RBI’s Monetary Policy Review
- RBI said in its ‘Statement on Developmental and Regulatory Policies’ to cover all repetitive bill payments under the Bharat Bill Payment System (BBPS) that includes 5 segments- electricity, telecom, gas, direct-to-home, and water bills.
- RBI has extended the working hour of retail payment system National Electronic Funds Transfer (NEFT), which is used for fund transfer up to Rs 2 lakh, from 8 am to 7 pm to 24x7 round-the-clock fund transfers to promote digital transactions.
- The MPC lowered its growth forecast (GDP) to 6.9% now from 7% of June policy owning to demand and investment slowdown.
RBI made Jana Small Finance Bank a Scheduled Bank
- RBI gave the Bengaluru-headquartered Jana Small Finance Bank Ltd, the status of a scheduled bank on 8th August 2019.
- The Jana Bank was established in 2009 as a financial services company and opened its banking operations in 2018.
- The government has put the bank on the list of banks included in the second schedule of RBI Act 1934.
Computation of Adjusted Net Bank Credit
Method to calculate Adjusted Net Bank Credit:-
| Bank Credit in India (As prescribed in item No.VI of Form ‘A’(Special Return as on March 31st) under Section 42 (2) of the RBI Act, 1934. | I |
| Bills Rediscounted with RBI and other approved Financial Institutions | II |
| Net Bank Credit (NBC) | III (I – II) |
| Investments in Non-SLR categories under HTM category + other investments eligible to be treated as a priority sector. | IV |
| Adjusted Net Bank Credit | III + IV |
Read an in-depth article on Adjusted Net Bank Credit here
CLASSIFICATION OF MICRO, SMALL AND MEDIUM ENTERPRISES
| Enterprises | Annual Turnover |
| Micro Enterprises | Does not exceed 5 crore rupees |
| Small Enterprises | More than 5 crore rupees but does not exceed 75 crore rupees |
| Medium Enterprises | More than 75 crore rupees but does not exceed 250 crore rupees |
Priority Sector Lending
- A large portion of the population in India doesn't have access to funds. Therefore RBI has adopted Priority Sector Lending norms which relaxes the lending norms for poor and small businesses.
- Priority Sector includes the following categories:
- Agriculture
- Micro, Small and Medium Enterprises
- Export Credit
- Education
- Housing
- Social Infrastructure
- Renewable Energy
- Others
| Categories | Domestic scheduled commercial banks and Foreign banks with more than 20 branches in India |
| Total Priority Sector | 40 per cent of Adjusted Net Bank Credit or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. |
| Agriculture | 18 per cent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. Within the 18 per cent target for agriculture, a target of 8 per cent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher is prescribed for Small and Marginal Farmers. |
| Micro Enterprises | 7.5 per cent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. |
| Advances to Weaker Sections | 10 per cent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher |
FOREIGN BANKS WITH LESS THAN 20 BRANCHES
| Total Priority Sector | 40 per cent of Adjusted Net Bank Credit or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, to be achieved in a phased manner by 2020. |