WEEKLY FINANCIAL SNIPPETS- 10/12/2016

1. RBI LIFTS INCREMENTAL CRR BURDEN ON BANKS: The Reserve Bank of India (RBI) has announced that the incremental 100% Cash Reserve Ratio ( CRR) requirement imposed on banks on November 26th will be withdrawn, effective from 10th December 2016. This additional CRR was for the deposits received between September 16th and November 11th. This was over and above the 4% CRR that banks already maintain with RBI. The additional CRR had been put in place to absorb excess liquidity which the banks have received by way of demonetization.

2. COMMON “QR” CODE SOON FOR PAYMENTS: As a part of multi-pronged push towards cashless economy, the government has asked RuPay, MasterCard and Visa to have a common “Quick Response” (QR) code based payment solution which will help merchants across India to accept payments without a card or swipe machine. This will be in line with the mode used by PAYTM now. A merchant will display his QR code, which the buyer scans through his smartphone app and can make payment using any of the three networks- RuPay, MasterCard or Visa.

3. PAYTM TO START PAYMENT BANK SOON: Paytm has got an in-principle approval from RBI for launching a payments bank. For this Paytm is transferring its wallet business into a newly created entity which is mandatory step to fulfil the rules laid by RBI. The wallet business is being transferred to the newly incorporated Paytm Payments Bank Ltd (PPBL). The transfer will be complete once the payment bank license is obtained.

4. AMAZON STARTS A NEW LAUNCHPAD PLATFORM TO HELP INDIAN START-UPS: Amazon.in, the Indian arm of Amazon.com has launched Amazon Launchpad in India to help Indian Start-ups to gain access to global markets. Amazon will lend its delivery and advertisement services to these start-ups and features their products on a dedicated store under the programme. Amazon charges Rs 5,000/- per merchant per month for the said services.

5. BAD LOANS CAUSE COLLATERAL DAMAGE AMID CASH CRUNCH: Banks are so busy to cope with cash crunch caused by demonetization that the critical task of following and going after bad loans has lost its track in banks. Not only that, bankers are worried that due to the demonetization there is a practical slump in asset value which means that the collateral value is depreciating making things worse.

6. EXCISE DUTY EXEMPTION FOR POS DEVICES: In yet another move to push the Indian economy towards digital economy, the government has provided excise duty exemption on point-of-sale (POS) devices manufactured in India. The excise duty exemption is also extended to all raw materials used for manufacture of POS machines. However, this exemption will be available only till 31st march 2017.

7. GOVERNMENT UNVEILS SPECIAL BONDS TO FREEZE DEMONETIZATION FUNDS: The government has created provisions to issue special bonds worth Rs 6.00 lakh crore to absorb the temporary flow of surplus funds with banks created due to demonetization. These bonds

are called Market Stabilisation Scheme Bonds (MSS) and RBI will sell these bonds to banks on behalf of the government. Money raised by these bonds cannot be used by the government and does not add to fiscal deficit.