Category: Financial Prudence

Finance Minister Nirmala Sitharaman chairs post-Budget meeting with heads of Banks, NBFCs and Financial Institutions

Finance Minister exhorts all banks to sign up to Account Aggregator Framework, says it will improve credit flow and promote digital lending

Meeting emphasizes that Benefits of digital banking should reach every nook and corner of the country in a consumer-friendly manner

Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman chaired a post-budget meeting with heads of Banks, Non-Banking Financial Institutions (NBFCs) and Financial Institutions in Mumbai today.

The meeting was attended by Union Minister of State for Finance Dr. Bhagwat Kishanrao Karad; Shri Sanjay Malhotra, Secretary, Department of Financial Services; Shri Ajay Seth, Secretary, Department of Economic Affairs and Dr. V. Anantha Nageswaran, Chief Economic Adviser. The heads of all Public Sector banks, select Private Sector Banks, NBFCs and Financial Institutions were also present in the meeting.

Underscoring the importance of information sharing and collaboration, the Finance Minister exhorted all the banks to sign up to the Account Aggregator model which would facilitate seamless flow of credit for small borrowers and promote digital lending. The Minister directed that pilots for Account Aggregator model and cashflow-based lending may be replicated in different regions around the country including in the North Eastern Region, on the lines of the initiative by two banks in Varanasi district.

The meeting deliberated on the various budget announcements in the context of PM GatiShakti, Defence, Telecom, Manufacturing & exports, Emergency Credit Line Guarantee Scheme (ECLGS) and tax concessions to new manufacturing units and start-ups, which offer new opportunities to the financial sector. The meeting discussed various schemes/programmes such as subordinated debt to MSMEs, KCC, Aatma Nirbhar Bharat Schemes and credit outreach programme which provided immediate relief to the borrowers and the banks, from the impact of the COVID-19 pandemic.  ECLGS, which has been enhanced to Rs. 5 lakh crore and extended up to 31.3.2023, was also discussed.

It was emphasised that digital banking, digital payments and fintech innovations are an opportunity for banks to find new ways to reduce the cost of intermediation and provide cost-effective services and that the benefits of digital banking should reach every nook and corner of the country in a consumer-friendly manner.  

 It was further stressed that banking industry should target to open accounts of unbanked adults under Jan Dhan Yojana and ensure Insurance/Pension coverage to all eligible adults.

It was highlighted in the meeting that with a record profit of Rs. 1.22 lakh crore in FY 20-21 and Rs. 0.79 lakh crore in HY 21-22, declining Gross NPA figures to 6.90% (as on Sep’21) from all-time high of 11.20% (as on Mar ’18) and sufficient buffers with all time high CRAR of 16.5% (as on Sep ’21) against the regulatory mandate of 11.5%, banks are in a strong position to support future growth, enabling the country’s economy for a take-off.

The way forward for stepping-up the lending activity and building a conducive credit environment for businesses and individuals was also stressed upon in the meeting.

Security Printing and Minting Corporation of India Limited (SPMCIL) celebrated its 17th Foundation Day programme today (11th Feb 2022) through the digital mode.

Union Finance Minister, Smt. Nirmala Sitharaman chaired the programme via virtual mode in the presence of Secretary, Department of Economic Affairs (DEA), Ministry of Finance (MoF), Senior Economic Advisor, DEA, MoF and other senior officials from Ministry and Director (HR) & Director (Finance) of SPMCIL. 

Union Finance Minister Smt. Nirmala also launched the first colour souvenir coin on “Panchtantra” during the occasion.

Ms. Tripti Patra Ghosh, CMD, SPMCIL, in her welcome address highlighted the achievements and the innovative initiatives of the Company.

During the occasion, the Chief General Managers of the respective 09 Units awarded the meritorious employees for their outstanding achievements.

The Finance Minister in her address laid stress on upskilling and acquiring new skills, and upgradation to meet the technology driven economy. Further she emphasized on ramping up of quality of products and to brand SPMCIL as lead producers of currency and other sovereign products.

In terms of Government of India Notification No.4(5)-B(W&M)/2021 dated October 21, 2021, Sovereign Gold Bonds 2021-22 (Series IX) will be opened for subscription during the period January 10-14, 2022 with Settlement date January 18, 2022. The issue price of the Bond during the subscription period shall be Rs 4,786 (Rupees Four thousand Seven hundred eighty six only) – per gram, as also published by RBI in their Press Release dated January 07, 2022. 

The Government of India in consultation with the Reserve Bank of India has decided to allow discount of Rs 50 (Rupees Fifty only) per gram from the issue price to those investors who apply online and the payment is made through digital mode. For such investors the issue price of Gold Bond will be Rs 4,736 (Rupees Four thousand seven hundred thirty six only) per gram of gold.

88% growth in volume of digital transactions during last 3 years since 2018-19

With over 22 billion transactions in FY 2020-21, UPI emerges as favourite digital payment choice

As a result of the initiatives taken by the Government, there has been a paradigm shift in digital transactions in India. This was stated by Union Minister of State for Finance Dr Bhagwat Kisanrao Karad in a written reply to a question in Rajya Sabha.

The Minster stated that the paradigm shift is reflected in terms of the increase in the volume of digital transactions over the last three financial years as illustrated below:

Financial Year

Volume (in lakhs)

2018-19

2,32,602

2019-20

3,40,025

2020-21

4,37,445

Source: RBI

As observed from the above table, there has been a growth of 88% in volume of digital transactions during the last 3 years since 2018-19, the Minister stated.

The digital transaction platform is a pan India platform with a facility of ‘’anytime anywhere’’ banking. Accordingly, the data is captured only at the National level, the Minister added.

The Minister further stated that as per the data sourced from National Payments Corporation of India (NPCI), India’s own payment platform, UPI has emerged as the country’s favourite digital payment choice, with over 22 billion transactions registered during FY 2020-21, showing 4 times growth over the last 3 years. Also, AePS inter-bank transactions during FY 2020-21 registered a 9-fold growth, over the past 4 years.

To promote digital transaction in the country, the Minister stated that RuPay debit cards are issued to Jan-Dhan account holders under Pradhan Mantri Jan-Dhan Yojana (PMJDY). As on 08.12.2021, 31.17 crore RuPay debit cards have been issued to PMJDY account holders. As digital payment is one of the priorities of the Government to facilitate hassle free and seamless banking transactions in the country, several other initiatives have been taken by Government of India through its various programs/agencies, Reserve Bank of India (RBI) and banks, to promote and create awareness about digital payments in rural areas.

While answering a question on preventing frauds in digital transactions, the Minister state that the Unique Identification Authority of India (UIDAI) issues the Aadhaar numbers to the residents of the country and provides authentication services for establishing identity of the individual. UIDAI already provides for various modes of authentication namely biometric (which includes fingerprint, iris), One Time Pin-based (OTP) and demographic authentication. These can be used in a single factor or multi-factor mode. Any user agency/ department can opt for one or a combination of these modes depending upon their security/ risk assessment of their respective systems, the Minister stated.

The Minster further apprised that NPCI, RuPay Debit and Credit cards are used at both domestic and international payment gateways. These international and domestic transactions are facilitated by NPCI’s International network partners and domestic tie-ups. In addition, acquiring banks also have their own payment gateways that work with RuPay cards.

As apprised by Ministry of Electronics and Information Technology (MeitY), Digital India Programme has made a significant and positive impact in the lives of common citizen in the country. This was stated by Union Minister of State for Finance Dr Bhagwat Kisanrao Karad in written reply to a question in Lok Sabha today.

As a result of the initiative taken, the Minister stated, the number of digital payments in volume terms have increased over the last 3 financial years (FY) as illustrated below:

Financial Year

Volume (in lakhs)

2018-19

2,32,602

2019-20

3,40,025

2020-21

4,37,445

2021-22 (till Oct’21)

3,68,284

Source: RBI

The Minister stated that the brief details of major Digital India initiatives, inter-alia, are at  ANNEXURE.

Giving more details, the Minister stated that as apprised by Reserve Bank of India (RBI), in terms of extant instructions, with effect from September 7, 1999, Scheduled Commercial Banks have however been given the freedom to fix service charges for various types of services rendered by them. While fixing service charges, banks have, however, been advised to ensure that the charges are reasonable and not out of line with the average cost of providing these services. They have been further advised to identify basic services and the principles to be adopted /followed by them for ensuring reasonableness in fixing such charges and to take steps to ensure that customers are made aware of the service charges upfront and changes in the service charges are implemented only with the prior notice to the customers.

The Minister further stated that the above instructions are consolidated in paragraph 6 of Master Circular on ‘Customer Service in Banks’ issued vide DBR. No.Leg.BC.21/09.07.006/2015-16 dated July 1, 2015, which is available on RBI website www.rbi.org.in . Also, RBI vide circular DPSS.CO.PD No. 1633 / 02.14.003 / 2017-18 dated December 06, 2017, banks have, inter- alia, been advised to ensure that merchants on-boarded by them do not pass on MDR charges to customers while accepting payments through debit cards.

Further, vide Circular 32 of 2019 dated 30.12.2019 of Department of Revenue, any charge, including the Merchant Discount Rate (MDR), shall not be applicable on or after 01.01.2020 on payment made through prescribed electronic modes i.e. RuPay Debit card, BHIM-UPI and BHIM-UPI QR Code, the Minister stated.

To initiate infrastructure development to boost the economy after COVID-19 pandemic, Union Budget 2021-22 has provided a capital outlay of Rs. 5.54 lakh crore, an increase of 34.5% over Budget Estimate of FY 2020-21. This was stated by Union Minister of State for Finance Shri Pankaj Chaudhary in a written reply to a question in Lok Sabha today.

The Minister stated that the Government has also made provision of more than Rs. 2 lakh crore for States & Autonomous Bodies towards their Capital Expenditure. National Monetization Pipeline was also prepared to unlock the value of investments in public sector assets by tapping private capital and efficiencies for delivering infrastructure services. These proceeds are envisaged to augment existing/ create Greenfield infrastructure. Additionally, Central Ministries/Departments have been suggested to expedite infrastructure investment by front-loading capital expenditure.

Giving more details, the Minister said that the CCEA in its meetings held on 21.10.2021 approved the proposal for development of ‘PM GatiShakti National Master Plan (NMP)’ for providing multimodal connectivity infrastructure to various Economic Zones. It aims to depict various economic zones and the infrastructure linkages to holistically integrate all the multimodal connectivity projects, remove missing gaps for seamless movement of people, goods & services, minimize disruptions, improve logistics efficiency. The sectors intended to be included in PM GatiShakti NMP are Transport & Logistics – Roads, Rail, DFC, Airports, Inland Waterways, Ports, Logistics infrastructure, Bulk material transportation, Urban Public Transport; Energy – Electricity Transmission with specific reference to evacuation of renewable energy projects, National Gas Grid; Communication – OFC network, Telecommunication Towers; Commercial infrastructure – Common infrastructure for industrial parks with industrial activities like, Food parks/Textile parks, SEZs, Electronics Manufacturing Clusters, Fishing Clusters/Harbours, Defence Corridors/Industrial Corridors, Pharma & Medical Device Clusters.

In response to the source of funding for the aforesaid project, the Minister stated that there is no financial implication for multimodal connectivity infrastructure to the economic zones under the PM GatiShakti NMP as the concerned line Ministries/Departments will seek funding of their respective infrastructure projects serving the economic zones as per procedures laid under their respective schemes/programmes.

Giving more details, the Minister stated that the National Infrastructure Pipeline (NIP) was launched with projected infrastructure investment of around Rs. 111 lakh crore during FY 2020-2025 to provide world-class infrastructure across the country, and improve the quality of life for all citizens. NIP was launched with 6,835 projects, which has expanded to over 9,000 projects covering 34 sub- sectors. NIP is a first-of-its-kind, whole-of-government exercise and covers all infrastructure sub- sectors, including MSMEs working in infrastructure sector, as mentioned in Harmonized Master List of Infrastructure Sub-sectors notified by Department of Economic Affairs (DEA).