To address potential liquidity stress, the Reserve Bank of India (RBI) announced a 50-basis-point reduction in the Cash Reserve Ratio (CRR) on Friday, bringing it down to 4%. The move is set to release ?1.16 lakh crore into the banking system, offering relief amid tightening liquidity conditions.

RBI Governor Shaktikanta Das stated that while system liquidity remains in surplus, factors such as tax outflows, increased currency circulation, and volatile capital flows could strain liquidity in the months ahead. To counter this, the CRR cut will be implemented in two phases of 25 basis points each, effective from December 14 and December 28, 2024. This adjustment restores the CRR to pre-tightening levels seen before April 2022.

Das emphasized that this measure aligns with the RBI's neutral policy stance, aimed at maintaining orderly money market conditions and ensuring adequate liquidity for the economy's productive needs. The decision also underscores the RBI's proactive approach to liquidity management as it navigates evolving economic conditions.

Despite the CRR reduction, the Monetary Policy Committee (MPC) has opted to maintain the repo rate at 6.5% for the 11th consecutive time. The standing deposit facility (SDF) rate and marginal standing facility (MSF) rate remain at 6.25% and 6.75%, respectively, with the Bank Rate also unchanged.

The MPC reiterated its commitment to a neutral monetary policy stance, focused on achieving a durable alignment of inflation with the target while supporting growth. Das highlighted that system liquidity benefited from higher government spending during October and November, even amid increased currency circulation during the festive season and capital outflows.

The RBI reaffirmed its commitment to nimble liquidity management to ensure market stability and sustained economic growth, signaling readiness to adapt as necessary to changing economic dynamics.

Reserve Bank of India (RBI) Governor Shaktikanta Das voiced strong concerns over cryptocurrencies, warning of their potential to destabilize financial and monetary systems. Speaking at the Peterson Institute for International Economics, Das argued that cryptocurrencies pose severe risks, threatening central banks’ ability to control money supply and manage inflation.

“I believe cryptocurrencies shouldn’t dominate our financial system due to the immense risks to financial and monetary stability,” Das said. He elaborated on how widespread use of private digital currencies could undermine central banks' roles in maintaining economic stability, explaining that if the RBI lost control of money supply, it would severely impact tools for controlling inflation and liquidity in crises. He stressed the need for an international consensus on cryptocurrency regulation due to their global, cross-border transactions.

Das also highlighted India’s proactive stance on this issue, noting that under its G20 presidency, India advocated for developing an international approach to address cryptocurrency risks. “India was among the first to raise concerns about cryptocurrencies,” he said, mentioning that there’s been some progress in building this global consensus but that more work remains.

Addressing the fundamental nature of cryptocurrencies, Das emphasized that private digital currencies share qualities with government-issued currency, yet they are designed to bypass regulated financial systems. He questioned whether authorities are comfortable allowing private entities to operate currencies with no government backing. “Issuing currency is a sovereign function,” he said, adding that a private currency system could destabilize the established monetary system.

Das underscored that a parallel system dominated by cryptocurrencies could fragment economic control, leading to systemic risks. In India’s case, he said, the RBI has been vocal about these dangers, calling for careful and cautious regulatory frameworks. While acknowledging that individual countries may make their own choices on regulation, he advised a strong, cautious approach globally to protect financial and economic stability.

Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the central bank's ongoing efforts to strengthen the country's financial sector by leveraging digital public infrastructure (DPI) and emerging technologies. Speaking at the RBI@90 Global Conference on 'Digital Public Infrastructure and Emerging Technologies,' Das highlighted key initiatives, including the Unified Lending Interface (ULI) and Central Bank Digital Currency (CBDC).

Das noted that India’s Unified Payments Interface (UPI) has become a robust, cost-effective real-time payment system, attracting global interest. He suggested that UPI could evolve into a more efficient alternative for cross-border remittances, starting with small-value personal transactions. This comes at a time when remittances to India are projected to grow steadily, reaching USD 129 billion by 2025.

The Governor expressed optimism about the RBI's future, particularly as it approaches its 100th anniversary. He stressed that the central bank is continuously working on policies and systems to make the financial sector more resilient, nimble, and customer-focused. He also pointed out that DPI has been instrumental in enabling India to achieve rapid financial inclusion, a process that would have otherwise taken decades.

Das discussed the importance of AI in the financial sector, highlighting its potential to deliver personalized services and streamline operations. However, he also cautioned against the challenges, particularly concerning data privacy, ethical governance, and the risk of misinformation. He emphasized the need for careful adoption of AI, especially in critical areas like loan sanctioning, to ensure fairness and prevent bias.

Looking ahead, Das mentioned the potential of CBDC and fast payment systems to enhance cross-border payments. He underscored the importance of interoperability as a key design element to maximize efficiency in these initiatives, which could transform global financial transactions.

In closing, Das envisioned a revolutionary step forward in India's digital infrastructure, driven by the "new trinity" of JAM (Jan Dhan-Aadhaar-Mobile), UPI, and ULI.

The Financial Services Institutions Bureau (FSIB) has selected Challa Sreenivasulu Setty, the senior-most managing director, as the next Chairman of State Bank of India (SBI), the country's largest lender. Setty, who took on the role of managing director in January 2020, currently oversees International Banking, Global Markets, and Technology.

Setty will succeed Dinesh Kumar Khara, who is set to retire on August 28 upon reaching the age limit of 63. The FSIB, responsible for selecting directors of state-owned banks, interviewed three candidates for the position on June 29, 2024.

"Based on their performance, experience, and other parameters, the Bureau recommends Challa Sreenivasulu Setty for the position of Chairman in SBI," the FSIB stated.

Traditionally, the chairman is chosen from the serving managing directors of SBI, with the senior-most typically assuming the role. The Appointments Committee of the Cabinet, led by Prime Minister Narendra Modi, will make the final decision on the FSIB's recommendation.

Setty, who has headed various government task forces and committees, previously managed SBI's retail and digital banking. A Bachelor of Science in Agriculture and Certified Associate of the Indian Institute of Bankers, Setty began his SBI career in 1988 as a Probationary Officer.

His extensive experience spans corporate credit, retail, digital, and international banking, as well as roles in developed markets. He has held significant positions including Deputy Managing Director of Stressed Assets Resolution Group, Chief General Manager, and General Manager in Corporate Accounts Group.

In a moment of pride for every Indian, a homegrown Indian company will for the first time rank among the world's most valuable banks after completing a merger, marking a new challenger to the largest American and Chinese lenders occupying the coveted top spots.

The titie-upf HDFC Bank Ltd. and Housing Development Finance Corp. creates a lender that ranks fourth in equity market capitalisation, behind JPMorgan Chase & Co., Industrial and Commercial Bank of China Ltd. and Bank of America Corp., according to data compiled by Bloomberg. It's valued at about $172 billion.

With the merger likely effective July 1, the new HDFC Bank entity will have around 120 million customers - that's greater than the population of Germany. It'll also increase its branch network to over 8,300 and boast of total headcount of more than 177,000 employees.

The 2,000 banknotes were introduced in November 2016 under Section 24(1) of the RBI Act, 1934 -- which allows the central bank to issue notes of any denomination not exceeding 10,000 -- primarily to meet the currency requirement of the economy "in an expeditious manner" after the big demonetisation exercise, in which the legal tender status of all Rs 500 and ? 1,000 banknotes in circulation at that time was withdrawn, the Reserve Bank of India has said.

"With fulfillment of that objective and availability of banknotes in other denominations in adequate quantities, the printing of Rs 2000 banknotes was stopped in 2018-19," RBI said.

RBI Governor Shaktikanta Das today said the exercise is part of the "currency management system" of the central bank, and "there's no reason to rush to banks" as people have four months to change or deposit Rs 2,000 notes.

RBI Governor said the bank expects most notes to come back. "We will decide what to do next after September 30. But it will continue as legal tender," he said and assured the people, even those living in foreign countries, that the RBI will be sensitive to all their problems.

A total of 7,813 complaints have been received against banks and NBFCs pertaining to digital lending apps and recovery agents under the Integrated Ombudsman Scheme of RBI during the period April 1, 2021 to March 3, this year.

Most of the complaints pertain to lending apps promoted by entities not regulated by the RBI such as companies other than NBFCs, unincorporated bodies and individuals.

Major concerns raised in such complaints were issues of exorbitant interest and charges levied by digital lending apps, and harassment of customers for loan repayments.

In a reply to a question in Lok Sabha on Monday, the Finance ministry said that RBI had cautioned the general public not to fall prey to unscrupulous activities of unauthorised digital lending platforms/ Mobile Apps and verify the antecedents of the company offering such loans.

The RBI has also issued advisories to state governments to keep a check on unauthorised digital lending platforms/ mobile apps through their respective law enforcement agencies.

The RBI has constituted a Working Group on digital lending including lending through online platforms and mobile apps, to study all aspects of digital lending activities in the regulated financial sector as well as by unregulated players.

The thrust of the report has been on enhancing customer protection and making the digital lending ecosystem safe and sound while encouraging innovation.

The Reserve Bank of India (RBI) has introduced "The Reserve Bank - Integrated Ombudsman Scheme, 2021" wherein complaints against Banks and Non-Banking Financial Companies (NBFCs) regarding digital lending can be lodged. Under the said scheme, the Ombudsman shall have power to pass an award for any consequential loss suffered by complainant up to Rs 20 lakh, in addition to, up to Rs 1 lakh for the loss of the complainant's time, expenses incurred and for harassment/mental anguish suffered by the complainant.

The increase in prepaid payment instruments transactions could lead to higher than expected growth in wallet transactions and revenue for Paytm, says a Goldman Sachs report

The Reserve Bank of India (RBI) on June 24 released its 'Payments Vision 2025' report, which talks about the way forward for the Indian digital payments industry. With this comes a big boost for digital payments, which will be a positive for listed players like Paytm.

The RBI expects more than 3x increase in digital payment transactions, an increase in PPI (prepaid payment instruments) transactions by 150 percent, an increase of payment transaction turnover vis-a-vis GDP to 8, an increase in debit card transactions at PoS by 20 percent, card acceptance infrastructure to increase to 250 lakh, increase of registered customer base for mobile-based transactions by 50 percent CAGR and more.

This overall growth will be beneficial for Paytm as it has established itself beyond UPI, and created a full-stack payment ecosystem. Paytm, which introduced India to digital wallets and the QR code, has a host of flexible payment instruments -- Paytm Wallet, Paytm UPI, Paytm Postpaid (Buy Now, Pay Later), Debit Cards, Credit Cards, NetBanking, and EMI and is also a leader in the offline payments market with its devices like Smart PoS and Soundbox.

A Goldman Sachs report dated June 19 notes that this will translate to $98 billion in value of transactions in FY25 (wallet+ cards) vs $39 billion in FY22. Additionally, it is expected that full KYC wallets only will be on UPI rails, where Paytm is a market leader.

"We note that digital wallets formed 77 percent of total PPI transaction value in FY22, a segment where Paytm has 67 percent market share (April 2022). We estimate wallets made up roughly one-third of Paytm's payments revenues in FY22, and a higher than expected growth in wallet transactions could positively impact the market leader Paytm," said the report.

The RBI's vision also states that there will be increased regulations for the fintech sector.

However, companies like Paytm being listed are already aware of regulatory measures and adhering to digital banking guidelines.

So, while it might be disruptive for the industry but it might be immaterial for Paytm.

As venture capital (VC) funds squeeze the flow of money to traditional startups and invest in emerging tech like Web3.0, Binance Labs, the venture capital and incubation arm of leading cryptocurrency exchange Binance, on Wednesday announced closing of a $500 million investment fund to boost Blockchain, Web3.0 and value-building technologies.

The fund is supported by leading global institutional investors such as DST Global Partners, Breyer Capital, as well as other major private equity funds, family offices, and corporations as limited partners, Binance said in a statement.

The new fund will invest in projects that can extend the use cases of cryptocurrencies and drive the adoption of Web3.0 and Blockchain technologies.

"The goal of the newly closed investment fund is to discover and support projects and founders with the potential to build and to lead Web3 across DeFi, NFTs, gaming, Metaverse, social and more," said Changpeng Zhao 'CZ', Founder and CEO of Binance.

Since 2018, Binance Labs has invested in and incubated more than 100 projects from over 25 countries.

Its portfolio includes industry-leading projects such as 1inch, Audius, Axie Infinity, Dune Analytics, Elrond, Injective, Polygon, Optimism, The Sandbox, and STEPN.

With the new fund, Binance Labs will make investments across three different stages: incubation, early-stage venture, and late-stage growth.

Early-stage venture investments include token and equity investments across all sectors of cryptocurrency and Web3.0, including infrastructure, DeFi, NFTs, gaming, Metaverse, social, and crypto adoption platforms.

Late-stage growth investments target more mature companies looking to scale or bridge into the Web3.0 ecosystem with the Binance ecosystem as a solid strategic partner, said the company.

Earlier, US-based investment firm Andreessen Horowitz (A16Z) announced two new funds -- a massive $4.5 billion fund for crypto and Blockchain companies and Web3.0 startups and a $600 million 'Games Fund One' that is exclusively focused on the gaming industry.

A group of former executives from one of the largest cryptocurrency exchanges Binance has also reportedly created a $100 million venture fund.

Web3, or Web 3.0, represents the next generation of the Internet.