GK POWER CAPSULE OCTOBER 2013 FOR IBPS-- PO PART-I Current RBI Policy & Reserve Rates: 1. Repo Rate – 7.50% 2. Reverse Repo– 6.50% 3. CRR – 4% 4. SLR – 23% 5. MSF– 9.00% 6. Bank Rate – 9.00% Important Banking Terminology: 1. Bank Rate: The interest rate at which at central bank lends money to commercial banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Lower bank rates can help to expand the economy, when unemployment is high, by lowering the cost of funds for borrowers. Conversely, higher bank rates help to reign in the economy, when inflation is higher than desired. 2. Repo: Repo is “Repurchase Agreement”. An agreement to sell a security for a specified price and to buy it back later at another specified price. A repo is essentially a secured loan. 3. Repo Rate: Whenever the banks have any shortage of funds they can borrow it form RBI. Repo rate is the rate at which commercial banks borrows rupees from RBI. A reduction in the repo rate will help banks to get money at cheaper rate. When the repo rate increases borrowing form RBI becomes more expensive. 4. Reverse Repo Rate: Reverse Repo rate is the rate at which RBI borrows money from commercial banks. Banks are always happy to lend money to RBI since their money is in the safe hands with a good interest. An increase in reverse repo rate can cause the banks to transfer more funds to RBI due to this attractive interest rates. One factor which encourages an organisation to enter into reverse repo is that it earns some extra income on its otherwise idle cash. 5. CRR (Cash Reverse Ratio): CRR is the amount of funds that the banks have to keep with RBI. If RBI increases CRR, the available amount with the banks comes down. RBI is using this method (increase of CRR), to drain out the excessive money from the banks. 6. SLR (Statutory Liquidity Ratio): SLR is the amount a commercial banks needs to maintain in the form of cash, or gold, or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by RBI in order to control the expansion of the bank credit. Need of SLR: With the SLR, the RBI can ensure the solvency of a commercial banks. It is also helpful to control the expansion of the Bank credits. By changing SLR rates, RBI can increase or decrease bank credit expansion. Also through SLR, RBI compels the commercial banks to invest in the government securities like govt. bonds. Main use of SLR: SLR is used to control inflation and propel growth. Through SLR rate the money supply in the system can be controlled effectively. 7. Marginal Standing Facility (MSF): MSF rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities. ii. This came into effect in may 2011. Under the Marginal Standing Facility (MSF), currently banks avail funds from the RBI on overnight basis against their excess statutory liquidity ratio (SLR) holdings. iii. Additionally, they can also avail funds on overnight basis below the stipulated SLR up to 1 per cent of their respective Net Demand and Time Liabilities (NDTL) outstanding at the end of second preceding fortnight. Why (MSF) is it required: Banks borrow money from RBI at MSF rate when there is an acute cash shortage or acute asset- liability mismatch. This does not carry any stigma. Size of MSF: Minimum amount of Rs. One crore and in multiples of Rs. One crore thereafter. 8. Commercial Paper: Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP. Maturity period: between a minimum of 7 days and a maximum of up to one year from the date of issue. CP can be issued in denominations of Rs.5 lakh or multiples thereof. Only a scheduled bank can act as an IPA (Issuing and Paying Agent) for issuance of CP. 9. Treasury Bills: Treasury bills (T-bills) offer short-term investment opportunities, generally up to one year. They are thus useful in managing short-term liquidity. At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State Governments. Treasury bills are available for a minimum amount of Rs.25,000 and in multiples of Rs. 25,000. Treasury bills are issued at a discount and are redeemed at par. Treasury bills are also issued under the Market Stabilization Scheme (MSS). 10. Certificates of Deposit (CD): Certificate of Deposit (CD) is a negotiable money market instrument and issued in dematerialised form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. Note: CDs can be issued by (i) scheduled commercial banks {excluding Regional Rural Banks and Local Area Banks}; and (ii) select All-India Financial Institutions (FIs) that have been permitted by RBI Minimum amount of a CD should be Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter. The maturity period of CDs issued by banks should not be less than 7 days and not more than one year, from the date of issue. 11. Fiscal Deficit: A deficit in the government budget of a country and represents the excess of expenditure over income. So this is the amount of borrowed funds require by the government to meet its expenditures completely. 12. Direct Tax: A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are an examples of direct tax. They are not shifted to somebody else. 13. Indirect Tax: This type of tax is not paid by someone to the authorities and it is actually passed on to the other in the form of increased cost. They are levied on goods and services produced or purchased. Excise Tax, Sales Tax, Vat, Entertainment tax are indirect taxes. 14. NOSTRO Account: A Nostro account is maintained by an Indian Bank in the foreign countries. 15. VOSTRO Account: A Vostro account is maintained by a foreign bank in India with their corresponding bank. 16. SDR (Special Drawing Rights): SDR are new form of International reserve assets, created by the International Monetary Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained as accounting entries and not as hard currency or physical assets like Gold. 17. Cheque: Cheque is a negotiable (which can be transferred to another person in exchange of money) instrument drawn on a specified banker ordering the banker to pay a certain sum of money to the drawer of cheque or another person. Cheque is always payable on demand. Types of Cheque: i. Ante Dated Cheque: A cheque bearing a date prior to actual date of signing the cheque or opening of an account is called an ante dated cheque which is valid and can be paid till it become stale. ii. Stale Cheque: If the validity of the cheque has already expired it is called stale cheque which cannot be paid. The normal maximum validity of cheque is 3 months earlier it was 6 months. iii. Post Dated Cheque: The cheque which bears a date subsequent to the date on which it is drawn. For ex. A cheque drawn on 10th January, 2013 bears the date of 12th January, 2013. 18. Crossing of Cheque: Crossings refers to drawing two parallel lines across the face of the cheque. C:\Users\abc\Desktop\BA_2.jpg A crossed cheque cannot be paid in cash across the counter, and is to be paid through a bank either by transfer, collection or clearing. A general crossing means that cheque can be paid through any bank and a special crossing means where the name of the Bank is indicated on the cheque can be paid only through the named bank. Dishonour of Cheque: Non – payment of cheque by the paying banker with a return memo giving reasons for the non – payment. 19. Demand Draft: Demand draft is defined as an order to pay money drawn by one office of a bank upon another office of the same bank for a sum of money payable to order on demand. Cheque and Demand draft both are used for transfer of money. Difference b/w Cheque & DD: A cheque can be bounce but D.D cannot be bounce as it is already paid. 20. Current account: Current account with a bank can be opened generally for business purpose. There are no restrictions on withdrawals in this type of account. No interest is paid in this type of account. 21. NEFT (National Electronic Fund Transfer): NEFT enables funds transfer from one bank to another but works a bit differently than RTGS. NEFT is slower than RTGS. The transfer is not direct and RBI acts as the service provider to transfer the money from one account to another. You can transfer any amount through NEFT, even a rupee. 22. RTGS (Real time gross settlement ): RTGS system is funds transfer systems where transfer of money or securities takes place from one bank to another on a real time and on gross basis. Settlement in real time means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. Minimum & Maximum Limit of RTGS: 2 lakh and no upper limit. 23. BOND: Publicly traded ling term debt securities issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal maturity. 24. Call Money: Call Money’ is the borrowing or lending of funds for 1day. 25. Notice Money: Money borrowed or lend for period between 2 days and 14 days it is known as ‘Notice Money’ 26. Term Money: Term Money refers to borrowing/lending of funds for period exceeding 14 days 27. CRAR(Capital to Risk Weighted Assets Ratio): Capital to risk weighted assets ratio is arrived at by dividing the capital of the bank with aggregated risk weighted assets for credit risk, market risk and operational risk. 28. Non Performing Assets (NPA): An asset, including a leased asset, becomes non performing when it ceases to generate income for the bank. 29. INFLATION: inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy. 30. DEFLATION: deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). This should not be confused with disinflation, a slow-down in the inflation rate (i.e., when inflation declines to lower levels). 31. REFLATION: When government wants to control the deflation condition, the suggests RBI to decrease the key rates. If deflation in not controlled, govt. makes a fiscal policy. (taxes decreased, subsidy on loan increased). 32. DISFLATION: When government wants to control the inflation condition, the suggests RBI to increase the key rates. If inflation in not controlled, govt. makes a fiscal policy. (taxes increased, subsidy on loan decreased) 33. Doubtful Asset: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months. 34. CASA Deposit: Deposit in bank in current and Savings account. 35. Liquid Assets: Liquid assets consists of cash, balances with RBI, balances in current accounts with banks, money at call and short notice, inter-bank placements due within 30 days and securities under “held for trading” and “available for sale” categories excluding securities that do not have ready market. 36. Import parity price (IPP): The price that a purchaser pays or can expect to pay for imported goods such as petrol, diesel or cooking gas. “The import parity price (IPP) is the price at the border of a good that is imported, which includes international transport costs and tariffs. The IPP is used in International trade and is sometimes referred to as the International Benchmark Price. 37. Export parity price (IPP): The price that a producer gets or can expect to get for its product if exported, equal to the Freight on Board price minus the costs of getting the product from the farm or factory to the border. The EPP applies only to the quantity that is exported and not to the quantity that is sold domestically 38. Participatory Notes or P-notes: are derivative instruments, used by Foreign Institutional Investors (FIIs) who are NOT registered with SEBI. P-Notes, mostly used by overseas HNIs (High Networth Individuals), hedge funds and other foreign institutions, allow them to invest in Indian markets through registered Foreign Institutional Investors (FIIs), while saving on time and costs associated with direct registrations. 39. Devaluation: means official lowering of the value of a countrys currency within a fixed exchange rate system, by which the monetary authority formally sets a new fixed rate with respect to a foreign reference currency. 40. Depreciation: is used to describe a decrease in a currencys value (relative to other major currency benchmarks) due to market forces, not government or central bank policy actions. News related to RBI: 1. According to The Raghuram Rajan committee report suggested a new methodology for devolving funds on states based on a Multi Dimensional Index (MDI). Note: Based on the MDI scores, the 10 least developed states are: Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan. ii. The 7 most developed status are Goa, Kerala, Tamil Nadu, Punjab, Maharashtra, Uttrakhand and Haryana. iii. 11 less developed states are : Manipur, West Bengal, Nagaland, Andhra Pradesh, Jammu and Kashmir, Mizoram, Gujarat, Tripura, Karnataka, Sikkim and Himachal Pradesh. iv. As per the report, the states with score of 0.6 and above on the Index have been classified as Least Developed; states with score below 0.6 and above 0.4 Less Developed; and states with score of below 0.4 relatively developed. 2. The Reserve Bank of India set up a three-member committee under former Governor Bimal Jalan to scrutinise applications for new bank licences, which are expected to be awarded by January. The committee under Bimal Jalan for bank licenses comprises: Usha Thorat (former RBI Deputy Governor), C B Bhave (former Sebi chairman) and Nachiket Mor (financial sector expert. 3. The government and the Reserve Bank of India (RBI) are considering buying idle gold from investors and routing it to jewelers to replace imports. The idea of setting up BCI was mooted by an RBI working group headed by K U B Rao. K U.B. Rao had suggested the idea of setting up Bullion Bank or Bullion Corporation of India can be set up by RBI with 51% equity and should have Rs 1000 crore paid up equity, financial institutions and bank could be 49% equity holders. 4. According to RBI Current Account Deficit (CAD) to 4.9 per cent of GDP to $21.8 billion in the April-June quarter of the current fiscal. CAD, the difference between inflow and outflow of foreign exchange, was 4.4 per cent or $16.9 billion in the same quarter of last fiscal, 2012-13. 5. The measure taken by RBI to shore up the currency: i. Issue of Quassi – Sovereign bonds. ii. Hiking the import duty on Gold and Silver iii. Tightening of liquidity iv. Liberalization of Bank Deposit Scheme 6. RBI has relaxed trade credit norms for all type of companies to avail of trade credit not exceeding $20 million up to a maximum period of 5 years for import of capital goods. 7. According to RBI prudential norms: i. Banks are allowed to lend a maximum of 50% of their capital fund on any day during a fortnight. ii. Borrowings by Scheduled Commercial Banks should not exceed 100 per cent of their capital fund. C:\Users\abc\Desktop\BA_2.jpg iii. Banks are allowed to borrow a maximum of 125 per cent of their capital fund on any day, during a fortnight. iv. Banks are allowed to lend a maximum of 25% of their capital fund on a fortnightly basis. V. Lending of Scheduled Commercial Banks, on a fortnightly average basis, should not exceed 25 per cent of their capital fund. 8. Under the BSBDA (Basic Savings Bank Deposit Account ) scheme of RBI: i. Any individual, including poor or those from weaker section of the society, can open zero balance account in any bank. ii. BSBDA guidelines are applicable to all scheduled commercial banks in India, including foreign banks having branches in India. iii. People belonging to weaker sections in the country can also open zero balance accounts in foreign banks such as HSBC, Citibank and Standard Chartered Bank and avail free ATM-cum-debit card facility. Iv. The aim of introducing BSBDA is part of the efforts of RBI for furthering financial inclusion objectives. There are 43 foreign banks with over 330 branches operating in the country. 9. RBI has released discussion paper on ‘Banking Structure in India – The Way forward’ which focuses on certain building blocks for the reorientation of the banking structure with a view to addressing various issues such as enhancing competition, financing higher growth, providing specialised services and furthering financial inclusion. 10. RBI has decided to introduce a Forex Swap Window to meet the entire daily dollar requirements of of three public sector oil marketing companies IOC, HPCL and BPCL 11. RBI has appointed an expert committee in the chairmanship of Dr. Urjit Patel, Deputy Governor of RBI for examining its current Monetary Policy Framework. 12. According to the new guide line of RBI, now banks can open their branches in tier I cities (the city which have population more than one lakh) without taking its permission in each case. 13. RBI announced the appointment of a 15 member Committee on Comprehensive Financial Services for small Businesses and Low-Income Households under the chairmanship of Nachiket Mor , member Central Board of Directors of RBI. 14. In order to protect consumer interest RBI banned zero per cent interest rate schemes for purchase of consumer goods In this regard Reserve Bank of India issued a notification to all the Schedule Commercial Banks and local area banks. 15. RBI, on September 10, had announced that banks can raise funds overseas above 50 per cent of their Tier I capital with a minimum maturity of three years and swap these borrowings with the central bank at a concessional rate for one to three years. 16. RBI Rajbhasa Awards: Punjab National Bank (PNB) won five Rajbhasa Awards organized by RBI. 17. The Union Government and RBI on 12 March 2013 decided to introduce one billion pieces of 10 Rupees bank notes made of plastic on a field trial basis in five cities of Kochi, Mysore, Jaipur, Bhubhaneswar and Shimla. 18. RBI guide lines for the clearance of all the cheques is 2 days. 19. RBI hiked the investment limit in government securities by FIIs and long-term investors $25 billion from $20 billion and in corporate bonds $50 billion from $45 billion. 20. Under the Basic Savings Bank Deposit Account (BSBDA) scheme, any individual, including poor or those from weaker section of the society, can open zero balance account in any bank (including foreign banks). 21. RBI permitted the premature encashment of 8% savings (Taxable) Bonds for individual investors who are 60 years and above in age. 22. The RBI said, min paid-up equity of 25 % should be held directly by the lender. Also, repayment of the principal will commence only after completion of minimum average maturity of 7 years and no prepayment will be allowed before maturity. 23. UAE Exchange, one of the largest foreign exchange firms in the United Arab Emirates, has applied to RBI for a banking license in India. 24. The Reserve Bank opened a special borrowing window of Rs 25,000 crore to help the crisis-ridden mutual funds tide over liquidity problems. 25. Aditya Birla Group chairman Kumar Mangalam Birla has resigned from RBI board to avoid any conflict of interest as one of his group firm is in the race for a new banking licence. 26. The RBI announced its decision to buy long-term government bonds worth Rs 80 billion (nearly $1.3bn) to pump more liquidity into the countrys banking system. News Related to Banking & Finance 1. Deutsche Bank has become the first bank in India to use the Reserve Bank of India (RBI)’s window to swap fresh foreign currency non-resident (bank), or FCNR (B), dollar funds. It has raised about $450 million FCNR (B) deposits from about 10 non-resident Indians and swapped it with the central bank, 2. YES Bank has become the first bank to raise $ 225 million funds overseas using the swap loan facility provided by the Reserve Bank of India (RBI) . The private sector lender raised $255 million ($180 million and €58 million) by way of dual currency, multi-tenor syndicated loan facility. 3. Canara Bank and Apollo Munich Health Insurance (AMHI) have entered into a bancassurance tie-up. This is the first such tie-up for the insurance company in its six years of existence. Bancassurance is distribution of insurance products through a bank’s network. 4. In September 4, RBI had announced a swap window to attract FCNR (B) dollar funds. Accordingly, it has been decided to offer such a window to banks to swap fresh FCNR (B) dollar funds, mobilized for a tenure of at least three years, at a fixed rate of 3.5% a year for the tenure of the deposit,”. 5. World Bank lowers 2013 growth forecast for East Asian developing countries to 7.1% 6. WTO lowers growth projection for world trade in 2013 to 2.5% against 3.3 per cent projected in April and 4.3 per cent earlier in the year 7. Own Your NPA’ campaign launched by IDBI: In a bid to speedily recover Non-Performing Assets (NPA), the IDBI Bank has launched a campaign named ‘Own Your NPA’. 8. Tata Communications Payment Solutions Ltd (TCPSL), a wholly owned subsidiary of Tata Communications Ltd, today inaugurated Indicash ATMs in Mysore. Note: The company’s first white-label ATM was launched at Chandrapada village in Thane district on June 27. 9. Financial Stability Board (FSB): FSB is an international body which was established after the 2009 G-20 London summit in April 2009 as a successor to the Financial Stability Forum. Note: i. FSB work is to coordinate at the international level the work of national financial authorities and international standard-setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies. ii. The Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and the Ministry of Finance are the members of FSB from India. 10. China launched its first direct bank, a new mode of providing online banking services without any entity outlets. The direct bank has been launched by the Bank of Beijing in co-operation with the Netherlands-based ING Group. Note: i. A direct bank is a bank without any branch network that offers its services remotely via online banking and telephone banking and may also provide access via ATMs (often through interbank network alliances), mail and mobile. 11. According to the budget announcement for the financial year 2013 the Technology Up gradation Fund Scheme (TUFS) will remain continue during 12th Plan period with a major focus on power looms. The total budget outlay for continuation of the scheme will be about 11900 crore rupees, out of which 2400 crore rupees have been allocated for the financial year 2013-14. 12. According to the latest data released by the CSO (Central Statistical office) the GDP growth of India during first quarter of the fiscal year 2013-14 dropped to 4.4 per cent, lowest in 4 years. 13. As per the latest data released by the National Sample Survey office it has said that poorest of poor in the country survive on barely Rs 17 per day in villages and Rs 23 a day in cities. 14. Bhartiya Mahila Bank proposes to complete the first six branches at Mumbai, Delhi, Kolkata, Chennai, Indore & Guwahati. Headquarter at New Delhi and likely to operational by November this year. 15. CRISIL cut India GDP growth to 4.8% for the current fiscal. 16. Andhra Pradesh Grameena Vikas Bank (APGVB) has opened about 1.5 lakh no-frills accounts in eight districts of the State on a single day as part of Direct Benefit Transfer (DBT) initiative. 17. Central Bank of India and Suvidhaa launched a prepaid (Channel) card for retailers that will enable people to pay their utility bills, taxes and book tickets by going to the nearest Suvidhaa outlets. 18. ICICI Bank Ltd, India’s largest private sector bank, has launched ICICI Bank Carbon in partnership with Visa. 19. SBI launches pre-paid card for for blue collar employees and students named State Bank of India smart payout card. i. The new product will bring a large number of workers, contract labourers and dependent family members, who dont have access to the basic banking facilities within the ambit of financial inclusion. ii. The pre-paid card can be loaded with Rs 10,000 at a time with a monthly cap of Rs 25,000. iii. This can also be used as an add on card for the existing account holders. iv. The bank will charge Rs 102 as fees for issuing the card with a validity of 10 years. v. This card can be used by students, who normally carry the debit cards of their parents while studying outside of their native place, Also, employers can give such cards to their workers for salary payment. 20. Indian banks would need Rs 3,90,000-5,00,000 crore capital over the next six years in the wake of Basel III capital regulations announced by the RBI. 21. The Bank International Indonesia (BII) launched its operations in India by opening a branch in Mumbai. 22. State Bank of India, in partnership with a non-banking finance company, UAE Exchange and Financial Services, has launched a card which will enable the holder to receive the remittance directly on the card. The card State Bank Xpress Money Card can be loaded with up to Rs 50,000. A maximum of 30 remittances can be loaded during a calendar year.Prepaid cards are beneficial to customers as there is no need to open a bank account in State Bank of India. 23. Axis Bank launched co-branded credit card that offers a blend of insurance and a number of travel benefits for international frequent flyers, available in 2 versions, viz. World Select and World. 24. ICICI Bank, the country’s largest private sector bank, launched its ‘Branch on Wheels’ to offer basic banking services in remote areas which have so far been devoid of banking facilities. Fiscal deficit: i. Fiscal deficit seen at 5.2 % of GDP in 2012/13. ii. Fiscal deficit seen at 4.8 % of GDP in 2013/14. iii. Fiscal deficit to 3 % by 2016/17 Revenue Deficit: i. Deficit seen at 3.9 % 2012-13. ii. Revenue Deficit seen at 3.3 % 2013-14. iii. Revenue deficit to 1.9% by 2016-17. Taxes: Service tax (12%), Custom duty (10%) & Excise duty (12%) remains unchanged. Tax benefits in RGESS extended to 3 years: i. The Rajiv Gandhi Equity Savings Scheme (RGESS) will be liberalised to enable first time retail investors to invest in mutual funds and listed shares and not in one year alone, but for three successive years. ii. Under the scheme, an individual with an income of less than Rs 12 lakh would get tax incentives for investing up to Rs 50,000 in the stock market. iii. Also, the limit for investors wanting to invest in RGESS has been raised to Rs 12 lakh from Rs 10 lakh earlier. FDI Limits: Sr no. List of Limits in Various Sectors (In %) 1. Defence 26 2. Pension 49 3. Insurance 49 4. Print Media 26 5. Civil Aviation 49 6. Public Sec. Banks 49 7. Private Sec. Banks 74 8. Multi Brand 51 9. Single Brand 100 10. Tourism 100 11. Pharmaceuticals 100 12. FM Radio 26 13. Telecommunication 100 14. Asset Reconstruction companies 100 India ranking in different Indexes for 2013: 1.Global Hunger Index- 66. 2. Global Peace Index – 141 3. Human Development Report – 136 4. Global Corruption Index – 94 5. Global Competitiveness Index-60 for 2013 (Switzerland top in this report) 6. Gender Inequality Index - 132nd (UN Human Development (Index) Report) 7. In List of High Net worth Individuals – (5th acc to the Knight Frank Wealth Report 2013) 8. In The List of Spam Spewing Nation in the World- 3rd (after US and China): as per the new report of Sophos Labs. 9. India has been ranked as the 119th freest country in the world out of 177 in the 2013 index of economic freedom. Index/Reports Issued by different organizations in World: 1. World Economic Outlook is published by: International Monetary Fund (IMF). 2. Global Hunger Index is issued by: International Food Policy Research Institute 3. Global Peace Index is issued by: Institute for Economics and Peace 4. Global Corruption Index is issued by: Transparency International 5. Global Competitiveness Index is issued by: World Economic Forum 6. Human Development Report is issued by: United Nations Development Programme (UNDP) 7. Gender Inequality Index is issued by: United Nations Development Programme (UNDP) Economic News: India & World 1. In the World Bank Report, India top beneficiary with foreign remittances worth 71 billion dollars followed by China with 60 billion dollars and the Philippines which got 26 billion dollars 2. World Bank funds project to help 300,000 families in North East Rural Livelihood Project (NERLP) would be executed in four northeastern states - Mizoram, Nagaland, Sikkim and Tripura, to uplift the economic condition of the rural people. 3. Leaders of BRICS announced to set up 100 Billion US Dollars Fund to steady currency markets (to guard against financial stocks) destabilized by an expected pullback of US monetary stimulus. Note: Brazil, India and Russia committed 18 billion dollars each while China announced 41 billion US dollars. South Africa announced 5 billion US dollars. 4. Arctic council: India together with five other states, has been granted the statue of an observer in Arctic council and CERN. Six new permanent observers: China, Japan, Korea, India, Singapore, Italy The Arctic Council is a high-level intergovernmental forum that addresses issues faced by the Arctic governments and the indigenous people of the Arctic. It has eight member countries: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States. 5. Romania gets 2 bn euro IMF standby aid. The International Monetary Fund approved a standby loan of nearly two billion euros ($2.7 billion) to match a backup loan of the same size requested from the European Union. The IMF loan is a two-year standby arrangement for 1.98 billion euros, to give the government space to continue reforms. Note: Romania President: Traian Basescu. Capital: Bucharest. Currency: Leu 6. Nabard ( National Bank for Agriculture and Rural Development ) has sanctioned Rs 40 cr for rural water supply scheme in the Union Territory of Puducherry under Nabard’s Rural Infrastructure Development Fund (RIDF). 7. Nabard opens lending window for pvt sector: The National Bank for Agriculture and Rural Development (Nabard) has opened a lending window for private sector for the creation of warehouse space and also to set up cold storages and cold chains in Karnataka. 8. SEBI board approves new Foreign Portfolio Investor norms: The new class of investors, FPIs, would encompass all FIIs (Foreign Institutional Investors), their sub-accounts and Qualified Foreign Investors (QFIs), and would be divided in three categories as per their risk profile. Under the new FPI regime: i. All existing FIIs, Sub Accounts and QFIs will be eventually merged into this new investor class to be known as FPIs. ii. SEBI also approved setting up ‘Designated Depository Participants (DDPs)’, which would register FPIs on behalf of the market regulator subject to compliance with KYC norms. iii. The Category I FPIs, which would be the lowest risk entities, would include foreign governments and government related foreign investors, C:\Users\abc\Desktop\BA_2.jpg iv. “Category II’ FPIs would include “appropriately regulated broad based funds, appropriately regulated entities, broad- based funds whose investment manager is appropriately regulated, university funds, university related endowments, pension funds etc“. iv. The Category III FPIs would include all others not eligible under the first two categories. v. SEBI said that all existing FIIs and Sub Accounts may continue to buy, sell or otherwise deal in securities under the FPI regime. vi. All existing QFIs can also continue to buy, sell or otherwise deal in securities till the period of one year from the date of notification of this regulation. In the meantime, they may obtain FPI registration through DDPs. 9. Moody’s has lowered its outlook for Indias GDP growth to 4.5 per cent for 2013-14 from 5.5 per cent. 10. GAAR to come into effect from April 1, 2016: The controversial GAAR provision, which seeks to check tax avoidance by investors routing their funds through tax havens, will come into effect from April 1, 2016. Note: i. The provision of General Anti Avoidance Rules (GAAR) will apply to entities availing tax benefit of at least Rs 3 crore, according to the notification ii. It will apply to foreign institutional investors (FIIs) that have claimed benefits under any Double Tax Avoidance Agreement (DTAA). 11. ADB (Asian Development Bank) to lend $500m for Rajasthan clean energy projects: 12. Japan to promote womenomics, pledges over $3 billion ODA: Japan will promote womenomics -- a theory which asserts that the advancement of women in society is directly correlated with its growth rate -- and give over $3 billion of official development assistance (ODA) in the next three years targeting womens participation in society and the empowerment of women, 13. Global rating agency Fitch has scaled down its projections on India’s growth to 4.8% for the current fiscal from the earlier estimate of 5.7% made in June, 2013. 14. China holds the world’s largest Foreign Exchange Reserve with $3.31 trillion tops the list. 15. Internet giants Yahoo closed its news and community services in China. 16. Air India & SBI Cards launch co-branded credit card: that seeks to add value to the travel experience of Indian customers. SBI Cards is a joint venture between SBI and GE Capital.Rohit Nandan, Chairman and Managing Director, Air India. 17. Import duty on Gold jewellery hiked to 15%. 18. SBI Life launches Smart Power Insurance plan which is designed to care for investor’s twin needs of insurance and investment. SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Cardif, the insurance arm of BNP Paribas. 19. ICICI Prudential Life launches new unit-linked pension plan: ICICI Pru Easy Retirement 20. ICICI Bank launches new Facebook app Pockets that will enable customers of the bank to transfer money, recharge mobile phones and book movie tickets from their Facebook pages. 21. ICICI Bank opened skill training academy in Jaipur (Rajasthan) to provide vocational training to youth from economically weaker section of the society 22. IndiaFirst Life offers policies in demat form: Private life insurer IndiaFirst Life has announced the availability of all its policies in dematerialized format (insurance policies in electronic form). Note: The electronic insurance account need for KYC norms like address and identity proof for every purchase and will bring in all the benefits of demat to the insurance business, including automatic reminders for premium. 23. Inflation jumps to 6.10 percent in August. 24. ADB (Asian Development Bank) funds Rs 130 cr to flow into Agartala water pipelines, would overhaul the entire 53-year-old water supply system. 25. Government of India has shifted the administrative control of Forward Markets Commission (FMC), the chief regulator of Forwards and Futures Commodity Markets in India to the Ministry of Finance. Earlier it was under the control of the Department of Consumer Affairs under the Ministry of Food. 26. The Union Cabinet approved the proposal to invest 4.3 billion US dollar in the bonds of World Bank Group. The RBI will make investments in the bonds that will be floated by the International Bank for Reconstruction and Development (IBRD). IBRD is the lending arm of World Bank. RBI will get returns on the investments made on the bonds. 27. According to the data released by the Department of Revenue of Finance Ministry of Government of India the net direct tax collections for the current financial year (2013-14) increased by 12.5 percent. 28. The foundation stone of Mainline Electrical Multiple Unit (MEMU) Coach Factory was laid at Rupaheli Station, Bhilwara District, Rajasthan. MEMU Coach Factory had been approved in the Rail Budget 2013-14 at an estimated cost of 800 crore rupees. This factory is a joint effort of Indian Railways, Government of Rajasthan and BHEL 29. The Cabinet Committee on Economic Affairs (CCEA) approved continuation of the scheme for Integrated Textile Parks in the 12th five year plan. 30. CCEA approved the implementation of the National Mission on Oilseeds and Oil Pal (NMOOP) during the 12th five year Plan which will help in enhancing in production of oilseeds. 31. Muthoot Fincorp, which is actually a part of Muthoot Pappachan Group, announced launching 100 crore Rupees non- convertible debenture (NCB) issue in order to fund the expansion of microfinance as well as small and medium enterprise (SME) business 32. Retirement fund body EPFO is likely to announce an interest rate of 8.5 % from 8% on provident fund deposits for 2013-14. 33. India to buy $4.3 billion worth of World Bank bonds: The government announced it decision to invest $4.3 billion (Rs 27,000 crore) the World Banks special private placement bonds (SPPBs) so that the country could remain eligible for the global lenders low-cost funding for various domestic infrastructure projects. 34. The Central Government raised customs duty on gold, silver and platinum to 10 percent in a bid to curb the surging imports and burgeoning Current Account Deficit (previously gold 8% and silver 6%). 35. India has signed a loan agreement of 100 million US dollar with the World Bank for its Low Income Housing Finance Project. The objective of the project is to provide access to sustainable housing finance for low income households to purchase, build or upgrade their dwellings. 36. India tops BRICS in super-rich membership: World Ultra Wealth report 2013. 37. India, Japan to enhance currency swap arrangement to USD 50 billion a development that is likely to bring stability in financial markets in the country. 38. The National Bank for Agriculture and Rural Development (NABARD) has sanctioned Rs 113.70 crore to Karnataka under Rural Infrastructure Development Fund (RIDF). 39. Maharatna status for BHEL and GAIL. 40. Govt. granted an aid of 41 Crore Rs. to protect “Pashmina Goats”. 41. The government signed a $60 million loan agreement with the World Bank to improve watershed operations in seven districts of Karnataka. 42. Centre to set up countrys 1st geothermal power project in Ladakh. 43. LIC Housing Finance has launched a new home loan product called “Bhagyalakshmi” for women home seekers. 44. ADB gave 100 Million US Dollar Loan to Uttarakhand for the urban infrastructure programme. 45. The ADB has offered $150 million loan for the expansion of railway tracks and to improve overall service in the country. 46. ADB announced to provide $74.8 million loan to improve road connectivity in the North East states. 47. ADB to provide $300 million loan to Chhattisgarh for overhauling roads 48. India is 4th largest energy consumer in the world: According to a Report by US Energy Information Administration (EIA), India has emerged the fourth largest energy consumer of the world after the US, China and Russia, but its per capita energy consumption remains lower than that of developed countries. 49. SIDBI signs tripartite MoU with Egyptian body, World Bank: Small Industries Development Bank of India (SIDBI) has signed a tripartite Memorandum of Understanding (MOU) with Social Fund for Development (SFD) Egypt and the World Bank. 50. Moneylender-free’ village: Canara Bank has taken move by declaring Kunjupannai village in Nilgiris district of Tamil Nadu a ‘moneylender free’ village. 51. Agriculture’s share in GDP may fall to 13.7% in FY13: on account of higher growth in the non-farm sectors. The contribution of agriculture and allied sector to the Gross Domestic Product of the country declined from 14.6 per cent in 2009-10 to 14.5 per cent in 2010-11 and further to 14.1 per cent in 2011-12. 52. Card related complaints are highest number of complaints which were reported to the ‘Banking Ombudsmans’ 53. MNREGA workers to get more wages: From April 1, the maximum daily wage of Rs 214 has been fixed for Haryana, while Bihar, Sikkim, Tripura, Nagaland and Arunachal Pradesh will get the minimum of Rs 135. The MNREGA wage rate is linked to the Consumer Price Index for Agricultural Labour (CPIAL) from April 1 every year. 54. Minimum net-owned funds for money transfer business: Rs 50 lakh. Further, collateral equivalent to three days’s average drawings or $50,000, whichever is higher, may be kept by the Overseas Principal in favour of the Indian Agent with a designated bank in India. 55. India Mortgage Guarantee Corporation is subsidiary of: National Housing Bank (NHB). 56. Direct Benefit Transfer Scheme will be expanded to 78 districts from July 13. 57. The State Bank of Travancore launched a new service for its customers - doorstep banking.The minimum pick- up will be Rs. 5 lakh and the maximum would be Rs. 20 million. 58. The government has approved private sector lender Yes Banks proposal to increase foreign holdings in the company to 60 percent that is likely to result in overseas equity inflow of Rs. 2,650 crore. 59. Ratings agency Crisil Friday assigned AAA ratings to India Infradebt Limited, the countrys first infrastructure debt fund under the non-banking finance company structure.The fund, jointly promoted by ICICI Bank, Bank of Baroda, Life Insurance Corporation (LIC) and Citicorp Finance (India), awarded its first sanction letter to a road project. 60. The Cabinet Committee on Economic Affairs (CCEA) approved disinvestment of government stake in State Trading Corporation (STC) and ITDC, which would fetch around Rs.30 crore to the exchequer. 61. M Pesa Scheme: Telecommunication major Vodafone India in association with ICICI bank has started a unique money transfer and payment service “M-Pesa” in Bihar and Jharkhand where banking network and financial penetration is inadequate, particularly, in rural areas. 62. Asian Development Bank (ADB) will provide about 6 billion dollars loan to India to maintain its lending level to India. 63. The Union Cabinet approved Women Self Help Groups to Get Low Interest Loans at 7% with the objective of removing poverty in rural areas by empowering women. Till now this rate was 11.5 to 14 %. 64. National Stock Exchange(NSE) launched the country’s first Debt Trading Platform. 65. WPI Inflation eased to 4.89 percent in April 2013. 66. World Bank will provide USD 255 million (Rs 1,499.6 crore) loan to India for National AIDS Control Project (NACP-IV) to promote safe behaviour among high risk groups. was signed in New Delhi on Tuesday between India and the World Bank. 67. Reliance Capital became the first company to suspend gold sales. 68. Exim Bank approved $300 million loan to Ethiopia for the construction of a railway line linking this landlocked country in the Horn of Africa to a port city in neighbouring Djibouti. 69. China, Britain set up currency swap line. 70. In its first ever loan to private agri-business in India, Asian Development Bank (ADB) will provide $ 18.4 million to Champion Agro to set up cold storage facilities for fruits and vegetables focusing on Gujarat. 71. IRDA penalty of over 3cr on Bajaj Allianz Life Insurance for violations Market regulator SEBI has allowed mutual funds to trade directly on debt platforms of recognised stock exchanges. 72. IIFCL Mutual Fund launched Infrastructure debt fund (IDF) with the support of Canara Bank and HUDCO being the strategic investors and Corporation Bank, Oriental Bank of Commerce & IIFCL being the other investors. 73. During the meeting with the ASEAN countries Ministers at Brunei India and ASEAN decided to set a target of $100 billion turnover for the bilateral trade by 2015 between the two entities and reviewed the completion of legal scrubbing of India- ASEAN agreements on Trade in Services and Investment. Points To Remember: MOU Signed by India: 1. India, US seal first commercial deal on civil nuclear power: The US Nuclear Regulatory Commission (NRC) and the Indian Atomic Energy Regulatory Board (AERB) intend to sign a memorandum of understanding for the exchange of technical information in nuclear safety matters 2. India & Bangladesh deal two energy cooperation : India begins electricity export to Bangladesh with the inauguration of the Bangladesh-India Power Transmission Centre at western Bherampura, adjacent to West Bengal. Note: i. India will export 500 megawatts of electricity a day to Bangladesh over a period of 35 years. ii. The Maitri thermal power project is being developed by the Bangladesh-India Friendship Power Company, a joint venture between NTPC and Bangladesh Power Development Board. 3. India seeks Belgiums and Turkey support to enter arms control regimes: Belgium will support Indias efforts to become a full member of the four arms control regimes, namely, NSG, Missile Technology Control Regime (MTCR), Wassenaar Arrangement and Australia Group. Note: i. Belgian King: King Phillppe, Prime Minister: Elio Di Rupa. Currency – Euro. Capital: Brussels ii. NSG has 47 members, MTCR has 34 countries as its members, Wassenaar Arrangement has 41 members iii. Wassenaar Arrangement is an order which is for the promotion of regional security, international security and stability by offering transparency and greater responsibility in transfers of conventional arms, dual-use goods and technologies. Turkey: President : Abdullah Gül PM: Recep Tayyip Erdogan. Capital: Ankara. Currency Lira: Both the countries are member of all groups. 4. Archaeological Survey of India (ASI) signed an agreement with Google to create 360 degree online imagery of 100 of India’s most important heritage sites. The sites include the Taj Mahal, Khajuraho , Ajanta and Ellora caves. 5. India has extended Lines of Credit (LoC) worth $640 million to Mozambique: Note: i. India is the 8th largest foreign investor in Mozambique with total investments estimated at more than $500 million. ii. Armando Emílio Guebuza: President of Mozambique. iii. Alberto Vaquina: Prime Minister of Mozambique. iv. Capital of Mozambique - Maputo v. Currency of Mozambique:Metical 6. Bharti Enterprises and Wal-Mart Stores, Inc. together for operations in the Indian retail sector. Walmart would acquire Bhartis stake in Bharti Walmart Pvt Ltd, a joint venture between Bharti and Walmart, giving Walmart 100 per cent ownership of the Best Price Modern Wholesale cash and carry business. Note: The two partners had joined hands in 2007 and launched its first B2B Best Price Modern Wholesale cash-and-carry store in Amritsar in May 2009. 7. The Indian Railways on 3 October 2013 signed a pact with Rashtriya Ispat Nigam Limited (RINL) to set up the countrys biggest Forged Wheel plant at Lalganj, Raebarelli in Uttar Pradesh. The Plant to be set with an investment of about 1100 crore Rupees will produce one lakh numbers of Forged Wheels per annum in the First phase for Locos and High speed trains. Note: i. The quality of wheel manufactured in the plant will be tested and certified by International certifying agency TTCI, USA. 8. The Cabinet Committee on Economic Affairs (CCEA) cleared Jet Airways proposed sale of 24 per cent equity to Abu Dhabi- based Etihad Airways, paving the way for the biggest ever foreign investment in the Indian aviation sector. 9. Tata Power to set up coal-fired plant in Myanmar. This would be the first project by the Tata Group Company in the South- East Asian nation. the power plant is proposed to be located in Ngayok Kaung, Ayeyarwaddy region. 10. Tata Power, countrys largest private power generator has signed an agreement with EESL for energy efficiency and conservation initiatives. EESL (Energy Efficiency Services Ltd) is a joint venture of public sector units of the Ministry of Power. 11. Tata inks deal with Singapore Airlines to start a new carrier 12. Tata Power has inked a deal to acquire AES Saurashtra Wind farms, a subsidiary of US-based AES Corp, which owns a 39.2 MW wind energy farm in Gujarat, 13. SEBI inked MoU with Argentina to promote mutual assistance and exchange information related to securities markets in both the countries. The MoU was signed between SEBI Chairman UK Sinha and CNV Chairman Alejandro Vanoli during the 38th IOSCO annual conference in Luxembourg 14. Datawind has entered into a strategic partnership with TES India, an online community for teachers, to provide a library of ready-to-use teaching material to its end-users. 15. India announced an aid of 5000 crore rupees to Bhutan. 16. India and Latvia signed an agreement on Double Tax Avoidance Agreement and the Prevention of Fiscal Evasion with respect to Taxes on Income Latvia is the third Baltic country with which DTAA has been signed by India. Earlier DTAAs were signed with Lithuania and Estonia. 17. The Asian Development Bank (ADB) and the Centre signed an agreement for US $300 million additional loan to upgrade 254 kilometres of deteriorated highways in northern and southern Bihar. 18. India extends US$144mn credit line to Liberia of power transmission and distribution projects to reduce the gap of power shortage in Liberia. 19. India and Myanmar set 3 billion dollar trade target by 2015 during the meeting of India’s energy minister Anand Sharma with his Myanmar counterpart U Than Htay in New Delhi held on 6 June 2013. 20. India and Afghanistan have pledged to enhance bilateral cooperation across various sectors, particularly in the field of education. India is currently one of the largest providers of education scholarships to Afghan youth under various programmes. 21. India and Japan signed a currency swap agreement for up to 50 billion dollars to address short-term liquidity problems. The bilateral swap arrangement (BSA) has been inked between the Reserve Bank of India and the Bank of Japan. FOR MORE PAPER CLICK ON LINK
Posted on: Tue, 15 Oct 2013 05:44:25 +0000
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