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Banking Issues_2 (FRDI BILL 2017 (Bill applies to (banks, insurance…

- - - - monitor the financial firms against market failure
      - provide deposit insurance up to a certain limit, in case of bank failure
  - - - When can it be used?
        
        only if the creditor has given the consent for it
        
        there is a provision for compensation in case of failure of adherence to the norms
      - What is it?
        
        Resolution Corporation can internally restructure the firm’s debt by
        
        (i) cancelling liabilities that the firm owes to its creditors
        
        (ii) converting its liabilities into any other instrument (e.g., converting debt into equity)
      - How is it different from bail out?
        
        Bailout - public funds are used to inject capital into an ailing company
    - - bridge service provider
      - a company limited by shares
      - created by the corporation
      - for the purpose of resolving a specified service provider
    - - An insurance entity under resolution
      - to allow the present insurance policies to run to their expiration dates
      - Its a type of classification
- - - - ensure their better functioning
      - prevent the indulgence of such banks in any grey areas such as money laundering etc
- - - - focused primarily on lending to infrastructure sector and MSMEs
  - - - PB and SFB - 100 Cr
    - - PB and SFB - Yes
    - - PB - No
      - SFB - Yes
    - - PB - Small biz and low income households
      - SFB - Small and marginal farmers, MSMEs and unorganized sector
    - - PB - No
      - SFB - Yes
    - - PB and SFB - Yes
    - - PB - NA
      - SFB - Yes, 75% of ANBC
    - - PB - Remittances, PoS, ATM, Internet banking, Sell Insurance and MFs - NO Credit Card
      - SFB - Remittances, PoS, ATM
- - - - to facilitate orderly growth of the Chit Funds sector
      - remove bottlenecks being faced by the Chit Funds industry
      - enabling greater financial access of people to other financial products
  - - - to each subscriber
      - determined by
        
        lot, auction or tender
        
        depending on the nature of the chit
      - Usually its the entire pool of contribution - discount
      - like dividend
  - - - does not regulate
      - can provide guidance to state governments on regulatory aspects
        
        like creating rules or exempting certain chit funds
    - - regulates collective investment schemes
      - but SEBI act specifically excludes chit funds
  - - - high rates of return
      - little risk
    - - generates returns for older investors by acquiring new investors
- - - - owned and operated to increase the geographical spread of ATMs
      - enhance financial inclusion
    - - owned and operated by the respective bank
    - - banks outsource the ATM operations to a third party
      - They have logo of the bank