Page 14 - Banking Finance June 2020

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India Post savings A/C of- day-end balances above Rs. 1 lakh in In its South Asia Economic Update, the
IPPB can be swept into linked POSAs Bank warned that migrant workers
fering higher interest than with India Post. and conditions in slum areas would

that offered by its banking What this means is that the interest make it challenging to adopt social dis-
arm rate on balances above Rs. 1 lakh will tancing norms to arrest the spread of
earn the higher interest rate of 4 per the deadly coronavirus.
India Post Payments Bank (IPPB) has
cut the interest rate on savings bank cent than those below Rs. 1 lakh. Govt allows virtual board
(SB) deposits thrice since February,
from 4 per cent to 2.75 per cent even World Bank sees FY 21 In- meetings

as it parent, India Post, continues to dia growth rate at 1.5-2.8% The Ministry of Corporate Affairs has
hold the interest rate on its Post Office allowed companies to hold board meet-
Savings Account (POSA) rock steady at India is likely to record its worst ings through video conference or other
4 per cent. growth since the 1991 liberalisation audio-visual means till September 30.
this fiscal year as coronavirus severely
This difference of 125 basis points be- disrupts the economy, the World Bank The relaxation comes amid the
tween the interest rate offered by said. India's economy is expected to coronavirus pandemic. Initially, the
IPPB and India Post on the same prod- grow between 1.5 and 2.8 per cent in ministry had allowed companies to hold
uct (an SB account) could make it diffi- board meetings through video confer-
2020-21, it added. It estimated India
cult for the former to attract fresh would grow between 4.8 and 5 per ences till June 30.
deposits. One basis point is one-hun- cent in 2019-20. The outbreak comes Referring to the extension of the re-
dredth of a percentage point.
at a time when India's economy is al- laxation period, the gazette notifica-
With the latest cut of 25 basis points ready slowing due to persistent finan- tion said: "In the Companies (Meetings
from 3 per cent to 2.75 per cent with cial sector weaknesses, the report said. of Board and its Powers) Rules, 2014,
effect from May 1, IPPB's SB interest The World Bank has scaled down in rule 4 in sub-rule (2), for the figures,
rate is the same as that offered by India's gross domestic growth (GDP) letters and word '30th June, 2020', the
State Bank of India, the country's larg- figures, letters and word '30th Sep-
growth projection to 1.5-2.8 per cent
est bank. tember, 2020' shall be substituted."
for the current fiscal year, which would
Before the latest cut, IPPB had reduced be the lowest economic expansion Under the Centre's guidelines post the
the SB rate twice -- from 4 per cent to since the balance of payments crisis of relaxations, companies have to follow
3.50 per cent with effect from Febru- 1991-92, as Covid-19 is dragging down all requirements laid out under the
ary 1, and from 3.50 per cent to 3 per activities in the already slowing rules for holding board meetings via
cent with effect from April 1. economy. It had earlier projected the video conferencing such as recording
It may be pertinent to mention that growth to be 6.1 per cent for 2020-21. of these proceedings, ensuring avail-

14 | 2020 | JUNE | BANKING FINANCE