The Reserve Bank of India recently released to the financial stability report for December 2020. This is the 22nd issue of financial stability report of the apex bank. It is released twice a year.
Key Findings of the Financial Stability Report of RBI
The Gross non-performing assets ratio of the scheduled commercial banks is to increase to 13.5% by September 2021.
The net NPA and GNPA ratios continue to decline. The GNPA ratio stood at 7.5% in September 2020. On the other hand, the NNPA the ratio stood at 2.1 % in September 2020 and at 3% in March 2020.
According to the financial stability report, the GNPA might increase to 13.5% by September 2021 under baseline scenario. Under severe stress scenario, the GNPA ratio might increase to 14.8% by September 2021.
According to the the July 2020 financial stability report prediction GNPA was to increase from 8.5 % in March 2020 to 12.5% by March 2021. Also, the July 2020 financial stability report predicted that the GNPA ratio was to increase to 14.7 % under severe stress test scenario.
The loans to corporate have grown to multi quarter high of 5.65 % in March 2020 quarter.
The financial stability report says that the long-standing trend of private and public sector banks have been reversed. According to the report, the private bank credit has grown rapidly and the public sector bank credit has declined.
What is GNPA?
Gross Non-Performing Assets.
What is NNPA?
Net Non-Performing Assets.
What is the difference between GNPA and NNPA?
The GNPAs are the summation of all the loan assets that are classified as non performing asset under RBI guidelines. The NNPA subtracts the provisions made by the banks from the gross NPA. Therefore, only NNPA gives the exact value of the non-performing assets.
Who releases Financial Stability Report?
The RBI Financial Stability Report is released by the Financial Stability and Development Council. The idea of the council was mooted by Raghuram Rajan Committee in 2008. The Union Finance Minister is the chairperson of the Financial Stability and Development Council. The other members include RBI Governor and other senior officials of RBI.
The National Informatics centre and the Central Board of Secondary Education (CBSE) jointly launched the CollabCAD software.
About CollabCAD Software
The CollabCAD software provides engineering solution for students and Faculty of Engineering Graphics curriculum. It aims to provide a platform to students across the country to create and modify digital designs.
The aim is to provide a good platform to the students of Atal tinkering labs across the country. With the software the students of Atal tinkering labs will be able to create and modify 3D designs with free flow of creativity. It will enable students to create data across the network and access the same design data for storage and visualisation.
Key Features of CollabCAD software
The software runs on zone Linux and OS platform .
It is available in both standalone and client server mode.
Tinker from Home
The Tinker from Home Campaign was launched by the Atal tinkering lab programme to ensure that the children in India have access to easy to learn online resources. The objective is to use the creativity of children by encouraging self initiatio.
Atal Tinkering Labs
The Atal Tinkering Labs aim to “cultivate 1 million children in India as neoteric innovators”. The Atal innovation mission will provide one time establishment cost of 10 lakh rupees and operational expenses of another 10 lakh rupees to each Atal tinkering lab. This financial support will be provided for maximum period of 5 years.
Any school can set up Atal tinkering lab. The only criteria is that the applicant school should provide at least 1500 square feet of built up space. On the other hand, an applicant school in a hilly region or Island State should provide at least 1,000 square feet of built-up space.
ISRO role in Atal Tinkering Labs
Recently the Indian Space Research Organisation adopted hundred Atal tinkering Labs. This will promote scientific temperament among students and will encourage them to learn space related Technologies.
The United States President elect Joe Biden recently announced 1.9 USD “American rescue plan”. It is a covid-19 stimulus package.
The plan will provide 130 billion USD to help the schools in the United States to reopen safely within the first hundred days of the presidency of Biden.
Eligible individuals are to be provided with 1,400 USD of stimulus payments.
The package includes 415 billion USD to bolster the response to covid-19 virus and also to roll out the covid-19 vaccine.
The package includes one trillion USD direct relief to households.
it will provide 440 billion USD to develop the small businesses and communities particularly to those that are hardly hit by the covid-19 pandemic.
And unemployment insurance of 400 USD per week is to be provided. Earlier it was 300 USD per week.
Covid-19 vaccine in United States
According to the United States Centres for Disease Control and prevention more than 9 million Americans have been provided with the covid-19 vaccination dose as of January 11, 2021.
Recently the United States Food and Drug Administration issued the first emergency use authorisation of Pfizer COVID-19 vaccine. The moderna vaccine was the second vaccine to receive emergency use authorisation in the country.
Operation Warp Speed
It is a public private partnership that was initiated in the United States to facilitate and accelerate the development, manufacturing and distribution of covid-19 vaccine. The operation was launched by the government of United States. It was announced in May 2020.
The operation promotes mass production of multiple vaccines and fast distribution. It promotes different types of vaccine Technology. The operation was initially funded with 10 billion USD from the CARES Act.
CARES Act of US
CARES Act is the Coronavirus Aid, Relief and Economic Security Act. It was a 2.2 trillion USD economic stimulus Bill passed by the US Congress in March 2020 in response to the economic fallout of covid-19 pandemic in the United States of America. It included three hundred billion USD of one-time cash payment to individual Americans, 350 billion USD to the small businesses under the Paycheck Protection Programme, 260 billion USD to increase unemployment benefits.
The Reserve Bank of India recently constituted a working group on digital lending. The working group was constituted to study all aspects of digital lending activities in the regulated and regulated financial sector. The working group will ensure that an appropriate regulatory approach is put in the digital lending platform.
Functions of the working group
The working group will evaluate digital lending activities in the country.
It will assess the standards of outsourced digital lending activities of entities regulated by the Reserve Bank of India.
It will suggest regulatory changes to promote orderly growth of digital lending.
The working group is to identify risks to be faced by the unregulated digital lending. It will mainly focus on risks faced by consumers and regulated entities that are exposed to unregulated digital lending.
It will recommend measures to expand statutory perimeter in digital lending. Also, it will suggest the role of various regulatory and government agencies in digital lending.
The working group will recommend a robust fair practice code for Digital lending players.
What are the benefits of digital lending?
Digital lending makes the financial products and services more efficient, inclusive and fair.
Earlier digital lending played a peripheral supporting role. However currently it is now at the core of the design, delivery and pricing of financial services and products.
What are the six Commandments RBI to banks on digital lending?
The names of the digital lending platforms working as agents are to be disclosed on the websites of banks and other non banking financial corporation.
The digital lending platforms that are working as agents are to be directed to disclose the details of name of the bank, customers on whose behalf they are interacting.
The sanction letter should be issued to the borrower on letter head of the bank. This should be done immediately after the sanction of the loan Agreement but before its execution.
A copy of loan Agreement should be furnished to all borrowers at the time of disbursement of loans.
Effective monitoring should be ensured.
Adequate efforts should be made in successful implementation of grievance redressal mechanism.
On January 15, 2021, the Government of India is to launch the third phase of Pradhan Mantri Kaushal Vikas Yojana. The third Phase is to be implemented by the Ministry of Skill Development and Entrepreneurship.
What are the key features of Pradhan Mantri Kaushal Vikas Yojana 3.0?
Under the third phase of Pradhan Mantri Kaushal Vikas Yojana, 729 Pradhan Mantri Kaushal Kendra are to be established and more than 200 ITIs are to be rolled out under Skill India mission. This will build a robust pool of skilled professionals.
Pradhan Mantri Kaushal Vikas Yojana 3.0 is to train more than 1 lakh candidates for a period of one year with an investment of 950 crores of Rupees.
Pradhan Mantri Kaushal Vikas Yojana Phase 2
The phase 2 of Pradhan Mantri Kaushal Vikas Yojana was launched in 2015. It focused on the following
Short term training: The Pradhan Mantri Kaushal Vikas training centres provided short term training to candidates who were school or college dropouts or unemployed. The training was provided according to the the National Skills Qualification Framework. The curriculum mainly focused on entrepreneurship, soft skills, digital literacy.
Recognition of prior learning: It focused on aligning the competencies of the unregulated workforce of the country to the National Skills Qualification Framework.
Special projects: The special projects of the phase consisted of those projects that may require certain deviation from the terms and conditions of the short-term training under Pradhan Mantri Kaushal Vikas Yojana.
Pradhanmantri Kaushal Vikas Yojana Phase 1
Pradhan Mantri Kaushal Vikas Yojana was launched as National Skill Development Mission in 2010. It consisted of the following three institutions
Prime Minister National Council on skill development
National Skill Development Corporation
National Skill Development co-ordination board
The main focus of the phase was to provide training to class 10 and class 12 dropouts.
What is the target of Pradhan Mantri Kaushal Vikas Yojana?
The National Policy on Skill Development had set a target of skilling 50 crore people by 2022.
Who implements Pradhan Mantri Kaushal Vikas yojana?
National Skill Development Corporation operating under Ministry of skill development and Entrepreneurship.