RBI Annual Report Bank frauds fall by 25%

GDP GROWTH

The Reserve Bank of India (RBI) on Thursday said the second Covid wave’s macro-economic cost to the country could hopefully be limited to the June quarter with a possible spillover to July, Even as it chose not to alter its GDP growth outlook for FY22 from 10.5%. This turns out to be marginally higher than the recently revised estimates by Moody’s (9.3%) and S&P (9.8%).

CREDIT GROWTH

Seeking to paint a somewhat rosy picture of credit demand and supply, the central bank observed that banks would have sufficient capital at the aggregate level even in a severe stress scenario. From the three-year low of 5.1% till October 2020, loan growth of banks rose to 5.6% on year till March 2021 and seems to be aided further by￾Liquidity support, low interest rates and the government’s ‘growth￾enhancing’ steps, the RBI noted.

INFLATION

Prognosticating that CPI inflation would likely average at 5% during 2021-22, with ‘risks broadly balanced’, The RBI reiterated its resolve to retain its growth-supportive bias in the conduct of monetary policy, Till economic expansion “gains traction on a durable basis” even while ensuring inflation remains within the target (4+/-2%). It pinned hopes on ‘coordinated action’ by the Centre and states to reduce auto fuel taxes that fan fuel 

BANK FRAUD

Bank frauds of ₹1 lakh and more fell by 25% in value to ₹1.38 trillion in the previous fiscal. The share of PSBs in total frauds, both in terms of number and value, decreased while that of private sector banks increased during the period. PSBs contributed over 59% to the value of frauds at ₹81,901 crore in FY21, a sharp decline from 80% in the previous year. The share of private sector banks to total value of frauds rose to 33% in FY21 from 18.4% a year ago.

The average lag between the date of occurrence of frauds and their detection by banks and other financial institutions was 23 months during 2020-21.

FOREIGN EXCHANGE TRANSACTIONS

The foreign exchange transactions of the central bank have come as a saviour for the government even as the Covid pandemic continues to rage across the country. The Reserve Bank of India (RBI) has been able to transfer a higher amount to the government as surplus this year following a sharp fall in provisions and gains from foreign exchange transactions during the year ended March 2021.

The central bank’s gain from foreign exchange transactions rose from Rs 29,993 crore to Rs 50,629 crore in 2020-21. A good chunk of the money transferred to the government was profit from the sale of dollars during the last three months of FY21 — $25.94 billion in March, $24.57 billion in February and $15.37 billion in January. Last year, RBI dollar sales were just $8.03 billion in March and $1.46 billion in February

The central bank said the rupee gained by 3.5 per cent (based on USD/rupee closing rates as at end-March 2021 over end-March 2020), But underperformed vis-a-vis its Asian peers during 2020-21.

CONTRACTION IN SERVICE SECTOR

The Reserve Bank of India has described the contraction in the service sector during 2020-21 as "unprecedented in Independent India's history", observing that even during the global financial crisis, it had remained resilient. The situation was exacerbated by imposed social distancing norms which led to construction activity in the first quarter of 2020-21 getting reduced by half year-on-year.

INDUSTRIAL SECTOR

On the industrial sector, the central bank said that the gross value added growth in the industry contracted sharply on a year-on-year basis by 7.4% in 2020-21. This is the fifth year of sequential deceleration, including two successive years of contraction in the industrial sector.

CONCLUSION

Going ahead, as the vaccination drive picks up 

and cases of infections fall, a sharp turnaround in growth is likely, supported by strong favourable base effects, it said.

Q. RBI issued currency for the first time in 1938 with photo of George VI on it. Which denomination of currency was issued?

A) Rs 1

B) Rs 5

C) Rs 10

D) Rs 20