WEEKLY FINANCIAL SNIPPETS – 17/12/2016

1. BILLIONAIRE PREM WATSA BUYS STAKE IN CATHOLIC SYRIAN BANK: Canadian billionaire Mr PremWatsa’s Fairfax Financial Holdings has bought 51% stake in Kerala based private sector bank Catholic Syrian Bank Ltd in an unprecedented deal. This is a far reaching development for the banks who are desperately looking for capital to meet Basel III norms.

2. CASH DELIVERY- RBI CUTS PROCESS TIME: The Reserve Bank of India has decided to ease the process related to transfer of currency notes to banks by start of the day itself. At present it is nearly by the afternoon that the transfer of currency to banks is affected. Following the criticism of mismanagement, the RBI has decided to transfer currency by 9 am every day. This may ease the pressure faced by bankers.

3. BANK CREDIT PLUNGES BY 61,000 CRORE IN POST DEMONETIZATION PHASE: Because of the demonetization after effects, the bank credit has shrunk by a vast margin of Rs 61,000 crore. Percentage wise it amounts to 0.8% . But at the same time the banks have been benefitted as many borrowers, including some default accounts have paid back.

4. RAIDS BY I-T DEPT AT BRANCHES IMPACTING STAFF MORALE: Added to the stress levels due to the long hours of working since demonetization, fear of raids by I-T Dept has added to stress for banking staff. Respective bank managements are taking serious steps to keep the morale up. These steps include reaching out to the bank employees manning the front desks and cash, and creating Whartsapp groups to spread awareness about unscrupulousoperators and point out the risks involved.

5. RBI’s SMALL STEP TOWARDS e-KYC IS A GIANT LEAP TOWARDS DIGITISING FINANCE: The Reserve Bank of India has now allowed the opening of deposit and borrower accounts through OTP e-KYC. This small step by RBI is a giant step towards digitising banking in India. It will help the Financial Inclusion drive in a big way as it will bring in potentially millions of unbanked Indians under ambit of formal banking. The traditional KYC process by way of submitting certain documents is more time consuming and expensive. However, e-KYC through OTP is instant and happens in real time which will be paperless.

6. SOON IT WILL BE NO CHEQUES WITHOUT AADHAAR DETAILS: Banks may make it mandatory for customers to mention the recipient’s Aadhaar details while carrying out cheque transactions. This move resonates with the Central governments’ plan to link all bank transactions with Aadhaar card. Since Aadhaar card stores demographic and biometric informationof the card holder, Aadhaar linked Unified Payment Interface (UPI) will enable an individual to carry transactions using a single platform.

7. REASONS FOR CASH CRUNCH IN THE MARKET: Even after 38 days of demonetization, the cash crunch doesn’t seem to be easing out. Hoarding of bulk new currency by some by some influential people across the country may be one of the reasons. However, hoarding may not be the only reason for the cash crunch. The other reason is that two of the government mints responsible for printing currency notes do not seem to be capable of printing so much money on short notice. But as per the latest reports the condition will improve in a few days.