be held on 28th, 29th August & 5th September 2021. The
CAIIB/CAIIB Elective Exams are tentatively scheduled for 11th, 12th & 25th September 2021. The above schedule is
subject to Covid conditions. For details visit www.iibf.org.in.
Two certificate courses introduced under RPE mode
From October 2021, two new certificate examinations will be conducted under the Remote Proctored Examination

IIBF VISION 6 September 2021

 News from the Institute - Green Initiative - Market Roundup

(RPE) Mode. The two new subjects are Strategic Management & Innovations in Banking and Emerging Technologies.
For more details, please visit www.iibf.org.in.
Introduction of Professional Banker Qualification
The Institute will be introducing a gold level aspirational qualification which will epitomize the pinnacle in learning
and knowledge. This qualification which will be known as “Professional Banker” will be a unique qualification to
plug the long-felt skill gap in mid-management levels and will provide cutting edge knowledge to professionals in
banking & finance fields. A banker seeking to achieve status of a “Professional Banker” needs to have an experience
of five years.
Bank Quest included in UGC CARE List of Journals
IIBF’s Quarterly Journal, Bank Quest has been included in UGC CARE list of Journals. The University Grants
Commission (UGC) had established a “Cell for Journals Analysis” at the Centre for Publication Ethics (CPE),
Savitribai Phule Pune University (SPPU) to create and maintain the UGC-CARE (UGC - Consortium for Academic
and Research Ethics). As per UGC’s notice, research publications only from journals indexed in UGC CARE list
should be used for all academic purposes.
Bank Quest Theme for upcoming issue
The theme for the upcoming issue of Bank Quest for the quarter July - September, 2021: Evolution & future of
Monetary & Fiscal Policies - Sub Themes: Regulatory Framework, Monetary Framework, Fiscal Framework.
Cut-off date of guidelines/important developments for examinations
The Institute has a practice of asking questions in each exam about the recent developments / guidelines issued
by the regulator(s) in order to test if the candidates keep themselves abreast of the current developments.
However, there could be changes in the developments / guidelines from the date the question papers are
prepared and the dates of the actual examinations. In order to address these issues effectively, it has been
decided that: (i) In respect of the exams to be conducted by the Institute for the period from February 2021 to
July 2021, instructions/ guidelines issued by the regulator(s) and important developments in banking and
finance up to 31st December 2020 will only be considered for the purpose of inclusion in the question papers.
(ii) In respect of the exams to be conducted by the Institute for the period from August 2021 to January 2022,
instructions/guidelines issued by the regulator(s) and important developments in banking and finance up to
30th June 2021 will only be considered for the purpose of inclusion in the question papers.

Green Initiative
Members are requested to update their e-mail address with the Institute and send their consent to receive the Annual
Report via e-mail.

Market Roundup
RBI Reference Rate Weighted Average Call Rates
110 3.25

100 3.2

90
3.15

80
3.1
70
3.05
60
March, 2021 April, 2021 May, 2021 June,2021 July, 2021 August, 2021 3
Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21
USD GBP EURO YEN

Source: FBIL Source: Weekly Newsletter of CCIL

IIBF VISION 7 September 2021

 Market Roundup

● Registered with Registrar of Newspapers Under RNI No. : 69228/1998 Crude Oil Growth %
0

Aggregate Deposit Growth % -1

-2

14 -3

12 -4

10
-5
8
-6
6
-7
4
Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21
2

0 Source: Ministry of Petroleum & Gas

Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21

Source: Monthly Review of Economy, CCIL, August, 2021 BSE Sensex & Nifty 50
60,000.00
Bank Credit Growth % 55,000.00
50,000.00
45,000.00
40,000.00
7
35,000.00
30,000.00
6.5 25,000.00
20,000.00
6 15,000.00
10,000.00
5.5 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21

BSE Close Nifty 50

5

4.5 Source: BSE & NSE

February, 2021 March,2021 April,2021 May,2021 June,2021 July,2021
Printed by Biswa Ketan Das, Published by Biswa Ketan Das, on behalf
of Indian Institute of Banking & Finance, and printed at Onlooker Press
Source: Reserve Bank of India
16, Sasoon Dock, Colaba, Mumbai - 400 005 and published at Indian Institute
of Banking & Finance, Kohinoor City, Commercial-II, Tower-I,2nd Floor,
Kirol Road, Kurla (W), Mumbai - 400 070.
Non-food Credit Growth % Editor : Biswa Ketan Das
7

6.5

5.5

5
Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21

Source: Monthly Review of Economy, CCIL, August, 2021

Gold Reserves Growth %

6

-2 INDIAN INSTITUTE OF BANKING & FINANCE

Kohinoor City, Commercial-II, Tower-I, 2nd Floor, Kirol Road, Kurla (W),
-4
Mumbai - 400 070.
March, 2021 April,2021 May,2021 June,2021 July,2021 August,2021
Tel. : 91-22-6850 7000
Gold Reserves Growth % E-mail : admin@iibf.org.in
Website : www.iibf.org.in

Source: Reserve Bank of India

IIBF VISION 8 September 2021