Money Credited in Bank Accounts

Money Credited in Bank Accounts
Reserve Bank of India (RBI) has advised the banks vide in circular Ref. No.DBS.CO.PPD / 4220/11.01.005/2016-17 dated November 29, 2016 to take action to prevent / detect / contain the malpractices or wrongdoing by staff in branches exchange / deposit of Specified Bank Notes (SBN). The banks were also advised vide the same circular to strengthen the internal / concurrent audit process in the bank including random visits / scrutinies so as to detect and avoid any malpractice in the exchange / deposit of SBNs in the branches. Further, on December 8, 2016 the banks were advised vide RBI DBS circular Ref. No.DBS.CO.PPD / 4480/11.01.005/2016-17 dated December 8, 2016 to track the complete trail of cash movements in large quantities so as to ensure that the extant instructions of Reserve Bank of India are followed both in letter and spirit. Further a list of 22 action points (illustrative)also was forwarded to banks with an advice to utilise their internal audit resources to monitor the position and bring any anomalies noticed to their Audit Committee of the Board so as to ensure that necessary action is taken in all such cases, apart from reporting the summary of findings to RBI.

Banks have reported 14 cases (branches) where bank employees have been found involved in ‘irregular exchange transaction’ of Specified Bank Note (SBN) during the phase of Demonetisation,

Bank wise details are as follows:

Bank Name
No. of branches (cases) reported
No. of employees suspended
Amount involved in Lakh
State Bank of Mysore
Bank of Maharashtra
Dhanlaxmi Bank Ltd
Axis Bank
Syndicate Bank
Not mentioned

Action against the staff for malpractices are taken by the respective banks as per their Staff Accountability policy.


Use of USSD for Cashless Payments

National Payments Corporation of India (NPCI) has introduced USSD for mobile banking. It is an interoperable payment platform, comprising of customers 51 banks & 11 telecom operators in India, which provide basic banking services in 9 different languages, including Hindi & English, to under-banked / un-banked customers across India. USSD works both on smart phones and feature phones.

*99# service of NPCI uses the USSD technology to make banking services accessible wherever voice grade mobile signals are available. USSD works on feature phone and without internet. It will help rural accountholders to carry out fund transfer through mobile banking.

BHIM Application launched on 30th December 2016: Salient features include Instant money transfer at all times among others

The BHIM App was launched on 30th December 2016. Salient features of BHIM App are as below:

i. Instant money transfer at all times.

ii. Direct transfer from one bank account to another.

iii. Scan and pay option by scanning QR code to make payment)

iv. Generation and sharing of personalised QR code

To address the issue of cyber security, Reserve Bank of India (RBI), vide circular dated 2nd June 2016, has issued cyber security framework to all banks. In addition, RBI has issued instructions to all authorised entities and banks issuing pre-paid instruments regarding cyber security on 9th December 2016. RBI has informed that information on number of hacking incidents is not available with it.

Meeting conducted by RBI prior to demonitization

RBI held a meeting of its Central Board on November 8, 2016. The agenda of the meeting, inter-alia, included the item : “Memorandum on existing banknotes in the denomination of Rs 500 and Rs 1000 - Legal Tender Status”

The following Directors of Central Board of Reserve Bank of India attended the meeting:

1. Dr. Urjit R. Patel, Governor 2. Shri R. Gandhi, Deputy Governor

3. Shri S. S. Mundra, Deputy Governor

4. Shri Shaktikanta Das, Director

5. Ms. Anjuly Chib Duggal, Director

6. Dr. Nachiket Mor, Director

7. Shri Bharat N. Doshi, Director

8. Shri Sudhir Mankad, Director

RBI periodically estimates and reviews the demand for currency and accordingly in consultation with GoI indents for supply is placed with the Presses. The same is a continuous process. As regards to printing of new banknotes in the denomination of Rs. 2000 and 500 the same had been printed to facilitate the cash requirements of the members of public. Towards this, Presses had augmented production of banknotes which were being sent to different parts of the country on priority.

The white paper on Black Money, dated May, 2012 by the Department of Revenue had noted that the estimate of Black Money has increased from 15-18 % of GDP to 19-21 % of GDP during 1975-76 to 1983-84. Report of the Special Investigation Team (SIT) mentioned that in India a large amount of unaccounted wealth is stored and used in the form of cash and also there have been huge cash recoveries by law-enforcement agencies from time to time. As per the World Bank report, the shadow economy was estimated at 20.7% of the GDP in 1999 and had risen to 23.2% in 2007.

From November 10, 2016 upto December 19, 2016, banks have reported that banknotes worth Rs. 5,92,613 crore have been issued to public

Consequent to the announcement of withdrawal of Legal Tender status of banknotes of Rs. 500 and Rs. 1000 denominations from the midnight of November 8, 2016, the Reserve Bank of India made arrangements for supply of adequate quantity of banknotes in various denominations to the public through the banks.

Over the period from November 10, 2016 upto December 19, 2016, banks have reported that banknotes worth Rs. 5,92,613 crore have been issued to public either over the counter or through ATMs.

In this period, the Reserve Bank has issued to the banks and their branches, for distribution to the public, a total of 22.6 billion pieces of notes of various denominations of which 20.4 billion pieces belonged to small denominations of Rs. 10, 20, 50 and 100s and 2.2 billion belonged to higher denominations of Rs. 2000 and Rs. 500.

As regards printing of currency, RBI periodically estimates and reviews the demand for currency and accordingly in consultation with Government of India indents for supply is placed with the Presses. The same is a continuous process.

Neither such data is available with the Government nor RBI has come across any confirmed reports of detection of counterfeit notes of the denomination of Rs.2000 in the banking channel.


First Advance Estimates released by the Central Statistics Office (CSO), the economy is estimated to grow at 7.1 per cent in 2016-17, as compared to the growth of 7.9 per cent achieved in 2015-16

As per the First Advance Estimates released by the Central Statistics Office (CSO), the economy is estimated to grow at 7.1 per cent in 2016-17, as compared to the growth of 7.9 per cent achieved in 2015-16. Data on Gross Domestic Product (GDP) for the quarter October-December, 2016 and January-March, 2017 is yet to be released by the CSO.

The International Monetary Fund, in its World Economic Outlook Update, released in January 2017, has estimated that India’s growth in 2016-17 would be 6.6 per cent, as compared to 7.6 per cent in the previous year.

As per the first advance estimates released by the CSO, the growth rate in agriculture and allied sectors, manufacturing sector, services sector has been estimated to be 4.1 per cent, 7.4 per cent and 8.8 per cent respectively in 2016-17, as compared to the corresponding figures of 0.8 per cent, 10.6 per cent and 9.8 per cent as per the first revised estimates for 2015-16.

Apart from the interest waiver announced on 31stDecember 2016, the agricultural sector is expected to receive a boost from the measures announced in the Budget 2017-18 including higher target for agriculture credit, increased coverage under Fasal BimaYojana scheme and augmentation of the Long Term Irrigation Fund set up in NABARD. The rural economy is also expected to be supported by the emphasis given by the Budget on employment generation. The manufacturing sector is likely to benefit from measures announced in the Budget 2017-18 like lower income tax for companies with annual turnover up to Rs 50 crore; allowing carry-forward of MAT credit up to a period of 15 years instead of 10 years at present; further measures to improve the ease of doing business; and the scheme for creating employment in the leather and footwear industries. Apart from the measures listed above to encourage business and enterprise, the services sector will also be boosted by the major push to digital economy and the focus on infrastructure like construction and affordable housing.

The decision on the Repo rate is taken by the Monetary Policy Committee of the Reserve Bank of India, taking into account various factors including the inflation and the state of the economy.

100 per cent FDI in White Labelled ATM operations

Government has allowed Foreign Investment upto 100% in White Label ATM (WLA) operations, subject to the following conditions :-

(i) Any non-bank entity intending to set up WLA should have minimum net worth of Rs. 100 crore as per latest financial year’s audited balance sheet, which is to be maintained at all times.

(ii) (ii) In case the entity is also engaged in any other 18 Non-Banking Finance Company (NBFC) activities, then the foreign investment in the company setting up WLA, shall also comply with the minimum capitalization norms for foreign investment in NBFC activities.

Demand of Point of Sales (PoS) / Electronic Data Capture (EDC) machines in the country

The demand of such machines in the country has increased after November 9, 2016, which is evident from the fact that during the months of November and December 2016, 2.52 lakh PoS machines have been installed.

Neither the Government has undertaken any study to assess the number of PoS machines needed to ensure smooth cashless economy in the country nor Government has any proposal for procuring PoS machines.

Reserve Bank of India (RBI) has issued guidelines to prevent PoS fraud and directed the banks to add more security features in credit and debit cards to stop frauds, vide its circular dated May 26, 2016 on upgradation of ATMS and cards.

Public Sector banks have been advised by the Government to structure rental payments in such a manner that the small merchant does not have to pay more than Rs. 100 per month rental on installation of PoS terminals.

National Bank for Agriculture and Rural Development (NABARD) has committed to support banks through the Financial Inclusion Fund for deployment of up to two PoS devices per village, to cover one lakh villages of Tier 5 and 6 areas.

Proposal to waive off bank transaction charges and decrease interest rate for credit cards to promote cashless transactions

Reserve Bank of India (RBI) has given banks the freedom to fix bank service charges for transactions.

RBI has deregulated interest rates on credit card dues. Interest rates are determined by banks with the approval of their respective Board of Directors subject to regulatory guidelines on interest rate on advances issued by RBI from time to time. RBI does not maintain information on the rate of commission charged.

National Bank for Agriculture and Rural Development (NABARD) has approved a scheme for giving 0.5% incentive on payments made through the Aadhaar Enabled Payment System (AEPS) to merchants.

In respect of debit card transactions on PoS devices, between 1.1.2017 and 31.3.2017, Merchant Discount Rate (MDR) has been capped at 0.25% for transaction value upto Rs. 1,000, and for debit card transactions value between Rs. 1,000 and Rs. 2,000, MDR has been capped at 0.5%.

Reserve Bank of India has decided that till 31.3.2017, banks and prepaid payment instrument issuers shall not levy any charges on customers for transactions up to Rs. 1,000 settled on Immediate Payment Service (IMPS), Unstructured Supplementary Service Data (USSD) and Unified Payments Interface (UPI). Further, Government has issued a direction in public interest to all public sector banks not to charge fees for transactions settled on IMPS and UPI in excess of rates charged for National Electronic Funds Transfer (NEFT) for transactions above Rs. 1,000, with service tax being charged at actual; for USSD transactions till 31.3.2017 above Rs. 1,000, a further 50 paise discount is provided.

NPCI has waived switching fees for RuPay Card transactions (both for PoS and e-commerce), IMPS, UPI, National Unified USSD Platform (NUUP) and AEPS, with effect from 1.1.2017 till 31.3.2017.

Credit card, debit card, charge card and other payment card services by banks have been exempted from payment of service tax for transactions of up to Rs. 2,000.

Government has introduced Lucky Grahak Yojana for customers and Digi Dhan Yojana for merchants to promote means of cashless transactions.

In terms of Office of Controller General of Accounts Office Memorandum dated 14.12.2016, the applicable Merchant Discount Rate (MDR) charges on debit cards for payment up to Rs. 1 lakh shall be absorbed by the Government. In terms of Department of Public Enterprises letter dated 9.12.2016, all Central Public Sector Enterprises (CPSEs) are required to ensure that transaction fees, MDR charges associated with payment through digital means shall not be passed on to the consumers and all such expenses shall be borne by CPSEs.


Credit and debit cards including RuPay Cards issued by the public sector banks

Reserve Bank of India (RBI) collects information on the number of debit and credit cards outstanding by the Scheduled Commercial Banks (SCBs). The credit and debit cards outstanding for the last three years is placed below:

(in millions)

2013-14 (As at the end of March 31, 2014)
2014-15 (As at the end of March 31, 2015)
2015-16 (As at the end of March 31, 2016)
2016-17 (As at the end of Dec 31, 2016)
Credit Cards Outstanding (Public Sector Banks)
Total Credit Card Outstanding
Debit Cards Outstanding (Public Sector Banks)
Total Debit Card Outstanding
Total Cards Outstanding

The bank-wise information of Scheduled Commercial Banks on the number of credit and debit card outstanding for the last three years is available on RBI website at

RBI collects bank wise information on transactions done through credit and debit cards at ATM and POS on a monthly basis. However, bifurcation of data on the basis of card network operators is not available with RBI.

National Payment Corporation of India (NPCI) has submitted a proposal for approval for launch of Rupay Credit Cards to Department of Payment & Settlement Systems (DPSS), RBI. The same is under process.

The authorised card networks such as RuPay, Visa, MasterCard, Amex and Diners levy types of charges on the member banks for the services that are provided by them. One such charge is the network fees / switching fees that is paid by the acquiring and issuing banks to the respective card network for each transaction. These charges are decided by the network and its members. The Reserve Bank has not issued any regulations in this regard.

RBI has authorised five card networks in the country for issuance of debit and/or credit cards through the franchisee banks. The Reserve Bank does not prescribe to banks the network with which they have to affiliate to issue the cards.

The Government had prescribed the issuance of RuPay cards to each of the account holders who have opened the accounts under the Prime Minister Jan DhanYojana.


Utilisation of Foreign Exchange Reserves

India’s foreign exchange reserves (FER) increased from US$ 341.6 billion at end March 2015 to US$ 360.2 billion at end March 2016 and US$ 360.8 billion as on 20th January 2017. India’s foreign exchange reserves (FER) comprise foreign currency assets, gold, Special Drawing Rights (SDRs) and Reserve Tranche Position (RTP) with the IMF. The level of foreign exchange reserves is largely the outcome of Reserve Bank of India’s intervention in the foreign exchange market to stabilise the rupee value. In line with the principles of preserving the long-term value of the reserves in terms of purchasing power, minimizing risk and volatility in returns and maintaining liquidity, the Reserve Bank of India holds foreign currency assets (FCAs) in major convertible currency instruments. These include deposits with other country central banks, the Bank for International Settlements and top-rated foreign commercial banks, and in securities representing debt of sovereigns and supranational institutions, etc. The Government and the RBI closely monitor the situation and take appropriate policies as and when required.


Tax Relaxation under NPS

The Finance Act, 2016 amended the Income-tax Act, 1961 (the Act) to provide that 40% of the amount payable to the employee subscriber of NPS on his closure of account or his opting out of the scheme, shall be exempt from tax.

Further, Finance Bill, 2017 has proposed to amend the Act to provide exemption from tax at the time of partial withdrawal by an employee from National Pension System Trust in accordance with conditions specified under Pension Fund Regulatory and Development Authority Act, 2013 and regulations made there under, to the extent it does not exceed twenty five per cent of the contributions made by him.

There was no proposal for tax relaxation from Securities and Exchange Board of India in the agenda of 16th Financial Stability Development Council meeting held on 5thJanuary 2017.

Revise the tax treaties with partner countries to enable the CBI and ED to use the data for prosecution

Government is contemplating to revise the tax treaties with partner countries to enable the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) to use the data for prosecution of those who have stashed black money abroad. Treaty partner countries have been requested to modify the tax treaties, so as to explicitly include provisions that will enable information exchanged for tax purposes to be utilized for other purposes, including criminal proceedings in non-tax matters. 40 treaties for avoidance of double taxation have been revised accordingly. In addition, India has also signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which also similarly facilitates exchange of information. These developments enable use of such information by non-tax agencies, subject to agreement by the Competent Authorities of the Requested Contracting State.

All treaty partner countries have not agreed to the proposal. Since a bilateral treaty cannot be modified unless both treaty partners agree, it is not possible to provide any time frame for this purpose


Tax Relief under GST

All decisions of GST Council so far have been taken unanimously. Various states may have different points of view on an issue but the final decisions have been unanimous.

The issue regarding treatment of the existing tax incentive schemes of the Central and State Governments was discussed during the 2nd Meeting of the GST Council held on 30th September, 2016 and the Council agreed that all entities exempted from payment of indirect tax under any existing tax incentive scheme shall pay tax in the GST regime and that in case the Central or State Government decided to continue any existing exemption/incentive/deferral scheme, then it shall be administered by way of a reimbursement mechanism through the budgetary route.

In the ninth meeting of GST Council held on 16th Jan, 2017, it has been agreed that for taxpayers with turnover below Rs.1.5 Crore, 90% of the taxpayers shall be under the administrative control of the State tax administration and 10% shall be under the administrative control of the Central tax administration. It has also been decided that the total number of taxpayers with turnover above Rs.1.5 Crore shall be divided equally between the Central and State tax administrations.

Total direct tax collections up to 16th January 2017 amount to Rs. 5,76,408 crore; the Budget Estimates fixed for direct taxes are Rs. 9,80,000 crore

Total direct tax collections up to 16th January 2017 amount to Rs. 5,76,408 crore. For the financial year 2017-18, the Budget Estimates fixed for direct taxes are Rs. 9,80,000 crore.

As per Receipt Budget 2017-18, the Budget Estimates for direct taxes have been fixed at Rs. 9,80,000 crore, including Rs. 5,38,745 crore for Corporation Tax and Rs. 4,41,255 crore for Taxes on Income.

Closure of Public Sector Undertakings (PSUs)

NITI Aayog constituted a committee on Sick/Loss making/Non performing Central Public Sector Enterprises (CPSEs) on March 9th 2016. The committee noted that financial performance of 74 CPSEs has been unsatisfactory and a number of these have requested for and received periodic support from budgetary resources. Over the years, this has become a significant drain on limited resources of the government. The committee has made the recommendations of closure/winding up of 26 such CPSEs.

Under the Central Sector Scheme of DPE i.e. Counseling, Retraining & Redeployment (CRR Scheme) skill development training is providing to CPSE’s employees separated under Voluntary Retirement Scheme (VRS)/Voluntary Separation Scheme (VSS) (VRS/VSS Optees) to enable them to get redeployment or to take up self-employment. The Scheme has a provision for training of the dependent also in lieu of the VRS/VSS Optees. 


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