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RBI releases its Annual Report for the year 2018-19

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On August 29,2019, India’s central bank, the Reserve Bank of India(RBI) has released its annual report for the fiscal year (FY) 2018-19. The report, which is released annually, analyses the working and operations of the RBI and suggests measures to improve the economic performance.RBI releases its Annual Report for the year 2018-19

Here are the key takeaways from the report:

Bank frauds touched Rs 71,543.93 cr in 2018-19, a record jump of 73.8 %
The number of cases of bank frauds reported by banks in 2018-19 increased 15 % on a year-on-year(Y-O-Y) basis to 6,801 cases from 5,916 cases in 2017-18.
The amount of frauds touched at Rs 71,542.93 crore in 2018-19 as against Rs 41,167.04 crore in 2017-18, a 73.8 %.
Key points:
i. PSB:
Among bank groups, Public sector banks(PSB) reported 3,766 cases of frauds worth Rs 64,509.43 crore as against 2,885 cases involving Rs 38,260.8 crore in 2017-18.

  • The amount that was involved in fraud for 2018-19- 2 %.
  • The number of frauds in 2018-19-  55.4%

ii. Private lenders: While private sector banks has reported 2090 cases worth of Rs 5515.14 crore for 2018-19.

  • The amount that was involved in fraud for 2018-19 -7.7 %
  • The number of frauds in 2018-19- 30.7 %

iii. Foreign Bank: They constituted 762 cases worth of Rs 955.3 crore for the fiscal year 2018-19.

  • The amount that was involved in fraud for 2018-19-  3 %
  • The number of frauds in 2018-19 – 11.2%

iv. The report notified that the average time lag between the date of occurrence and its detection by banks was 22 months, while the average lag for frauds for amount involving over Rs 100 crore, amounting to Rs 52,200 crore during 2018-19, was 55 months.
v. The number of bank frauds related to advances were predominant followed by card/internet related frauds and deposits related fraud.
vi. To detect the frauds efficiently the RBI is co-coordinating with various entities, including the Ministry of Corporate Affairs, to check the viability of interlinking various databases and information systems for getting improvement in the monitoring of frauds.
vii. RBI will create Fraud registry for improving fraud analytics & for improving the fraud risk management framework, RBI bank will revise the directions on frauds & include new instructions for fraud prevention.

Banks contain gross NPAs at 9.1% in 2018-19
The report stated that the stressed assets recognition and resolution in earlier manner has helped the banks contain their gross non- performing loans ratio at 9.1 % in FY2018-19, slips from 11.2 % in 2017-18.
The proportion of provision in the banking system for such loans increased to 60.9 % during the period under review as the level of fresh growth in non-performing loans also decreased.
Key points:
The report stated that after the initial difficulties, the insolvency and debt solvency code is proving to be a step to change the entire atmosphere.
ii. The receivables of the old stranded debt are improving and as a result, the stability that had remained in the potential investment cycle has started easing.
iii. The capital buffer has been strengthened by adding new capital of Rs 2.7 trillion. This includes the allocation of the budget for FY 2019-20.
 iv. The rules of NPA identification and resolution in June 2019 have raised hopes of an early solution to the problem.
About NPA:
A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

Currency circulation increased  by 17% to Rs 21.1 lakh cr
The circulation of bank notes in the economy has increased 17% in FY2018-19 to Rs 21.1 trillion as against Rs 18.03 trillion in FY2017-18.
Key points:
In terms of circulation in volume trends, the bank notes in circulation increased 6.2% to 108.76 billion pieces from 102.4 billion during FY2018-19.
ii. The bank notes of  Rs 500 and Rs 2,000 constituted 82.2% of the total value of bank notes in circulation at the end of March 2019. Of this, share of ₹2,000 notes in the economy in terms of the total value of currency in circulation slips to 31.2% as of March 2019from 50.2% in 2016-17 & the value of ₹500 notes is now 51% from 22.5% in 2016-17.
iii. Rs 10 and Rs 100 bank notes constituted 47.2% of bank notes in circulation at end of March 2019, as compared to 51.6% in 2017-18).
iv. While the share of Rs 200 notes has increased to 3.8 % in 2018-19.

Counterfeit notes:
i. Rs10, 20, 50 & 100 denomination
:   The detection of fake notes in Rs 10, Rs 20, Rs 50 denomination increased 20.2%, 87.2% and 57.3% respectively in 2018-19, as compared to 2017-18.while, Rs 100 counterfeit notes detected declined 7.5% during 2018-19.
ii. Rs. 500, 2000, 200 denomination:  The Counterfeit notes of ₹500 (new design) increased by 121% to 21,865 pieces during 2018-19. For ₹2,000 notes, it is nearly 22% increase in the detection of counterfeit at 21,847 pieces. Totally 12,728 counterfeit notes of ₹200 were detected in 2018-19 as compared to 79 in 20117-18.
iii. The central bank also announced that the varnished ₹100 notes to be launched soon on a trial basis.

About RBI:
: 1 April 1935
Headquarters: Mumbai
Governor: Shaktikanta Das