RBI GRADE B Officer Recruitment-2013

WHAT SHOULD BE READ FROM THE ECONOMIC SURVEY?

The answer is really simple. Go through your ESI and FM syllabus and identify the topics which have a current/factual/data orientation and date pertaining to which can be found in the Survey.

The list of such topics is as follows:

Measurement of growth: National Income and per capita income Poverty Alleviation and Employment Generation in India Sustainable Development and Environmental issues Industrial and Labour Policy Monetary and Fiscal Policy Balance of Payments Export-Import Policy WTO Demographic Trends Urbanization and Migration Gender Issues Social Justice : Positive Discrimination in favor of the under privileged Human Development Social Sectors in India Health and Education The Union Budget – Direct and Indirect taxes; Non-tax sources of Revenue GST Thirteenth Finance Commission and GST, Finance Commission Fiscal Policy Fiscal Responsibility and Budget Management Act (FRBM), Inflation: Definition, trends, estimates, consequences, and remedies (control): WPI, CPI – components and trends. Latest trends, latest data, latest committees, latest terms and phrases, etc related to all the above topics can be found in the Survey.

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Role of Technology in Driving Financial Inclusion

The banking sector has made rapid strides largely because of the swift advancement in technology. Auto­mated teller machines, internet and mobile banking, payment wallets, and other advancements have brought in significant improvements in consumer experience and have also helped banks widen their reach.

RBI has been actively involved in harnessing technology for the develop­ment of the Indian banking sector over the years. The apex bank took upon the task of promoting computerisation in banking to improve customer services, book keeping and management infor­mation system (MIS) to enhance pro­ductivity. RBI has played a pivotal role in achieving various objectives such as implementation of the electronic payment system such as RTGS (Real Time Gross Settlement), electronic funds transfer (NEFT), mobile banking system etc.

Adoption of the Core Banking Solu­tions (CBS): CBS is networking of branches, which enables customers to operate their accounts and avail of banking services from any branch of the bank on CBS network, regardless of where the customer maintains his/her account.

Mobile Phone Penetration

Leveraging mobile phone penetration and mobile phone service, providers are introducing innovative methods of bringing the unbanked populations into the formal economy using mobile phones.

India has witnessed rapid growth in mobile adoption and today more than 70 per cent of the population owns a mobile phone.

The extensive reach of mobile phones offers an innovative low-cost channel to expand the reach of bank­ing and payment services especially to the large section of rural mobile subscribers.

It has advantages over traditional banking methods because it breaks down geographical constraints.

Other advantages include imme­diacy, security and efficiency.

Mobile banking also reduces the cost of financial transactions as it involves little or no infrastructure cost to the bank and no additional investment from the customers.

Government Initiative for Inclusive Growth

Financial inclusion is likely to remain high on the government’s agenda over the next decade. Over the last several years, many initiatives have been progressively launched.

Digital India

The Digital India initiative, coupled with a payment infrastructure, is laying the cornerstone for a digital economy, keeping in mind the increas­ing willingness of people to use the internet and the rising data traffic in the country.

The impact of Digital India by 2019:

An investment of $18.4 billion to provide last mile internet connectivi­ty, better access to government ser­vices, and development of IT skills

Provision of Wi-Fi services in cit­ies with a population of more than one million, as well as major tour­ist centres

Provision of broadband internet access to 250,000 village clusters by 2019 at a cost of about $5.9 billion

Availability of digital lockers to each citizen, allowing them to store all their original identification docu­ments and records

Development of 100 smart cities in India

Focus on moving towards automation in delivery of government services

Achievement of a leadership position in IT towards betterment of health, education and banking services

Widened internet access and an enabled use of shareable private space on a public cloud model in order to empower citizens digitally

Aadhaar Card

The technology-levered Aadhaar programme is likely to be the big­gest disruptor in financial inclusion delivery, as innovations leveraging the Aadhaar card are expected to assist in broad-basing the access and acceptance by financially excluded segments.

Direct Benefits Transfer

The scheme was initiated to facilitate disbursements of government entitle­ments such as those under the social security pension scheme, handicapped old age pension scheme, etc., of any central or state government bodies, using Aadhaar and authentication thereof, as supported by UIDAI.

As the market has been exposed to innovative digital-based services that have been disruptive in nature, it is now betting on changing client preferences to move from pricing (discounts)...

Retail Banking

The provision of these services is expected to encourage electronic retail payments and facilitate inter-operability across banks in a safe and secured manner.

Payment Banks

Payments banks are a new model of banks conceptualised by the Reserve Bank of India (RBI).The main objec­tive of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environ­ment in remote areas of country.

They can raise deposits of up to Rs 1 lakh, and pay interest on these balances just like a savings bank account does

They can enable transfers and remittances through a mobile phone at low cost

They can offer services such as automatic payments of bills, and purchases in cashless, cheque less transactions through a phone

They can issue debit cards and ATM cards usable on ATM net­works of all banks

They cannot lend money and issue credit cards

Digitisation Trends and Opportunities

Consumer behaviour is changing towards rapid adoption of digitisation

As the market has been exposed to innovative digital-based services that have been disruptive in nature (e-commerce players and e-gover­nance services), it is now betting on changing client preferences to move from pricing (discounts) to conve­nience and service.

Demographic dividend is likely to create a large digital-savvy customer segment

India’s demographic dividend is well suited to switch to digital behaviour, considering that the median age of an Indian is expected to be 29 years by 2020, with 900 million of the population falling in the age group of 15–60 years by 2025.

The banking sector has made rapid strides largely because of the swift advancement in technology...(that) have made significant improvements in consumer experience and have also helped banks widen their reach.

As the market has been exposed to innovative digital-based services that have been disruptive in nature, it is now betting on changing client preferences to move from pricing (discounts)...

Reverse Mortgage

Reverse Mortgage is the exact opposite of a Home Loan. Anyone, who has a fully owned House can get a loan. The way,
this works, is that his loan money will be divided in chunks (EMI’s) over many years and given to him every month. This
can easily act as Monthly income. At the end of the loan tenure, the Bank stops paying the monthly income. If one of
the spouses dies, the other can still continue living in the house. If both die, the bank gives their heirs two options –
settle the overall outstanding loan and retain the house or, the bank will sell the house, use the proceeds to settle the
outstanding loan and give the rest to the heirs.
How is the loan paid ?
With a reverse home mortgage, no payments are made during the life of the borrower(s). Which means the loan has to
be paid only after both the borrower and spouse die. Since no payments are made during the term of the reverse
home mortgage loan, the loan balance rises over time. In most areas, where the appreciation is good, the value of the
home grows at a much faster rate than the loan balance. Therefore, the remaining equity continues to grow.
When both, the borrower and spouse pass away, the ownership of the home is then passed to the estate or directed
by a living will or will to the beneficiaries. The beneficiaries now own the home and have to sell the home or pay off the
loan. If the home is sold, the reverse home mortgage lender is paid off and the beneficiaries keep the remains. Read
about Real Estate returns over last 10 yrs .
Example :
Mr Ajay is around 62 yrs old, and his wife is 60 yrs old, they live and own a house in Karvenagar, Pune which is worth Rs
1 crore now . They have a daughter and son who are their legal heirs (50:50) . The old aged Ajay and his wife do not
have a monthly income source, so they decide to go in for a Reverse Mortgage loan. The Bank is ready to loan upto 60
lacs to them, which means they will be paid Rs 35k per month for next 15 yrs (just an example.)
Now, they start getting monthly income of 35k per month for next 15 yrs, & they continue to live in the same home.
After this point, their children support them financially and then Ajay dies at age 79. After this, his wife still continues
to live in the house. Sadly she too, passes away at age 85. By this time the total loan outstanding becomes Rs 1.1 crores
(It was 60 lacs at the end of 15 yrs, but after that, it starts growing.)
Now the loan has to be paid off. The son and daughter does not have money to pay to the bank, so the bank decides to
sell off the property. At that time, the price of the house is Rs. 3 crores. The bank sells the house and get total 3 crores,
out of which 1.1 crores is taken by the bank and rest is paid to legal heirs, which they split amongst themselves.
Important Points in Reverse Mortgage
Reverse Mortgage is available to Senior Citizens only. Any house owner over 60 years of age is eligible for a reverse
mortgage. If wife is a co-applicant, she should be above 58.
The maximum loan is up to 60 per cent of the value of the residential property subject to maximum of Rs 50 Lacs.
The maximum period of property mortgage is 15 years with a bank or a HFC (housing finance company.) Minimum
tenure will be 10 years. Some banks like Punjab National Bank offer RML for 20 years also.
The borrower can opt for monthly, quarterly, annual or lump sum payments at any point, as per his discretion.
The revaluation of the property has to be undertaken by the bank or HFC once every 5 years.
The amount received through reverse mortgage is considered as loan and not income; hence the same will not attract
any tax liability. How to do last moment Tax Planning ?
Reverse mortgage rates will vary according to market conditions depending on the wheather borrower has choosen
Fixed or Floating interest rate.
Processing fee for the loan would be between 0.15 per cent and 1.50 per cent of the loan amount.
One can prepay the loan along with the interest any time during the loan tenure. Typically, there is no pre-payment
penalty