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Bandhan Financial Services started operations as Scheduled Commercial Bank

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Bandhan Financial Services started operations as Scheduled Commercial Bank

Bandhan Financial Services, a Micro Financial Institution (MFI), on 23 August 2015 started operations as a Scheduled Commercial Bank (SCB). Henceforth it will be called as Bandhan Bank.

The banking services were inaugurated by the Union Finance Minister Arun Jaitley in Kolkata.

With this, Bandhan became the first micro finance company in the country to start operations as a full-fledged commercial bank. It is also the first commercial bank from Eastern India to get RBI clearance since independence.

Bandhan along with IDFC (Infrastructure Development Finance Company) were granted banking licenses in 2014 by the Reserve Bank of India (RBI). The move was aimed at deepening financial services reach in the country by utilizing the services of the existing players in the market.

About Bandhan

Bandhan started as a Non Banking Finance Company in 2001 and focused on the lower strata of the especially unorganized sector workers.

On the inaugural day, the bank started operations with 501 branches in 24 states across the country with 1.43 crore accounts.

Chandra Sekhar Ghosh, the Managing Director and Founder of the Bank.

R Gandhi panel recommended conversion of UCBs into Regular Banks

The Reserve Bank of India’s (RBI’s) High Powered Committee on Urban Cooperative Banks (UCBs) headed by RBI Deputy Governor R Gandhi in its report has recommended conversion of UCBs with business size of 20000 crore rupees or more into regular banks. This will allow them to grow and proliferate further for financial inclusion.

RBI on 20 August 2015 placed the panel’s report on its website and invited suggestions and comments from public on this report by 18 September 2015.

The important recommendations made by the HPC are briefly as under:

1. Business Size and Conversion of Multi-State UCBs into joint stock bank: A business size of 20000 crore rupees or more may be the threshold limit beyond which a UCB may be expected to convert itself into a commercial bank. The conversion need not be de jure compulsory. However, the types of businesses to be undertaken by those choosing not to convert may remain within the limits of plain vanilla products and services and hence, growth will be at a much slower pace. Their expansion in terms of branches, area of operations and business lines may thus be carefully calibrated.

2. Conversion of UCBs into Small Finance Banks (SFBs): Smaller UCBs with business size of less than 20000 crore rupees willing to convert to SFBs can apply to the Reserve Bank for conversion provided they fulfil all the eligibility criteria and selection processes prescribed by the Reserve Bank and further provided that the licensing window for SFBs is open.

3. Issue of fresh licences: Licenses may be issued to financially sound and well-managed co-operative credit societies having a minimum track record of 5 years which satisfy the regulatory prescriptions set by the Reserve Bank as licensing conditions. For providing banking access in unbanked areas, the Reserve Bank may put in place an appropriate set of incentives for existing banks to open branches there.

4. Board of Management (BoM) in addition to Board of Directors (BoDs): Putting in place a BoM as suggested by the Malegam Committee has to be one of the mandatory licensing conditions for licensing of new UCBs and expansion of existing ones.

5. Entry Point Norms: The new Entry Point Norms (EPNs) may be as under:

• To operate as a Multi-State Urban Co-operative Bank- 100 crore rupees

• To operate beyond two districts and as a State level UCB - 50 crore rupees

• To operate as District level UCB (upto 2 districts) - 25 crore rupees

• In case of conversion of co-operative credit societies in unbanked areas and in the north-east, suitable relaxation may be made by the Reserve Bank.

6. Depositors as voting members: The depositors ought to have a say on the Boards of UCBs. For this, a majority of the board seats may be reserved for depositors by making suitable provisions in the bye-laws.


The High Powered Committee on Urban Co-operative Banks (UCBs) under the chairmanship of RBI Deputy Governor R Gandhi was constituted on 30 January 2015. The committee was formed to examine and recommend permissible business lines and appropriate size, and examine the issues with regard to conversion of UCBs into commercial banks besides determining whether the time is opportune to issue new licenses to UCBs as recommended by the Expert Committee on Licensing of New UCBs (Malegam Committee).

The committee was formed in accordance to the recommendation made by the Standing Advisory Committee (SAC) on UCBs in its meeting held on 20 October 2014.

RBI granted 'in-principle' approval to 11 Payment Banks applicants

The Reserve Bank of India (RBI) on 19 August 2015 granted in-principle approval to 11 payment banks applicants under the Guidelines for Licensing of Payments Banks. The guidelines were issued on 17 November 2014.

The 11 payment banks granted the approval includes

• Aditya Birla Nuvo Limited

• Airtel M Commerce Services Limited

• Cholamandalam Distribution Services Limited

• Department of Posts

• Fino PayTech Limited

• National Securities Depository Limited

• Reliance Industries Limited

• Shri Dilip Shantilal Shanghvi

• Shri Vijay Shekhar Sharma

Tech Mahindra Limited

• Vodafone m-pesa Limited

RBI's “in-principle” nod will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfill the other conditions as may be stipulated by the Reserve bank.

On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the Reserve Bank would consider granting to them a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949. Until a regular licence is issued, the applicants cannot undertake any banking business.

Payments Bank

A payments bank differs from conventional banks as it cannot lend to its customers. It is allowed to take deposits, allow remittances and provide simple financial products. The payments bank will need to invest 75 percent of its funds in government securities.

The minimum capital needed to set up a payments bank is set at 100 crore rupees. The bank will be allowed to accept savings deposits of up to 1 lakh rupees from each customer.

Union Government appointed two private sector professionals to head BoB, Canara Bank

Union Government on 14 August 2015 appointed private sector professionals, namely PS Jayakumar and Rakesh Sharma, as Managing Director (MD) and Chief Executive Officer (CEO) of Bank of Baroda (BoB) and Canara Bank, respectively.

This is the first time that private sector professionals were appointed to head the Public Sector Banks (PSBs). Earlier, the heads of PSBs were selected from among the state-run banks or government officers.

The announcements were made along with appointment of MD and CEO of Bank of India (BoI), IDBI Bank and Punjab National Bank (PNB).

These three executive heads are serving officials in other government-owned banks and the appointees are MO Rego, Kishore Kharat Piraji, and Usha Ananthasubramanian.

The government also announced appointment of Non-executive chairman of 5 banks, namely Bank of Baroda, Bank of India, Canara Bank, Vijaya Bank and Indian Bank.

Besides, the government also announced that some vacancies of Non-official Directors and non executive chairman of six other PSBs will be completed in the next three months.

RBI notified Interest Subvention Scheme 2015-16 of Union Government for banks

Reserve Bank of India on 13 August 2015 notified the Union Budget-2015-16 Interest Subvention Scheme (ISS) and asked all banks to provide interest concession of 2 percent on short term crop loans of up to 3 lakh rupees.

The central bank in its notification said that interest subvention of 2 percent per annum will be made available to public and private sector banks provided they lend short term credit at the ground level at 7 percent per annum to farmers.

The bank said that additional interest subvention of 3 percent will be available to farmers for repaying the loan promptly from the date of disbursement of the crop loan. This implies that farmers paying promptly would get short term crop loans at 4 percent during the year 2015-16.

To provide relief to farmers affected by natural calamities, the Reserve Bank has said that interest subvention of 2 percent will continue to be available to banks for the first year on the restructured amount. However, such restructured loans may attract normal rate of interest from the second year onwards.


The government in the Budget for 2015-16 proposed to implement interest subvention scheme in the 2015-16 fiscal for short-term crop loans up to 3 lakh rupees. After that, the Union Government on 21 July 2015 extended ISS to Public Sector Banks (PSBs), private sector commercial banks, rural regional banks (RRBs), cooperative banks and NABARD.

India & World Bank signed agreement of US$ 308.40 Million for NCRMP-II

Union Government and World Bank on 11 August 2015 signed 308.40 million US dollar credit agreement in support of the second phase of the National Cyclone Risk Mitigation Program (NCRMP-II). The agreement was also signed by the state Governments of Goa, Gujarat, Karnataka, Kerala, Maharashtra, and West Bengal.

The agreement was signed by Raj Kumar, Joint Secretary, Department of Economic Affairs on behalf of the Union Government and John Blomquist, Program Leader and Acting Country Director in India, on behalf of the World Bank.

The Project Agreements in respect of the States of Goa, Gujarat, Karnataka, Kerala, Maharashtra and West Bengal were signed by the representatives of the respective State Governments.

Objective of the National Cyclone Risk Mitigation Project-II (NCRMP-II)

• To reduce vulnerability to cyclone and other hydro-meteorological hazards of coastal communities in the states of Goa, Gujarat, Karnataka, Kerala, Maharashtra and West Bengal

• It aims at increasing the capacity of the State entities to effectively plan for and respond to disasters.

• The project will also finance technical assistance for strengthening of multi-hazard risk management at the national level and improving the quality of available information on multi-hazard risks for decision making across the country.

• NCRMP-II has four components and they are

a) Early Warning Dissemination Systems

b) Cyclone Risk Mitigation Infrastructure

c) Technical Assistance for Multi-Hazard Risk Management

d) Project Management and Implementation Support

The primary beneficiaries of NCRMP-II will be coastal communities in the target states benefitting from cyclone risk mitigation infrastructure and early warning systems.

The project will be implemented by the Ministry of Home Affairs through National Disaster Management Authority (NDMA) and at the state level, it will be executed by the respective State Disaster Management Authorities.

Union Ministry for Minority Affairs launched Nai Manzil Scheme in Patna

The Union Minister for Minority Affairs Najma Heptulla on 8 August 2015 launched a new Central Sector Scheme Nai Manzil in Patna.

The scheme will address educational and livelihood needs of minority communities in general and muslims in particular as it lags behind other minority communities in terms of educational attainments.

Highlights of the scheme

• The scheme gives a new direction and a new goal for the all out of school or dropped out students and those studying in Madrasas. It is so because they will not be getting formal Class XII and Class X Certificates rendering them largely un employed in organised sector.

• The Nai Manzil scheme is aimed at this target group as an integrated intervention in terms of providing education as well as skill development.

• It aims at providing educational intervention by giving the bridge courses to the trainees and getting them Certificates for Class XII and X from distance medium educational system.

• It will also provide them trade basis skill training in 4 courses including Manufacturing, Engineering, Services and Soft skills.

• The scheme is intended to cover people in between 17 to 35 age group from all minority communities as well as Madrasa students.

• It will provide avenues for continuing higher education and also open up employment opportunities in the organised sector.

RBI decided to issue 10 rupees coins to commemorate International Day of Yoga

The Reserve Bank of India on 30 July 2015 decided to put into circulation 10 rupees coins to commemorate the International Day of Yoga. The coins have been minted by the Government of India.

The design details of these coins are:


• The obverse of the coin bears the Lion Capitol of Ashoka Pillar in the center with the legend "सत्यमेव जयते" inscribed below, flanked on the left periphery with the word "भारत" in Devnagri script and on the right periphery flanked with the word "INDIA" in English.

• It also bears the Rupee ₹ symbol and denominational value "10" in the international numerals below the Lion Capitol.


• The reverse of the coin bears the logo of "International Day of Yoga", with inscription "सामंजस्य एवं शान्ति के लिए योग" in Devnagri Script and "YOGA FOR HARMONY AND PEACE" around the logo and design.

• The date "21 JUNE" is written at the bottom of the logo.

• The inscription "अंतर्राष्ट्रीय योग दिवस" in Devnagri script on left periphery and "INTERNATIONAL DAY OF YOGA" in English on the right periphery is written on this side of the coin.

• The year "2015" is written on the lower periphery in international numerals exactly below the logo.

These coins are legal tender as provided in The Coinage Act 2011. The existing coins in this denomination will also continue to be legal tender.

Union Cabinet approved setting up of National Investment and Infrastructure Fund

Union Cabinet on 29 July 2015 approved setting up of National Investment and Infrastructure Fund (NIIF) to back new and stressed projects may help restart the investment cycle.

The fund will have an initial corpus of 20000 crore rupees which can be leveraged by infrastructure companies.

NIIF is proposed to be set up as a Trust which would raise debt to invest in the equity of infrastructure finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB).

The fund was proposed by the Union Finance Minister Arun Jaitley in his Budget 2015-16.

Besides, the Cabinet also gave approval to foreign investment in the Alternative Investment Funds for facilitating domestic investment.

Union Government extended Interest Subvention Scheme to banks

Union Government on 21 July 2015 extended Interest Subvention Scheme (ISS) to Public Sector Banks (PSBs), private sector commercial banks, rural regional banks (RRBs), cooperative banks and NABARD. It was extended to ensure availability of crop loans of up to 3 lakh rupees to farmers at 7 percent per annum.

The decision to continue interest subvention on short term crop loans was taken by the Union Cabinet chaired by Prime Minister Narendra Modi for the fiscal 2015-16. The Cabinet also approved an additional interest subvention of 3 percent per annum for those farmers who repay on time.

The government also decided to provide interest subvention to small and marginal farmers with Kisan Credit Cards (KCC) for loans against negotiable warehouse receipts post-harvest at annual interest of seven percent for six months.

The government will also give relief to farmers affected by natural calamities, where the interest subvention of two percent will continue to be available to banks for the first year on the restructured amount.

Besides, the Cabinet also approved a Central Agricultural University at Samastipur in Bihar. According to the approval, the existing agricultural university at Pusa will be converted into an international level institution through strengthening of infrastructure, manpower and other provisions.

The cabinet also gave its in-principle nod for the revival of Banana Research Centre at Goraul in Vaishali, Bihar.

RBI signed Special Currency Swap Agreement with the Central Bank of Sri Lanka

The Reserve Bank of India on 17 July 2015 signed a Special Currency Swap Agreement with the Central Bank of Sri Lanka.

Under the arrangement, the Central Bank of Sri Lanka can draw up to 1.1 billion US dollar for a maximum period of six months. This special arrangement is in addition to the existing Framework on Currency Swap Arrangement for the SAARC Member Countries.

Earlier on 25 March 2015, the Reserve Bank of India had signed a Currency Swap Agreement with the Central Bank of Sri Lanka for 400 million US dollar under the existing SAARC Currency Swap Framework within the overall limit of 2 billion US dollar.

The swap arrangements are intended to provide a backstop line of funding for the SAARC member countries to meet any balance of payments and liquidity crises till longer term arrangements are made or if there is need for short-term liquidity due to stressed market conditions.

The proposal to extend the additional currency swap facility of 1.1 billion US dollar for a limited period was decided by the Union Government in April 2015 based on the recommendation of the Reserve Bank of India for mitigating the possible currency volatility in the spirit of strengthening India’s bilateral relations and economic ties with Sri Lanka.

Union Government launched National Mission for Skill Development

Union Ministry of Skill Development and Entrepreneurship (MSDE) on 15 July 2015 launched the National Mission for Skill Development (NMSD). The NMSD was launched to provide the overall institutional framework to rapidly implement and scale up skill development efforts across India.

The Mission seeks to provide the institutional capacity to train a minimum of 300 million skilled people by the year 2022.

Objectives of the Mission

Create an end-to-end implementation framework for skill development, which provides opportunities for life-long learning.

Align employer/industry demand and workforce productivity with trainees’ aspirations for sustainable livelihoods, by creating a framework for outcome-focused training.

Establish and enforce cross-sectoral, nationally and internationally acceptable standards for skill training in the country.

Build capacity for skill development in critical un-organized sectors and provide pathways for re-skilling and up-skilling workers in this sector, to enable them to transition into formal sector employment.

Ensure sufficient, high quality options for long-term skilling, benchmarked to internationally acceptable qualification standards, which will ultimately contribute to the creation of a highly skilled workforce.

Develop a network of quality instructors/trainers in the skill development ecosystem by establishing high quality teacher training institutions.

Leverage existing public infrastructure and industry facilities for scaling up skill training and capacity building efforts.

Support weaker and disadvantaged sections of society through focused outreach programmes and targeted skill development activities.

Propagate aspirational value of skilling among youth, by creating social awareness on value of skill training.

Maintain a national database, known as the Labour Market Information System (LMIS), which will act as a portal for matching the demand and supply of skilled workforce in the country.

Institutional Mechanism

The Mission at the Centre will consist of a apex Governing Council to be headed by Prime Minister, a Steering Committee to be headed by Minister of MSDE and a Mission Directorate to be chaired by Secretary, MSDE.

Mission Directorate will be supported by three other institutions, viz., National Skill Development Agency (NDSA), National Skill Development Corporation (NSDC) and Directorate General of Training (DGT).

At the State level, States will be encouraged to create State Skill Development Mission along the lines of National Skill Development Mission with a Steering Committee and a Mission Directorate at the State level.

Seven Sub-Missions

The Mission will have seven sub-missions under its purview. These are:

Revitalizing Institutional training

Infrastructure through undertaking sector specific skill training initiatives

Ensure convergence of existing skill development programmes

Leverage existing public infrastructure for skilling

Focus on training of trainers

Facilitate overseas employment and

Promote sustainable livelihoods

CCEA approved Scheme for Promotion of National Agricultural Market

The Cabinet Committee on Economic Affairs (CCEA) on 2 July 2015 gave its approval to the Central Sector Scheme for Promotion of National Agricultural Market through Agri-Tech Infrastructure Fund (ATIF).

The scheme envisages creation of a common electronic platform deployable in 585 regulated markets across the country with an outlay of 200 crore rupees from 2015-16 to 2017-18.

Key characteristics of the scheme

• Common e-platforms will be set up by Department of Agriculture & Cooperation (DAC) through the Small Farmers Agribusiness Consortium (SFAC). These platforms will provide farmers and traders with access to opportunities for purchase/sale of agri-commodities at optimal prices in a transparent manner across the country.

• SFAC will be the lead agency for the development of the National e-Market by the Union Ministry of Agriculture. It will implement the national e-platform in three phases with 250 mandis targeted to be integrated with e-platform in 2015-16, 200 mandis in 2016-17 and 135 mandis in 2017-18.

• DAC will meet expenses on software and its customisation for the States and provide it free of cost to the States and UTs.

• DAC will also give grant as one time fixed cost subject to the ceiling of 30 lakh rupees per Mandi for related equipment/infrastructure in the 585 regulated mandis, for installation of the e-market platform.

• Big private mandis will also be allowed access to the e-platform for purposes of price discovery. However they will not be supported with any funds for equipment / infrastructure.

• The Scheme is applicable on All-India basis and there is no State wise allocation under the Scheme though States would need to meet the pre-requisites in carrying out necessary agri-marketing reforms. These pre-requisites are:

a) a single license to be valid across the State

b) single point levy of market fee and

c) provision for electronic auction as a mode for price discovery


Integration of agri-markets across the country through the e-platform is seen as an important measure for overcoming challenges posed by the present agri-marketing system. These are fragmentation of State into multiple market areas each administered by separate APMC, multiple levy of mandi fees, requirement for multiple license for trading in different APMCs and etc.

It is with this view, the Budget of 2014 and 2015 announced to set up an Agri-Tech Infrastructure Fund and a National Market. As a result, DAC formulated the scheme for Promotion of National Agriculture Market through Agri-Tech Infrastructure Fund (ATIF).

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