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Highlights of RBI Annual Report 2019-20; India’s Growth Projected at -4.5%

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Hightlights-of-RBI-Annual-Report-2019-20On August 25, 2020, Reserve Bank of India (RBI) released its Annual Report for 2019-20. It is Report of the Central Board of Directors on the working of the Reserve Bank of India (RBI) for the year ended June 30, 2020 submitted to the Central Government in terms of Section 53(2) of the Reserve Bank of India Act, 1934

  • In the report, RBI projected that India’s growth at minus 4.5% for 2020-21. It will be (-) 3.7% in the single hit scenario and (-) 7.3% in the double hit scenario in FY2020-21.
  • On the global front, the growth is projected at (-) 6.0% in the single hit scenario and (-) 7.6% in the double hit scenario in FY20-21.

Balance Sheet of RBI:

-The RBI’s balance sheet increased by 30%, or Rs 12,31,888 crore, from Rs 41,02,905 crore to Rs 53,34,793 crore. 

-The gross total income for the year 2019-20 declined by 29% to Rs 149,672 crore as compared to Rs 193,036 crore in 2018-19.

-Its expenditure for the year 2019-20 is Rs 92,540 crore compared to an expenditure of Rs 17,045 crore in 2018-19. 

-The year ended with an overall surplus of Rs 57,128 billion which was transferred to the government.

-On the liability side, the rise was due to an increase in notes issued, other liabilities and provisions and deposits. 

-Domestic assets constituted 28.75% while foreign currency assets and gold (including gold deposit and gold held in India) constituted 71.25% of total assets as of June 2020 as against 28.03% and 71.97% respectively, as of June 2019.

–Bank frauds more than double in FY20 to Rs 1.85 trillion

As per the RBI annual report FY19-20, bank frauds of Rs100,000 and above have more than doubled in value to Rs 1.85 trillion in FY20, with the number of such cases increasing 28% in the same period.

  • The top 50 credit-related frauds constituted 76% of the total amount reported as frauds.
  • Public sector banks (PSBs) accounted for 80% of the Rs 1.85 trillion reported as frauds in FY20, followed by private sector banks at 18%. 
  • Frauds in loans constituted 98% of the total frauds or at Rs 1.82 trillion.
  • The aggregate amount of money involved in frauds in April-June 2020 stood at Rs28,843 crore, as against Rs 42,228 crore in the April-June of 2019.

–Setting up GST Council type authorities for land, labour, power 

The Reserve Bank suggested setting up GST (Goods and Services Tax) Council type apex authorities for land, labour and power to drive structural reforms and expedite implementation of national infrastructure pipeline.

–RBI to dissolve Banking Codes and Standards Board of India

The Reserve Bank of India (RBI) has decided to dissolve the Banking Codes and Standards Board of India (BCSBI) which was set up in February 2006 as an independent and autonomous body for formulating codes of conduct to be adopted by banks voluntarily for ensuring fair treatment of customers.

  • BCSBI, in collaboration with the Indian Banks’ Association (IBA), has evolved two codes – Code of Bank’s Commitment to Customers and the Code of Bank’s Commitment to Micro and Small Enterprises.
  • The nodal department for BCSBI is CEPD (Consumer Education and Protection Department).

–Integration of three existing Ombudsman schemes into one

Meanwhile, the RBI will be implementing the recommendations of an in-house committee for integrating three existing Ombudsman schemes – Banking Ombudsman Scheme, 2006; Ombudsman Scheme for NBFCs, 2018; and Ombudsman Scheme for Digital Transactions, 2019 – into one scheme.

Key Points:

-Currency notes of Rs 2,000 denomination were not printed in 2019-20. The number of Rs 2,000 currency notes in circulation has come down from 33,632 lakh pieces at end-March 2018 to 32,910 lakh pieces at end-March 2019 and further to 27,398 lakh pieces at end-March 2020.

-On the other hand, the circulation of currency notes of denomination of Rs 500 and Rs 200 has gone up substantially, both in terms of volume and value over the three years beginning 2018.

  • Notably, the share of Rs 500 notes in the total value of currency has raised maximum from 51% in 2018-19 to 60.8% in 2019-20.

-Government consumption will have to fuel demand till the economy comes out of the COVID-19 shock and regains pre-COVID-19 momentum.

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Recent Related News:

On July 09, 2020, According to data from RBI, Tamil Nadu (TN) has topped market borrowings among States in India with a collection of Rs.30,500 crore in the fiscal 2020-21(FY 21). It has been followed by Maharashtra (Rs 25,500 crore), Andhra Pradesh (Rs 17,000 crore), Rajasthan (Rs 17,000 crore).

About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).